Will Rising Oil Prices Bring Back Carry Trades?

If you want to know why the Federal Reserve refuses to budge from their hawkish inflation bias, all you have to do is look at the price of oil. Crude prices have increased over 15 percent in the past week and 30 percent since January. This rapid move has sent traders scrambling to adjust their interest rate expectations because up until last week, the market had been anticipating a rate cut by the Federal Reserve as early as June due to the escalating problems in the subprime lending sector.

However, no one expected the Iran conflict to reach the level that it did when they gained the upper hand by capturing 15 members of the UK’s Royal Navy Crew. Over the past few years, we have seen oil become the primary driver of inflation and hawkish monetary policy across the globe. The higher oil prices rise, the longer central banks will keep interest rates high, which in one word, boils down to CARRY.
High yielding currencies have already resumed their climb, with strength seen in the US, Australian and New Zealand dollars. This intimate relationship between oil prices and US consumer prices can be clearly seen in chart below. Back in 2006, when oil prices hit their peak, annualized consumer prices in the US accelerated by more than 4 percent, while CPI levels in the UK and the Eurozone rose solidly above their 2 percent inflation targets. As long as oil prices keep on climbing, the central banks of these respective countries may have no choice but to leave interest rates at their currently lofty levels, which will keep demand for carry trades intact.


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Not the First Time Iran Has Rocked the Boat
The primary driver for the rise in oil prices and the real wildcard at the moment is undoubtedly Iran. This is not the first time that they have rocked the boat. In May of 2006, the newly elected Iranian President Mahmoud Ahmadinejad announced that they have successfully produced low grade enriched uranium, which allows them to become a country with nuclear technology. They refused to discontinue this program despite calls by countries around the world. As a result, this led to a strong 9.5 percent jump in crude price. For the record, Iran is ranked in the top 5 of global oil producers, and they are responsible for almost 4 million barrels a day.
So why does this matter? Simply put, crude prices are rising back to levels seen in the summer of 2006. Although some had expected a more stable price at $50, the fact is that contracts have been moving higher above $60 a barrel this week alone. The fear here is that tensions between the major industrialized world, in this case the UK, and Iran would leave oil supply short on Iran’s refusal to release the captives. Even though the US does not import oil from Iran, many countries do. Therefore the absence would definitely be felt in the global trade markets. As a result, with oil prices higher, central banks around the world may either have to raise interest rates, if growth supports it, or leave them unchanged at higher levels for a longer period of time even if the economy is vulnerable. With the US dollar being one of the market’s favorite carry trade currencies over the past year, further strength or weakness will be dependent upon oil. Technically, the rise in oil prices is looking tired, but as long as Iran fails to release the troops, we could be facing an even bigger mess in the Middle East. RIA Novosti, a Russian News Agency has already reported a “flurry of activity by US Armed Forces near Iran’s borders.” According to a high-ranking Russian security official, "The latest military intelligence data point to heightened U.S. military preparations for both an air and ground operation against Iran.” If the US gets involved in the conflict, oil prices could easily spike to $70 a barrel. At that point, expect all of the Yen crosses, including USD/JPY to head back towards their January highs.
Crude contracts advance by a total of 30 percent in just the first quarter

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What about the Problems in the US?
Of course, the US economy’s ability to weather the rise in oil prices is also important since higher oil prices act as a tax for US consumers. Therefore e are keeping a close eye on the subprime sector and the housing market as a whole because US consumers may not be able to weather the triple blow of higher mortgage payments, falling house prices and rising oil prices all at the same time. This is not a problem yet, which is why the dollar has strengthened, but it could be problem in the future. The Federal Reserve has to walk a very fine line in terms of balancing growth with inflation. Other central banks in the Eurozone, Canada, Australia and New Zealand on the other hand do not have as difficult of a predicament, which means that carry trade demand against the Yen and Swiss Franc could benefit those currencies the most.

Craig Murray (former Head of the Maritime Section of the Foreign and Commonwealth Office) on Britain's "Gulf of Tonkin" Incident

Posted by Craig Murray on Thursday, March 29th at 1:57 PM

Murray on the "Dodgy Dossier" presented by the Bliar Regime.

March 28, 2007
Fake Maritime Boundaries

I have been unpopular before, but the level of threats since I started blogging on the captured marines has got a bit scary. It is therefore with some trepidation that I feel obliged to point this out.

The British Government has published a map showing the coordinates of the incident, well within an Iran/Iraq maritime border. The mainstream media and even the blogosphere has bought this hook, line and sinker.

But there are two colossal problems.

A) The Iran/Iraq maritime boundary shown on the British government map does not exist. It has been drawn up by the British Government. Only Iraq and Iran can agree their bilateral boundary, and they never have done this in the Gulf, only inside the Shatt because there it is the land border too. This published boundary is a fake with no legal force.

B) Accepting the British coordinates for the position of both HMS Cornwall and the incident, both were closer to Iranian land than Iraqi land. Go on, print out the map and measure it. Which underlines the point that the British produced border is not a reliable one.

None of which changes the fact that the Iranians, having made their point, should have handed back the captives immediately. I pray they do so before this thing spirals out of control. But by producing a fake map of the Iran/Iraq boundary, notably unfavourable to Iran, we can only harden the Iranian position.

http://www.craigmurray.co.uk/archives/2007/03/fake_maritime_b.html

March 27, 2007
Captured Marines (Again)

My two earlier posts have caused quite a stir, so here are some further observations.

Sadly, but perhaps predictably, both the British and Iranian governments are now acting like idiots.

Tony Blair has let it be known that he is "utterly confident" that the British personnel were in Iraqi waters. He has of course never been known for his expertise in the Law of the Sea. But let us contrast this political certainty with the actual knowledge of the Royal Navy Commander of the operation on which the captives were taken.

