When I read Drudge yesterday and saw the red screamer headline that Greenspan said the battle in Iraq was about oil, it definitely caught my attention. My thoughts were that in a sense the importance of oil may have been in the mix in some way. I mean, admit it, if it weren't for oil, if oil had never been found in the Mid East, would the Royal House of Saud ever been visited by any world leader? Would the sheikdom of Dubai be able to buy a new Bentley every minute instead of saving up goat skins for a decade to buy a used Chevy? The only reason Iran, Iraq, Saudi Arabia, Qatar, UAE, Dubai are even blips is because of oil. And that gave the Arabs and Aryans (Iranians are not Arabs) money and power. So, because of a radical like Hussein and the delicate balance of Mid East politics, Greenspan has a point.
Nixon in the early 70's took America off the gold standard because Europe was demanding gold for dollars as promised in the Bretton Woods agreement. Nixon then promised the Royal House of Saud that if they accepted only dollars for oil, the U.S. would protect the sheikdom. So we created petrodollars and substituted oil for gold to back the dollar. As the world bought oil from the Mid East, and the Saudis determined what happened in all the oil economy and what price would be paid, the dollar again was the world's reserve currency. Saddam Hussein was threatening to accept euros for oil and thereby upset the petrodollar balance. Iran was threatening to do the same at the March oil bourse. Add that to a tyrant that was also willing to invade Kuwait and mix in radical mullahs and there is a recipe for worldwide financial collapse. All because of oil.
So, Greenspan's comments are accurate, but taken out of context. Captain Ed has more on this this morning.
As I searched the internet to find articles, I came across a few that reminded me that the Royal House of Saud is doing a very, very dangerous balancing act. It is seen as corrupt and decadent and is the target of Islamic radicals. And in my next post, I'll tie decadence in the House of Saud and Norm Coleman's stance on bio-diesel.