Right from the get-go I want you to know that this column is about two distinctly different items: First, the decline of the value of oil and gold in recent days and second, some discourse about a Christian sect called Copts who reside mostly in Egypt.
My rationale is that I really am not going to say enough in volume about either one to fill up a whole column and, in the Season of Christmas, the Copts should be remembered in your prayers as they are in a bad fix.
Over the last week or so the value of oil and gold have both been dropping. A person might think that with all of the turmoil in Europe concerning their sovereign debt (that pertaining to the bonds issued by countries) problems and their systemic banking weakness that there might be a bunch of Europeans buying gold and oil to hedge the fall of the Euro. After all, the Euro has declined about 3 percent in just this last week. In the currency trading business, 3 percent is a huge amount.
I read today that one prognosticator thinks that the Euro might drop as much as 30 percent more during 2012. All this should create a "flight" from the Euro with folks getting into stocks and bonds valued in other currencies.
Indeed, this flight is happening and the reserve currency of the world, the U.S. Dollar, has buoyed up very well in the last 10 days or so. That's the reason that oil and gold are dropping.
I wrote recently about the "intrinsic value" of both oil and gold and nothing has happened in that period to decrease the utility of either item. The intrinsic value is the same but the currency in which they are valued went up in it's market value relative to all other currencies in the world. As a consequence of the dollar's increase in value, the prices of oil and gold have dropped.
The New York Stock Exchanges indices are staying up a little bit relative to the German, French, Japanese, and English exchanges. This means that some European cash is probably coming to the U.S. for protection from inflation and possible economic chaos in Europe.
Our economy is performing a little less pitifully than the European socialist systems at this time.
Now for a total change.
The Copts are the principal Christian religion in Egypt. They comprise about 10 percent of the population and are an ancient faith.
Like the Roman and Orthodox Catholics, the Episcopalians and some others, they claim unbroken apostolic success of their leaders (Patriarchs) since the time of Christ. They were the dominant religion in the Middle East until the time of Mohammed.
In order to practice their faith in Egypt in recent times, they supported the strongman Mubarak. He guaranteed relatively little hassle for them by the Islamic majority but there were still incidents of church burnings and murders.
Now that Mubarak is gone and militant factions like the Moslem Brotherhood are gaining power, the Copts are in a very bad position. Religious slaughter seems a certainty as we have seen in Iraq that the Christians have emigrated or gone underground because of their faith.
This second part doesn't seem to have much to do with economics but it does. When our energy policy in this country helped to destabilize the Middle East and North Africa, an unintended consequence was to put these Christians in danger.
Perhaps including them in your Christmas prayers might help them.
Stephen Fletcher was graduated decades ago from Cornell University with an A.B. in Economics and from Michigan State University with an M.B.A. He has lived and worked in the decades from graduation until now in the Alpena area. He thinks that Economics is fun and interesting.