Breaking: Persians Still Better at Chess than Americans

Is it any surprise that Iran chose this moment to ditch the dollar?

Iran, the second-biggest producer of crude oil in the Middle East, has “completely halted” all oil transactions in dollars, the state-run ISNA news agency said, citing Oil Minister Gholamhossein Nozari.

No, I don’t think so. After all, the release of the NIE this week will make it very difficult for the US to respond with full-scale war–as some believe the US did when Iraq moved away from the dollar. The Administration has been telling us for weeks now that Iraq is all peachy keen, which will make it hard to claim that Iran is destabilizing Iraq. And now the Administration has just said Iran has no active program to develop nukes–the other convenient excuse to start a war. Moreover, by pushing Europe to strong-arm Iran, all the while hoarding the information that Iran didn’t have the nuke program we claimed they did, has really pissed off our European allies.

And, at the same time, Iran has picked a moment that may have maximum effect on OPEC as a whole.

The Organization of Petroleum Exporting Countries has set up a team to study pricing oil in another currency, the INSA cited Nozari as saying. The measure is designed to prevent further losses in revenue to oil exporters, ISNA reported.

The group’s findings will be announced at the next OPEC meeting, Nozari said, according to ISNA.

IANAE, but it seems that each time an oil producer moves away from the dollar, it’s going to be more and more tempting for others to follow. So by moving while the issue is under consideration, it may pressure those on OPEC (our Saudi bankers) who want to help the US out.

Two weeks ago, the Annapolis Conference looked like an opportunity for the US, the Saudis, and the Israelis to forge some kind of agreement that might counter Iranian power. But things haven’t gone so well for them in the interim two weeks.

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  1. eCAHNomics says:

    And I disagree that this was a good chess move for Iran. It’s really stupid for them to tweak U.S. at this moment in our mutual histories. But then, we knew we had W-type personalities on both sides.

    • Ann in AZ says:

      And I disagree that this was a good chess move for Iran. It’s really stupid for them to tweak U.S. at this moment in our mutual histories. But then, we knew we had W-type personalities on both sides.

      While I totally agree that there are “W-type personalities on boht sides,” I think I would be pretty pissed if I were Iran and I found out that America had the information on the fact that we had dropped much of our nuclear ambitions in 2003, and yet the American President went out and did more saber rattling even after that. I’d also be more than insulted that Bush had that twisting of arms conference to try to intimidate others with false rumors about Iran’s activities. This after being rebuked when they approached us about diplomacy. That was in 2003, wasn’t it? So maybe they just didn’t want to sit idly by and let Bush smear them like he does every other political enemy. I can’t blame ‘em. Pay back’s a bitch!

      • eCAHNomics says:

        I don’t know if you knew this but the real reason papa bush attacked Iraq was because he threatened to trade petro in euro’s

        This is the least of the U.S. insults to Iran. BTW, there is NO evidence that Iran ever had a nuke program.

      • eCAHNomics says:

        Sorry, wrong paste in my 15. Meant to copy this sentence:

        I think I would be pretty pissed if I were Iran and I found out that America had the information on the fact that we had dropped much of our nuclear ambitions in 2003, and yet the American President went out and did more saber rattling even after that.

    • bobschacht says:

      “And I disagree that this was a good chess move for Iran. It’s really stupid for them to tweak U.S. at this moment in our mutual histories. But then, we knew we had W-type personalities on both sides.”

      In a chess game between Iran and the US, especially under this (mal-)administration, I’m betting on Iran every time. I agree with emptywheel’s headline.

      Oh, BTW, I’ve been to Iran 2 times for field trips (6 months each) and several times for short visits, all before the Revolution. And my dissertation was on a chapter of ancient history in Iran. Which does not make me an expert like Bill Beeman– I’m not anywhere near his league. Scroll down the page to see some of his relevant current publications.

      Bob in HI

    • Leen says:

      Except the Bush administration and the cakewalk in Iraq zealots keep moving the goal post on Iran. Now it’s the “knowledge”, the IED’s, etc etc.

      When the hell are they going to throw out some carrots instead of bashing Iran over the head?

  2. Loo Hoo. says:

    Funny,eCAHN was just saying she’s not worried about this. It will be interesting to watch the chess game.

  3. BooRadley says:

    the US did when Iraq moved away from the dollar. The Administration has been telling us for weeks now that Iraq is all peachy keen, which will make it hard to claim that Iran is destabilizing Iraq.

    I know it wasn’t the point, but it’s another example of how many nuggets are buried in all your posts.

  4. Ann in AZ says:

    How can I be first? I read the post before I commented.

    Did Argentina ever come out of that terribly unstable economy stage? I haven’t paid attention. I know that China went through a really rough period with their currency also, but I don’t have a clue how they may have worked their way out.

  5. jumpinjack says:

    Venezuella has also threatened to ditch the dollar and, given Chavez’ love for the USA, they probably will. Saudi is also considering DTD (”Ditching The Dollar”). They are pissed because they are trying to fight inflation in their country by using interest rate movements that are opposite of the US interest rate movements – SA wants to RAISE rates while the US wants to CUT rates. And they have many billions of dollars that are plummmeting in value as the dollar continues to lose value against the Euro.

  6. perris says:

    perris is more worried about this but ecahn is far more the expert

    I am worried this might do one of two things:

    1) pressure other countries to do the same

    2) force the president into an attack as some say the reason his father attacked Iraq

      • Neil says:

        OT

        Hey perris, which thread should we duke it out? Here or next door?

        Talking about DUKE-ing it out. The Maize and Blue are taking them on at Cameron Indoor Arena.

        And BMAZ, Gongratulations on Arizona’s OT victory over Illinois.

        Back to the nasketball game… Oh! D3 #1 Amherst men take on D3 #3 Brandeis this afternoon in Waltham MA. We’ll see just how good the defending national champions are this year.

  7. OldCoastie says:

    Iran certainly picked the perfect moment for The Dollar Ditch to keep us from bombing the holy snot outta them… if they’ve been wanting to make the change, this was the perfect time…

    • eCAHNomics says:

      There’s obviously some potential economic damage for the U.S. from this move. It’s just that I think the U.S. will manage it behind the scenes with Saudi Arabia. And other countries that are dollar-asset holders (China, India to name 2 big ones) know that if they start dumping them, they’re impoverishing themselves more quickly than if they diversified slowly.

      It’s dangerous for Iran because that country doesn’t have many friends in the world. The U.S. may be a bully but it’s still a big one with large fists and many co-dependents.

      Now if Isr*el were to bomb Iran, all bets are off.

        • eCAHNomics says:

          Wouldn’t rely too much on Russia. You know that thing about seeing Putin’s sole. Don’t know why they’d be a better friend to Iran than to U.S. They have business interests there, but that’s no guaranty. They’ve gone along with sanctions in the past, indicating they’re a fair weather friend. And also, a flakey country like Venzuela.

          And China is paranoid about instability of any sort. It will stand in the way of punishing Iran for imagined sins if it doesn’t cost them too much, but they won’t do anything actively to support Iran.

          So I don’t think much of the friends Iran has on its side.

          • emptywheel says:

            I guess that’s where we disagree.

            Russia has every interest in an alliance with Iran. Putin remains in power courtesy of his access to the oil and his ability to dominate the pipeline politics coming out of Central Asia. The US has been trying to counter his power here for years. One way for Putin to solidify his position–perhaps definitively–is with a successful relationship with Iran. I highly doubt the Iranians have any illusions about Putin’s soul or he the Mullah’s soul. But from a geostrageic position their alliance is a route to really grasping a lot more power in the world.

            And as to China–yes. they hate instability (within their own boarders). But they have relentlessly spent the last decade trying to find new sources of energy to sustain their growth, which is in turn the key to their internal stability. The US wants Iran so as to be able to deny oil to China, and China knows that. So China will not let the US do to Iran what it has done to Iraq–it can’t afford to.

            • eCAHNomics says:

              Well, Iran is cetainly part of the 21st Century Great Game. But Russia is still a flakey country.

              Yes, China’s been scooping up oil assets wherever they could, but gradually, orderly, deliberately.

