In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
Rex
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with 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.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
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The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."
This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.
Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.
China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.
Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.
Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.
The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.
The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.
"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.
October 6th, 2009, 14:57
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
SYDNEY (Reuters) - Britain's The Independent newspaper Tuesday reported that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.
The U.S. dollar eased after the report, written by Middle East correspondent Robert Fisk and monitored on The Independent's Web site. It cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.
Fisk said the proposal was for trade in crude oil to move over nine years 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, the United Arab Emirates, Kuwait and Qatar.
"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars," said the report. It added that France had also been involved in the talks.
Most Gulf Arab states have pegged their currencies to the dollar.
The Independent said U.S. authorities were aware that the meetings had taken place but had not discovered the details and were "sure to fight this international cabal."
The issue of shifting oil trade away from the U.S. dollar has been raised occasionally in recent years, but analysts and experts say it is unlikely to occur any time soon.
"I don't think we will see much concrete actions coming out of such discussions because even when the dollar is weak, it doesn't mean that commodities are undervalued," said David Moore, commodities analyst at the Commonwealth Bank of Australia.
"In fact, when the dollar weakens, commodities prices tend to increase by a higher ratio."
Iran began settling most of its crude oil exports in non-dollar currencies, primarily the euro, several years ago, but the actual price for its oil is still set in dollar terms.
The U.S. dollar dipped in the wake of the report, with analysts cautious about reading too much into it, particularly given the nine-year timeframe.
The euro edged up to $1.4691 from $1.4662 before the news broke, while the dollar eased to 89.00 yen from 89.40.
"This looks to be a very long-term thing with a few hurdles to cross," said Jonathan Cavenagh, currency analyst at Westpac in Sydney. "Foremost, China needs to be more flexible with its currency."
"Still, this is U.S. dollar negative news which is moving markets and shows that central banks not just in Asia are looking to diversify away from the US dollar," he added.
(Reporting by Wayne Cole; Editing by Mark Bendeich and Dayan Candappa)
SINGAPORE (Reuters) - A report on Tuesday in the Independent newspaper revived the idea of ending a huge volume of trade of the world's most liquid commodity -- oil -- in the U.S. dollar, a potentially major sign of the greenback's fading status. Quoting unnamed sources, including Gulf Arab and Chinese banking sources, the paper reported that Gulf Arab states were in secret talks with Russia, China, 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."
That appeared to suggest the easier of two ways to break the oil/dollar link: ending the use of the dollar as the currency used to settle oil trades between countries or between companies, an important function but essentially a treasury operation, one that Iran, for instance, has already undertaken.
The much more difficult task would be to replace the currency in which oil is priced: the U.S. dollar, the currency that underpins benchmarks from New York to Dubai to Singapore, and which would require a massive effort to change.
In other words, if the plan materializes, it could be major news for forex markets by allowing oil exporters to more easily diversify their currency reserves and remove the need for importing nations to buy dollars to pay for their oil, but would appear unlikely to revolutionize oil trade.
The notion is hardly new and has been periodically raised, and frequently dismissed, during the dollar's long slide this decade, particularly with increased discussion about a shift toward a new global reserve currency.
Although an increasing share of global commodity trade is being settled between counterparties in non-dollar currencies, that's a far cry from changing the dollar-denominated markets that establish the underlying prices for those trades, even within the nine-year time frame that the paper cited.
* BENCHMARK BLOCKER
Beyond the strong political alliances between major Gulf exporters and the United States, there are deep logistical reasons to mitigate against a major shift in the basis currency for oil trade away from the U.S. dollar.
Despite the Gulf's role as the swing oil supplier to the world -- and China's status as the fastest-growing consumer -- the most liquid market for oil remains the New York Mercantile Exchange, followed by the London-based Brent contract.
Even the Oman crude oil futures contract launched two years ago in Dubai is traded in dollar terms.
Unless Gulf nations are prepared to remove restrictions on the free trade of their crude oil exports -- allowing them to become benchmarks for the rest of the world, as some analysts have argued would be useful -- it will be difficult for them to influence the basis currency for global oil.
Although commodity exchanges in both Japan and China offer local currency-based oil futures, they are ultimately linked back to regional benchmarks denominated in U.S. dollars.
* CONVERTIBILITY ISSUE
The fact that China's yuan and many Gulf currencies are not fully convertible is also a significant obstacle to any effort to replace the dollar in global commodity pricing.
* IRAN EXAMPLE
Iran, the most virulently anti-dollar nation in the region, has notched up some modest success in reducing its involvement with the greenback.
Two years ago it asked its Asia customers to settle their oil trades in non-dollar currencies; after a few months of debate, most complied. But still Iran sets its export prices based on a formula linked to dollar-denominated benchmark crudes.
Iran has pushed for the Organization of the Petroleum Exporting Countries to switch from the dollar when calculating international oil prices, though it has so far received little support for the initiative.
