In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.
Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.
"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
Israeli police and Arab Muslim residents of Jerusalem clashed in several parts of the Israeli capital on Friday, after Palestinian leaders and local Muslim clerics urged the Arabs to rise up in "defense of the Al Aksa Mosque."
The Arab leaders claimed that by restricting entry for Friday prayers atop the Temple Mount to Muslim men over the age of 50, Israel was laying siege to the mosques that occupy the biblical holy site. Israel regularly impalements such measures when intelligence suggests younger Arabs may be planning violence.
Israeli security forces managed to keep the Old City and Temple Mount area violence-free, but more raucous Arab elements did clash with police in the eastern Jerusalem neighborhoods of Ras al-Amud and Sur Baher.
In the Ras al-Amud confrontation, some 200 Israeli officers decked out in riot gear and shields had to push back thousands of stone throwing rioters. Once the police got close enough to buildings in the neighborhood, local women began throwing potted plants and stones at the Israelis from open windows and rooftop balconies.
Five Israeli officers were wounded in that clash.
In Sur Baher, which is near the Jerusalem-area kibbutz of Ramat Rachel, hundreds of Arabs hurled stones at police and tried to approach Jewish areas, but were stopped without injuries on either side.
According to Israeli President Shimon Peres, the Jewish state is putting its faith in US President Barack Obama to bring peace to their troubled region.
During a meeting on Thursday with US envoy George Mitchell, Peres said Israel has "full faith in Obama's policies," and insisted the American leader was dealing with the Israeli-Arab conflict in a very fair manner.
Many Israelis would probably disagree with Peres, as polls show the majority of Israeli Jews feel the new US president very much favors the Arabs and their demands, as evidenced by Obama's overriding focus on halting all Jewish construction in areas claimed by the Palestinians, including Jerusalem.
During his meetings with Peres and later with Israeli Foreign Minister Avigdor Lieberman, Mitchell said he was sent by Obama to push for the "early relaunch" of direct peace negotiations between Israel and the Palestinians. He was scheduled to meeting with Israeli Prime Minister Benjamin Netanyahu and Palestinian leaders over the weekend to advance that goal.
Netanyahu has repeatedly declared his readiness to restart talks immediately, but the Palestinians, sensing Obama's desire to please the Muslim world at all costs, has refused direct negotiations until Israeli is pressured into making extreme promises and concessions.
A senior US official told Israeli reporters that Obama is becoming fed up with the delay in restarting peace talks. Observers feel that the president's visible impatience is also fueling the Palestinians' steadfastness in their hardcore positions, certain that a restive Obama will eventually bully Israel into doing whatever it takes to conclude a peace deal.
President Obama will deliver the keynote address to the nation's largest homosexual organization Saturday evening, the night before thousands of homosexuals are scheduled to march and rally on Washington calling for, among other things, "gay marriage" legalization.
It's not the first time Obama has spoken to a gathering of homosexual activists, but it may be the most prominent. Obama will speak in Washington at the Human Rights Campaign's 13th annual national dinner. The National Equality March will take place the next day, beginning at noon Eastern time. The march is taking place 40 years after the 1969 Stonewall Riots, which launched the modern-day "gay rights" movement.
"We are honored to share this night with President Obama, who has called upon our nation to embrace LGBT people as brothers and sisters," Human Rights Campaign President Joe Solmonese said in a statement. "It is fitting that he will speak to our community on the night that we pay tribute to his friend and mentor Senator Edward Kennedy, who knew that as president, Barack Obama would take on the unfinished business of this nation -- equal rights for the LGBT community, and for every person who believes in liberty and justice for all."
In early June, Obama issued a proclamation naming June "Lesbian, Gay, Bisexual and Transgender Pride Month," and later that month he welcomed several hundred homosexual leaders to the White House and told them in a 15-minute speech they have "an ally and a champion" in the Oval Office. During that speech he also reiterated his opposition to the military's Don't Ask, Don't Tell policy as well as to the federal Defense of Marriage Act (DOMA), which gives states the option of not recognizing another state's "gay marriages." If DOMA is overturned, every state could be forced to redefine marriage.
The two-hour march will end at the west lawn of the U.S. Capitol building, where a rally with speeches and music will commence. According to its website, the march "will be the first step toward a larger goal of creating a national movement." The goal of that movement is to demand of every representative in all 435 congressional districts "full equality under the law."