Before the spin doctors could get to him, Commodore Lambert said:

"There is absolutely no doubt in my mind that they were in Iraqi territorial waters. Equally, the Iranians may well claim that they were in their territorial waters. The extent and definition of territorial waters in this part of the world is very complicated".

That is precisely right. The boundary between Iran and Iraq in the northern Persian Gulf has never been fixed. (Within the Shatt-al-Arab itself a line was fixed, but was to be updated every ten years because the waterway shifts, according to the treaty. As it has not been updated in over twenty years, whether it is still valid is a moot point. But it appears this incident occurred well south of the Shatt anyway.) This is a perfectly legitimate dispute. The existence of this dispute will clearly be indicated on HMS Cornwall's charts, which are in front of Commodore Lambert, but not of Mr Blair.

Until a boundary is agreed, you could only be certain that the personnel were in Iraqi territorial waters if they were within twelve miles of the coast and, at the same time, more than twelve miles from any island, spit, bar or sandbank claimed by Iran (or Kuwait).

That is very hard to judge as the British government refuse to give out the coordinates where the men were captured. If they really are utterly certain, I find that incomprehensible. Everyone knows the Gulf is teeming with British vessels and personnel, so the position of units a few days ago can hardly be valuable intelligence.

Until a boundary is set, it is not easy to posit where it should be. It has to be done by negotiation or arbitration. I have participated in these negotiations, for example on the boundary between the Channel Islands and France.

With a dead straight coastline with no islands, and a dead straight border between two countries hitting the coast at a right angle, you could have a straight maritime border between the two running out from the coast at a right angle. This never happens.

In practice, you agree a series of triangulation points on both coastlines and do a geometric triangulation exercise to find a line running out from the coast. Coasts of course can be very odd shapes. Draw an imaginary coast and border on a bit of paper and try it yourself. You will soon see why the rules permit you to take into account the general trend of the coastline, and even the angle of the land border. Those are not problems of geometry but old fashioned horse trading.

First, of course, both sides will argue about which triangulation points on the coast to accept. You are allowed, for example, to draw a line across a bay entrance and use that as the coast, but there is plenty of room for the other side to argue over where that line is drawn.

That is only the start. For territorial seas (but not the 200 mile exclusive economic zone) uninhabited rocks and sandbanks count. Again huge room for argument here - the ownership of a useless sandbank is not necessarily a settled thing. Sticking your triangulation point on a sandbank twelve miles out can make a huge difference.

Then it really gets complex. What if the sandbank only appears at low tide? What if it is dry all day, but only at certain times of the year? What if it is prone to move about a bit?

You haggle like mad over this. "You can't have that sandbank unless we have this one plus this spit." You also then get into weighting. "That bit of land is only around half the time, so we'll give it one third weighting" - in other words we will allow 33.3% more sea than you would get if it didn't exist and we just used a point on the coast.

Massive volumes have been written on the principles behind these negotiations, but they tend to ignore the fact that ultimately it has to come down to political negotiating skills between a vast range of justifiable possible agreements. That is why we just can't know where the boundary is between Iran and Iraq in this area, which has enough sandbanks to keep me happy thinking about it for centuries. If either side needs a negotiator...

Anyway, the UK was plainly wrong to be ultra provocative in disputed waters. They would be allowed to enter Iranian territorial seas in hot pursuit of terrorists, pirates or slavers, but not to carry out other military operations.

The Iranians had a right to detain the men if they were in seas legitimately claimed as territorial by Iran. Indeed, it is arguable that if a government makes a claim of sovereignty it rather has to enforce it, possession being nine parts of international law. But now the Iranian government is being very foolish, and itself acting illegally, by not releasing the men having made its point.

The story leaked by Russian intelligence claiming knowledge of US plans to attack Iran on 6 April has had great publicity in Iran, if very little here. Personally I doubt it is true. But it seems to me a definite risk that the Iranians will decide to keep the marines against that contingency.

That would be very unfortunate. The Iranian government, by continuing to hold the British personnel, are foolishly providing new impetus to Bush and Blair, whose attempts to bang the war drum against Iran have so far met profound public scepticism. We don't need any more oil wars.

If Blair actually sought the release of our people, rather than anti-Iranian propaganda, he would stop making stupid macho noises and give an assurance that we intend to resolve not only this problem but all disagreements with Iran by peaceful means, and give specific reassurance that no attack is imminent.

But if the Iranian government wait for Blair to behave well, the marines will rot for ever. They should let the men (and woman) go now, with lots of signs of friendship, thus further wrongfooting Bush and Blair.

http://www.craigmurray.co.uk/archives/2007/03/captured_marine.html

British Marines Captured By Iran

I explained that in international law the Iranian government were not out of order in detaining foreign military personnel in waters to which they have a legitimate claim. For the Royal Navy to be interdicting shipping within the twelve mile limit of territorial seas in a region they know full well is subject to maritime boundary dispute, is unneccessarily provocative. This is especially true as apparently they were not looking for weapons but for smuggled vehicles attempting to evade car duty. What has the evasion of Iranian or Iraqi taxes go to do with the Royal Navy? The ridiculous illogic of the Blair mess gets us further into trouble.

Incidentally, they would under international law have been allowed to enter Iranian territorial waters if in "Hot pursuit" of terrorists, slavers or pirates. But they weren't doing any of those things.

Having said all that, the Iranian authorities, their point made, should now hand the men back immediately. Plainly they were not engaged in piracy or in hostilities against Iran. The Iranians can feel content that they have demonstrated the ability to exercise effective sovereignty over the waters they claim.