              Under reasonable circumstances, they’d both be strong supporters of Iran, but the circumstances we are in right now are not reasonable. So what I’m questioning is how far those countries would go for Iran.

            • merkwurdiglieber says:

              There is the view that this is the third proxy war we have lost with
              China… they play the longe duree.

            • bmaz says:

              Russia has every interest in an alliance with Iran. Putin remains in power courtesy of his access to the oil and his ability to dominate the pipeline politics coming out of Central Asia. The US has been trying to counter his power here for years. One way for Putin to solidify his position–perhaps definitively–is with a successful relationship with Iran. I highly doubt the Iranians have any illusions about Putin’s soul or he the Mullah’s soul. But from a geostrageic position their alliance is a route to really grasping a lot more power in the world.

              And as to China–yes. they hate instability (within their own boarders). But they have relentlessly spent the last decade trying to find new sources of energy to sustain their growth, which is in turn the key to their internal stability. The US wants Iran so as to be able to deny oil to China, and China knows that. So China will not let the US do to Iran what it has done to Iraq–it can’t afford to.

              Agreed completely. Although I suspect China won’t make too much noise on it’s own; rather will fall in line behind Russia and Putin.

            • skdadl says:

              Very late with this response, but like bmaz, I agree completely.

              One thing that is worth watching, always, is the dedication of a number of actors in Washington to mucking about with maintaining relations with all the Stans and with the eastern European countries, thus drawing a ring around Russia. Gates announced recently that the U.S. would continue to build missile bases in Poland and the Czech Republic; the public rationale is that a defence is required against some fantastical attack from Iran. And Cheney has taken a personal hand in diplomacy with the Stans.

              I presume this is all in response to the Shanghai Accord. IOW, we’re watching even more than just a regional war in the ME/Central Asia; we’re watching the beginnings of a new great-power confrontation.

              Ok. I go to put my tinfoil hat on now.

              • Loo Hoo. says:

                Well, shit. If Dick Cheney has taken a personal hand in the diplomacy, we know there will be a happy ending. Where’s Condi?

              • eCAHNomics says:

                So I once got an email Q asked on CNN. The guest was some useless general retiree. My Q was: The short version of U.S. foreign relations is that our friends become our enemies and our enemies become our friends. What is the cuurent status about the Stans? Of course he said that the Stans would always be our friends forever & ever.

  8. emptywheel says:

    And to add to selise’s question: if they get away with it, then what? I’m seeing this as a strong move in an effort to 1) assert hegemony and 2) prevent themselves from being melted into glass. 2) has always depended on 1) That is, Iraq had no power and so got blown away; Iran has had to solidify its power in a very delicate time such that Russia and China wouldn’t let it get blown away. Iran has also recently gotten Putin on the record as saying an attack on Iran is an attack on Russia. So at this point, if the US wants to strike, it’s either going to be Israel by itself, or the US relying on Saudi’s declining oil fields against Russia, Iran, and Venezuela invoking the oil weapon. Giving that it’s winter, I don’t think Europe is any mood to piss off Putin, not least because the US has worn out its welcome.

    • eCAHNomics says:

      Iran has had to solidify its power in a very delicate time such that Russia and China wouldn’t let it get blown away.

      Agree with that. But how does pulling the U.S.’s tail solidify Iran’s power?

      • merkwurdiglieber says:

        Not so much pulling the tail as drop kicking a teetering economy in
        the privates… we are on the petrodollar and it has spiraled downward.
        No US military option to rectify that available, India and China need
        Persian oil, China holds our paper, covers rock.

      • emptywheel says:

        They’re going to go to an alternative currency eventually. The rest of OPEC, so far, won’t do it because 1) they don’t want to devalue their reserves, and 2) they don’t want to piss off the US.

        But at some point the tipping point of US power will be hit. Countries are aware of taht–and they’re trying to game it out, both financially and geostrategically.

        While this is not such a tipping point, Iran has solidified key relationships in recent weeks, a block against it has weakened (and if Iran goes heavy Euro that will change the equation for the Europeans, though not all in safe ways for Iran), and it has a breather from the death sentence it has been under in recent years. I think this move undercuts anything that might have come out of Annapolis (that is, weakening a potentially dangerous block forming against it).

        Iran is basically taking a moment of US weakness to consolidate its power, when, two weeks ago, the US thought IT had finally found a wya to counter Iran.

      • bobschacht says:

        “But how does pulling the U.S.’s tail solidify Iran’s power?”

        Modern Iran, which has been an international power for 3000 years, thinks that it is not getting the respect that it deserves. Dissing the dollar is a way for it to say, “We’re a force to be reckoned with”.

        In chess and basketball, position matters a lot. The U.S. goes madly charging around the Middle East like a pinball, knocking into things and making noise, but it will eventually lose energy and drop into a hole. Iran just moves its feet a little bit, getting into better position, and waits for the pinball to drop out. They know they’ll be there for the long haul. They think in terms of long-term advantage.

        [Metaphorically, I was thinking of the only NBA championship the Baltimore Bullets ever won (1978). They had a relatively short (6′7″) center, Wes Unseld, with bad knees. But he knew how to position himself for maximum benefit.]

        Bob in HI

        • eCAHNomics says:

          They think in terms of long-term advantage.

          Not sure I’d give the current crew in Iran the benefit of the doubt on that one. The long history of the country seems to point in that direction, but with many major & disastrous departures.

          Besides, if that’s what they were thinking about, it would have been much better for them to just gradually switch to euros beneath the radar rather than making an announcement.

            • eCAHNomics says:

              Now that would be a great thing to know. Then we could stop speculating (in every sense of the word), n’est pas?

            • TheraP says:

              cheney likely does not hav $$$ in euros. Someone the other day indicated his money is at Vanguard. In certain bond funds there. There’s no way to hold an account in euros at Vanguard.

              No way that I know of to hold euros in US banks either. But these guys may have money offshore.

          • bobschacht says:

            ” In response to bobschacht @ 43

            They think in terms of long-term advantage.

            Not sure I’d give the current crew in Iran the benefit of the doubt on that one. The long history of the country seems to point in that direction, but with many major & disastrous departures.

            Besides, if that’s what they were thinking about, it would have been much better for them to just gradually switch to euros beneath the radar rather than making an announcement.”

            Another principle of Iranian fopo is What’s With the Neighbors? In 2000, Iran had two hostile neighbors: Afghanistan, and Iraq. It had recently concluded a long, bloody, and indecisive war with Iraq. So, Uncle Sam comes marching in and smacks down their two hostile neighbors. Booyah! But then, the enemy of their enemies was not their friend (calling them part of the Axis of Evil & such). So, Iran gets friendlier with Russia, as a counter-balance to the US. Russia has also been a problematic neighbor, but now the -stans serve as a buffer. It is a convenient piece of fopo chess to play neighbors off against each other. We are now a “neighbor,” with our military presence in both Iraq and Afghanistan.

            Another curious tidbit in this equation is our close cooperation with the Badr Organization in Iraq, which has closer ties to Iran(!) than any of the other groups we’re dealing with. Politics makes for some strange bedfellows.

            ================
            Digression about oil supplies and prices.

            “Oil in the ground” is not all the same. Some is light, some is heavy, some is high in undesirable chemicals like sulfur, others isn’t. And it may occur in different deposits. Like in Colorado, we have a huge supply of Oil, but its in shale deposits. Not economical to extract– yet.

            So when we’re talking oil supply, we’re really talking about several things: How much oil of which kinds is still in the ground? The most desirable, high quality oil is fast disappearing. But oil shale has barely been tapped yet. It will be, when the price of oil rises high enough.

            So the oil in our future will come from lower grade oils that cost more to refine. If I were young, with money to invest, I’d look seriously into oil refineries.

            Bob in HI

      • Ann in AZ says:

        Agree with that. But how does pulling the U.S.’s tail solidify Iran’s power?

        If you want to bring it down to the animal level, the U.S. pulled Iran’s tail first, in fact, several times. Just letting Bush continue to attempt to intimidate Iran hasn’t worked. Now they’re trying snapping back. But actually, it’s not necessarily even that they’re trying to snap back. After all, a lot of countries are now thinking about not using our dollar as the basis for financial value, aren’t they? And aren’t they doing it primarily because it seems to be a fiscally advisable thing to do at the moment?

