Comments on: Persian Gulf currency union and the forex risk to nations everywhere http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 22:30:38 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: mathman http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242300 mathman Wed, 16 Dec 2009 20:56:59 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242300 @ Zack: About the same as when the dollar is essentially worthless here. @ Zack: About the same as when the dollar is essentially worthless here.

]]> By: ZackAttack http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242295 ZackAttack Wed, 16 Dec 2009 20:35:49 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242295 So the gulfo is pegged to oil. How does that work out for them when it runs out? So the gulfo is pegged to oil. How does that work out for them when it runs out?

]]> By: steve from virginia http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242293 steve from virginia Wed, 16 Dec 2009 20:22:06 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242293 I've looked @ currency unions as a way to hedge resource uncertainties; the costs are spread across different levels of economic efficiency. Ergo, the Euro, where efficient Germans can indirectly subsidize inefficient Italians. What resource are the 'Gulfo' states hedging? Credit, maybe? Maybe the Guldo's are acknowledging Peak Oil: without oil, none of the backward satraps could borrow a dime. Meanwhile, the Saudis have set a peg of oil to dollars. I'm watching convulsions in the various markets begin as a de facto 'hard dollar' is recognized and Bernanke's 'kill- the- dollar' strategy begins to stumble. A dollar that is worth a half- gallon of crude oil is too valuable to short, do you think? In this light a currency union would suggest the 'other' Gulfos have something on the Saudi royal family. Otherwise, why would one oil producer stand underr the currency hegemony of another oil producer? What would be the real return? Any seigniorage would be simply factored into the crude that is being priced. Gulf state oil production hasn't reached the 'take it or leave it' stage ... ... yet. I’ve looked @ currency unions as a way to hedge resource uncertainties; the costs are spread across different levels of economic efficiency. Ergo, the Euro, where efficient Germans can indirectly subsidize inefficient Italians.

What resource are the ‘Gulfo’ states hedging? Credit, maybe? Maybe the Guldo’s are acknowledging Peak Oil: without oil, none of the backward satraps could borrow a dime.

Meanwhile, the Saudis have set a peg of oil to dollars. I’m watching convulsions in the various markets begin as a de facto ‘hard dollar’ is recognized and Bernanke’s ‘kill- the- dollar’ strategy begins to stumble. A dollar that is worth a half- gallon of crude oil is too valuable to short, do you think?

In this light a currency union would suggest the ‘other’ Gulfos have something on the Saudi royal family. Otherwise, why would one oil producer stand underr the currency hegemony of another oil producer? What would be the real return? Any seigniorage would be simply factored into the crude that is being priced. Gulf state oil production hasn’t reached the ‘take it or leave it’ stage …

… yet.

]]> By: rj http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242292 rj Wed, 16 Dec 2009 20:13:33 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242292 I'm really surprised sites, posters, and commenters haven't touched on the fates awaiting the Greeks, Spaniards, Latvians, and Irish more. I’m really surprised sites, posters, and commenters haven’t touched on the fates awaiting the Greeks, Spaniards, Latvians, and Irish more.

]]> By: The Curmudgeon http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242284 The Curmudgeon Wed, 16 Dec 2009 19:41:15 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242284 But you see, the problem, torrie-amos, is that individuals have the incentive to develop virtuous traits like saving and living humbly within their means, if the cost of their otherwise spendthrift behavior is borne by them alone. The free-rider problem that inheres with aggregations of individuals in corporations, unions, government entities, etc., means that all such aggregations will eventually spend and borrow as much as is possible, hoping always that someone further down the line will pay the tab. But you see, the problem, torrie-amos, is that individuals have the incentive to develop virtuous traits like saving and living humbly within their means, if the cost of their otherwise spendthrift behavior is borne by them alone. The free-rider problem that inheres with aggregations of individuals in corporations, unions, government entities, etc., means that all such aggregations will eventually spend and borrow as much as is possible, hoping always that someone further down the line will pay the tab.

]]> By: torrie-amos http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/comment-page-1/#comment-242277 torrie-amos Wed, 16 Dec 2009 19:05:32 +0000 http://www.ritholtz.com/blog/2009/12/persian-gulf-currency-union-and-the-forex-risk-to-nations-everywhere/#comment-242277 u mean what works for an individual works for countries also, amazing u mean what works for an individual works for countries also, amazing

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