Any further detention of the men would now be unlawful and bellicose. One of the great problems facing those of us striving hard to prevent a further disastrous war, this time on Iran, is that the Iranian government is indeed full of theocratic nutters.

http://www.craigmurray.co.uk/archives/2007/03/british_marines_1.html

March 23, 2007
British Marines Captured By Iranians

The capture of British Marines by Iran has happened before, then on the Shatt-al-Arab waterway. It will doubtless be used by those seeking to bang the war drum against Iran, though I imagine it will be fairly quickly resolved.

Before people get too carried away, the following is worth bearing in mind. I write as a former Head of the Maritime Section of the Foreign and Commonwealth Office.

The Iranians claimed the British soldiers had strayed into Iranian territorial waters. If they had, then the Iranians had every right to detain them for questioning.

The difficulty is that the maritime delimitation in the North West of the Persian Gulf, between Iraq, Kuwait and Iran, has never been resolved. It is not therefore a question of just checking your GPS to see where you are. This is a perfectly legitimate dispute, in which nobody is particularly at fault. Lateral maritime boundaries from a coastal border point are intensely complicated things, especially where islands and coastal banks become a factor.

Disputes are not unusual. I was personally heavily involved in negotiating British maritime boundaries with Ireland, France and Denmark just ten years ago, and not all our own boundaries are resolved even now. There is nothing outlandish about Iranian claims, and we have no right in law to be boarding Iranian or other shipping in what may well be Iranian waters.

The UN Convention on the Law of The Sea carries a heavy presumption on the right of commercial vessels to "innocent passage", especially through straits like Hormuz and in both territorial and international waters. You probably won't read this elsewhere in these jingoistic times but, in international law, we are very probably in the wrong. As long as the Iranians neither mistreat our Marines nor wilfully detain them too long, they have the right.

http://www.craigmurray.co.uk/archives/2007/03/british_marines.html

Homepage: http://www.craigmurray.co.uk/
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<!-- START items/comments/full_C.inc --> Eatser Suprise: Attack on Ira, New 911, or Worse ...

Posted by Heather Wokusch on Thursday, March 29th at 1:59 PM


Russian intelligence, noting the US military buildup along the Iran-Iraq border, suggests that Iran will be attacked within the first two weeks of April. Britain's recent provocations suggest they may be right.

The Bush administration continues moving closer to a nuclear attack on Iran, and we ignore the obvious buildup at our peril.

"This notion that the United States is getting ready to attack Iran is simply ridiculous... Having said that, all options are on the table." - George W. Bush, February 2005

Russian media are sounding alarms. In February, ultra-nationalist leader Vladimir Shirinovsky warned that the US would launch a strike against Tehran at the end of this month. Then last week, the Russian News and Information Agency Novosti (RIA-Novosti) quoted military experts predicting the US will attack Iran on April 6th, Good Friday. According to RIA-Novosti, the imminent assault will target Iranian air and naval defense capabilities, armed forces headquarters as well as key economic assets and administration headquarters. Massive air strikes will be deployed, possibly tactical nuclear weapons as well, and the Bush administration will attempt to exploit the resulting chaos and political unrest by installing a pro-US government.

Sound familiar? It’s Iraq déjà vu all over again, and we know how well that war has gone.

Seymour Hersh has published numerous articles in The New Yorker detailing the Bush administration’s plans to invade Iran. His latest, "The Redirection," discusses US participation in Iran-based clandestine operations, the kidnapping of hundreds of Iranians (including many "humanitarian and aid workers") by US forces and the shocking revelation that an Iran-Contra-type scandal has been run out of Vice President Dick Cheney’s office with some of the illicit funds going to groups "sympathetic to al-Qaeda."

"The Redirection" also reports that the Pentagon has been planning to bomb Iran for a year and that a recently-established group connected to the Joint Chiefs of Staff is formulating a assault strategy to be implemented "upon orders from the President, within twenty-four hours." Hersh notes that current capabilities "allow for an attack order this spring," possibly when four US aircraft-carrier battle groups are scheduled to be in the Persian Gulf simultaneously.

Meanwhile, the Democratic Congress busies itself with non-binding, timid resolutions on Iraq and recently altered a military-funding bill to make it easier for Bush to invade Iran. As Rep. Shelley Berkley (D-NV) explained, language demanding that Bush seek congressional approval before attacking Iran "would take away perhaps the most important negotiating tool that the U.S. has when it comes to Iran."

Such sheer ignorance and blind denial would be laughable if it weren’t marching us into Armageddon.

But with this Administration (and this Congress, apparently) diplomacy be damned.

It’s now widely known that Iran had broached peace talks with the US in 2003 - Secretary of State Condoleeza Rice admitted as much in 2006 when she said, "what the Iranians wanted earlier was to be one-on-one with the United States." Yet the White House rejected Tehran’s overture outright and Rice has since developed selective amnesia, later saying of the Iranian proposal, "I don’t remember seeing any such thing. "

For its part, the UN Security Council recently tightened sanctions aimed at pressuring Iran to cease uranium enrichment, and in response, Iran announced it would cooperate less with the International Atomic Energy Agency.

It’s worth noting that Iran is a signatory to the Nuclear Non-Proliferation Treaty (NPT) and says that its program falls under the legally permitted right to "peacefully use nuclear technology." In contrast, Israel has neither signed nor ratified the NPT and the US would breach the Treaty by conducting a nuclear attack against Iran.

Besides, the Bush administration's message to its enemies has been very clear: if you possess WMD you're safe, and if you don't, you're fair game. Iraq had no nuclear weapons and was invaded, Iran doesn't as well and risks attack, yet that other "Axis of Evil" country, North Korea, reportedly does have nuclear weapons and is left alone. When considering that India and Pakistan (and presumably Israel) developed secret nuclear weapons programs yet remain on good terms with Washington, the case for war becomes even more tenuous.

What consequences would arise from a US attack on Iran?