  9. perris says:

    ecahn, I defer to your knowledge, mine is seat of the pants

    I am pure speculation and asking the what if’s

    so, as you said on the other thread, “what if they bought rockefeller center dear”

    I am saying that is exactly the problem, that’s what creates inflation…other countries buying up our assets for far more then they are worth

    then we have no assets and we have a bunch of paper running around trying to buy

    that’s the very problem

    • eCAHNomics says:

      Price of Rock Center was driven up mainly by domestic factors, not foreign demand. Japanese are not known for their timing ability. And we bought it back cheap.

  10. perris says:

    I see people here are counting on suadi arabia and china to “have our backs” because they need to protect their own interest

    this supposes they don’t WANT our economy to fail…think of all the assets that could be theirs IF our economy fails

    we certainly haven’t gained their good will to protect us

    • eCAHNomics says:

      this supposes they don’t WANT our economy to fail…think of all the assets that could be theirs IF our economy fails

      And then, just what do you suppose those assets would be worth? And what would the world economy look like if the U.S. economy failed? How much oil do you suppose Saudi Arabia would sell under those circumstances?

      One of the big lessons I learned in my forecasting career is to try to grasp the true order of magnitude when adverse events occur. You know, that cliche about the stock market forecasting 9 of the last 5 recessions. So, it’s not as if this is good for the U.S.; it’s that I think it’s a minor bad (and one that needs active managing), not a major one.

      • perris says:

        the assets would be hard assets, production companies in the states, things like our office buildings, rockefeller center, penn station, our bridges and tunnels, our ports

        anyone would want these assets whether or not our dollar was sound

        they would buy the assets in dollars and use the assets to trade in the currency of choice

  11. Loo Hoo. says:

    BREAKING NEWS: Justice Department opens investigation in destroyed CIA tapes

    * Top stories

    as of 11:35 a.m. Sat., Dec. 8, 2007
    New York, NYpartly

  12. selise says:

    how does pulling the U.S.’s tail solidify Iran’s power?

    i think there’s some game theory name for this…. the issue with dumping the dollar is that if everyone does the dollar’s value tanks, which indeed would mean that everyone left holding dollars would be hurting.

    but what if you suspected that that everyone else is either thinking about dumping the dollar, or starting to do so.. but doing it in such a way as to hide intentions as much as possible? if the world is going to go off dollar reserves – and do it in a non-controlled way… wouldn’t you want to be at the head of the line to sell of yours? wait until everyone else moves and then you’re fucked.

    seems like a very unstable situation to me – with risk all around… but less risk for those not holding any dollars. which, we now know will pretty soon be iran.

    …. so, looks to me that iran is putting themselves in a stronger economic position (especially if there is a run on the dollar) while ratcheting up the risk of a dollar run… all of which puts the usa in a more unstable position and distracts our leaders while they run around coordinating with everyone else to prevent a run on the dollar.

    the risk to iran is that there will be a military attack in retribution for this move. but, as marcy shows, that risk is somewhat contained now (compared to a month ago).

    • eCAHNomics says:

      Interesting way to look at it.

      I’ve been thinking it’s more political, as with Venezuela. Chavez can tweak U.S. secure in the knowledge that Gulliver is tied up in Iraq. But not so with Iran.

      • selise says:

        re: game theory.

        i think it’s a version of the iterated prisoner’s dilemma with more than 2 unequal players

        In the iterated prisoner’s dilemma the game is played repeatedly. Thus each player has an opportunity to “punish” the other player for previous non-cooperative play. Cooperation may then arise as an equilibrium outcome. The incentive to defect is overcome by the threat of punishment, leading to the possibility of a cooperative outcome. So if the game is infinitely repeated, cooperation may be a subgame perfect Nash equilibrium although both players defecting always remains an equilibrium and there are many other equilibrium outcomes.

        … where the usa’s ability to “punish” “non-cooperative play” just took a blow. if the punishments are not sufficient to make cooperation the equilibrium outcome, then defecting becomes more attractive.

        disclaimer – i know nothing about this… although the ideas are intriguing, i should read up (if anyone here has some knowledge in this area of study, i’d love a reference for a good introductory text book).

  13. perris says:

    hey guys, marcy gets a hat tip over at think progress!

    UPDATE II: Marcy Wheeler documents the responses from Congressional members as to what they knew and when they knew it. She notes the ostensible silence of former Senate Intelligence Committee Chairman Pat Roberts (R-KS), who is running for reelection next year.

    good stuff

  14. Leen says:

    Watched this guy John Radsan on Cspan this morning. An event that took place I believe on Tuesday or Wednesday. What Mr. Radsan had to say about Iran was frightening, not their threat to us, but the way we was talking about what we need to do to “take Iran out”. He was so arrogant, so dismissive of Iranian lives, I was not sure who I was listening to Cheney, Bolton almost seemed more radical? This guy was truly creepy. He kept asking people to come over to the “dark side”

    This was the event he was speaking at
    http://www.americanexperiment&…..-12-04.php

    John Rasdan CIA attorney?

    this is his organization.
    http://www.americanexperiment.org/events/

    What do folks know about him?

    Here were some of his suggestions in regard to isolating Iran (I keep wondering for what reason). Although he was not adverse to bombing the day lights out of Iran

    1. kick out Iranian diplomats from the US
    2. go after their money…banking
    3. attack them in cyber space
    4. hit them with a whole range of propaganda

    The inflammatory rhetoric about Iran has been turned up a great degree this past week. Bolton , Bush, Cheney, Radsan etc.

    Last night Brian Williams said “Iran is not trying to build nuclear weapons anymore”. I have yet to hear anyone come up with solid evidence that there ever was a nuclear weapons program.

    Scott Ritter questions the claim that Iran has ever had a nuclear weapons program.
    Scott Ritter audio..worth the time

    Dr. Trita Parsi audio also worth the listen
    rita Parsi, president of the National Iranian-American Council and author of Treacherous Alliance, discusses the possibility that the new Iran NIE will give the Israeli government the opportunity to adopt a new foreign policy toward Iran, how the wars in Afghanistan, Iraq and Lebanon have benefited Iran and the Iranian leadership’s sanity.

    MP3 here.

    Trita Parsi is the author of the forthcoming Treacherous Triangle: The Secret Dealings of Iran, Israel and the United States (Yale University Press, 2007.) He wrote his Doctoral thesis on Israeli-Iranian relations under Professor Francis Fukuyama (and Drs. Zbigniew Brzezinski, R. K. Ramazani, Jakub Grygiel, Charles Doran) at Johns Hopkins University School of Advanced International Studies in 2006.

    Dr. Parsi is one of the few people in the US – if not the only one – that has traveled both to Iran and Israel and interviewed top officials in these countries on the state of Israeli-Iranian relations. He has conducted more than 130 interviews with senior Israeli, Iranian and American officials in all three countries. He is fluent in Persian/Farsi.He has followed Middle East politics for more than a decade, both through work in the field, and through extensive experience on Capitol Hill and the United Nations. Dr. Parsi’s articles on Middle East affairs have been published in the Financial Times, Jane’s Intelligence Review, the Globalist, the Jerusalem Post, the Forward, BitterLemons and the Daily Star.

    He is a frequent commentator on US-Iranian relations and Middle Eastern affairs, and has appeared on BBC World News, PBS NewsHour with Jim Lehrer, CNN (Wolf Blitzer’s Situation Room, Anderson Cooper 360°), CNN International (Your World Today), Al Jazeera, C-Span, NPR, MSNBC, Voice of America and British Channel 4.

  15. Minnesotachuck says:

    Selise @ 17: “never take on the strong – only go after the weak?”

    Emmanuel Todd, in his book After The Empire: The Breakdown of the American Order, calls the USA’s use of its national security stick “theatrical micromilitarism”. Todd is the Amero-French demographer who, as a twenty-something grad student in Paris in the mid 1970s, wrote a thesis that predicted the forthcoming demise of the USSR. He got his degree in spite of the hilarity his dissertation generated.

