The power of lying 20

From Politico:

It’s the biggest mystery in global finance right now: Who conducted a sneak attack on the U.S. dollar this week?

It began with a thinly sourced but highly explosive report Monday in a British newspaper: Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.

Is it true? Everyone from the head of the Saudi central bank to U.S. officials scrambled to undercut the story, but no matter.

With the U.S. economy on the ropes and America by far the world’s biggest debtor, investors aren’t feeling as secure about the dollar as they used to. And the notion of second-tier economies ganging up on Uncle Sam didn’t sound so far-fetched.

For American officials, the possibility of the dollar losing its long-term dominance in global commerce is a nightmare scenario because it would likely mean sharply higher interest rates at home and a declining ability to finance the U.S. debt. No one believes it could really happen right now, but stories like the British report this week make it seem incrementally more likely.

So the piece by Robert Fisk of the Independent shocked currency traders around the world and almost instantly sent the value of the U.S. dollar spiraling downward and the price of gold skyrocketing to an all-time high, as a hedge against a weakened dollar.

The website quickly amplified the impact of the story with a headline atop the site: ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING …

“You read that story, and you do two things: You sell the hell out of dollars and you buy gold,” said Les Alperstein, president of the financial research firm Washington Analysis. “The story has a lot of credibility, with some caveats.”

So who wanted dollars diving and gold rising? In other words, who is Fisk’s source, and why did he or she want to tank the dollar? It’s the global currency version of the old Washington parlor game of speculating on the real identity of Deep Throat.

No one knows. …

But what we do know is that Robert Fisk is the toadie of Arab despots, the propagandist of  terrorists, the hater and calumniator of Israel, the denigrator of America, and above all the veteran inventor of ‘news’. His reports of Middle Eastern wars have notoriously been full of vicious fabrications, designed to denigrate and impugn Israel. He does not need a Deep Throat – he is his own source. And he has not been ineffective. We grant him that. There can be little doubt he has contributed significantly to the continuing misery of the Palestinian people and the intensity of European anti-Semitism. Now he has had his biggest effect yet. There may be very little truth in his story, but such a tale told at such a time was sure to have a dramatic and dire effect.

This is a triumphant moment for a villain, the consummation of a career in bearing false witness.

Posted under Arab States, Commentary, Israel, middle east, Saudi Arabia, United States by Jillian Becker on Monday, October 12, 2009

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