Retaliation, for one. Tehran promised a "crushing response" to any US or Israeli assault, and while the country - ironically - doesn't possess nuclear weapons to scare off attackers, it does have other options. Iran boasts a standing army estimated at 450,000 personnel, as well as long-range missiles that could hit Israel and possibly even Europe. In addition, much of the world's oil supply is transported through the Strait of Hormuz, a narrow stretch of water which Iran borders to the north. In 1997, Iran's deputy foreign minister warned that the country might close off that shipping route if ever threatened, and it wouldn't be difficult. Just a few missiles or gunboats could bring down vessels and block the Strait, thereby threatening the global oil supply and shooting the price of crude oil to over $100 a barrel, with untold negative consequences for the world economy.

An attack on Iran would also inflame tensions in the Middle East, and could tip the scales towards a new geopolitical balance, one in which the US finds itself shut out by Russia, China, Iran, Muslim countries and the many others Bush has managed to alienate during his period in office.

The most horrific impact of a US assault on Iran, of course, would be the potentially catastrophic number of casualties. The Oxford Research Group predicted that up to 10,000 people would die if the US bombed Iran's nuclear sites, and that an attack on the Bushehr nuclear reactor could send a radioactive cloud over the Gulf. If the US uses nuclear weapons, such as earth-penetrating "bunker buster" bombs, radioactive fallout would become even more disastrous.

The devastating implications of a US strike on Iran are clear. And that begs the question: how could the US public be convinced to enter another potentially ugly and protracted war?

Former CIA Officer Philip Giraldi chillingly noted that the Pentagon's plans to attack Iran were drawn up "to be employed in response to another 9/11-type terrorist attack on the United States." Writing in The American Conservative in August 2005, Giraldi added, "The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites ... As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States."

Chew on that one a minute. The Pentagon's plan would be in response to a terrorist attack on the US, but not contingent upon Iran actually having been responsible. How outlandish is this scenario: another 9/11 hits the US, the administration says it has secret information implicating Iran, the US population demands retribution and bombs start dropping on Tehran.

While even contemplating another 9/11 brings shudders, it’s worth noting that last year, Congress quietly approved provisions making it easier for the President to declare federal martial law after a domestic terrorist incident. And recall that in late 2003, General Tommy Franks openly speculated on how a new 9/11 could lead to a military form of government: "a terrorist, massive, casualty-producing event somewhere in the Western world – it may be in the United States of America – that causes our population to question our own Constitution and to begin to militarize our country in order to avoid a repeat of another mass, casualty-producing event. Which in fact, then begins to unravel the fabric of our Constitution."

Meanwhile, Iran conducted wargames in the Persian Gulf last week and just yesterday, the US Navy began its largest maneuvers in the region since the 2003 Iraq invasion, complete with over 100 US warplanes and 10,000 personnel.

The clock is ticking, and there’s far too much at stake.

If you’re from the US, contact your Senators today and ask them to support the Webb amendment prohibiting the Administration from attacking Iran without congressional approval. Tell them to support the Sen. Patrick Leahy (D-VT) and Sen. Kit Bond (R-Mo.) bill making it harder for Bush to declare martial law and take over the National Guard, and while you’re at it, tell your Senators to only fund troop withdrawal and to bring the troops home. Thank those Congress members who voted against more war funding.

We could be looking at WWIII. The time for positive action is now.

Heather Wokusch
http://www.heatherwokusch.com/

Itme,

Without a doubt, you dance to your own beat, man. I suppose it's good that you can think freely and with intelligence.

However, I take a rather different stand point.

You probably are right about both governments acting foolishly, but what you're probably missing (in my opinion) is WHY they're being so "hard-headed".

The truth is both you and I don't truly know anything about EXACTLY what happened where. Based on this map or that map, we don't have the exact coordinates, and to be honest, I don't think either government has the "exact" coordinates, but all exactness aside, it's beside the point. The point is we all make conjectures based on our values. It is apparent where you stand in terms of political (and not necessarily government, national or ethnic..there IS a different) alliances...and this is, of course, just fine...however, not everyone will or even should agree with you.

You point out that you created a "stir", and one can only think that you pointed out that as validation to your own points. I would hope that you wouldn't find anyone who disagrees with you as ignorant (or arrogant).

I also know of the waterway issue, and while the british soldiers maybe did cross it...the issue is the british were operating under specific knowledge that may have been faulty...whether or not it was their intention to operate under this, both you and I have no idea and you really can't claim that you do...and this is where the politics comes in.

Regardless, the truth of the matter is all the rhetoric on all sides is merely how the politicians control their people. The Iranian government HAS to make an enemy out of the "west"...it's a cultural thing. If the Iranian government shows any sign of weakness, they very well know through historical events, that they could be overthrown. The people that the Iranian government are catering to (their power base) are people who are at ideological odds with the West. Now, that isn't to say that they are bad people, or even ill-intentioned, but just as our values are inherited, so are theirs, and you can imagine with all the publicity that they receive it's probably pretty difficult NOT to demonize the "West". *NOTE* I'm not saying this gives them a free pass on anything, but it gives us some insight on why the situation over there is so volatile.

On the flip side, Blair is saying what he needs to in order to rally his power base behind him. Whether or not you and I agree with that is irrelevant. He's probably not catering to you or me. He's doing what he feels he needs to do and that is firmly demand the return of the sailors.

If the Iranians ARE holding the brits as insurance against an attack, that would be somewhat retarded because the longer the brits are held, the more "justified" the attack becomes in the eyes of the "power base" in the west.

MrMikal, I simply posted an informed assessment of the situation, as opposed to the politically biased disinformation which is the stock and trade of the contemporary media. I didn't express any personal opinion. I dance to the beat of international law, universal human rights, truth and reality, and the values and beliefs of 90% of the world's populace who deplore lies, government deceptions, and illegal invasions, slaughters, torture, occupations, and resource theft.

