FOLLOW THE MONEY
…Dollars vs Euros And The Oil Of The World
By Pat Geisler
There's a story to tell about the proposed U.S. war against Saddam Hussein that goes back many years. But astrologically, let's start with 2000.
That was the year of the latest Great Conjunction of the planets Jupiter and Saturn at 23º of Taurus where it landed dead on the U.S. part of fortune in the 8th house of investments and other people's money.
It squared the U.S. moon at 24º Aquarius in the 5th house, which rules the national sun sign, Cancer. The U.S. strike was a bull's-eye by any standard.
A Great Conjunction occurs every 20 years or so and marks a new generation of events in the world.
Obviously, I am speaking of a U.S. chart with 13º Libra rising and 15º Cancer on the MC. This is not an argument for or against this or any other U.S. chart, merely an explanation of the one I use and have found accurate in predictive work.
At the time it was obvious to me that we were entering a far more economically conservative time (Taurus is the pre-eminent sign of conservative views) and one that would seriously affect the stock markets, the economic climate, the banking system and the currencies of the world. It would have particular impact in the U.S., given the points it hit in the chart.
I had begun warning people about the coming economic downturn as early as late '99, particularly since the Millennium eclipse in August of that year involved a massive grand cross in fixed signs which always target money and the status quo.
This was not popular of me, because all of the U.S. markets were blowing full steam ahead, but a few prescient economists also warned that it was a bubble on borrowed time. I urged friends and family members to get out of the market. Not all of them paid much attention. I sold my own stock in the spring of 2000, before the markets began to fall later that year.
They have continued to drop ever since.
Many astrologers have considered that market downturn the major effect of the Great Conjunction. But much more was involved. Many banks and financial institutions merged, went under or restructured in the following months and years.
Japan missed the boat
In Japan, where economic recovery had stalled for more than a decade-they missed the whole prosperous '90s as a result-- due to the nation's reluctance to allow its unsuccessful banks to go under, times got tougher. The healthy banks were constrained by the need to prop up the dying one. The situation worsened year by year as the government refused to take the hard steps to allow bankruptcies or to fix the system. Institutions and businesses in Japan scratch each other's backs and prop up each other's stocks as a matter of common policy. They don't let each other fail.
After a while nobody was doing well.
By comparison, the huge U.S. savings and loan scandal which had come in the 1980s was long over because the U.S. government moved in and took over, allowed failed institutions to go under, sold the viable ones and restructured the system. It cost a fortune but it saved the U.S. from paying a much higher price later. It also protected the U.S. banking system.
Last year some Japanese banks were finally allowed to fail. It was too little and too late, of course. The Nikkei standard of stock performance is a shadow of its former self. The Japanese market has lost far more than that of the U.S since the Conjunction, although many investors caught in the U.S. "tech wreck" might not think so.
However, in Japan, the world's second largest economy, a great many loans-business and otherwise--were underpinned by the enormous real estate values of some years back. The banks didn't revalue those loans although the real estate had lost its luster. Nor were stocks routinely marked to market-a process whereby stocks held as collateral are given their current values rather than the value they had when the loans were first obtained. If the collateral were ever called in, it would be worthless or greatly diminished in value, of course, by lower current prices. The stocks, far from being worth their original price, would then be worth only what they could actually be sold for on the open market.
Thus, while Japan is still rich and the Japanese banking system is still viable, there has been an enormous, unhealed wound in its side for many years. Its troubles have become common knowledge since the Conjunction and the value of the yen shrank against the dollar.
There is no doubt the U.S. has also been hit hard by the Conjunction. For one thing, U.S. currency itself has changed its appearance. Some say the overhaul was overdue and perhaps they are right.
The 8th house rulership over insurance, tax matters and money saved for things like retirement has also been nailed to the wall. Many huge corporations have gone under, their books awry with lies and deception and theft, often from their own employee retirement accounts. Workers who saved and invested in their company's stocks have been devastated.
Scandal and loss
The Enron scandal was the biggest, but hardly the only one. Many companies "borrowed" from retirement accounts to fund stock market speculation and replaced the borrowed money with company stock. When the company stock went down, so did the retirees' savings.
Even Social Security seemed threatened, although immediate steps were taken to reassure the public that it was safe even if all else failed.
But in another huge economic development since the Conjunction, the euro has become a major currency in the world.
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For a very long time the U.S. dollar has been the world's key money, its so-called "reserve" currency. All oil trading has taken place in dollars. Countries who sell oil want dollars for it. If you want to buy oil, you convert your money to dollars and then make the purchase. This has been great for the dollar. It has forced other nations to keep a continual "reserve" of dollars in their banks.
Since banks never have unused money sitting around, that money has been invested in the U.S., mostly in bonds. Japan alone probably owns 15% of the U.S. Treasury market.
And oil trading is ubiquitous. The whole world runs on oil.
So the whole world has dollars in "storage."
About two/thirds of all official exchange money held in reserve is dollars. More than four-fifths of all foreign exchange transactions and half of all world exports are in dollars. In addition, all International Monetary Fund loans are made in dollars. That gives the U.S. a finger in everybody's pie.
