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ichael Delyagin: the USA Are Compelled to Lower Dollar Rate Rescuing Own Bank System

ichael Delyagin: the USA Are Compelled to Lower Dollar Rate Rescuing Own Bank System
17.06.2008

In the meantime last week prices for oil closely came nearer to a level of 140 dollars/barrel. On results of tenders in New York on NYMEX on June, 13th of the current year, prices for oil futures Light Sweet were established at a level of 134,86 dollars/barrel. Meanwhile analysts marked that at preservation of a current trend the cost of barrel of oil can fly up up to 150 dollars/barrel already in the nearest month.

 

Financiers polemize on the question of the factor which is key one for a rise in prices on the oil market. Administration of the USA declares that the reason of the growth is disbalance between supply and demand and actively calls petromanufacturers to increase volumes of manufacture. At the same time Organization of Petroleum Exporting Countries (PEC) is inclined to blame for a rise in prices on oil speculative investors who are buying up and reselling futures.

 

On this background, no matter how paradoxical it seems, conversations on inevitable reduction of prices on oil even in view of reduction of the rates of world economy growth and, accordingly, falling of consumption of oil renewed. Those conversations were warmed up by dollar rate increase in relation to euro which never took place for last 3 years while the Russians had 4 days' holidays on occasion of a national holiday.

 

Editor-in-chief of FORUM.msk Anatoly Baranov addressed known economist, Doctor of Science Michael Delyagin with inquiry to explain to our readers occurring today on the global markets, it's good that as chairman of editorial board of FORUM.msk it was difficult to escape this role.

 

- So, it's clear that to give forecasts and estimations during a developing crisis is risky, probability of the factor of unexpectedness is high and still, as they say, "people want to know". Why did everybody suddenly get alarmed, why did Kudrin start to calm people down saying that there‘s nothing dangerous in reduction of prices of oil?

 

- Well, what decrease you are talking about? Just recently oil has stepped through psychologically important barrier of 100 dollars for a barrel, here you are - it's being sold for already about 140 dollars - do mean that its establishment on a mark 134 dollars is a decrease?

 

However situation is simple. World power agency recognized at last many analysts were taking about for a long time - that in the long term of the nearest 10 years at existing rates of extraction, at preservation of current trends of consumption and present level of technologies which, by the way, did not vary much for a long time, there will be a technological shortage of oil and gas in the world. And rise in prices for oil after getting to a level of 100 dollars for barrel is connected with comprehension by corporations of this very circumstance which is now being taken into account in business plans, programs and so on.

 

- But the dollar has really risen in relation to euro...

 

- Actually the Americans now rescue their economy by distribution of money to banks and it is natural that at such a policy dollar has reached a level of 1,6 to euro. But at a level of 1,6 dollars to euro not only economy of China and Southeast Asia which export the goods to America and are all the same compelled to transfer it, but also economy of EU began to suffer. Thus now EU decided to support dollar. As soon as no serious support was needed, on the background of that info markets left dollar alone and for some time it remained in the range of 1.55, may be even 1.53. To the end of the year I think it will again rise up to 1.65 to euro. So, I don't think that the present strengthening of dollar - is the beginning of a new cycle. I don't think so.  

 

- Meanwhile one of those days Bush very confidently spoke about change of priorities in the monetary policy of the USA and obligatory strengthening of dollar. I understand it so that some prize from easing of own currency the USA have already received, while now further easing of dollar already threatens for the States with geopolitic consequences if dollar will lose a role of world currency...

 

- A lot of people spoke the same things before Bush. But hypothecary crisis really undermined the American bank system. So that to keep it, it is necessary to give money to the banks (or to write off debts, that's too most) and they were given, very little at first, then a lot and in open. But if you pour out money just this way, they necessarily emerge in speculative sector of the market and inevitably undermine dollar. Rescuing bank system the USA are compelled to lower dollar rate.

 

It's simpler in Russia - the government strengthens rouble and struggle with inflation.

 

- How does it make it?

 

- Well, for comparison - you break a hand and come to the doctor, he inspects you and says: "Well, dear friend, two tens of press-ups every morning!" Inflation in Russia is a direct consequence of arbitrariness of monopolies, but the Ministry of Finance keeps silent about it, otherwise Antimonopoly committee will become the main body of financial authority in the country. Moreover - the requirement of a transparency of financial activity of monopolies means revealing of a huge share of bribes in their turn-round. It means already undermining of  the developed in the Russian Federation state mode.

 

At monopolism even benefits from cheap import that is natural at strengthening of rouble when we buy dollar not for 30 roubles but only for 24, are not being felt by population. Prices for the consumer do not vary, monopoly keeps all the profit in its pocket, naturally, dividing it with the state bureaucracy.

 

There is only one plus here - earlier ministries had to answer before Putin for all that disgrace, now Putin would be responsible for all having went down from the Kremlin to the Government House.

 

It is necessary to understand that the mentality of our people strongly differs from a way of thinking of the politically motivated intelligency. It looks absurdly from the point of view of the politically motivated intelligency but people perceives Putin's transition from the Kremlin to the Government House as becoming closer to people, to its, people's interests. What does it see now? That Putin went down to it but did nothing and gave nothing good to it. That is what people don't like and for what it will ask from him...
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