"We will no longer be told to wait," Kip Williams, a co-director of the march, said in a statement. "This march is our chance to demand full equal protection under the law, and it will help us realize the dream of Equality Across America: a committed group of grassroots activists in all 435 Congressional Districts."
Obama's June speech particularly frustrated evangelicals because he seemed to criticize orthodox interpretations of the Bible regarding homosexuality.
"Though we've made progress, there are still fellow citizens, perhaps neighbors or even family members and loved ones," he said, "who still hold fast to worn arguments and old attitudes, who fail to see your families like their families, and who would deny you the rights that most Americans take for granted."
Bob Stith, the Southern Baptist national strategist for gender issues and representative of the denomination's Task Force on Ministry to Homosexuals (SBCTheWayOut.com), told Baptist Press in June that evangelicals haven't "arrived at our conclusions on homosexuality lightly."
"It isn't simply that we believe homosexuality is sin," Stith said. "We have wrestled with the texts, with the new apologetics of many activists and have come to a genuine, heartfelt belief that Scripture is clear on this."
If "God says something is wrong," Stith said, then those who deviate from God's commands are missing "out on God's best" and are "in an adversarial relationship with God." Obama's words, Stith said, marginalize not only evangelical Christians but also those homosexual persons who desire to change.
"If God says something is wrong, He also provides a way out," Stith said. "If, as seems evident, Mr. Obama is intent on marginalizing or eradicating any who hold to traditional biblical convictions, then he also eliminates the hope of many who struggle with same-sex attractions and want to be free from that struggle. It is tragic to think of the thousands of young men and women who will opt for an immoral choice without having the opportunity to hear all the options. This is neither compassionate, tolerant nor an expression of true freedom."
On October 6, 1973, Israel was hit by a massive and devastating surprise attack on Yom Kippur, the holiest day in Judaism. The warning signs that Israel’s enemies were gearing up to deal the Jewish State a death blow were there. Her leaders simply didn’t properly assess, interpret and respond to them. By God’s grace, Israel was saved from the brink of utter ruination. But it was close, and painful.
Thirty-six years later, Israel is once again in grave danger. By Iran’s nuclear threat, to be sure. But Israel is actually in danger of being blindsided by two new threats.
The first threat is the real and growing possibility that the United Nations will shift the nuclear spotlight away from Iran and on to Israel in an effort to force Jerusalem to disclose and dismantle its alleged nuclear weapons and join the Nuclear Non-Proliferation Treaty (NPT). Israel does not openly acknowledge having atomic weapons. But the U.N. Security Council could pass a resolution forcing Israel to allow international inspectors in. If Israel refused to comply, she could be subject to diplomatic isolation, crippling economic sanctions, and even international enforcement (that is, a coalition of nations ready to go to war over the issue, just as the U.S. led a coalition in 2003 to force Iraq to comply with U.N. resolutions regarding weapons of mass destruction.)
This is a scenario I’ve been warning about for years, including in my 2005 political thriller, The Ezekiel Option. But this is no longer fiction. IAEA chief Mohammed ElBaradei publicly raised this as a serious possibility yesterday, saying, “Israel is the number one threat to the Middle East given the nuclear arms it possesses.” The Wall Street Journal columnist Bret Stephens also has a must-read column in today’s paper explaining how this scenario could come to pass in the not-too-distant future. Keep in mind: President Obama is making global nuclear disarmament his top foreign policy priority. He chaired a U.N. Security Council meeting last week to push this agenda. It is increasingly conceivable that he will try to force Israel to “play by the same rules” as everyone else and disarm unilaterally, even though Israel has never threatened to “annihilate” a neighbor. As I imagine in The Ezekiel Option, such a resolution against Israel could be introduced into the U.N. by Russia. The coalition against Israel could be led by Russia and Iran. Should this happen, we could begin to see the prophecies of Ezekiel 38-39 come to pass in fairly short order. While it is too early to conclude that is what is happening now, it is not too early to intensify our prayers for the peace of Jerusalem, according to Psalm 122:6.
The second threat is the real and growing possibility that the world will unilaterally create and recognize a Palestinian State, not through negotiations with Israel but by fiat. World leaders have been trying to engineer a “comprehensive” final peace agreement for decades. The Palestinians rejected a generous final peace offer by then-Israeli PM Ehud Barak in 2000 at Camp David. Then, Yasser Arafat unleashed the “Second Intifada” and a horrific wave of suicide bombings throughout Israel. The Palestinians then rejected repeated peace offers by then-Israeli PM Ehud Olmert. Then, Hamas fired thousands of rockets and mortars at southern Israel until Operation Cast Lead crushed most of the Hamas activities in January of 2009.