Now to digress a moment, the U.S. owes the world a lot of money. Why? Americans like to buy the world's goods. We pay for them with dollars. Thus, a lot of U.S. money goes out of the door all the time and since foreigners don't buy nearly as much of our goods, not as much foreign money comes into the U.S. to keep things even. It's called the balance of payments, and it's very lopsided in favor of the foreigners at the moment.
It wasn't always so. For many years the U.S. produced the most desirable goods and services and the whole world beat a path to the door to buy. Now the U.S. does the buying.
That's no problem for us-if we need more money, we just print it. And because of the oil buying business, people ALWAYS need our money.
The more dollars at work outside the U.S., or invested by foreign owners in American assets, the more the rest of the world gives the U.S. its goods and services in exchange. The dollars cost the U.S. next to nothing to print, so this means that the U.S. is importing all those foreign goods and services practically for free.
How bad could it be?
But what if they don't need our money anymore?
What would happen if the dollar weren't the world's reserve currency any more? What if oil producers decide to accept payment in euros?
That would be a very large problem for the U.S.
Other countries would scramble to trade their dollars for euros. Their money, currently invested in dollars (as in our Treasury market) would be pulled out of those dollars and re-invested in European banks in euros.
That 15 % Japanese investment in the U.S. treasury market? Gone.
All that wonderful foreign investment in U.S. companies? Gone.
All those cheap goods and services? Gone.
All that U.S. debt? Bigger and bigger.
And what if the U.S. had to swap its dollars for euros at a time when the dollar is falling in value and the economy is already in trouble with U.S. companies coming unglued right and left?
Printing more money wouldn't help us then.
Not only would the stock market fall, so would the whole U.S. primacy in the world's financial affairs. From being top dog we would drop to the bottom, owing everybody a ton of money and they wouldn't want our dollars for it. They'd want euros.
And oil? Forget oil. It would be bicycles and walking in the U.S. again as oil's price in dollars goes through the roof. We'd simply be too broke to buy very much of it.
The big oil embargo of the '70s? Mickey Mouse stuff by comparison.
At this point, oil is the only game in town. Despite options such as hydrogen and methane, the world still runs on oil and the U.S. is the biggest consumer. The amount of oil found on U.S. soil is pitifully small by comparison to the demand of U.S. industry and consumer.
Big bankers and big oil men understand how this works. The U.S. government currently has a number of people with backgrounds in oil, starting with President George W. Bush, and they know loss of dollar power would be a terrible blow to the American economy.
And then the surprise
So imagine the shock it caused in certain circles when Saddam Hussein stepped up to the plate in November of 2000 as the first oil producer to say yes, I will take euros for my oil. They thought he was just desperate. It seemed insane. The euro was also at its lowest value compared to the dollar. Unfortunately, he was also looking ahead. The euro has since risen nearly 20% and generated a lot of profit.
Before long other countries began considering the move from dollar to euro. Iran has said it is thinking about it.
North Korea began accepting the euro in November last year.
All three have been dubbed the "axis of evil."
Another willing to take euros is Venezuela. And it has been in the throes of a terrible national upheaval with halted oil production ever since President Chavez said so. Certainly its another odd coincidence in the oil and money struggle. The U.S. would be happy to see Chavez go and has not been particularly subtle about its opinion, either.
And of course now, war is imminent against Saddam Hussein, who started the whole thing.
France and Germany are against the war. They have no problem with the euro being accepted for his oil. They use the euro. They ARE the euro. Or a large chunk of it, anyway.
The big supporter of the U.S. is Great Britain, which did not convert to the euro. The British still use the pound and they aren't particularly eager to see the euro become any bigger.
Meanwhile, another element in the restructuring of the world's financial affairs is taking shape quietly in the background but it has enormous implications and it involves gold.
When Richard Nixon was President he gave the order which took the U.S. off the gold standard. Before that time, every dollar printed, once considered "as good as gold," was backed by an equivalent amount of gold stored in Fort Knox, Kentucky. Now the stockpile of gold has become somewhat immaterial.
Today the U.S. dollar is only backed by the U.S. government. It "floats" among world currencies, as they say.
But the Russians, who suffered greatly when the Soviet Union collapsed along with the value of the ruble, are considering a gold standard.
Iraq has said that accepting gold for oil would be a blow against the dollar's premier position in the world.
And if the surging euro would cause a huge commotion in world financial affairs as OPEC nations begin accepting it for oil, imagine what would happen if Russia had a currency based on solid gold.
More amazing still is the fact that this currency war is being played out in front of the whole world's eyes and hardly anybody sees it -- truly a Jupiter/Neptune opposition keeping people deluded.
And so the Great Conjunction and its effects continue with the world looking for value and reliable money. Will it be the dollar in the years ahead or will Saddam Hussein be crushed for his temerity in giving the euro a foothold in the economic future of the world?
The U.S. has a huge stake in this and if it can't do anything else to stem the tide of the euro it will use its second largest weapon against Saddam Hussein: military might.
The nations of the euro are bound to get the message.
©Copyright Mar 2003 by Pat Geisler