The end of Bretton Woods?

[lovuian]

http://www.enn.com/business/article/27273

he mainstream media doesn't seem to understand the potential magnitude of changes currently underway in the sensitive international monetary balance. On December 8th Iran decided to no longer accept the US dollar in exchange for its oil. Since the mainstream media did not cover it either, you may not remember that this was one of the last actions of any international significance done by Saddam Hussein before he once again caught the attention of the US (and incidentally, it is one of the first things to be undone after Baghdad fell). It looks like Iran is switching to the Euro rather than the basket of currencies that OPEC is considering in the wake of the US dollar's recent weakness. An exodus from the dollar would effectively mark the end of the Bretton Woods agreement under which the US currency was established as the currency of oil and therefore international banking.

To further add to the dilemma, countries that have maintained their currency's value at parity with the US Dollar under what is referred to as Bretton Woods II are increasing going their separate ways. Oil-rich countries and other countries that have large trade deficits with the US, such as China, are also slowly trying to get rid of their US treasury bonds (if they remove them too fast the dollar will crash, drastically reducing the value of their remaining bonds).

In another worrying development, Russia's Oil and Gas giant Lukoil announced today that it may switch from the US dollar as soon as 2009. Venezuela's leader, Hugo Chavez, recently denounced the US Dollar as a worthless piece of paper so it is entirely possible that Venezuela may soon make an announcement as well.

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Big changes ahead for America and Congress is just raising Binnie's reward when serious issues are out there... Its not about Iran's nukes its about taking the Power away from America

[rockymountaindem]

1. While the current situation is worrisome

the Breton Woods system ended during the Nixon administration with the abolition of unlimited dollar-gold convertibility.

[lovuian]

2. it looks like Russia is leaving the dollar too

Russia may dump weakening U.S. dollar in its energy deals

http://english.pravda.ru/russia/economics/13-12-2007/102797-dollar-0



Rafael Correa, the president of Ecuador, supported the proposal and noted that the dollar fall eats up a considerable part of oil exporters’ income: “In spite of the fact that oil prices have reached the level of about $100 per barrel, in fact they are lower than in the 1980s,” Correa said. However, these ideas received no support from OPEC. The dollar peg issue was put off till the next OPEC summit.

Officials of Russia’s natural gas giant, Gazprom, voiced an idea to use rubles in gas trade. “We consider the idea of selling our resources for rubles to be quite possible,” Gazprom’s Vice President Alexander Medvedev said at a recent conference in New York.

Meanwhile, Iran has already renounced the dollar. “Our country has completely ceased to export liquid hydrocarbons for the U.S. currency. Taking into consideration the dollar setback and the damage that it causes to oil exporters, we can not trust this currency any more,” said IRI Oil Minister Gholam Hossein Nozari on December 8.
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The day of the Dollar is coming to an end