Rather than be impatient with the Palestinian leadership, however, for consistently rejecting sweeping Israeli peace proposals, the world increasingly wants to force Israel to make deeper and deeper concessions. With his Cairo and U.N. General Assembly speeches, President Obama has taken the lead on this effort. He is demanding Israel return to its pre-1967 borders, divide Jerusalem and allow the Palestinians to have a state with contiguous borders (thus cutting Israel proper in two).
Now come a growing number of signs that world leaders are preparing to impose a final solution to the Israeli-Palestinian impasse, perhaps based on Palestinian Prime Minister Fayyad’s new two-year plan to create a viable Palestinian state. “During July, the EU’s Javier Solana lectured in London and said that if the peace process was going nowhere, the international community should consider recognizing a Palestinian state under a UN resolution even without Israel’s consent,” reports Dr. Dore Gold, the former Israeli Ambassador to the U.N. “[Solana] called for a fixed deadline for future negotiations. The Fayyad Plan could prepare the groundwork for such international action by providing the Palestinians with the main legal preconditions for recognition: the exercise of effective governmental control, the capacity to engage in foreign relations, and a defined territory. The last criteria for statehood is the most problematic. According to Solana, after the UN Security Council proclaims the adoption of a two-state solution, it will also adopt further follow-up resolutions regarding the highly contentious issues of refugees, Jerusalem and borders. In short, the Solana plan is an imposed solution, using the UN Security Council as its main instrument, which will decide the issue of Israel’s future borders and those of the Palestinian state.”
These are dangerous developments. And let’s be clear: trying to force Israel to comply with such unfair and misguided initiatives won’t lead to peace. Rather, they will put millions of innocent Israeli and Palestinian lives in grave danger. May God have mercy on us all.
Is the U.S. stepping up preparations for a possible attack on Iran's nuclear facilities?
The Pentagon is always making plans, but based on a little-noticed funding request recently sent to Congress, the answer to that question appears to be yes.
First, some background: Back in October 2007, ABC News reported that the Pentagon had asked Congress for $88 million in the emergency Iraq/Afghanistan war funding request to develop a gargantuan bunker-busting bomb called the Massive Ordnance Penetrator (MOP). It's a 30,000-pound bomb designed to hit targets buried 200 feet below ground. Back then, the Pentagon cited an "urgent operational need" for the new weapon.
Now the Pentagon is shifting spending from other programs to fast forward the development and procurement of the Massive Ordnance Penetrator. The Pentagon comptroller sent a request to shift the funds to the House and Senate Appropriations and Armed Services Committees over the summer.
The comptroller said the Pentagon planned to spend $19.1 million to procure four of the bombs, $28.3 million to accelerate the bomb's "development and testing", and $21 million to accelerate the integration of the bomb onto B-2 stealth bombers.
'Urgent Operational Need'
The notification was tucked inside a 93-page "reprogramming" request that included a couple hundred other more mundane items.
Why now? The notification says simply, "The Department has an Urgent Operational Need (UON) for the capability to strike hard and deeply buried targets in high threat environments. The MOP is the weapon of choice to meet the requirements of the UON." It further states that the request is endorsed by Pacific Command (which has responsibility over North Korea) and Central Command (which has responsibility over Iran).
The request was quietly approved. On Friday, McDonnell Douglas was awarded a $51.9 million contract to provide "Massive Penetrator Ordnance Integration" on B-2 aircraft.
This is not the kind of weapon that would be particularly useful in Iraq or Afghanistan, but it is ideally suited to hit deeply buried nuclear facilities such as Natanz or Qom in Iran.
Make no mistake. We're now in the middle of a bloodless coup'
A political activist who was behind the famous Willie Horton advertisement that left Gov. Michael Dukakis' candidacy for president floundering and was among the first to sound the alarm on the need for Bill Clinton's impeachment says the United States is collapsing around its citizens right now, but there is a defense.
"Make no mistake. We're now in the middle of a bloodless coup – the takeover of an entire nation by the hate-America crowd – a cold-blooded gang that despises America's prosperity, our standing in the world, our trust in God and our generosity and goodness," says political activist Floyd Brown in a post on the new Impeach Obama Campaign website.