  16. garyg says:

    Why on earth should the Iranians use the dollar? Our country is openly, aggressively hostile to Iran. And Putin has already come out and stated an attack on Iran is an attack on Russia.

    And, per EW at 38, any doubt that China would line up with Russia and Iran instead of the US?

    George et al have completely screwed the pooch. The age of American empire has come to a precipitous end under their watch.

    • merkwurdiglieber says:

      Irony is that this military move into the middle east was to prevent
      the very thing that is happening now… diplomacy rejected for the rush
      of power, contracts, glory in the reflecting pool of the press.

  17. selise says:

    p.s. if my comment above was not clear. the way i’m thinking is:

    defection = dumping dollars
    cooperation = keeping dollar reserves and coordinating a gradual transition to another reserve currency (or basket of currencies).

    • eCAHNomics says:

      I got your point. And it’s an interesting hypothesis. Just no way of knowing how they’re thinking.

      • selise says:

        if i were them, that’s how i would be thinking… (but that may very well be because i don’t economics or geostrategy)

        Besides, if that’s what they were thinking about, it would have been much better for them to just gradually switch to euros beneath the radar rather than making an announcement.

        not if they are looking to use this moment to lock in their new position…. there’s no way they could switch to euros and keep in beneath usa’s radar. might as well announce it now while bush is weakened – then it becomes a done deal if he can’t push back now.

        p.s. i really don’t know what i’m talking about here… just throwing out my thinking, hoping others will poke holes in it.

        • eCAHNomics says:

          not if they are looking to use this moment to lock in their new position

          What new position? Iran is 21st in GDP ranking, even with all its oil, and 73rd on per capita basis. It’s run by a group of crazy mullahs with an even more wacko president. Doubt that Iran gets much respect anywhere right now. Benefits from criminal U.S. mistakes, and is a pawn for many other countries like Russia, but that’s not the same as being a real place with real leaders. I feel very sorry for the people of Iran.

          Sometimes I perceive we fall into the neocon framing, thinking that Iran is more important than it actually is.

          • jumpinjack says:

            It may be currently run by a bunch of crazy mullahs, but the majority of the young population are VERY pro-Western. They like things like bluejeans, shopping malls, Western music and movies, etc. The majority of the population would like to join the Western civilization and dump the burkas, mullahs, etc. Western nations will make much greater inroads by working with the Iran population than by trying to bomb them back to the Stone Age. I suspect most nations, esp. Western nations, understand this. Bushco either does not understand this or rejects the pansy notion of diplomacy in favor of testorone-pumping WAR!!!!!

            • eCAHNomics says:

              I agree with you on (very young) population of Iran. At least that’s what all the reliable people with real knowledge report. That’s why I said I was sorry for the people of Iran. W sees the world thru the eyes of the an autocrat in charge. So Iran population is not on his radar screen.

            • garyg says:

              Bushco does not want to get along with Iran. They want control of, and the proceeds from, their oil.

              I’m sure they “get it” just fine. But “it” is not a plus, but a negative in their books. You can’t bomb and steal without an excuse.

              • bigbrother says:

                Theft of other nations natural assest has been the supply engine of the military industrial complex either by coersion or force. The beauty for big oil is doing off shore exploitation comes without paying the environment costs. Global warming is going to hit that hard. The Bali conference with 190 nation may undermine big oil profits. What is that impact in the bigger picture? Maybe a post some time.

            • eCAHNomics says:

              Six years after the Iranian revolution sent the price of oil to $50 (or thereabouts, too lazy to look), there was an oil price crash. You know, that supply-demand reaction to oil prices.

              This time around, in addition to higher prices spurring supply and dampening demand, you can add the push to non-carbon energy sources.

              Again, you are buying into the bad guys’ framing. Oil is just a commodity. It’s not larger than life. Over time, prices of all commidities fall relative to other prices, as technology develops substitutes.

              Someone above mentioned Palast’s work indicating that Iraq was, from oil cos POV, all about keeping oil off market to raise the price. (Neocons wanted to privatize it & flood the market. Neocons lost that one.) But Saudi Arabia learned that if the price went too high in the near-term, there was hell to pay a little later. Guess the oil cos didn’t learn the fine-tuning lesson.

              • selise says:

                i don’t doubt that the price of oil will probably eventually tank even more than the oil price crash of the ’80s (?), especially if we (the world) ever get our act together and institute a big carbon tax. but that won’t happen this year, next year or for a few years (absent a global depression).

                we hit global peak oil production 2 years ago (the ’70s was just peak oil for the usa). at this moment oil (and to a lesser degree natural gas) looks like a potent economic weapon to me. also the saudi fields look to be in a steep decline which leaves an opening for some other country to become the swing producer.

                …i’m not saying this is all smart thinking by the players (bushco, iranco, putinco…). but if i try to see things from their perspective (short term and power is the only thing worth having), that’s the world i think they see…. and not just the neocons. it sure looks like the dems see it the same way (look at our military involvement in, for example, columbia).

                maybe these are not normal times.

                and hopefully i’m full of it.

                • eCAHNomics says:

                  Peak oil was an invention of the oil cos in the 1950s, according to Palast. I agree with him that it’s an invention with no factual evidence to support it. Which doesn’t stop a lot of people from opining.

                  As I said, in the 1980s, the crash took about 6 years. It could take longer this time around owing to U.S. sabre-wielding. But the longer the oil price stays high, and the higher it goes in the near-term, the bigger the fall later. Has to do with the normal lags between prices and the supply & demand response, which are quite long for oil. (And I’ve run the regression analysis to document it.) In general, the longer the lags the more the price overshoots at the top & undershoots at the bottom.

                    • selise says:

                      ok.

                      that, i think, helps a lot. maybe explains us talking past each other.

                      … maybe i’m not thinking like a neocon at all. maybe i’m just thinking like a biologist (population growth curves and resource constraints).

                      hmmm….

                    • freepatriot says:

                      got any predictions about when oil production will exceed 90 million barrels a day

                      capacity has been steady at about 88 million barrels a day for 20 years

                      looks like a trend to me

                      and from what I’ve heard about hydro extraction, halliburton, and Saudi Arabia, we ain’t gonna be able to maintain 88 million barrels a day for much longer

          • freepatriot says:

            please read my comment below about the article at truthout

            Doubt that Iran gets much respect anywhere right now

            try looking around a bit more

            when you’re sitting on the world’s second largest proven crude oil reserve, respect kinda comes with the package

  18. jdmckay says:

    And I disagree that this was a good chess move for Iran. It’s really stupid for them to tweak U.S. at this moment in our mutual histories.

    If I were in their position, IMO it’s perfect time for such a move. Many reasons… shortlist:

    a) $$ has never been more vulnerable or it’s uncertainty greater. It’s not just oil producers, world economic’s confidence in USD low and slipping fast.
    b) with all W’s Iran saber rattling (”axis of evil”), necons haven’t been in politically disadvantaged (wings are clipped) since 9/11.
    c) EU/NATO diplomats supporting Iran sanctions are pissed about W’s NIE foolishness, eg. no way they’re going to support US military action against Iran.
    d) conquer & divide… won’t take too many foreign actions like this to send USD to tipping point… the Mullahs can really hurt US economy w/this.

  19. jumpinjack says:

    December 2000, right after Bush/Cheney elected, Euro vs. Dollar was around $0.85. Recently, Euro vs. Dollar was around $1.48.

  20. Leen says:

    The torture tapes

    Yesterday one of the points Larry Johnson stated at his website No Usa Quarter was that he thought it was likely that CIA had not done the torturing but “contractors” are the more likely contenders.

    Just who are the contenders for being contractors for torture?

    http://noquarterusa.net/blog/2…..ure-tapes/
    “Then there is the question of tradecraft. Did the CIA officers participating in the interrogation/torture sessions allow themselves to be filmed so that they could be easily identified? I am skeptical. When the truth comes out I think we are likely to discover the people doing the questioning were contractors, not undercover Agency officers.”

