Carter 2.0

Phillyrocket · Apr 10, 2012

Seriously does no one follow history the oil shocks THAT CARTER INHERITED were a direct result of Republican Richard Nixon.

On August 15, 1971, the United States unilaterally pulled out of the Bretton Woods Accord taking the US off the Gold Exchange Standard (whereby only the value of the US dollar had been pegged to the price of gold and all other currencies were pegged to the US dollar), allowing the dollar to "float". Shortly thereafter, Britain followed, floating the pound sterling. The industrialized nations followed suit with their respective currencies. In anticipation of the fluctuation of currencies as they stabilized against each other, the industrialized nations also increased their reserves (printing money) in amounts far greater than ever before. The result was a depreciation of the value of the US dollar, as well as the other currencies of the world. Because oil was priced in dollars, this meant that oil producers were receiving less real income for the same price. The OPEC cartel issued a joint communique stating that, from then on, they would price a barrel of oil against gold.

This led to the "Oil Shock" of the mid-1970s. In the years after 1971, OPEC was slow to readjust prices to reflect this depreciation. From 1947–1967, the price of oil in U.S. dollars had risen by less than two percent per year. Until the Oil Shock, the price remained fairly stable versus other currencies and commodities, but suddenly became extremely volatile thereafter. OPEC ministers had not developed the institutional mechanisms to update prices rapidly enough to keep up with changing market conditions, so their real incomes lagged for several years. The substantial price increases of 1973–74 largely caught up their incomes to Bretton Woods levels in terms of other commodities such as gold.
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On October 6, 1973, Syria and Egypt launched a surprise attack on Israel. This new round in the Arab-Israeli conflict triggered a crisis already in the making; the price of oil was going to rise. The West could not continue to increase its energy consumption 5% annually, while also paying low oil prices, and selling inflation-priced goods to the petroleum producers in the developing Third World. This was stressed by the Shah of Iran, whose nation was the world's second-largest exporter of oil and a close ally of the United States in the Middle East at the time. "Of course [the world price of oil] is going to rise", the Shah told The New York Times in 1973. "Certainly! And how...; You [Western nations] increased the price of wheat you sell us by 300%, and the same for sugar and cement...; You buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us...; It's only fair that, from now on, you should pay more for oil. Let's say ten times more."

On October 12, 1973, President Richard Nixon authorized Operation Nickel Grass, an overt strategic airlift to deliver weapons and supplies to Israel, after the Soviet Union began sending arms to Syria and Egypt.
On October 16, 1973, OPEC announced a decision to raise the posted price of oil by 70%, to $5.11 a barrel. The following day, oil ministers agreed to the embargo, a cut in production by five percent from September's output, and to continue to cut production over time in five percent increments until their economic and political objectives were met. October 19, US President Richard Nixon requested Congress to appropriate $2.2 billion in emergency aid to Israel, including $1.5 billion in out-right grants. George Lenczowski notes, "Military supplies did not exhaust Nixon's eagerness to prevent Israel's collapse. ... This [$2.2B] decision triggered a collective OPEC response." Libya announced it would embargo all oil shipments to the United States. Saudi Arabia and the other OPEC states quickly followed suit, joining the embargo on October 20, 1973. At their meeting in Kuwait the OPEC oil-producing countries, proclaimed the oil boycott that provided for curbs on their oil exports to various consumer countries and a total embargo on oil deliveries to the United States as a "principal hostile country". The embargo was thus variously extended to Western Europe and Japan.

Though United States was the initial target of the embargo, it was later expanded to the Netherlands. Price increases were also imposed. Since short term oil demand is inelastic, demand falls little when the price is raised. Thus, oil prices had to be raised dramatically to reduce demand to the new lower level of supply. Anticipating this, the market price for oil immediately rose substantially, from $3 a barrel to $12. The world financial system, which was already under pressure from the breakdown of the Bretton Woods agreement, was set on a path of recessions and high inflation that persisted until the early 1980s, with oil prices continuing to rise until 1986.
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http://en.wikipedia.org/wiki/1973_oil_crisis

Nixon taking us off the gold standard and his support of Israel during the Yom Kippur war are what caused oil prices to rise. As usual a conservative causes the mess a liberal inherits it and get's blamed for the ramifications.

apollo33 · Apr 10, 2012

gwayneco said: ↑

The real unemployment rate is already 11%.
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Is that like true shooting percentage

larsv8 · Apr 10, 2012

OP brings up a good point though.

Who destroyed the economy more: Nixon or Bush?

Commodore · Apr 10, 2012

Cohete Rojo · Apr 10, 2012

Jimmy Carter was a crusader and progressive when it came to energy issues, and other issues. I wouldn't put Obama on that level; he is more of a status-quo Chicago style politician.

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mc mark · Apr 10, 2012

Commodore said: ↑

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What do you have against Easter?

bigtexxx · Apr 10, 2012

Love how the liberals try to overwhelm the thread with nonsense. They cannot offer any defense. A clear sign they've lost.

QdoubleA · Apr 10, 2012

bigtexxx said: ↑

Love how the liberals try to overwhelm the thread with nonsense. They cannot offer any defense. A clear sign they've lost.
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Lost the.....? I see you ran away from that bet about the GOP losing the election in November. I see you doggy, I see you running.

CrazyDave · Apr 11, 2012

I was frightened this was about a premature and poorly done sequel.

<img src="http://i1269.photobucket.com/albums/jj596/figurefreaks/MOVIES/john_carter.jpg" border="0" alt="JOHN CARTER Pictures, Images and Photos"/></a>

Seriously though, so now "lib'ral" means anyone who disagrees with hooey?

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Carter 2.0

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