The Strange Case of Gold, Oil and Mummar Kaddafi.

What with the world’s attention diverted with demise of Osama Bin Laden and dubious controversies over whether or not to release any photographic evidence of his brain matter, the story of the ongoing violence in Libya has been moved to page 12 so to speak. That is until just the other night when Kaddafi’s forces managed to blow up the last remaining oil facilities in rebel hands at the port city if Misrata. Going up in the smoke of the fires was not only the rebels last hopes of holding the city but any potential of funding there little revolution with oil and any financial viability to the curiously and hastily created new Central Bank of Libya.

I’d say that it’s a pretty safe bet that Kaddafi is a low life tin pot dictator not much different than any other low life tin pot dictator found all across the Arab world. This raises the questions of why Libya and why now? As the wave of violence spread across the Middle East Kaddafi was hardly the only or the first to turn his guns on his subjects. In particular, as in Syria, where using unarmed protesters for target practice is now a daily ritual.

So is there something going on under the surface with Libya that is perhaps not being discussed but is also perhaps a driving force behind the “humanitarian mission” that NATO has undertaken? Well let’s look at a few elements, some not necessarily making the front page in the New York Times.

1. Shortly after the so-called rebels took control of the city of Benghazi it was announced that it would become the home for a new Central Bank of Libya and would seek association with both the (International Monetary Fund (IMF) and the Bank for International Settlements (BIS).

2. This new “Bank” would also become the financial clearing house for new oil export agreements between the new rebel “government” and other Arab states that would provide the logistical support to get the oil out of Libya, i.e. tankers and refinery capacity.

3. Libya’s existing Central Bank is wholly owned by the State and is not affiliated with either the IMF or the BIS. (Not to mention that it also owns about 12% of the major Italian banks.)

4. Just a few months before this “revolution” spread to Libya, Kaddafi (through the state owned bank) announced that they were seeking to create a “Gold Dinar” to be used by Arab and African States as the medium of exchange for oil transactions within the region.

5. Any such transaction would be outside the reach of the IMF and BIS and would not necessarily be based on any translation of the spot price value based in U.S. Dollars, and whatever the agreed to transaction price was, based in Gold Dinars.

With any such transactions now taking place directly between the buys and sellers and cutting out the western spot market and banking interests and eliminating whatever their cut of the action is for the currency trades certainly casts an additional if not different light on the above questions of “Why Libya and why now.”

I’ll be waiting for Osama Ben Bernanke to be asked about this at his next propaganda press conference. But I won’t be holding my breath.