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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ItsAllCyclical who wrote (70649)	10/30/2007 3:24:30 AM
From: mishedlo	Respond to of 116555

If Opec goes to a basket you might find that CBs have more cover to divest of the Dollar and/or Dollar peg. Central banks don't need "cover" to divest out of dollars. They will do it when the time comes. I suspect most oil exporters are doing so RIGHT NOW. The key thing is that is is not related to pricing units. It is instead related to a freaking flood of dollars. Oil producing countries with ties to the dollars are having inflation problem. Heck, China is having inflation problems because of the dollar peg and they are not an oil exporter. China's problem is the peg + unwillingness to sterilize dollars flooding into the country. It's a very unstable situation on many fronts (including the carry trade in Japan) but this has nothing to do with oil being priced in dollars per se. Mish