The US needs monthly foreign trade inflows of $70 billion, to balance its current-account (trade balance). Japan and China, seeking to diversify their currency holdings, have withdrawn an unprecedented $165billion.
This vote of "diminished" confidence in the green back, severely knocked the US current-account balance. Bond yields rose sharply, whilst stocks on Wall Street dropped by nearly 4%, the 5th largest drop this year. The Dow responded to a basket of issues including a significant rise in the oil price to just under $100 per barrel, a $39bn drop in earnings for General Motors, Dollar sentiments and gloomy economic projections by the Fed.
At the same time, the US 5th fleet is undergoing naval exercises in preparation for a war on Iran, whilst Russian forces engage their own war games, including a revival of its strategic bomber fleet.
US wars have tended to coincide with the political agenda of the White House, but with presidential elections a year away, war is of limited value to the incumbent administration. Economic woes and congressional concerns about defence expenditure, could further frustrate any attempts to engage the US in Iran and Russia may well perceive a developing hiatus for a preemptive strategic initiative.
The US is in a tight spot: if it delays its planned offensive too long, Iran could acquire nuclear weapons. However, if it acts too early it could preempt a peaceful resoluton to the current standoff, whilst aggravating existing relatiosnhips in the UN and the middle east.
Iran is fanatical enough to front Russian ambitions for a strengthening of its hand in the region, but a significant oil prize in Iraq also offers as big an incentive to Russia as does Iran's scope for hitting back at the US.
This and other simmering conflicts across the region, including the nuclear ambitions of Iran and problems in Pakistan and Turkey, make for a heady mix of dangerous politics.
This vote of "diminished" confidence in the green back, severely knocked the US current-account balance. Bond yields rose sharply, whilst stocks on Wall Street dropped by nearly 4%, the 5th largest drop this year. The Dow responded to a basket of issues including a significant rise in the oil price to just under $100 per barrel, a $39bn drop in earnings for General Motors, Dollar sentiments and gloomy economic projections by the Fed.
At the same time, the US 5th fleet is undergoing naval exercises in preparation for a war on Iran, whilst Russian forces engage their own war games, including a revival of its strategic bomber fleet.
US wars have tended to coincide with the political agenda of the White House, but with presidential elections a year away, war is of limited value to the incumbent administration. Economic woes and congressional concerns about defence expenditure, could further frustrate any attempts to engage the US in Iran and Russia may well perceive a developing hiatus for a preemptive strategic initiative.
The US is in a tight spot: if it delays its planned offensive too long, Iran could acquire nuclear weapons. However, if it acts too early it could preempt a peaceful resoluton to the current standoff, whilst aggravating existing relatiosnhips in the UN and the middle east.
Iran is fanatical enough to front Russian ambitions for a strengthening of its hand in the region, but a significant oil prize in Iraq also offers as big an incentive to Russia as does Iran's scope for hitting back at the US.
This and other simmering conflicts across the region, including the nuclear ambitions of Iran and problems in Pakistan and Turkey, make for a heady mix of dangerous politics.
(c) Peter Eleazar at http://www.bethelstone.com/
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