His suggested defense is nothing more or less than a strike at the emperor, plans which are detailed on the website.
"Like so many on the far-left before him, going all the way back to Karl Marx, he [Obama] believes that it's his mission to promote 'equality of outcome' over 'equality of opportunity' even if Americans must learn to live in chains to make it happen," Brown said. "That worldview makes Barack Hussein Obama a very dangerous man and one of the greatest threats to your personal liberty today."
Brown said that view also explains why Obama "has already gobbled-up major banks and why the government now controls more and more of our money – yours and mine. And if you wake up one day to discover you're broke, don't be surprised. Barack Hussein Obama is Bernie Madoff with the political power of the presidency at his disposal."
"That dangerous worldview explains why his attorney general, Eric Holder, despises the 2nd Amendment… And that dangerous worldview explains why Obama intends to take away your freedom to choose your own doctor …. Your own treatment," he said.
Brown said the only one solution to the problem he described as a "monomaniac."
"Article I, Section 4 of the Constitution reads: 'The President, Vice President and all civil officers of the United States, shall be removed from office on impeachment for, and conviction of, treason, bribery, or other high crimes and misdemeanors.'"
Brown told WND that first and foremost, "people need to believe that it's possible."
He recalls the campaign to impeach Bill Clinton was begun back in the 1990s when Congress was controlled by the Democrat Party and there was virtually no obvious support for the concept.
"But we were patient and we kept at it, and he was impeached," he said.
"We believe he [Obama] is not qualified to be president, he should have never been allowed to be president, and [impeachment] is the best process for resolving this situation," he said.
Brown said most people remember him for being behind the Horton ad, which highlighted the subsequent crimes of a felon released from prison under Dukakis' watch. He also was among the first to sound the alarm on the Clinton Whitewater scandal as well as the mysterious circumstances of the apparent suicide of White House Counsel Vince Foster.
In a WorldNetDaily column, Floyd and Mary Beth Brown write that the idea already is mushrooming among conservatives, such as those in the discussions on the Expose Obama website where Floyd Brown is a moderator.
"Radio-personality, Tammy Bruce may have captured these activists beliefs about Obama best: '... ultimately, it comes down to... the fact that he seems to have, it seems to me, some malevolence toward this country, which is unabated,'" she said, according to the Browns.
They argue Obama already is guilty of the "high crimes and misdemeanors" for which the U.S. Constitution provides impeachment as a penalty.
"Our Founding Fathers fully intended to allow for the removal of the president for actions which include: gross incompetence, negligence, and distasteful behavior," they wrote.
According to the Impeach Obama Campaign, Obama already has:
Since impeachment proceedings are handled by no one but Congress, Brown writes that it is important now for people to realize the impact of their votes in 2010, because that will determine the makeup of Congress, and very probably whether any impeachment against Obama could proceed.
Brown cited a key opinion from former President Gerald Ford, who while serving in the House of Representatives, said an impeachable offense was, "whatever a majority of the House of Representatives considers it to be at a given moment in history."
"Impeachment, as written in the Constitution, was tailor-made for Barack Hussein Obama and our Founders placed it in our Constitution for such a time as this," Brown said.
Brown cited his concerns over Obama's attitudes and behaviors, including:
WND has reported on dozens of legal challenges to Obama's status as a "natural born citizen." The Constitution, Article 2, Section 1, states, "No Person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President."
Some of the lawsuits question whether he was actually born in Hawaii, as he insists. If he was born out of the country, Obama's American mother, the suits contend, was too young at the time of his birth to confer American citizenship to her son under the law at the time.
Other challenges have focused on Obama's citizenship through his father, a Kenyan subject to the jurisdiction of the United Kingdom at the time of his birth, thus making him a dual citizen. The cases contend the framers of the Constitution excluded dual citizens from qualifying as natural born.
Complicating the situation is Obama's decision to spend sums probably exceeding $1 million to avoid releasing an original long-form state birth certificate that would put to rest the questions.
WND also has reported that among the documentation not yet available for Obama includes his kindergarten records, Punahou school records, Occidental College records, Columbia University records, Columbia thesis, Harvard Law School records, Harvard Law Review articles, scholarly articles from the University of Chicago, passport, medical records, files from his years as an Illinois state senator, his Illinois State Bar Association records, any baptism records and his adoption records.
