How will Middle Eastern unrest impact the US economy?

Discussion in 'Economics' started by morganist, Feb 23, 2011.

  1. How will Middle Eastern unrest impact the US economy?

    Initially when I saw the situation in the Middle East unravel starting with Tunisia I thought that it was an indication of the shrinking power of the American government. The reason for this thinking was based on the common view that most Middle Eastern governments are puppet governments set up by the United States. Therefore if the governments were being deposed it was a sign that the power and influence of the United States was dwindling. This assumption is partly based on the way that the Roman Empire fell gradually losing the outside satellite regions to barbarian hoards. In the same way the retraction of American influence in the Middle East sparked the idea that the whole of the global American empire was under threat. I now after deeper thought and economic analysis believe that this view of the current situation is wrong and that the conflict and revolutions in the Middle East will serve America or at least the American government very well in the current economic climate.

    The reason for this is simple it is the key economic advantage that America has had over the rest of the world for a very long time and has probably caused more bloodshed than people are even aware of. This advantage is oil, not so much the commodity itself but how it is traded. When oil is purchased it is purchased in dollars, American dollars to be exact, so whoever buys the oil has to buy dollars first to do so. This means that the price of oil relates very strongly to the price of the dollar and in turn creates an artificial value to the currency that no other currency in the world is endowed with. When the price of oil rises, the number of dollars purchased will also rise, which in turn increases the relative purchasing power of the American currency against all other currencies in the world. Americans can therefore afford to buy a lot more goods or the same amount with less money than other consumers across the world. Due to the unrest in the Middle East the oil price has risen and is likely to rise again. Although this means that there is a detrimental impact on America’s oil supply the benefits of the general purchasing power of the currency more than out way the negatives.

    Additionally the countries that are supplied by the main oil producing country that is currently unstable, namely Libya, are mainly European or BRIC members. In short the majority of the impact of the oil constraints caused by the Middle Eastern unrest is absorbed by American competitors. Further to that, even if the impact of the oil supply shortage was evenly distributed the consequences to the growing BRIC countries in particular China would be far more damaging than it would be for the US. China’s developing economy is dependent on oil to expand and although oil price rises would hamper American growth too, it is already developed enough to provide high end and infrastructural support needed to enable production. China would have to invest heavily on the capital goods and infrastructure facilities required to compete with the developed world if it intended to maintain its current rate of growth. Therefore regardless of the currency value advantages of rising oil prices for the American economy the detrimental ramifications to its competitors that the current Middle Eastern unrest creates is vastly in its favour too.

    The political state of these Middle Eastern countries is under debate and the intervention of foreign organisations is also currently discussed. It is my opinion that the Americans would benefit greatly if there is widespread unrest in the Middle East and could do better if there is no government at all in the region, or perhaps weak governments that collapse regularly creating oil supply shocks which damage their competitors. It is however not in the interests of the EU or the BRIC countries if they wish to compete with the Americans. Therefore it is my prediction that the EU will go to great lengths to resolve the situation in the Middle East and China may offer financial support, but America will unlikely be willing to intervene effectively.
  2. he reason for this thinking was based on the common view that most Middle Eastern governments are puppet governments set up by the United States.

    You are correct and backed by facts.

    The US under OBAMA is looked at as a weak and dying animal. The move into IRAQ, for what ever purpose, has help to plant the seed of hope.

    However, now that the US is backing down from their Mission, Obama Admin is telling IRAQ they are going to leave them in the dust, we through our "Puppets" under the Bus again. Then we have Muhbork (SP), who we through under the bus and the we have not said much about LIBYA since it started.

    We are weak. We are not strong. This is the signal for the Islam groups to hijack what may be a serious push for democratic ideas.
    I do not believe that the riots in the middle east were kicked off by Islamic Jihads.

    The Riots started with Youth, who have no hope, no vision and they have no jobs. Food prices have shot through the roof as well. They want jobs, they want to eat.

    With that said, because the US is weak, they Brotherhood has hijack the middle east and will take all 6 countries to an IRAN like state. The only one who will prevent such a move is Israel. However, the Current Political Power in the White House has thrown Israel under the bus and could possible create an Enemie's Image,

    Israel is alone now.

    How will this impact our economy. It will depend what sector you are in. I deal in many sectors, including energy. I will make a lot of money, as I did in 08. I also deal in Global Trade, this could be effected but I will make a lot of money as price of goods will rocket higher and transportation cost will sky rocket as well. We fund many projects that deal with Infrastructural plays in many countries and these Infrastructures are needed. Hence, profits will be plentiful.

    The average American and Business in the Service sector may get hit hard. People will not spend, no extra money for the "Services". The average consumer may fall out of the spending mode. 1970s all over again. High unemployment, high inflation.

    We are a consumer driven economy...70%. So, I would place my bet that 70% of the US population will feel some serious pain and more layoffs to come by summer. Just easy to use a round number.

    But we really have no idea how this will impact the US economy. OIL is not our problem, as far as rising prices. DEBT, on all levels, and very high unemployment are far worse. However, you add 100 dollar oil or higher into the isn't going to be a good decade for those who are not prepared.

    It is far to early in the "Revolution" in the middle east. It is far to early with the UNIONS in American, who are about to be history.

    To make a prediction now would be very difficult.

    Also, the main stream press is calling the recession over, consumer spending up, consumer confidence up, housing up, and the stock market higher than last year.

    Everyone is partying and having a good time. Raw raw raw.
  3. ElCubano


    much better with the colors on the blog site...
  4. Which colors the green or the black and purple?