Dollar distress signal
I get the feeling the government of Qatar is sending out a distress signal. And it's the dollar that's in distress.
Recall a post from last week, in which the Qatari prime minister revealed his nation's sovereign wealth fund had severely curtailed its dollar-based holdings — from 99% of the portfolio to 40% in just a couple of years. He also remarked that he's so concerned about the dollar's slide that an oil price of $125 a barrel wouldn't be unreasonable.
Then today, we get this:
Qatar's energy minister said crude oil prices, which have surged recently to record levels above 80 dollars a barrel, should be more than 100 dollars.
"If we take into account inflation from 1972 to the present day, the real and fair price for oil should be more than 100 dollars," Abdullah bin Hamad Al-Attiyah said in remarks aired by Al-Jazeera television on Tuesday.
He said such a price was justified by rising inflation, a fall in purchasing power and the weakness of the dollar, which has dropped about 10 percent in value against the euro over the past year.
Two comments like this in succession bear the hallmark of a coordinated awareness campaign.
Are the Qataris sending their American friends a signal that this dollar crisis is truly serious and they'd better get on the stick? Are they telling their American friends that friendship goes only so far and they won't sacrifice their own well-being to prop up the dollar? Is this the first genuine sign of a worldwide "rush to the exits" from the dollar? Or is it merely a recognition of new realities, devoid of value judgments on the part of Qatar's government?
We leave it to dear readers to answer these questions for themselves. But we know this much: Whatever happens to the dollar over the next year or two pivots on these questions. Whatever their motives, Qatari leaders are performing a valuable service by raising them. If only their intended audience hears them…