Legislation to punish hate crimes became a flashpoint on Capitol Hill on Thursday, as a measure expanding the definition of such crimes was attached to the bill outlining the Defense Department budget and approved by the House over the strong objections of Republicans.
House and Senate negotiators agreed earlier this week to attach the hate-crimes provision to the conference report for the $680 billion Defense Department authorization bill. The combined bill passed the House on Thursday, 281 to 146, with 131 Republicans and 15 Democrats in opposition. The measure must pass the Senate, in a vote that could come as early as next week, before it can head to President Obama's desk for his signature.
Congressional Republicans complained that appending the hate crimes provision to a bill laying out the Pentagon's budget for the coming year was an abuse of the legislative process and made U.S. troops "political pawns" in an unrelated social debate.
The provision would broaden the current definition of federal hate crimes to include attacks based on gender, sexual orientation, gender identity or disability. It would also create a new federal crime to cover attacks against U.S. military personnel because of their service.
"This is radical social policy that ... is being put on the defense authorization bill, on the backs of our soldiers, because they probably can't pass it on its own," said House Minority Leader John A. Boehner (R-Ohio).
The House passed the hate-crimes measure as a stand-alone bill in April, with 18 Republicans joining 231 Democrats in support. But it stalled in the Senate. At the strong urging of Speaker Nancy Pelosi (D-Calif.) and fellow supporters from the House, the measure was attached to the Defense legislation -- considered a must-pass bill.
Pelosi said Thursday that this week's timing of the hate-crimes vote was appropriate.
"Monday is the 11th anniversary of the murder of Matthew Shepard, and we want in the same week of that tragic event to call the public's attention once again to people acting upon their hatred in a violent way," Pelosi said, referring to the infamous 1998 murder of a gay University of Wyoming student.
Civil-rights groups welcomed Thursday's House action.
"We're very pleased by this and look forward to it landing on the president's desk," said Rea Carey, executive director of the National Gay and Lesbian Task Force.
Urges making U.S. government subject to U.N.-run apparatus
White House science czar John Holdren has called for the United States to surrender sovereignty to a "Planetary Regime" armed with sufficient military power to enforce population limits on nations as a means of preventing a wide range of perceived dangers from global eco-disasters involving Earth's natural resources, climate, atmosphere and oceans.
As previously reported, WND has obtained and reviewed a copy of the 1970s college textbook "Ecoscience: Population, Resources, Environment" that Holdren co-authored with Malthusian population alarmist Paul R. Ehrlich and Ehrlich's wife, Anne. The authors argued that involuntary birth-control measures, including forced sterilization, may be necessary and morally acceptable under extreme conditions, such as widespread famine brought about by "climate change."
On page 943, the authors recommended the creation of a "Planetary Regime" created to act as an "international superagency for population, resources, and environment."
The authors argued, "Such a Planetary Regime could control the development, administration, conservation, and distribution of all natural resources, renewable or nonrenewable, at least insofar as international implications exist." (Emphasis in original text.)
In the next sentence, the authors specified the following conclusion: "Thus, the Regime could have the power to control pollution not only in the atmosphere and the oceans, but also in such freshwater bodies as rivers and lakes that cross international boundaries or that discharge into the oceans."
"The idea of feathered dinosaurs and the theropod origin of birds is being actively promulgated by a cadre of zealous scientists acting in concert with certain editors at Nature and National Geographic who themselves have become outspoken and highly biased proselytizers of the faith. Truth and careful scientific weighing of evidence have been among the first casualties in their program, which is now fast becoming one of the grander scientific hoaxes of our age.
The U.S. dollar continued its six-month slide this week amid a growing international chorus that wants the dollar replaced -- or at least supplemented -- as the world's reserve currency, a move that would end the greenback's six decades of global dominance.
The dollar has come under attack from abroad as the economic crisis has played out, thanks to the Federal Reserve's decision to flood a seized-up financial system with liquidity last fall. The central bank's moves likely staved off deflation, but the massive influx of new dollars has devalued existing ones. Foreign nations are worried that the massive U.S. national debt and rising deficits are not being addressed. And though inflation is not yet a concern in the United States, a prolonged slide in the dollar's value could lead to higher prices for consumers.
