Do China, Japan, the Arab OPEC countries, and the EURO zone countries continue to hold their $TRILLIONS – losing purchasing power on an almost daily basis? Or... do they divest (as in dump) and suffer the consequences – possibly bringing down the world economies in the process?
I’ve been thinking about mone-TERROR-ism. Actually I’ve been thinking about the US dollar, the emergency OPEC conference, the big four TRILLION-aires, spending, and solutions. While working as a forensic investigative accountant on the Savings and Loan mess, I was told that when someone owes you $100,000s, you have a borrower. When someone owes you MILLIONs, you have a partner! Taking that to the next level... when someone owes you BILLIONS or TRILLIONS, it is the one holding that debt who has the real problem, and it’s the debtor who is really the one in the driver’s seat.
You see, the many facets of the complex global debt crisis are morphing from the sublime to the ridiculous. A week ago last Friday, the oil moguls of OPEC held the third emergency conference in the organization’s history. While the topic was supposedly oil broaching $100 a barrel, regulating levels of output, and peaking oil production, the real focus was on the continuing decline of the US dollar relative to other currencies and maintaining that dollar as the “official” currency of OPEC. Both of these aspects relate to the TRILLION-plus-dollar holdings of these collective OPEC member nations and producers.
They have the problem—and it's huge! While they were supposed to be in a closed executive session, a live media feed was left on, and Europe was privy to the discussion and debates. I don’t believe this was an accident. The oil moguls wanted the outside to be aware that a shift MUST be coming down the pike. The accidental broadcast was effectively firing a warning shot across the bow of the US Treasury. Still, the comments told the world that while the oil producers wanted a divorce from the buck, they are stuck in the loveless marriage for now because the split will cost them way too much. There is no easy way out, and there certainly was no pre-nuptual to protect their massive dollar holdings.
The new mini-dollar...
Decades of printing fiat currency fueled by this nation’s profligate consumption of goods, services, and energy—mostly on borrowed (or printed) money—have made the US the largest debtor on the globe. The US now consumes about one fifth of the planet Earth’s total output. Annual deficits—both trade (current deficit) and budget—run in the hundreds of BILLIONs. This has been true for years. As a result, there are now four foreign entity groupings which presently sit on over a TRILLION in US IOU’s and fiat money. These are China, Japan, the Arab OPEC’s and the EURO zone. Do they continue to hold their TRILLIONS—losing purchasing power on an almost daily basis? Or... do they divest (as in dump) and suffer the consequences—possibly bringing down the world economies in the process?
Anyone familiar with my columns knows I’ve been mulling over the threat(s) of our foreign held debt for some time now. Oil/energy, or the withholding of it, can be used as a weapon. I coined the word p-oil-itics some time ago, and now I want my readers to think about mone-TERROR-ism as a further lurking danger to US/us. Here, money, or rather our own dollars, would be used as the weapon against us. Forensic accountants qualify amounts, then analyze how we got to where we are, what are the ramifications, and what are the solutions (and the costs of resolution). I’ve been doing just that of late, and I must say that my current conclusions would be laughable if they weren’t so tragic in the long run.
“The Big Four”, with their respective TRILLION-plus EACH in US dollars can’t dump them. They can only ultimately continue to hold them, or spend them. Therein is the true dilemma—just how do you spend a TRILLION? With a TRILLION... you don’t shop at WalMart, you buy WalMart. You don’t buy a Cadillac, you buy General Motors. You don’t buy a 747, you buy Boeing. You don’t buy a computer fully loaded with Vista and Office, you buy Microsoft. You don’t open a mega-super-jumbo bank account, you buy the entire financial institution. Then too... there are now millions of homes coming on the market. If you are in “the Big Four,” is power shopping gone wild any solution? I don’t TH*NK so.
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2007 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at email@example.com
Copyright © 2007 The Baltimore Chronicle. All rights reserved.
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This story was published on November 26, 2007.