    Today he brings up Cofer Black (Blackwater)
    Here is Larry Johnson’s latest on the torture tapes
    http://noquarterusa.net/blog/2…..ment-77207

    More on Torture Tapes

    By Larry Johnson on December 8, 2007 at 11:43 AM in Current Affairs

    The blooming scandal surrounding the destruction of torture tapes is just beginning. The parade of current and former intelligence officers with something to say on the matter will include some very highly regarded Case Officers. For example, asking who ordered the tapes and who directed keeping them on hand will lead to Cofer Black, who headed the Counterterrorism Center at CIA until he moved to the State Department as the Coordinator for Counterterrorism in December 2002. Whether or not Cofer is complicit in any way, his positions as a Blackwater executive and advisor to Republican presidential candidate Mitt Romney will make him irresistible to lazy reporters looking for colorful characters and simple story lines.

  21. jumpinjack says:

    December 2000, right after Bush/Cheney elected, British Pound vs. Dollar was around $1.47. Recently, Pound vs Dollar around $2.07.

  22. Leen says:

    I don’t even try to pretend that I understand the economy or the oil game. I do remember hearing Greg Palast in Washington D.C. speak just after the invasion and he said “we did not go into Iraq to turn the oil spigot on but to turn it off”. With Ahmad Chalabi in charge of Oil in Iraq (is that right?). Just how does this all play into the role that Chalabi played?

  23. BooRadley says:

    I would bet my last dollar that A*P*C’s investments are NOT 100% in dollar denominated assets. Uncovering that hedge would be some kind of scoop wouldn’t it?

  24. eCAHNomics says:

    BTW selise, before the U.S. invaded Iraq, I called Saddam Hussein nothing but a washed-up has-been of a dictator. You should have seen listeners’ faces. But in fact, that’s what he turned out to be, at least from the POV of a non-Iraqi. Siun’s Iraqi friend would probably argue that he wasn’t washed up enough, but still she didn’t want the U.S. to get rid of him.

  25. Leen says:

    From JTA. Israel keeping the pressure on Iran for their non-existent nuclear weapons program

    Israel keeps up pressure on Iran

    Published: 12/07/2007

    Israeli foreign minister Tzipi Livni said she has no doubt Iran is still 22pursuing nuclear arms.

    In Brussels on Friday for a meeting with NATO officials, Livni said Iran is close to crossing a technological threshold that will allow it to produce nuclear weapons without help from outside sources.

    “The time to reach a decision is near,” she said, according to reports.

    Livni is in Europe to rally leaders there to keep up pressure on Iran despite the release earlier this week of a National Intelligence Estimate by the United States that found Iran halted its nuclear program in 2003. Israel says Iran is still working toward acquiring atomic weapons.

    THROW SOME CARROTS

    1. Israel sign the Non-Proliferation Treaty

    2.U.S. and Israel sign an agreement saying that they will not pre-emptively attack Iran if they give up their uranium enrichment (allowed under the Iaea)

    If I were living in Iran and heard the leaders in Israel saying every other day that they might bomb the living day lights out of my country I would want Nukes to deter Israel and the U.S.

    • merkwurdiglieber says:

      Guess here is energy task force was continuo of gulf war 1 plan
      pitched at end of Bush 1 term for 2nd term that did not come. Energy
      Control Task Force may be better term.

  26. emptywheel says:

    eCAHN

    Ah, I see the real root of my disagreement. You see crazy leaders and low GDP and judges that means one is powerless.

    That’s where the Saudis were before Roosevelt got friendly with them. And while they’re still run by a bunch of crazy fuckers, they are very powerful indeed, precisely because the swing producer is a tremendous position of power. That won’t be true in 25 years, probably. But it will be true in 5, as Saudi fields continue to dry up and as Iran (or, potentially, the Shiite block, depending on what happens in S Iraq) takes over as the swing producer. Plus, Iran is in a much more interesting place geographically than Saudi Arabia.

    If Iran were even a fraction as powerless as you suggest, we would have waltzed in with the British in 2005.

    • eCAHNomics says:

      Nope.

      Think our disagreement is on the margin. All I’m questioning is how FAR Russia & Cina would go to defend Iran.

      Iraq was very weak & it defeated U.S. Being a laughingstock of a country does not mean a powerful military can defeat it militarily. See also Vietnam.

      Saudi Arabia’s power comes from unprecedented oil resources & savvy use of them, both economically (see my 84) and to form deep political alliances with very powerful countries. Don’t see that Iran is in the same league.

  27. Leen says:

    A*P*C trial delayed again. Got to get in that pre-emptive strike on Iran before this trial. If Mukasey does not dismiss it.

    Delayed for the sixth time…at JTA
    An April 29 trial date was set in the classified information case against two former AIPAC staffers.

  28. freepatriot says:

    is this thing on ???

    yo, emptywheel, did you see the article titled “The Zero Sum Fiasco” at truthout by Dilip Hiro

    that about sums up my fears about george bush

    I knew back in 2001 that attacking Iraq would elevate Iran

    I didn’t really know about the Afghani angel, but I knew bush was gonna fuck up in Iraq,to the benefit of Iran

    now I got an article that sums up my fears

    whaddayathink ???

  29. Loo Hoo. says:

    OT, looks like you were right about the second tape, EW.

    From Think Progress:

    ‘Well-Informed’ Source Tells CBS That Tapes Were Destroyed To Prevent Prosecution

    Last night on the CBS Evening News, national security correspondent David Martin reported that a “well-informed source” informed the network that the CIA destroyed the interrogation videos to “avoid criminal prosecution.”

  30. JodiDog says:

    So what if it isn’t in dollars.

    The exchange rates are updated constantly, and the intial currency doesn’t matter as long as you don’t hold on to it.

  31. noen says:

    Peak oil was an invention of the oil cos in the 1950s, according to Palast. I agree with him that it’s an invention with no factual evidence to support it. Which doesn’t stop a lot of people from opining.

    No, peak oil is just a name for the point we have consumed nearly half of available oil reserves. We may or may not be there but it is a guarentee that we will be soon. Greg Palast is not my most admired reporter. He has this shtick going and a fair amount of sloppy reporting esp around NOLA. I don’t trust people that constantly feed me what I want to hear.

  32. eCAHNomics says:

    OK, selise. Here’s some meat for the bones.

    An economist by the name of Altman, at M.I.T., said in the first oil crisis (1973-74) that the world is awash in a sea of oil. Stick a straw in anywhere & you’ve got a gusher. You’d have been well served to pay attention to him in all the intervening years.

    Palast has the history of the Peak Oil meme in Armed Madhouse. It’s an easy read & well worth the time spent.

    Now, I do believe the Saudi reserves are being depleted. Simmons’ Twilight In the Desert seemed dispositive to me on that issue.

    But, again according to Palast, Venezuela’s reserves are enormous. Something imperfect about their oil, like it’s heavy, or sour, and isn’t extractable for less than $50 when he wrote the book, which would still make it profitable at $90, despite dollar fall. Also, huge reserves around Caspian. Development difficulties relate to distance to be transported across mountainous terrain & fact that during Soviet years, more easily developed oil fields were tapped first. And finally, again according to Palast, the Sunni triangle in Iraq has more reserves than Saudi Arabia, and has been purposly red-lined against development since the Brits took it over in the 1920s.

    Never seen any other source on Iraq. Maybe I’ll do a little googling & see what I can find.

    • noen says:

      But, again according to Palast, Venezuela’s reserves are enormous.

      The Tulpa reserves off the coast are estimated to be 8bn barrels. At our current rate of consumption once they go online they will last 3 months.

      The power of exponential growth in demand assures us that we will never be able to find oil fast enough to satisfy our need for it. The real question is how hard are we going to crash?

    • selise says:

      thanks, will looks up altman…. never heard of him before. very glad to be made aware.

      have not read armed madhouse, but have listened to several talks palast gave on it (same story for matt simmons). will put it on the to read list (but the list is quite long, and getting longer). i can’t read all the books i’d like to, so i end up listening to lots of lectures given by authors and then narrow it down from there.

      on venezuela (and reserves in general – especially non-conventional reserves) i think it’s a mistake to look at only at $ cost of production. for forecasting i think we need to look at resource (energy and water especially) cost of production. (if it take 99 barrels of oil energy equivalent to get 100 barrels…).