Further, large emerging economies -- such as China, Russia, Brazil and India -- are tired of kow-towing to the American buck, and sense an opportunity to knock a weakened dollar off its imperial perch.
"The U.S. dollar is headed for also-ran status, and it will continue to lose its value against many other currencies and assets," Miller Tabak equity strategist Peter Boockvar said. "The rest of the world wants the U.S. dollar to lose influence, but no one wants it to be abrupt, as it's in no one's interest. An evolutionary process is what is wanted."
The question is: When will that happen?
"In the next two to three years, it is highly unlikely to see the dollar replaced," said Eswar Prasad, an economics professor at Cornell University and a senior fellow at the Brookings Institution in Washington. "Over the next decade, though, we would expect to see other currencies play a much more significant role."
The dollar fell to nearly its lowest point of the year against the yen and euro on Tuesday, which sent the price of gold surging to a record intraday high above $1,045 per ounce, as investors sought a hedge against inflation and foreign nations continued to stockpile the precious metal.
For the American consumer, a falling dollar means U.S. exports sell better overseas, which can lead to more jobs here. But it also means imports costs more, which means higher prices at U.S. stores.
"For the average Joe, the implications of a crisis of confidence in the dollar could end up in higher borrowing costs, lower government expenditures -- so that means reduced services -- and higher taxes," Prasad said. "Most likely, some combination of all of the above."
Stocks, which typically move opposite of the dollar, staged a strong rally on Tuesday, continuing their fast Monday start. The Dow Jones industrial average and the broader Standard & Poor's 500-stock index both gained 1.4 percent, while the tech-heavy Nasdaq surged 1.7 percent.
The U.S. dollar has been the world's reserve currency since World War II. Central banks and financial institutions in other nations hold dollars to pay off foreign obligations, or to influence their currency's exchange rate. Commodities, such as oil, are priced in dollars, which spreads the dollar's influence around the world.
But the dollar's dominance is being challenged, thanks to the crisis.
China was the first major power to attack the greenback, calling in March for the dollar to be replaced as the world's reserve currency. China holds more U.S. debt than any other country -- about $800 billion -- and the further the dollar drops, the less the value of the U.S. debt owed to China.
Other nations have followed China's criticism. In March, Kazakhstan criticized the dollar and called for the creation of a new currency it calls the "acmetal" (a coinage combining "acme" and "capital"). Last month, Iran shifted its reserve currency from the dollar to the euro, a move that is likely more political than economic and a response to harsh U.S. criticism of Iran's nuclear moves.
But major powers have spoken against the dollar, as well. In September, Russia said it remains satisfied with the dollar as a reserve currency but said others are also needed. At an international investment summit last month, Russian Prime Minister Vladimir Putin criticized the United States -- and implicitly, Federal Reserve Chairman Ben S. Bernanke, who controls the money supply -- for "uncontrolled issue of dollars."
Both China and Russia have called for a new "global supercurrency," similar but larger in scale to the euro, that would replace the dollar.
Even the world's big financial institutions are piling on.
"The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," World Bank President Robert Zoellick said in a speech last week.
ISTANBUL, October 9 – State Security Investigations (SSI) forces in Egypt arrested, abused and then extorted money from a Coptic Christian for rescuing his daughter from her Muslim husband, who was holding her against her will in Alexandria, according to sources in Egypt. Security forces also arrested 10 people in Alexandria and tortured them in an attempt to find all those involved in the rescue. Authorities are preparing to make a new wave of arrests, the sources said. On Sept. 30, they said, the only daughter of Gamal Labib Hanna called home and asked her family to save her from her Muslim husband. How Hanna’s daughter, Myrna Gamal Hanna, came to marry Mohamad Osama Hefnawy is disputed, but sources said the now-20-year-old woman was 19 and under the age of marital consent when she and Hefnawy were wed 10 months ago. After the rescue, Hefnawy and his neighbors filed a report with local police and the SSI. Soon after, Hanna’s brothers, one brother-in-law and his mother-in-law were rounded up, charged with abduction and detained. According to sources in Egypt, at least one of the family members was tortured until Hanna turned himself in. Sources said security forces pressured Hanna until he agreed not only to hand his daughter back to Hefnawy but also to give him several thousand dollars. “Cases like this are very common, they happen every day,” said Rasha Noor, an Egyptian human rights activist and journalist living outside of Egypt. “That’s usually what happens when families try to rescue daughters from their kidnappers.”