Wednesday, October 7

The Dollar's Demise: Glenn Beck and Larry Kudlow get sucked into Robert Fisk's brain

"[O]ld Bob has become something of a bellwether. At the time of the Gulf war he wrote incredibly despondent articles predicting the annihilation of the western powers. He found a group of British soldiers lost in the desert and extrapolated defeat for the whole of Desert Storm. At the time of the Kosovo crisis he reported that the bombing would only make things worse.

Since September 11, he has been dreadfully pessimistic, predicting that the West was about to bring total disaster upon its own head.

In short, he is that most valuable resource, a journalist whose judgments are not just mistaken, but reliably mistaken. If ever Fisk predicts that the Americans will walk it, that will be the time to put on the tin hat."

-- Simon Hoggart, (UK) Guardian, November 2001

Robert Fisk's war reporting has made him one of Britain's most honored journalists, but he is also so notorious for taking liberties with the concept of reporting that a form of literary criticism was devised and named just for him; it's called fisking, whereby the critic publishes an entire Fisk article then does a sentence-by-sentence deconstruction.

I will not attempt to fisk Mr Fisk's October 6, 2009 The Demise of the Dollar for The (U.K.) Independent, any more than I would attempt to draw a perfect circle freehand while drunk.

But in brief he took a dollop of fact from here and a smidgen of fact from there and conjured a soupcon of something from somewhere. Then he crowned the mishmash with a tale told to him by unnamed "Gulf Arab and Chinese banking sources in Hong Kong."

The tale involved secret meetings among Gulf Arabs, China, Russia, Japan and France "to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar" to go into effect in 2018.

A senior Gulf OPEC official told Dow Jones in Dubai that he had no idea where Fisk got his information but that Arab Gulf members of OPEC were not in talks about dropping the U.S. dollar in favor of a basket of currencies in the trading of crude oil. And Kuwait's oil minister assured a Reuters reporter that there were no talks among Gulf Arab exporters to replace the U.S. dollar for trading oil.

The denials were of course ignored. The Drudge Report picked up Fisk's tale and headlined it, "Arabs plot to drop dollar." And so it came pass on Tuesday night that Fox's Glenn Beck and CNBC's Larry Kudlow based their dire warnings about the state of the U.S. dollar on a Fisk tale. (1)(2)

Robert Fisk is a 9/11 Truther; given how much derision Glenn heaped on Van Jones for Jones's association with the Truthers, I surmise that Glenn or his research team were so riveted by Fisk's assertions they didn't pay attention to the author.

And Larry Kudlow has expressed so much worry in recent weeks about the dollar's weakness that it's likely he saw the article as grist for his mill, but without his noticing the name of the author or researching him.

As a general rule the more controversial the claims in a news story, the more one needs to consider the source. And given the source in this case, and that he didn't name his sources, the Fisk article makes for fish wrap even though it contains bits and pieces of facts.

Robert Fisk is proudly unapologetic for his view of journalism, which is that it must "challenge authority, all authority, especially so when governments and politicians take us to war." According to the Wikipedia article about him, "He has quoted with approval the Israeli journalist Amira Hass: 'There is a misconception that journalists can be objective ... What journalism is really about is to monitor power and the centres of power.'

I interject that it's just such agenda-driven approaches to reporting that have wreaked havoc on the journalism profession and sowed great mistrust for the news media among the public.

In Mr Fisk's case he is so eager to believe that America will collapse any day from the sheer weight of its sins that he's an easy dupe.

As to why "Gulf Arab and Chinese banking sources in Hong Kong" would tell Mr Fisk such a story at this particular time, there could be any number of reasons. And given his tendency to listen to the voices in his head it's not clear as to exactly what he was told. His article does not provide direct quotes from those unnamed banking sources.

I've made an issue of Mr Fisk's article because it was picked up by two influential American commentators. They and their researchers need to take particular care at this juncture; that's because a big trade in rumor-mongering has arisen from the uncertainty about the direction of financial and currency markets. The only protection is to read and listen defensively to news reports about those sectors.

None of the above means there isn't discussion about diversifying more from the U.S. dollar; the discussion, and diversification, have been going on openly for years. That's not a bad thing; it's good thing, and a natural development if it's allowed to proceed naturally. However, it's also no secret that OPEC members who like the United States least, such as Iran and Venezuela, want to abruptly end OPEC's formal pricing of oil in dollars.

Would OPEC be self-destructive enough to destabilize the international monetary system by suddenly refusing to accept dollars for oil? I don't think they're suicidal. As to whether they might try to put a scare in everybody by hinting they're crazy enough to do something like that --

Well, some OPEC members are still pretty steamed that the USA went around them earlier this year when the cartel jacked up the oil price. The U.S. began pumping more oil and turned to Russia and Brazil for oil; those countries were all too happy to deal. That forced OPEC to back down.

As to how happy the British government is to see the United States getting cozier with Russia, gee, maybe Mr Fisk can find out the answer and report back.

1) Larry Kudlow, The Kudlow Report, October 6, 2009, CNBC Transcript:
Two big economic stories today. The first is about the demise of the dollar. According to London’s Independent, the Arab oil producers in the Gulf are planning with China, Russia, Japan, and France to end dollar transactions for oil and move instead to a basket of currencies that might include the Japanese yen, the Chinese yuan, and the euro, along with gold and some kind of regional Gulf state currency. [...] As far as the currency story goes, I say where there’s smoke there’s fire. [...]
2) Glenn Beck, October 6, 2009, Glenn Beck Show, Fox News Channel Transcript:
[...] OK, that's nice optimism. I'm sure you are going to be a favorite with Lindsey Graham — he's optimistic about stuff too. But that doesn't quite provide comfort after what I read in The Independent on the "Demise of the Dollar." The British paper claims that Arab states have launched secret moves with China, Russia and France to stop using the U.S. currency for oil trading. They plan to instead move towards a "basket of currencies." Oh, that sounds so inclusive, doesn't it? The basket includes the euro, yen, pound sterling, Canadian dollar, Swedish crown krona and the Swiss franc. [Fisk's article does not mention all the currencies Glenn named] Hmmm, what's missing?

Now, just so you know, the Saudi Central Bank governor denies the secret talks took place. Oh, well if they said so, we can all assume the dollar is here to stay and everything is peachy. But, in the off-chance the Saudi Central Bank governor isn't *reliable*, what does that mean for our dollar and our country if it is no longer pegged to oil? What does that mean for you? [...]"


DocJim said...

Thanks, I needed this. I printed out the article from the Independent, not knowing the author.
Later, it occurred to me that the Chinese made a bone-headed mistake to reduce the value of the dollar, since they hold so many. I began to wonder about the veracity.
You relieved my mind.

Pundita said...

DocJim -- My pleasure. One has to learn to think like a bunko squad cop when reading the news.