  33. Richmond says:

    I concur with EW that this was strategically very smart, if for no other reason than it gives Iran a REAL bargaining tool vis-a-vis the U.S. (the economy, investors who are largely Rethugs). Also, and perhaps most critically this issue is one that is likely to triangulate the partners in crime in the ME: US investors on the one hand and Isr*el/US neo-con hawks on the other. In some ways this is potentially the most siginficant factor in this from the vantage of ME policy. In short, Iran may be able to use this to prevent a US attack.

  34. BlueStateRedHead says:

    OT. Is anyone tracking coverage of Sen. Whitehouse’s speech yesterday? googling “”sheldon whitehouse” speech” produces lots of blog coverage and his website, but as for MSM, nada.
    Nothing in NYT
    Also, unless my search was faulty, media matters is not tracking the non-coverage.*
    If this is indeed what’s happening, it’s we pups to the rescue time. A grass roots efforts to reach law professors and students might be the most fruitful way to get the news out to people who actually sit up and take notice when you say btw, forget Marbury. It’s been canceled.

    Tried this experiment this morning. I described Whitehouse’s three points to three well educated and bluer than blue lawyers in private practice and a Harvard Law Student. Two of the lawyers said well this is what we expected. One promised to forward it to an association of lawyers. The law student practically grabbed the document from my hands.

    * http://mediamatters.org/issues…..tehouse%22

    • eCAHNomics says:

      What a sweetheart you are. I had this in the very back of my mind when typing my 106 but couldn’t bring it to the fingers. It’s exactly the kind of discovery you’d expect when oil prices spike.

      • noen says:

        It will last 3 months. Divide global rate of consumption into 8bn barrels and you get 90 days. That is the optimistic estimate.

        • eCAHNomics says:

          So here’s the quote from Palast re Venezuela:

          Venezuala, warns Caruso, holds 90% of the earth’s heavy oil reserves. Ninety percent. This reserve remains hidden, “off the books,” unless and until the price of oil rises permanently above $28 per barrel, at which point the Venezuelan oil is worth pulling up.

          p. 183. Italics in the original.

          Guy Caruso, you’ll recall from Chapter 2, is the former CIA oil expert, now the Energy Department information chief, who gave Paul Wolfowitz’s Pentagon the realistic projections of Iraq’s oil production that the U.S. public never sees.

          also p. 183

      • selise says:

        It’s exactly the kind of discovery you’d expect when oil prices spike.

        for a while sure…. but like saudi arabia – aren’t the planet’s supplies ultimately a limited resource?

        ahh… now i see your comment at 121… so you think we are so far from the point of energy resource limitations that we can effectively ignore them? (well, except for the global climate change thing).

    • noen says:

      What I mean is that we consume oil and other things too, at a certain rate. That rate is not static, it grows. Approx every ten years our need for oil doubles. That means that every ten years we need to discover as much oil as we have ever discovered in our entire history just to keep even. and then do it all again in another ten years.

      This goes to the heart of the discussion. How much oil is left? That is what Cheney heard in his energy conference and it what he means about “getting honest information” from the oil companies. You can’t play a very good game if you don’t know where all the pieces even are.

      • eCAHNomics says:

        The demand for & supply of oil depend on the PRICE. The reason why demand has been growing so rapidly & supply has been suppressed is because the Saudis have kept the price low.

          • eCAHNomics says:

            Worry is appropriate. Panic goes too far. But I’ve really done A LOT of work on the influence of oil prices, both on supply & demand for oil, and also on the economy, so I’m pretty confident in what I’ve posted here on that subject. That’s one of the reasons why I tend to give credence to Palast, without my usual double- & triple-checking. I have learned over the years since the 1973-74 oil crisis that supply comes out of the woodwork once the price goes up. Don’t follow the nuts & bolts of where it is, but tend to believe others who give reasonable documentation.

            Back on the subject of Iran. My prior work on oil makes me downgrade the power of countries that have it. Not only the traditional resource curse (wiki has a good description of resource curse) but also the way markets work means the power will not be long-lasting.

            What I’ve missed is the way old-economy Rs will use the oil card. But now that is obvious, the forecast is less murky.

            • noen says:

              supply comes out of the woodwork once the price goes up.

              Only to a point. Somewhere along the line you won’t get more supply at any price. Or more likely, at only grossly exorbitant prices. Exponential growth is a power series. It simply cannot continue unabated.

              • eCAHNomics says:

                Don’t hold your breath while waiting. chnaces are you won’t reach that point on oil in your lifetime.

                • noen says:

                  Don’t hold your breath while waiting. chnaces are you won’t reach that point on oil in your lifetime.

                  But that is the chess game we are talking about right? How do we know? How much oil is actually left and how much is left that is too expensive to extract?

                  • eCAHNomics says:

                    Oh, like with Iraq WMDs, the evidence is pretty clear. See my 106, 121, 123. Nothing is ever certain, but when preponderance of evidence is so convincing, it’s enough to make a rational decision. I became an economist by switching fields during my working career but my undergraduate major was chemistry. That taught me how to evaluate hypotheses and evidence. In science, nothing is ever proved, everything is a hypothesis waiting to be disproved. But in everyday life it’s often easy to decide whether the evidence is sufficient for making a decision.

                    • selise says:

                      back for a sec to ask a question…

                      working hypothesis (for the sake of the question) – there is currently an overabundance of accessible oil.

                      q – when we’re nearing the point of having used half of the world reserves and the situation will soon be one of transition from overabundance to resource limitation…. whether that is 20 years or 100 years from now (when ever it is)…. what do you predict the signs will be. what will the cheneys and the putins of the world be doing? what will the “great game” of geostrategy look like then?

                      … where i’m going with this is, if we’re not in a situation of resource limitation now – how would things be different if we were?

                      does my question make any sense?

                    • Loo Hoo. says:

                      Seems like even if there is plenty of oil in 20 or 100 years, we’re just not going to be able to use it like it’s been used. It will have to used sparingly for things like lubricating machinery run using solar or wind. I don’t believe people will use oil to the death.

                    • eCAHNomics says:

                      does my question make any sense?

                      Not really. I’m in the reality-based world, not in the reality-creation world.

                      But let me take a stab. Are you asking what would the oil price look like if we were really running out of oil? (’scuse my literalism, but I’m really a scientist who’s been coopted into the much more fluid world of policy.)

                      If that’s what you’re asking, then the A is simple. Oil price would keep spiralling upward and there would be no signs of new oil discoveries or no signs of dampening demand. Now I would expect that you would have to wait 1/2 to one year to see initial signs of either, but apparently supply responses are already evident. Demand responses will show up soon enuf.

                      Is that what u were asking?

                    • selise says:

                      thanks for the attempt.

                      let me try again… what i was trying to get at (not very well), is if we’re not at or near peak oil now – what would you expect to be different if we were? and by different i meant politically – what would people like cheney and putin be doing that they are not doing now?

                      p.s. i spent 10 years working as an engineer and longer as a scientist – i always found thought experiments, even those involving imaginary not-real-world possibilities, to be a useful too.

                    • eCAHNomics says:

                      I can’t go there. Acting Prez Cheney & my mindset are so far apart, I could never put myself in his place,

                    • selise says:

                      I can’t go there. Acting Prez Cheney & my mindset are so far apart, I could never put myself in his place,

                      ok, fair enough.

                      i’m always trying to do it, since their actions affect so many.

                      It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle. — Sun Tze, “The Art of War”

                    • noen says:

                      well Selise I think one would see what we are seeing right now. A desperate grab for that last reserves of easily refined oil. I think we are probably at peak, perhaps between now and 2010. The reason I feel that way is because the numbers say so. Estimated global reserves calculated against the rate of consumption gives peak at about now. No amount of discovery or technological innovation can change that. What can be changed is how bumpy the ride is. Personally, I don’t think the Bushies or the Cheneys give a shit about how right it might be for us little folk.

  35. wmd1961 says:

    Iran has been talking about pricing in Euros for some time. See Iranian Oil Bourse initially planned for March 2006. The article states that 65% of Iran’s petroleum products are priced in Euros and 20% Yen as of Oct of this year.