I disagree with all of your characterisation of my opinions and values. I also disagree with your characterisation of the values and beliefs of the Iranian populace. You are simply regurgitating jingoistic propaganda.

I agree with truthfulness, honesty and accuracy as the basis for making assessments, both legal, political and military. I think that most wars are deliberately manufactured for various reasons, and founded on lies and deceptions. I support international law as it currently stands for the most part. The supreme international law is the Charter of the United Nations, which forbids countries invading each other except in self-defense after an attack, and only after all attempts at diplomatic resolution have been exhausted. The USA has deliberately refused to negotiate with Iran, and the USA has never been attacked by Iran. The USA is not threatened now, nor is likely to be threatened by Iran in the foreseeable future. Iran has not violated any international laws. The USA is in the habit of flaunting all international laws, as is Israel, Canada and the U.K. Both truth and law are being flaunted as a norm in the current political climate.

In any case, this is a trading forum, so the pertinent issue is what may eventuate, what the perceptions are, and the actual economic repercussions of various scenarios. The economic, diplomatic, military, geopolitical, health, environmental, legal and other ramifications of a US attack of Iran are probably being grossly under-represented by the corporate media propaganda machine right now, as it plays out a scientific program of perception management to manufacture within the gullible and misinformed / uninformed US populace support for another grossly illegal and unethical invasion and slaughter, but that doesn't change the reality of what could happen to the US and world economy.

Whatever you or I believe or say, a massive military buildup is occurring in the Middle East, and a scenario is unfolding which typically results in a massive conflict. This will impact the US dollar, and the carry trade situation as well. Beliefs of you or me are unimportant. It is what the institutional fund managers believe that moves the market now. And when reality sets in, then fact supersedes belief. The consequences of a US invasion of Iran could be a domino effect that transforms the entire planet. Russia has promised to defend its interests in Iran. China also has massive strategic interests in Iran, and the Middle East region in general. China holds $1 trillion dollars in US currency. Several other Arab countries in the Middle East hold massive amounts of US assets and currency. They don't favor the USA re-organising and occupying the Middle East, with Israel as the only country with thousands of nuclear weapons, and thus the dominant military power. The dumping of this currency reserve will probably crash the US dollar. This is a strong card that they hold, and might wield.

The only facts between our posts is that we simply disagree.

You are unfairly pigeon-holing me into some slice of the public as if I haven't fully thought out my opinions. I can tell you for certain that I have spent quite a bit of time thinking about the situations and I can surely tell you that I'm quite confident in my convictions. You have no idea what I know or what I'm even thinking as I don't believe I have necessarily communicated...and to that point, I haven't really tried...because I'm not trying to make you understand my point of view.

You see, I just have doubts that anyone can be completely in tune with international law because to be perfectly honest, I'm not sure it really exists. So my convictions are merely predicated on the belief that I'm not sure that 1) any single person cannot possibly have a handle on every single law in every single country
2) these laws, if they are actually accessible and studied, are probably open to interpretation which means that anything that may be read may simply be interpreted differently depending on their core beliefs.

I can tell you that almost everything you've said is simply your opinion...and that's perfectly fine...I'm not saying I disagree with everything that you're saying, I'm just saying that simplying believing that you have all of the answers implies that you have all of the knowledge, which I (under my own core beliefs) believe you do not...that doesn't mean that you're wrong, it just means that others are allowed to be skeptical and disagree with what you're saying because what you're saying isn't necessarily factual. Now, I understand that strong convictions may mislead people to believing that what they have in their hands is the truth, but I assure you, if that's the case then the truth is quite variable and open to interpretation...which merely proves my point that we're still allowed to disagree.

A few things I just need to point out:
- you say you dance to the beat of international law...how pray tell do you know ALL of the international laws?
- universal human rights, eh?? this is a bit of a quandry, isn't it? obviously, these are open to interpretation...aren't they? For example, some believe that women should be treated the same way as men...in some countries (Iran for example), that isn't necessarily the belief...now, how do you handle that situation? If you support Iran, then through your wisdom, you believe they are "marching" in step with international law and human rights, as you put...but then it means their documented treatment of women is either OK - OR - the media or whoever has it wrong, and you have proof of this. I dunno...however, if you disagree with their policies, then you can't support their government, can you? I'm sure you can see where I'm going with this...so I'll spare myself.
- 90% of the world...I had no idea you actually knew that many people...or are YOU just regurgitating stats collected by the media? You think China (roughly 20% of the population) agree with "human rights" and "slaughters"? or is the fact that the Chinese actually have a relatively high capital punishment rate misleading in some way too? I know you were probably exaggerating, but in my book exaggertion might as well be a lie...you can't throw around numbers like it's fact, my friends...just like you can't throw around opinions and strong convictions and get them to pass for facts.
- Again, you say you believe in truthfulness and accuracy, but I can tell you that you can't possibly be accurate or completely truthful because there are too many variables in the world. You may be close, but close doesn't mean you're either truthful or accurate...it means that you're following what you believe is truthful based on your core beliefs...yours and yours alone.
- I'm sure the charter of the united nations is a bit more complicated than the over simplification of saying one country cannot invade another.

Again, Itme...I agree with a lot of what you're saying, but I accept the inevitable disagreements others will have. Sometimes the way you respond is a little off-putting and quite frankly, insulting. I have my theories as to why you are the way you are, but you act as if you have ALL the domain knowledge, and that anyone who is in contention is either a bigot or a drone. I would hardly characterize myself as either. You sometimes talk as if anyone who disagrees with you is against human rights and the 90% of the world when in reality, they're not...it's just a little condescending...and it doesn't necessarily entitle you to any more respect than you're showing.

