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2008-06-06 - 9:21 p.m.

Today, I saw the news and it made me want to write an entry into this blog-diary thing I've got going. Today is Friday, 2008 June 06. The Dow Jones Industrial Average dropped 400 points today, crude oil hit a new record high price close to $140 per barrel, unemployment hit the highest numbers it has seen for 22 years, the US Dollar currency dropped further in value, and the Israeli defense minister Shaul Mofaz declared that an attack on Iran was inevitable.

The news guys made it seem like all but one of these issues were directly related to each other:

The US economy is suffering from financial hardship due to mortgage issues and bank forclosures, sending the dollar value down against other world currencies. Oil is inversely related to the dollar, so its price went up. The Dow and other US stocks are dependent on dollar value, so they went down. The companies whose stock values went down have fired employees to keep from going bankrupt, so there is high unemployment.

But the news on Iran is the anomaly. Why is there still a war-path drumbeat going on against Iran? What is Iran doing that warrants this extreme level of hostility threat right now? It would be foolish of the US to attack Iran right now, since it is stretched beyond military capacity in Iraq and Afghanestan. Apropos, it is understandable that Israel would be the one to make the hostile threats. Israel's overall well-being is directly tied to US economic well-being. The Israelis chose to interlace their military, economy, etc. with that of the US. Now that the US is strained, they are the ones being used to fix the situation. Which brings me to the tie-in of the earlier issues dealing with the US economy.

Iran's president, Mahmoud Ahmadinejad, made it clear that he is determined to cause pain for the US and Israel (or be a pain in the rear-end, depending on how you want to look at it). Publicly, they (Iranian government officials) made these ape-like gestures of threatening annihilation and muscle-flexing to gain the backing of their own followers within Iran and those of angry citizens of nearby pawns-of-the-US Arab states. Down deep everyone knows the idiots running the country from Tehran do not stand a chance in a real fight against the US, Israel and the Europeans. But the Ahmadinejad gang is smart enough to see the weak link of the US economy.

The US went off of the gold backing of the US Dollar a long time ago. The US dollar is valued based on the credit of the American public borrower and the federal lending interest rates set by the Federal Reserve Banks. That oil, the backbone of the world economy, is directly traded in dollars, makes the dollar utterly dependent on the value of oil for its valuation. A rise in oil prices internationally kills the US economy almost overnight. High oil = low dollar = Joe and Jane Californian can't buy a bag of bread for a hundred bucks. This is exactly what is happening now, but it seems that it is artificial. The rise in oil prices is extremely steep. The increase has gone up WAAAAAY too much too fast. But how? What aren't we being told?

The US congress dragged the heads of the US oil company executives before a bunch of Senators and made them say that it was not their faults the oil prices were going up so fast. They told the truth. They are not price-fixing. They are letting the international markets determine the oil prices. But what they omitted was that they ARE getting rich. And they know that the artificially high prices are due to manipulation of a different kind. But they are getting RICH, so why should they interefere?

The others who are getting rich are the people supplying the oil. They have a monopoly. They have the deck stacked in their favor. Those who used to be under the influence of the Americans have risen above the old tricks of trading favors and gifts for breaking the monopolic ranks. That is not to say they are not breaking ranks for some others, they just are not breaking ranks for the bones that the Americans have to throw their way.

Mister Mahmoud desperately needed allies. The US bullied his kind about the Nuclear issue so much that he had to find the weak point in the American armor and take a little jab. He used the same trick that the US had used in the past. Undermine them from their friends by promising money... He went to the American allies, the Europeans, and made a deal to strengthen them. He convinced his friends in the Middle East, the ones with oil, to start trading oil using Euros, the currency of the European Union. At least for a little bit. He convinced the Saudis that it was a smarter idea to invest their oil money in British banks trading in Pounds Sterling, backed by gold, than in US dollars. The Saudis already have plenty of money. They already have plenty of US military toys. They already have everything that money can buy for them. And since they are no longer investing in their civilian society, the money is completely theirs, no worries of running out based on current social spending levels.

So with Mahmoud promising to make the Europeans and their currency richer, the British more vested in their Saudi allies, as opposed to losing them more and more to the Americans, and with every single oil-producing country rolling in oil money, there was no argument to be had from any of these guys. Mahmoud and his buddies were making people rich by stealing power away from the Americans. And here in the US, we are roiling from the repercussions of this thing. Our economic fundamentals are being tested. It has been foolish to not have our currency tied to a real physical entity, namely gold. It may have made the currency more fluid, and made a select few utterly rich, but it made the whole of the nation susceptible to undermining, as it is now. Our hopes for regaining control over oil prices and the value of our Dollar lies squarely in winning the war in Iraq. If US oil companies get Iraq, we can challenge Saudi Arabia. We can regain the stability of oil markets. We can go back to something resembling the "good old days", with some small changes.

But Iraq is Mahmoud's backyard. Mahmoud and his buddies have Shi'a friends in Iraq. These Iraqis, with a little bit of coaxing from Tehran, are now asking the American oil companies to get their hands OFF THEIR IRAQI OIL. Here is the reference for the story: http://www.indybay.org/newsitems/2008/05/26/18502174.php

So it seems like the giant chess match is in the favor of the Iranians at the moment. Until the US plays its old game of slamming their fist on the chessboard and remaking the rules of the chess game. "We are bigger than you". "We can push you around!" The American populace would never stand for a new front in the American war in the Middle East. So US will use its proxy, which is also vested in this thing with the US directly and economically. So we hear that Shaul Mofaz of Israel threaten Iran with war. Basically saying, "lay off the havoc-wreaking in the oil market, we are pissed off now. Diplomacy, shmiplomacy. You keep up this annoying power-shifting and we'll kick your tukhus."

That is how the threat of hositility against Iran is related to the rest of the US economy. Mister Mahmoud is stepping on really really big feet. He's upsetting the monster that is the US.

Seriously scary, though, is the knowledge that Mahmoud and his buddies in power have a specific brand of Islam that they follow, wherein they believe the Islamic version of Armageddon will come soon, and that they are on the winning side. They WANT this thing to happen. They WANT the people of their country and whatever other country is involved in the upcoming war to DIE. They seek martyrdom for salvation. They are madmen, but they are internationally savvy, and cunning. It is not the $100 loaf of bread that scares me here in the US. It is that the idiots in Tehran's Capitol are pushing the right buttons to make the annihilation of the world happen, and we are obliging them!

Vindication: Added 2008-June-19: finally, someone else saw my connection of Mahmoud Ahmadinejad and the gas prices of the United States:

http://articles.moneycentral.msn.com/Investing/SuperModels/AxisOfAnxietyBoostsFuelPrices.aspx

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