  36. eCAHNomics says:

    One thing to realize about oil stats. Reserves, as is apparently the case for Venezuela (see my 121) are often tallied at a presumed price. I think there is no consistency from one country to another, so it isn’t possible for a non-expert to use the reserve stats intelligently.

  37. Richmond says:

    On Oil: I would be curious if anyone has put together a list of sites of oil prospecting (northern Mali for example) and sites our troops have recently been sent to “root out” ME terrorists. I bet we will find a correlation between oil company interests internationally and US military engagement.

      • garyg says:

        Absolutely. I have been concerned about the whole Darfur thing due to the appearance, virtually overnight it seemed, of an incredibly well funded and organized campaign to “Save Darfur”.

        I am sure there have been atrocities there. I am skeptical, however of the backing of this campaign which was able to toss out full page ads in the NYT like candy.

        Would there be a save darfur campaign if there were not oil at stake? And might not the very unrest itself be generated by interests agitating for control of the oil?

  38. eCAHNomics says:

    BTW, I think water might become a more scarce resource than oil. Again, the economist caveat: at a price. Water has been close to free, so it is incredibly wasted. But adjusting economies to non-free water might be painful.

  39. Hmmm says:

    Excellent commentary so far.

    An observation: It seems Iran’s PetroEuro move will have the end effect of isolating Israel, vis a vis any attack on Iraq any time soon, and I suspect Israel won’t strike on their own.

    That’s because Iran’s given OPEC a shove toward the PetroEuro, and South America may follow. So now Saudi Arabia’s (we assume) holdout position within OPEC to stay on the USD may be just about the only thing holding off a massive devaluation of the USD against all other currencies. Some of us previously believed the Sauds’ fingerprints are all over the situation, and that they in association with the Establishment Repubs were a primary force restraining Team Dick and Israel from first-striking Teheran, i.e. using the threat of tanking the dollar & throwing the US into recession as their big stick. The Iranian move amplifies that dynamic, making the US less likely to attack, or to support an attack in any way; particularly after the NIE. So now if Israel is going to act, it is going to have to go it alone, and now that attacking Iran also means attacking Russia, well, which side d’ya think is gonna prevail in a shooting war?

    So I agree the chess move was a deft one for Iran. Unless you believe Israel is crazy enough to strike anyway, and that the additional pressure is enough to make them pop. That would be Bad.

    Hmmm.

    • noen says:

      Unless you believe Israel is crazy enough to strike anyway

      They might be. Are we trying to play good cop bad cop with the middle east?

      • Richmond says:

        My sense, based on past history, is that Isr*el will not attack Iran unless they have good reason to believe that the US will be supportive. Things on this side are beginning to reach a saturation point with the American public highly scepticle of war and more war in the ME. Plus many are beginning to push back effectively against the neo-con point of view. NB the reason that Americans are beginning to believe that Iraq is going better is not only because of the new news reports, but also because (as with Vietnam) there is the thought that once things stay clear for a bit, we will be able to bring the troops home. Wishful thinkng perhaps, but it will impact policy.

    • eCAHNomics says:

      Agree Iran is probably “off the table.” Including an Isra*li strike. That said, anything can penetrate U.S. missle (laughingly-referred-to-as) shield.

      • noen says:

        That said, anything can penetrate U.S. missle (laughingly-referred-to-as) shield.

        Yeah, we agree about that for sure.

  40. radiofreewill says:

    Bush’s Chess-play is much like a player who enjoys both numerical piece superiority and has a Queen, where the opponent does not, and instead of masterfully reducing the Board into an almost certain mating-net, he chooses to act with only One Tactic – to take everything with his Queen, aka Shock and Awe.

    The number of chess players is legion, who have enjoyed such a dominant position only to go slack-jawed when their opponent’s two rooks or bishop and rook, fork and check their way to checkmate like the Queen wasn’t even on the Board.

    That’s Bush. The Iranians could count on George to Throw Away all the resources of Our great Country – resources that could have been part of an Over-whelming coordinated effort – and simply apply brute force without changing course, no matter what.

    Mastodon’s were easy prey, too.

    • noen says:

      I used to play chess and yeah, I ran into players like that. It was always satisfying to take them apart slooowly.

  41. ProfessorFoland says:

    ecahn–you may know a number I’ve been poking about for…

    Is there an accepted value, or range of values, for the price elasticity of demand for crude oil? Or, if no accepted value, do you have any guess from your own experience?

    Also, I think your earlier statement that there is no evidence for an Iranian weapons program is a little strong. They did violate safegaurds, and there are some outstanding questions from the IAEA (about polonium [sic] production they are known to have undertaken, and uranium metallization documents they are known to have been in possession of.)

    I’d probably agree that there is no unambiguous evidence of a weapons program.

    Sorry to nitpick…

    On peak oil…I was on the faculty of a very old university. Faculty meetings (which, as junior faculty, I really didn’t waste my time attending but did read the minutes) routinely discussed 50- and 100- year plans for the university, and what needed to be done to bring them about.

    Peak oil may not be now, it may not be in 20 years, but the oil supply will be sucked dry eventually. Whether it’s 50 years, or 100, or 150 will depend, as you say, on how good refining techniques get as prices go up. But nature is not infintely malleable (as I can attest as a physicist and machine designer); those processes will hit limits, and one day we will run out of oil.

    From an economic or trading perspective, it matters a lot whether it’s 50 or 100 or 150. But none of them are really irrelevantly far in the future, looked at with the sort of time horizon that a great-power nation should be taking.

    • eCAHNomics says:

      OMG, a prof asking me for price elasticities. I’m so flattered, you can’t imagine.

      Back in the day when I was running regressions, the price elasticity of demand was 1.0, with a 2 year lag. About half the influence occurred within a year. But that was before the 1973-74 crisis. After that, econometrics showed that that the lag was longer, can’t remember how much, but that the eventual elasticity was still 1:1. Order of magnitude 3-4 years.

      WRT my stridant statements about no nuke programs in Iran check out Prather & Ritter on antiwar.com, audio or written posts.

      WRT 50-100 year plans, may I respectfully suggest you & your faculty spend your scarce time more productively?

      • ProfessorFoland says:

        As I’m in physics (and no longer on the faculty) and not economics, I’m not sure how flattered you should be, but I’m glad I could make your day. I’ve been trying to get some back-of-the-envelope feel for whether the “emerging demand” story (as opposed to, say, geopolitical speculation) is plausible as an explanation for the past year’s oil price rise. At around 1.0 it certainly is not.

        Actually, the 50-100 year planning was not useless at all. Or so it seemed. Guess we won’t really know for a while…

        On Iran we’re on the same side, don’t worry (click my homepage link if you don’t believe me!) I’d say, check out the IAEA Iran in Focus page for where I’m coming from, especially the outstanding issues in the Nov. 15 2007 report, in sections A.1.3-A.7 . I’m not saying these are evidence there was a program; I’m saying it’s not an aggressively anti-reality stance to think that it’s an open question about whether there was one.

        noen–moslty I’m proteins, water, and bones. I am partially made of oil-like substances in various forms which I’d surely be healthier to the extent I could reduce. But there’s no useful sense that I know of in which I am made of a substance like crude oil.

        Your point about rate, though, is precisely on. A back-of-the-envelope calculation will show you that the long-term (measured in geological terms) sustainable crude oil global consumption rate is something on the order of 10-100 barrels a day.

        • noen says:

          noen–moslty I’m proteins, water, and bones. I am partially made of oil-like substances in various forms which I’d surely be healthier to the extent I could reduce. But there’s no useful sense that I know of in which I am made of a substance like crude oil.

          You take me too literally. The food you eat was grown and delivered to you with oil. So we are made of oil by proxie.

        • selise says:

          noen–moslty I’m proteins, water, and bones. I am partially made of oil-like substances in various forms which I’d surely be healthier to the extent I could reduce. But there’s no useful sense that I know of in which I am made of a substance like crude oil.

          and not just by proxy, as neon describes in 172. it takes a lot of energy to fix nitrogen. and so, unless you are eating organic food… you are indeed eating oil (or some type of hydrocarbon) via this route: hydrocarbon -> nitrogen fertilizer -> grain -> meat.

