<DrumBeat: December 9, 2006The Oil DrumFuel duty and the effect of oil prices on the UK economy>

179 comments on Scarcity Rents and Oil Prices, Again

Comments can no longer be added to this story.

Yosemite Sam on December 8, 2006 - 5:43pm Permalink | Subthread | Parent | Comments top
My understanding is that the Euro is not robust enough currency to handle the all the capital that is now is petrodollars.  The dollar is like the failing bank that is too big too fail in it is too big to ignore.
0
Comments can no longer be added to this story.
memmel on December 8, 2006 - 8:01pm Permalink | Subthread | Parent | Comments top

General Motors is too big to fail.

I think the USSR is too big to fail also.

Oh wait...

0
Comments can no longer be added to this story.
Yosemite Sam on December 8, 2006 - 9:05pm Permalink | Subthread | Parent | Comments top
OK, bad example.  The Euro cannot "physically" handle the job.  The stock and bond markets denominated in Euros do not have the necessary capacity.
0
Comments can no longer be added to this story.
Nagorak on December 8, 2006 - 10:08pm Permalink | Subthread | Parent | Comments top
I believe the Euro bond market might be larger than the U.S.'s.  I've heard that anyway, although I can't provide a link to any substantial source.  If so, it's kind of silly to say the Euro can't handle the job.  

The dollar is not all that important.  Everything could easily switch over to Euros or other currencies.  It will happen, but it will no doubt take many years time.  

0
Comments can no longer be added to this story.
Paul in Nevada on December 9, 2006 - 12:42am Permalink | Subthread | Parent | Comments top
The euro float is certainly large enough to handle the oil trade. If money is purchasing power, the financial institutions of this world can provide plenty of Euros.

The weakness of the Euro is political. Not all countries in the Euro market are happy with membership. See Italy for one example. It would prefer a currency it could more easily inflate (devalue or debase).

0
Comments can no longer be added to this story.
Dragonfly41 on December 9, 2006 - 10:01am Permalink | Subthread | Parent | Comments top
Hey...a petrocurrency has to start somewhere.  The Euro already acts as a defacto "basket" currency.  Makes it easier to add additional countries/currencies.  I think it would be quite easy to switch over, if/when countries decide to give it value.  All it takes is "agreed upon" confidence.
0
Comments can no longer be added to this story.