I have no illusion of trying to make you understand my point of view. If that happens, that would be a wonderful side-effect, but it is not my intention. I understand what isle of the debate you stand on, and it would seem your convictions would never let you waiver...and to that end, that's fine...but you have to admit, you're going to be fodder for disagreement...which I'm sure you're fine with, aren't you?

So what I understand is that - you let the Iranians have the bomb and wipe Isreal from the map.

Are you sure the Arabs are on the side of the Iranians?

You should have lived before world war II. Then you could have talked to Hitler and let him have his way and avoided the war !!

MrMikal, I didn't say a single thing about what you might think or believe, except that your sweeping characterisation of the Iranian citizenry is cartoonish and false. Having said nothing about your viewpoints, I could hardly have pigeonholed you. Again, what you or I think, feel, or want is irrelevant to the world currencies. But what the citizenry of the world and the political, economic and military decision makers believe, know, think, want and expect to happen does, however, make a difference.

The DailyFX analyst said, "If the US gets involved in the conflict, oil prices could easily spike to $70 a barrel. At that point, expect all of the Yen crosses, including USD/JPY to head back towards their January highs." His reasoning, as I understand it, is that higher oil prices will drive up consumer prices and make a Fed interest rate reduction less likely. This is supposed to boost the USD relative to the JPY. My opinion is that a goodly part of Forex "analysis" is reflexive USD jingoism, disconnected from reality, and designed to add psychological support to the US dollar. Many of the statements made about the currency movements are simply untrue, and the explanations for the actual movements are not credible, for several reasons, but often simply because the movements preceeded the supposed causal factor in time! The above explanation is not reasonable to me. The carry trades are conservative currency plays, and geopolitical insecurity causes their unwinding, not their winding up. A US invasion of Iran will be a highly destabilising geopolitical development, perhaps the highest possible destabilising development. I can't see how this would bolster the US dollar or cause an increase in carry trades.

Regarding your assertion that international law is hazy and indeterminate, nothing could be further from the truth. The core principles of international law are very clear on many points. The key point is that the supreme crime under international law is to invade another country unless you have already been attacked, and have exhausted all diplomatic means to resolve the conflict. Why was Hitler bad? Because he violated this principle. Why else was he bad? Because he violated the human rights of many people. Under the sway of this lesson, the Atlantic Charter and Four Freedoms of Franklin Roosevelt and Winston Churchill were framed, which formed the basis, along with the Magna Charta, for the Charter of the United Nations.

I have read and studied the Charter of the United Nations for many years, as well as the Universal Declaration of Human Rights. I have read many thousands of articles and some books, and there is no general disagreement on the interpretation of these laws. They are about 60 years old, they evolved over many centuries, and have stood the test of time, and have only gained in stature and appreciation over the decades. They are clear and there is near unanimous agreement what they mean, and that they are good, useful and valid among most general informed people, lawyers, judges, and academics. Only the misinformed subjects of the US and Israeli propaganda system are ignorant and confused on these matters, as with most all matters.

Almost all the people of the world agree with the fundamental postulates of the UN Charter and UDHR, as well as the Geneva Conventions. The evidence for this is overwhelming. Virtually every country in the world is a signatory to these international laws. Virtually every legal system is based on them. I have never seen any serious attempt to challenge them except by supporters of the Chinese communist party and the Bushist regime. To call these documents and principles into question is to stand with the brutal dictators, colonialists, empirists, and totalitarian regimes throughout history. To mischaracterise international relations and international law as "us" or "them", and to reason from false premises is the degraded mentality of the brainwashed US / Israeli / British patriot. It is the exact same method employed by Hitler and the other brutal despots throughout time. More than 50% of Americans and British don't even buy into this idiocy any more.

And over 90% of the world's citizens strongly disagree with the Bushist imperial hubris, brutality, militancy and flaunting of every established principle of diplomacy, multilateral cooperation, the principle of national sovereignty, the concept of nuclear disarmament, respect for international law, military detente, the core notions of human rights and legal justice, and the demonstrated total disregard for truth and human life. You can question or deny it, but it's still true. Most people want to live in a secure world without aggressive wars or state violation of human rights, where all nations respect the sovereignty of all others, where discussion is employed to resolve disputes, where no nation has the means to threaten the survival of any other, and where the military doesn't eat up 50% of the world's productive capacity.

The Iranians are merely the "devil of the week" for the brainwashed US citizens. First it was the Philipinos, then it was the communists, including the Chinese, East Germans, Koreans and Russians, then the Cubans, then the Nicaraguan socialists, then the El Salvadoreans, then the Panamanians, then the Haitians, then the Afghanis, then the Iraquis, now it's the Iranians, then it will be the Syrians, the Lebanese, the Yemenise, the Nigerians, the Sudanese, the Venezuelans, etc. as the US propaganda system demonizes whatever nation or group is next on the hit list of the Profiteers for a New American / Israeli Century who are waging perpetual war to create an uncontestable global military / industrial empire. The American people will be told in turn that each of these groups threatens the life of all Americans and must be pre-emptively conquered and subdued. Note that there is no correlation between the actual threat that any of these nations or groups pose to US sovereignty, territory or survival. And there is a strong correlation between regimes which the US government supports militarily, economically and diplomatically, and extreme, systemic and atrocious abuse of human rights, imperialistic actions, and totalitarian political tendencies.

The problem is that there is no logic or law that can justify this policy of serial genocide and conquest. It is pure and naked ambition, and indistinguishable from the crimes of Lenin, Mao Tse Tung, Hitler, Pol Pot or any other imperialist, brutal regime. Everyone in the world can see this except the brainwashed subjects of the Empire itself, who are held enthralled by a barrage of scientific propaganda. Perhaps this brainwashing will cause the 40% or so of Americans who are fully brainwashed to be blind to what others see and feel, but the markets will react according not to the illusions of the US neo-patriot, but to the reality of what is occurring in the world.