    • noen says:

      Peak oil may not be now, it may not be in 20 years, but the oil supply will be sucked dry eventually. Whether it’s 50 years, or 100, or 150 will depend, as you say, on how good refining techniques get as prices go up. But nature is not infintely malleable (as I can attest as a physicist and machine designer); those processes will hit limits, and one day we will run out of oil.

      We will always have oil. Just as we still have wood and coal and kerosene. The thing to bear in mind is the rate of consumption and what that implies for our quality of life. It is the process of making the transmission from an oil based economy to whatever comes next that worries me.

      Look around you, you are made of oil. Your food is made of oil. Your children, your family, your car, your job… all depend on the availability of easy access to cheap oil. When that goes away, everything that depends on it goes away.

  42. skdadl says:

    I’ve got something wrong there. It isn’t the Shanghai Accord that I mean — that’s an APEC thing. Will have to check to remember what I actually mean. Gah.

    • skdadl says:

      Correct name: the Shanghai Co-operation Organization. As of 2005, anyway, when Uzbekistan joined, the members were Russia, China, and [I think] Kazakhstan, Kyrgyzstan, and Tajikistan. Belarus may also be involved. See also Eurasian Economic Community (Eurasec), which is Russia, those four Stans, and Belarus (or was).

  43. prostratedragon says:

    What heavy oil is. Demand for it would seem to depend partly on the capacity to refine it. This country’s refining capacity is geared mainly toward the light crudes, e.g. Saudi, AIR. Which is one reason we only compete indirectly for semi-heavy Iranian oil, there being other refining industries that are better geared to it. I think Euro-area industries are among these, again AIR. This could be one reason Iran has long been interested in a pricing mechanism that is not dominated by the dollar. So, agree that the Iranians had a good opportunity for a move that they’ve been wanting for a while, and they took it.

    It’s been a long time since I read up on the Oil Bourse idea, but if the point is to create a currency-basket pricing system for oil without embarking on the fool’s errand of trying to create an OPEC currency union, it would not surprise me to see Iran’s move as a first step in that direction, at a time when many central banks are rebalancing their currency portfolios; speaking of which, that is all the bulk of them would be doing even if the dollar were near historic post-WWII lows against other hard currencies, which it is not, yet. Here’s some discussion of why.

    Some of us previously believed the Sauds’ fingerprints are all over the situation, and that they in association with the Establishment Repubs were a primary force restraining Team Dick and Israel from first-striking Teheran, i.e. using the threat of tanking the dollar & throwing the US into recession as their big stick.

    Indeed.

    Also agree with eCAHNomics about water. Now, that’s the scary one!

    • noen says:

      Also agree with eCAHNomics about water. Now, that’s the scary one!

      Yes, another finite resource affected by exponential growth in consumption, this time in population. Same math though, and much the same potentially catastrophic results.

      • eCAHNomics says:

        Do not misinterpret me. It’s the transition that sucks. Always & forever. So if you really beieve that, you would plan for a more orderly transition, n’est pas?

  44. Richmond says:

    Let’s not forget that US-Iran relations (and the ME more generally) is only partially about oil. There is also the Halliburton (war profiting) issue and the question of Isr*el policy, to name a few. These are among the other factors that come into play in this chess game.

  45. noen says:

    Do not misinterpret me. It’s the transition that sucks. Always & forever. So if you really beieve that, you would plan for a more orderly transition, n’est pas?

    Perhaps I have been misunderstanding, sorry if I have. I guess the thing is I don’t have the ability to plan. I feel vulnerable.

    • eCAHNomics says:

      Can’t plan as an individual. I meant to refer to policy planning. Your individual vulnerabilty is perfectly reasonable, and the only thing I know that you can do about it is less financial & energy leverage exposure.

  46. Eureka Springs says:

    Great thread. While reading at several points, I was surprised the topic remained so focused on peak/no peak (except for bigborother #151) without addressing (enter Al Gores voice here) global warming. We are all in serious trouble within a few decades if we maintain (much more increase) our rates of oil and coal consumption.

    • selise says:

      oh, i very much agree. i just don’t think that cheney, putin, or iran’s and saudi arabia’s leaders are letting that influence their decision making process very much (if at all)>

  47. TheraP says:

    Skimmed the thread. Good reading!

    One little observation re the troll. Many have observed that more are posting here than in the previous site. I bet it’s a big drag for the troll! Hard work to go from 10 to 60 just like that! Poor troll. Has my sympathy. (chuckle) or *g* – as you’ve taught me!

      • TheraP says:

        apparently somebody named Jodi… and there was a question from her way early in the thread, wondering why it would even matter what currency oil was in, because you could always exchange it. Apparently she’s never changed money and doesn’t realize it “costs something.” And there was some reply to her comment related to the troll status.

        I haven’t usually commented on emptywheel before (maybe only once or twice)… but I did read a discussion about the “blog troll” and whether or not to keep her or ban her a few days ago. I think they decided she could stay… they were used to her… but not her Jodi impersonators, which is funny.

        Hope that helps! (I’m not expert here … as you can see… just have paid attention this week as tpm is a bit too focussed on the repub scandals at the moment)

        Cheers!

  48. JodiDog says:

    I am still trying to understand the doomsayers here carrying on about Iran not dealing in dollars.

    Currently the rest of the world is dealing in a currency that isn’t their own. So what if oil is priced in Yen? Yes there may be exchange premiums but that is the case now for other countries, and they aren’t dying on the vine. Sure it will be a bit of an inconvenience but others have managed in the same situation.

    On Israel you should realize that if Israel goes after Iran, and then someone else goes after Israel, the US by treaty and because of the big Political Donors to both the Democrats and Republicans will be quickly in the fray.

    You can say it is wrong, that it is crazy, that it is too fast, just like you did with Iraq, but just like Iraq, the US will be in there slogging away.

    • FelixMoronia says:

      Jodi, you ignorant slut. The US has no military treaties with Israel because under Int’l. law we can’t. Israel has never defined its borders and hence, cannot enter into alliances with any other country.

  49. rxbusa says:

    Not good at chess. Reminds me of an observation made by one of the guests on Bill Maher after the Gary Kasparov interview that it looks like Putin is playing chess and we are playing checkers. More like we are cheating at checkers and thinking we are winning a chess game.

  50. jdmckay says:

    But then, the enemy of their enemies was not their friend (calling them part of the Axis of Evil & such). So, Iran gets friendlier with Russia, as a counter-balance to the US. Russia has also been a problematic neighbor, but now the -stans serve as a buffer.

    “Counter balance” preceeded timeline you describe.

    I’d remind that, prior to Junior’s Iraq

  51. jdmckay says:

    (# 186 continued… I pushed enter key which submitted prior to completion. Which begs question: is there a way here for poster to edit his/her given post?)

    (I’d remind that, prior to Junior’s Iraq) invasion, Putin placed Russian destroyers/battleships in Persian gulf as response to BushCo/Neocon rumblings against Iran up to that time. This was mostly backpaged in MSM, but most significant.

  52. DefendOurConstitution says:

    Here it is more than 36 hours after the wires (AP, UPI, AFP) had this story and there is ZERO coverage in any US newspaper or MSM. This is probably what the rest of OPEC was waiting for; now they don’t need any excuse to do it as it’s already done. This is the kind of news that could trigger a run on the dollar which would bring a South American type hyperinflation (as Marcy predicted weeks ago) and no one in this Country is paying attention? I guess it is time to buy any Euros we can because our $ wont be worth much if/when this happens.

    Even though this is going completely unnoticed by MSM, I am sure Cheney and neocons are scared shitless and calling for a quicker attack on Iran. While most of us liberals are thinking NIE halts drumbeat for attacking Iran, I am sure Cheney and AIPAC are saying “hey attacking our currency like this is a provocation so that we do not need nuclear weapons any more in order to justify attack”.

    I think Iran’s move, while shrewd because neocons are presently down because of NIE, is the kind of action imperialists like Cheney will consider deserve an immediate military response even if it is illegal.