Selling Our Soul to Terror

Middle East countries riding high on oil revenues are becoming savvy financial players in the global marketplace. According to the WSJ,

“Yesterday saw a burst of activity involving Mideast governments, including a battle between two Persian Gulf emirates over stakes in the London Stock Exchange and a bid by one of them for a stake in Nasdaq Stock Market Inc.”

The Nasdaq deal is part of a larger battle between Dubai and Qatar for increasing control over parts of the world’s stock exchanges. In addition to Nasdaq, the London Stock Exchange Group PLC and OMX AB (a company operating stock exchanges in Sweden, Denmark, Finland, Iceland and the Baltics) are also involved in the maneuvering.

This deal would give Dubai a 19.9% stake in Nasdaq and buy a 28% stake in the London exchange from Nasdaq. The deal would also result in Nasdaq owning OMX. Qatar’s play involved the spending of $1.36 billion before the market opened to buy 20% of the London exchange. It also spent $470 million during trading hours to buy 10% of OMX.

The WSJ also reports,

While President Bush promised a careful review of the deal, a key legislator, Democrat Barney Frank, said it “doesn’t raise any alarm bells to me.” Rep. Frank, who is chairman of the House Financial Services Committee, noted Nasdaq is a highly regulated entity and “there’s no physical transfer of property” in the proposed deal.

You’ve got to be kidding!

No alarm bells?

We’re talking about selling an interest in our stock exchange to a state that finances terrorism! Dubai is a banking center believed to attract funds from known terrorist groups like Al Qaeda. And Qatar, although more friendly to the U.S., is a safe-haven for terrorists! Qatar provides sanctuary for exiled Islamic terrorists and radical preachers from Algeria, Chechnya, Egypt, Lebanon and the occupied territories.

So, why do these countries have such tremendous buying power? It’s easy to attribute their financial power to the growing price of oil, but why have oil prices skyrocketed? The answer is simple: the devaluation of the U.S. dollar! (today $1 will buy you about £0.50 or €0.70)

The dollar is the world trading currency, which means all goods and services are priced in U.S. dollars. With a U.S. dollar devaluation, the impact on international trade is tremendous. Any country trading with the U.S. will raise their prices in light of this devaluation. This is one reason why oil has peaked at $80 per barrel. Since the dollar is worth less in the world market, oil producers are forced to raise their prices to protect their investment.

Why is our dollar devalued? Two reasons: The budget deficit (spending more than tax revenue collected) and trade deficit (importing more than you’re exporting) are the primary reasons for the US dollar decline today. Currently, the budget deficit is close to $500 billion and the trade deficit is also close to $500 billion. We’re talking $1 trillion in deficits!

What does that mean? No one wants to hold a currency that is declining in value. As the U.S. dollar declines investors will turn to the stronger currencies, such as the British pound and the Euro. Ultimately, it could lead to the collapse of the U.S. economy!

And we’re selling our stock exchange to terrorists…