Regarding the alleged Iranian nuclear bomb. There are only two holders of nuclear weapons in the Middle East - Israel and the USA. Iran was always in full compliance with the International laws that govern nuclear proliferation, and has always been carefully scrutinized by the agencies which monitor the peaceful application of nuclear technology. There can be no informed debate on this point. The USA and Israel, however, stand in total contempt for the principles which underlie nuclear non-proliferation and nuclear disarmament, in their research, testing, building, stockpiling, employing, and threatening to employ nuclear weapons to assert dominance over other countries in the world. These actions are highly destabilising and constitute flagrant state terrorism.

I have read articles from the world press that say that China is already starting to flex their economic muscles to try to deter the US regime from invading any more countries in the Middle East. Apparently the US government had to call a favor from the Saudis who then had to threaten China with an interruption in their oil supply if they harmed the US economy too much. I believe that the economic theatre is where many of the battles for world dominance or for a respectful community of sovereign, law abiding nations will be fought. We may have already recently witnessed the repercussions of one or two opening salvos in this new form of economic warfare. The reduction in purchases of US Treasuries by the Chinese government, and diversification of their foreign currency reserves, and today's trade sanctions levied by the US government against China can be interpreted in this light. Likewise with the Iranian and Venezuelan policies regarding the trade currency denomination of their oil exports.

Traders of foreign currencies who monitor macro-economic trends and currency exchange fluctuations may be analysts of the battleground of the future - where the economies of various countries are either defended or attacked in order to either defend countries from military attack or to support aggressive takeover bids.

Another highly pertinent factor in this equation is the threat of nation-wide martial law that hangs over the US nation in the event of an either real, invented, or straw man US government-engineered "terrorist" attack on US interests - either at home or abroad - and the devastating impact that this would have on the US economy. "Former CIA Officer Philip Giraldi chillingly noted that the Pentagon's plans to attack Iran were drawn up "to be employed in response to another 9/11-type terrorist attack on the United States." Writing in The American Conservative in August 2005, Giraldi added, "The plan includes a large-scale air assault on Iran employing both conventional and tactical nuclear weapons. Within Iran there are more than 450 major strategic targets, including numerous suspected nuclear-weapons-program development sites ... As in the case of Iraq, the response is not conditional on Iran actually being involved in the act of terrorism directed against the United States."

Chew on that one a minute. The Pentagon's plan would be in response to a terrorist attack on the US, but not contingent upon Iran actually having been responsible. How outlandish is this scenario: another 9/11 hits the US, the administration says it has secret information implicating Iran, the US population demands retribution and bombs start dropping on Tehran.

While even contemplating another 9/11 brings shudders, it’s worth noting that last year, Congress quietly approved provisions making it easier for the President to declare federal martial law after a domestic terrorist incident. And recall that in late 2003, General Tommy Franks openly speculated on how a new 9/11 could lead to a military form of government: "a terrorist, massive, casualty-producing event somewhere in the Western world – it may be in the United States of America – that causes our population to question our own Constitution and to begin to militarize our country in order to avoid a repeat of another mass, casualty-producing event. Which in fact, then begins to unravel the fabric of our Constitution."

The US populace has been told many times that another "terrorist attack" is inevitable. Many, if not most Americans are concerned that the next attack will be engineered by factions within the US administration in order to provide a justification for foreign military adventures and domestic fascistification. In that eventuality, consumer confidence will be shattered, normal transportation, communication and travel will be curtailed, and the US dollar will be punished very severely as a consequence. Oil prices will skyrocket, and American citizens will huddle scared at home with their doors taped up with duct tape. Under these conditions, it is hardly likely that the carry trade volumes will increase.

I don't see where mrmikal says anything of that nature, but I will let him respond for himself.

But what I do see is that he is trying to understand both sides of the current UK/Iran situation. I also don't see anyone else here doing the same.

The only statement of mrmikal that I commented on is his sweeping, derogatory, false and dehumanizing characterisation of the people of Iran. This is how the subjects of imperialistic regimes are programmed to perceive the next object of their terrorisation, slaughter, domination and subjugation.
I also commented on what I interpreted as his assertion that international law is either non-existent, ambiguous, obsolete, or incomprehensible.
Everything else he said I let stand without either explicit agreement or challenge, because I either agree with it or have no comment to add.
If there is another side to this "debate", then I don't even know what the debate is concerning. Who is the good guy? That is a pointless debate in my mind. The issues are of facts, law, and economics. Opinions, loyalties, and moral judgements are beyond the scope of this forum. Will the carry trades go up in the case of a US invasion of Iran? That is the subject of this thread.

Well this dialogue gives even more reason to beleive a war is imminent.
Itme I believe you are spot on.

I gotta go with John Lennon.
Lets give peace a chance.
The key point is as stated the carry trade is a conservative issue. Chaos will cause it to basically end.

Wait until itme goes off on John Lennon.

Lennon was a great musician, and loved humanity. He inspired people to think about and work towards world peace - the most cherished dream of all humankind.

But I don't think the world would be better off without religion. At least not sincere, honest, kind, respectful, intelligent religion. We would be better off without the kind of religion that's used to justify cruelty, murder and oppression, though.

Your analysis of the carry trade is within boundaries...the thread certainly started with that, but you choose to bring attention to other characteristics of yourself by berating others who do not share your beliefs.

