Market Confidence and Iraq

From Bernhard at Moon of Alabama... Market Confidence and Iraq

EXCERPTS:

Oil Rises to Record $80.18 on Larger-Than-Expected Supply Drop
Dollar Falls to Record Low Versus the Euro on Rate Differential
...
But the major issue here is confidence. This has very much to do with Iraq and the inability of the U.S. to pull itself out of that quagmire.

The financial/commercial world has paid the U.S. for delivering international stability by putting money into Dollar assets. This allowed the U.S. to live beyond its homegrown financial income capacity.

Now the U.S. is no longer able to deliver stability, especially for the big oil exporters in the Middle East.

On the issue of financial stability the U.S. has blown it by allowing its citizens unreasonable speculation without the means to mitigate the consequences.

On the geo-political side the U.S. has proven itself impotent. Sure there are still lots of nukes and planes available, but that is not exactly the kind of leadership the world is yearning for.

The U.S. is spending some $700+ billion per year for 'defense'. But it would have problems to deliver even one brigade, some 4,000 soldiers, to any contingency should one occur. What can the U.S. do if someone shoots the king of Jordan or the president of Georgia?

With no political ability to end the war on Iraq, as was aptly demonstrated by the bipartisan comedy played in congress this week, there is hardly a chance that the U.S. will regain such capacity within a forseeable timeframe.

Compare the 700+ billion for the military with some $10 billion the U.S. spends for the State Department. The role of the global arbitrator is no longer believable when the only instrument the arbitrator has is total annihilation of this or that country.

Hence no further need to pay for that dubious service.

In the comments at MOA, small coke notes that Western Europe is about to crack open its own subprime crisis, modeled after the U.S. excesses.

PeeDee notes (and so has every CNBC talking head this week) "Either way, you want to be long the USD price of oil."

No shit, if America bombs Iran's oil production facilities, the price of oil should hit $120+
Yay Free Market Capitalism!
Uh, shit.

If Bush orders an attack on Iran, real Conservatives should drive to Washington D.C. and oust the president themselves. But, maybe they won't be able to afford the gas...

And Cloned Poster wonders why EU bankers fell prey to US. subprimes. "US is doing a China on the EU." Doh!

Well, that's been my experience in big business. You get fucked over for being stupid, pass it on. It's all a learning experience, right? And fucking someone over in free market capitalism isn't wrong, it's just good business sense. If they're stupid enough to do it, fuck em. Probably something that China has been saying about us for years now. Although you could argue that the U.S. Govt could always declare all those foreign held treasuries to be "temporarily non-negotiable" and fuck the Chinese at their own game...

Gosh, it's just like Vegas, without all the noise and lights. And hey, we can pull the plugs on the slot machines anytime we really feel like it. Right?

It's getting interesting. Crack open those chaos-theory books, because apparently no one really knows what the hell they are doing beyond cashing in their chips each day.