Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold

by Mahmoud A. El-Gamal , Amy Myers Jaffe

• ISBN13: 9780521720700
• ISBN10: 0521720702
• Format: Paperback
• Copyright: 2009-12-14
• Publisher: Cambridge University Press

Summary

Oil, Dollars, Debt, and Crises studies the causes of the current oil and global financial crisis and shows how America's and the world's growing dependence on oil has created a repeating pattern of banking, currency, and energy-price crises. Unlike other books on the current financial crisis, which have focused on U.S. indebtedness and American trade and economic policy, Oil, Dollars, Debt, and Crises shows the reader a more complex picture in which transfers of wealth to and from the Middle East result in a perfect storm of global asset and financial market bubbles, increased unrest, terrorism and geopolitical conflicts, and eventually rising costs for energy. Only by addressing long-term energy policy challenges in the West, economic development challenges in the Middle East, and the investment horizons of financial market players can policy makers ameliorate the forces that have been causing repeating global economic crises.

Author Biography

Mahmoud A. El-Gamal, Ph.D, is Chair of the Department of Economics and Professor of Economics and Statistics at Rice University in Houston, Texas, where he also holds the endowed Chair in Islamic Economics, Finance, and Management. His most recent book is Islamic Finance: Law, Economics, and Practice (Cambridge University Press, 2006). Amy Myers Jaffe is the Wallace S. Wilson Fellow for Energy Studies at the James A. Baker III Institute for Public Policy and Associate Director of the Rice University Energy Program. She is coeditor of Natural Gas and Geopolitics: From 1970 to 2040 (Cambridge University Press, 2005, with David G. Victor and Mark W. Hayes) and Energy in the Caspian Region: Present and Future (2002).

Table of Contents

List of Illustrations	p. vii
List of Tables	p. ix
Foreword	p. xi
Preface	p. xiii
The Challenges of Resource Curses and Globalization	p. 1
Volatilities: Financial, Economic, and Geopolitical	p. 10
Petro-States, Hydrocarbon Dependence, and Resource Curses	p. 14
Geopolitical Conflicts and the Politics of Discontent	p. 16
Mounting Debt and Fragility of the Global Financial System	p. 18
Constants and Variables in the Cycle: 1970s to the Present	p. 19
New Middle East: Childhood 1973-84 and Adolescence 1985-95	p. 25
OPEC's Market Power: Economics, Politics, and Volatility	p. 26
Middle-East Flows of Labor, Capital, and Cultural Norms	p. 31
Oil Price Collapse and the Politics of Discontent	p. 33
The Rise of National Oil Companies	p. 40
Militarism, Debts, and Global Finance	p. 44
Road to the Status Quo: 1996-2008	p. 51
Changing OPEC Politics and Renewed Oil Revenues	p. 52
The Other Black Gold: Natural Gas	p. 60
The Economics and Geopolitics of Middle-East Discontent	p. 65
Déjà Vu: Overgrown Children of the 1970s?	p. 71
Globalization of Middle-East Dynamics	p. 75
Hedge Funds and Sovereign Wealth Funds	p. 76
Increased Financial Integration and Contagion	p. 80
Liquefied Natural Gas and Globalized Energy Markets	p. 85
Conflicts, Economic Sanctions, and the "War on Terror"	p. 90
Dollars and Debt: The End of the Dollar Era?	p. 97
The Dollar as Reserve Currency	p. 97
Bretton Woods and Beyond: The Primacy of U.S. Debt	p. 99
Global Economic Growth, Interest Rates, and Debt	p. 101
Uneasy Symbiosis: U.S. Consumers and Asian Savers	p. 103
Contagion: Sequential Bubbles and Crashes	p. 107
The Dollar and Bets on Chinese Growth and Oil	p. 110
Motivations to Attack or Abandon the Dollar	p. 117
America's "Exorbitant Privilege" and Geopolitics	p. 119
Petrodollar Recycling and the Dollar-Pricing of Oil	p. 121
Saddam Hussein, Ahmadinejad, and Dreams of Petroeuros	p. 122
The Paradox of Pegged Currencies	p. 125
Pegged Currencies and "The Balance of Financial Terror"	p. 130
The Threat of Renewed Protectionism and Mercantilism	p. 134
Globalization with Multiple Currencies: Bretton-Woods III?	p. 139
Resource Curses, Global Volatility, and Crises	p. 143
Continued Regional and Global Resource Curses	p. 144
The Global Resource Curse	p. 147
Continued Global Dependence on Oil	p. 150
Global Conflicts, Radicalisms, and Terrorism	p. 159
Serial Amnesia, Greed, and Financial Crises	p. 164
Peaks and Troughs: The Need to Ameliorate the Cycle	p. 167
Ameliorating the Cycle	p. 171
Technical Solutions and International Cooperation	p. 175
Attenuating the Energy-Markets Cycle	p. 177
Energy Market Regulation and Multilateral Intervention	p. 181
Petrodollar Recycling and International Lender of Last Resort	p. 184
Managing Geopolitical Conflicts	p. 188
Conclusion	p. 191
Notes	p. 193
Bibliography	p. 210
Index	p. 216
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