And before you say that I'm talking out of my ass


Tell me...how am I NOT supposed to be offended by that...first of all, I don't seem to remember characterizing the people of Iran (let alone "sweepingly" characterize them). The only thing I said on the point of Iran is that I don't think women are treated equally as men...can you prove to me otherwise? Seriously...I didn't characterize them as anything, I just said that women in Iran don't have the same rights...am I wrong? I mean, if I'm completely off base, let me know...but I was pretty sure that men can do certain things that women can't over there...and my entire point of mentioning that had nothing to do with any antipathy towards Iran, but to debunk your ability to say you support human rights, yet live with what I suspect is inequality amoungst men and women in Iran...I mean, personally, I categorize women as humans, which for me means that they have same human rights as men, I would think...Like I said, I'd LOVE to be completely wrong and hear that women ARE treated the same as men in Iran...I honestly don't know...but you seem to have first-hand knowledge of this. So by all means, do share...

It's apparent you like to argue...

Look, I never said what the US has done or is doing is correct, or justified. Personally, I think it was retarded. I ALWAYS thought it was...

With that said just as you think I'm making sweeping judgements of the Iranians (which I don't remember actually saying anything about the populace), you're making sweeping judgements of ordinary US citizens. Why is it such a crime to disagree with anything that you're saying?

I'm not going to try and justify the invasion of Iraq or the plans to attack Iran...

Still, I don't view Iran as innocent...and let me guess, because I don't I'm at odds with you, which in your eyes makes me an asshole...

So, Itme...give me solutions...stop spouting regurgitated anti-US/Israeli/British rhetoric and suggest something...all I see you doing is complaining that people don't agree with you.

Of course, my guess is that you'll just pass a chance to truly give me a solution in lieu of saying I'm a programmed robot or whatever it is you try to minimize your detractors to.

I'm REALLY curious...what religions AREN'T used to justify cruelty, murder and oppression?

Riddle me that, Itme...

MrMikal, the only thing that I was responding to in your first post was this statement, which according to my interpretation is your version of the "clash of civilisations" tripe that was invented by propagandists to justify the US imperial crusade against all oil - producing nations worldwide.

"The people that the Iranian government are catering to (their power base) are people who are at ideological odds with the West. Now, that isn't to say that they are bad people, or even ill-intentioned, but just as our values are inherited, so are theirs, and you can imagine with all the publicity that they receive it's probably pretty difficult NOT to demonize the "West". *NOTE* I'm not saying this gives them a free pass on anything, but it gives us some insight on why the situation over there is so volatile."

Buddhism, Zoroastrianism, Jainism, Taoism, some kinds of Christianity, the majority of sects of Hinduism, Bahai, Sufism, most forms of Islam, Jedi religion, Wicca, actually thousands of forms of religion are peacable and exhort their students and followers to love and respect their neighbours. Christianity is historically the religion that has and continues to be correlated with the majority of imperialism, slavery, murder, torture, oppression, genocide, etc.

For the record, I am 1000% in favor of every word of the Universal Declaration of Human Rights in every single case. So are over 95% of the world's populace.

*sigh*

I'm afraid this is as far as I'm going to go here. It is my wish that you would have sat down with me face-to-face and had some tea and perhaps I could understand what you're saying and maybe given you some insight into what I was feeling...but it is what it is. You are too strict in your beliefs of people to be reasonable.

ok there is a lot to read here and i've only skimmed the thread, but please try to keep the debate within rule #1 and respond to each other in a respectful, polite manner.

thanks for your co-operation.

i agree with isotonic,...i think that PTR is back on track at stocks, and i think that those countries that export oil, like NOK or CAD (?) might bring back carry trades in a short term, ..if there will be war, there is going to be fight among (NOK/CHF, or CAD/CHF)....

a little about religions,...Free religion is the key, ok. i like budism (meditation), at hindu i like that cows are saint animals, at cristianity i like the holidays, at islam i like many womens,...taoism not familiar, only evry jang has its own jing,....and i hate the Judes, EXCEPT at game Civilizations, there i love it

Sorry, MrMikal, if my tone appeared strident or I've appeared to pigeonhole you or anything like that. I admit that I drew inferences from the comment you made that I quoted above that may be incorrect. In any case, there's no need or value in being in the least personal about any of this. The question is - will a US attack on Iran bolster the USD and increase the carry trade positions? I suggest that the answer is obviously not - contrary to the apparent assertions of the original post.

As a purely side issue, the US government and media are justifying their plan to attack Iran, which is a clear and flagrant violation of the Charter of the United Nations, (just as the US attack and invasions of both Afghanistan and Iraq were supreme crimes under international law, which is obvious if you read the UN Charter, and the assistant Secretary-General of the United Nations stated exactly that in a lecture I attended - you can watch it on the internet if you want), based on the premise that the government and people of Iran are constitutionally inclined to attack the United States of America if they obtain the means - namely nuclear weapons. This is wrong on three counts. First of all, no one in Iran harbors the intention to attack the USA. And secondly, the Iranian government and military don't have and likely never will possess the means to attack America while they are being closely supervised by the International Atomic Energy Commission. And thirdly, even if the people and government of Iran wanted to attack the USA and had the means to do so (neither of which is the case, or is ever likely to be the case), they still wouldn't as it wouldn't work and they would be instantly exterminated, so it would be pointless, which they are aware of.

The point that I was making above is that the people of American have been lied to into believing that the people of certain countries are fundamentally different from them, because they supposedly want to annihilate the USA and all other western countries, and must be wiped out first to protect America from attack. This is blatant nonsense. It is an essential prelude to an aggressive military action to characterise the "enemy" as being mortally dangerous, and irreconcilably different than you, essentially nonhuman. I invite people who believe that the people of Iran are so different from them, and so dangerous to them, that they have to be exterminated, there being such a huge and irreconcilable gulf between the two cultures that one or the other must be effectively destroyed, to watch the following videos, and to learn more about the real Iran:

Peacetrain, by Cat Stevens accompanies images of Iran:
http://www.lucasgray.com/video/peacetrain.html
Iran: People Like Us

VIDEO OF IRAN TODAY

President Carter's National Security Advisor Brzezinski predicts USA provoking war with Iran