Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold » (New Edition)

Oil, Dollars, Debt, and Crises studies the causes of the current oil and global financial crisis and shows how America's and the world's growing dependence on oil has created a repeating pattern of banking, currency, and energy-price crises. Unlike other books on the current financial crisis, which have focused on U.S. indebtedness and American trade and economic policy, Oil, Dollars, Debt, and Crises shows the reader a more complex picture in which transfers of wealth to and from the Middle East result in a perfect storm of global asset and financial market bubbles, increased unrest, terrorism and geopolitical conflicts, and eventually rising costs for energy. Only by addressing long-term energy policy challenges in the West, economic development challenges in the Middle East, and the investment horizons of financial market players can policy makers ameliorate the forces that have been causing repeating global economic crises.

List of Illustrations

List of Tables

1 The Challenges of Resource Curses and Globalization 1

Volatilities: Financial, Economic, and Geopolitical 10

Petro-States, Hydrocarbon Dependence, and Resource Curses 14

Geopolitical Conflicts and the Politics of Discontent 16

Mounting Debt and Fragility of the Global Financial System 18

Constants and Variables in the Cycle: 1970s to the Present 19

2 New Middle East: Childhood 1973-84 and Adolescence 1985-95 25

OPEC's Market Power: Economics, Politics, and Volatility 26

Middle-East Flows of Labor, Capital, and Cultural Norms 31

Oil Price Collapse and the Politics of Discontent 33

The Rise of National Oil Companies 40

Militarism, Debts, and Global Finance 44

3 Road to the Status Quo: 1996-2008 51

Changing OPEC Politics and Renewed Oil Revenues 52

The Other Black Gold: Natural Gas 60

The Economics and Geopolitics of Middle-East Discontent 65

Deja Vu: Overgrown Children of the 1970s? 71

4 Globalization of Middle-East Dynamics 75

Hedge Funds and Sovereign Wealth Funds 76

Increased Financial Integration and Contagion 80

Liquefied Natural Gas and Globalized Energy Markets 85

Conflicts, Economic Sanctions, and the "War on Terror" 90

5 Dollars and Debt: The End of the Dollar Era? 97

The Dollar as Reserve Currency 97

Bretton Woods and Beyond: The Primacy of U.S. Debt 99

Global Economic Growth, Interest Rates, and Debt 101

Uneasy Symbiosis: U.S. Consumers and Asian Savers 103

Contagion: Sequential Bubbles and Crashes 107

The Dollar and Bets on Chinese Growth and Oil 110

6 Motivations to Attack or Abandon the Dollar 117

Americas "Exorbitant Privilege" andGeopolitics 119

Petrodollar Recycling and the Dollar-Pricing of Oil 121

Saddam Hussein, Ahmadinejad, and Dreams of Petroeuros 122

The Paradox of Pegged Currencies 125

Pegged Currencies and "The Balance of Financial Terror" 130

The Threat of Renewed Protectionism and Mercantilism 134

Globalization with Multiple Currencies: Bretton-Woods III? 139

7 Resource Curses, Global Volatility, and Crises 143

Continued Regional and Global Resource Curses 144

The Global Resource Curse 147

Continued Global Dependence on Oil 150

Global Conflicts, Radicalisms, and Terrorism 159

Serial Amnesia, Greed, and Financial Crises 164

Peaks and Troughs: The Need to Ameliorate the Cycle 167

8 Ameliorating the Cycle 171

Technical Solutions and International Cooperation 175

Attenuating the Energy-Markets Cycle 177

Energy Market Regulation and Multilateral Intervention 181

Petrodollar Recycling and International Lender of Last Resort 184

Managing Geopolitical Conflicts 188

Conclusion 191

Notes 193

Bibliography 210

Index 216