(Reporting by Jonathan Leff; Editing by Clarence Fernandez)
JEDDAH, 29 March 2005 — The six-member Gulf Cooperation Council countries are committed to issue the GCC common currency in the year 2010, Finance Minister Dr. Ibrahim Al-Assaf stated yesterday. He denied press reports that the new currency has been named Gulf dinar. “We have not yet finalized the name of the currency as to whether it be Gulf dinar or riyal or any other name,” Al-Hayat Arabic daily quoted the minister as saying.
According to a study, the new currency will be the world’s most important currency union after the euro.
The GCC currency will have far-reaching implications, including a big boost to inter-GCC trade, and could help the region’s countries diversify their economic base away from hydrocarbons, said the study prepared by the Dubai-based Gulf Research Center (GRC).
“The relevance of the currency is not only because it will be the single currency of an economic bloc that has a GDP of $388 billion and controls 45 percent of the world’s known oil reserves, but also because currency unions invariably increase the levels of intraregional trade,” it said.
Once established, the GCC leadership may decide to invoice their hydrocarbon sales in the new common currency, moving away from the current dollar pricing system. It could also become the reserve currency of choice for Islamic and Arab central banks for a combination of religious and political reasons.
Al-Assaf also disclosed that GCC finance ministers would meet in Riyadh on Sunday to discuss important topics including GCC’s negotiations with the European Union. “We will discuss ways to remove the obstacles confronting GCC-EU talks to conclude a trade agreement,” he said.
The Saudi minister was speaking to reporters after attending a ceremony organized by the Jeddah-based Islamic Development Bank to mark its 30th anniversary. He refused to describe the US-Bahrain talks to establish free-trade zone as a crisis. However, he pointed out that the Riyadh meeting would discuss the matter among other topics.
Al-Assaf said Saudi Arabia has proposed to renew the term of Dr. Ahmed Muhammad Ali, president of IDB, for another five years. “We have presented a proposal officially last week to Malaysian Prime Minister Abdullah Badawi, current chairman of the Organization of the Islamic Conference,” he said. IDB governors meeting, scheduled to be held in Malaysia after three months, will take a final decision on the issue.
October 6th, 2009, 15:09
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
ISTANBUL (Reuters) - A newspaper report that Gulf Arab states are in secret talks to replace the U.S. dollar in the trading of oil is wrong, Saudi Arabia's central bank chief said on Tuesday.
Asked by reporters about the story in Britain's The Independent, Muhammad al-Jasser said: "Absolutely incorrect."
Asked whether Saudi Arabia was in such talks, he replied: "Absolutely not."
Asked whether Saudi Arabia was committed to the dollar, he said: "You asked the question, I answered it. You asked about the story."
The Independent quoted unidentified sources as saying Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.
(Reporting by Simon Rabinovitch; Editing by Andrew Torchia)
October 6th, 2009, 15:10
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
ISTANBUL/SYDNEY (Reuters) - Big oil producing nations denied on Tuesday a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.
The U.S. dollar eased in response to the report, which was written by The Independent's Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.
It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.
But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks.
Asked by reporters about the newspaper story, Saudi Arabia's central bank chief Muhammad al-Jasser said: "Absolutely incorrect." He repeated the same response when asked whether Saudi Arabia was in such talks.
Russia's deputy finance minister Dmitry Pankin said: "We did not discuss this at all."
Algerian Finance Minister Karim Djoudi told Reuters: "Oil producing countries need to stabilize revenues but...I don't see a need for oil trade to be denominated differently.
"But we are at the IMF conference where all sorts of subjects are raised and discussed," he added.
SLIP
The U.S. dollar slipped in the wake of the newspaper story. The euro edged up as high as $1.4749 in European trade from $1.4662 before the story appeared.
The euro fell back to $1.4701 when the Saudi Arabian and Russian officials denied the story, but it subsequently resumed strengthening because of the currency market's continued concern over the dollar's trend.
Russia has in the past publicly raised the idea of shifting its oil trade away from the dollar because of the weakness and volatility of the currency, which has been undermined by the U.S. trade and budget deficits.
China, holder of the world's biggest foreign exchange reserves, has suggested that in the long term, the dollar should lose its role as the globe's top reserve currency.
A main focus of the talks among global finance officials in Istanbul has been correcting big trade imbalances that can destabilize the world economy. Many economists think the dollar may have to weaken further to reduce the imbalances.
However, analysts said that while individual countries would find it relatively easy to stop using the dollar in settling their oil trades, as Iran has already done, replacing the currency in which oil is priced would require a massive effort.
The newspaper story did not make clear how the change would work, and many analysts doubted it would occur any time soon.
"I don't think we will see much concrete action coming out of such discussions because even when the dollar is weak, it doesn't mean that commodities are undervalued," said David Moore, commodities analyst at Commonwealth Bank of Australia.
"In fact, when the dollar weakens, commodities prices tend to increase by a higher ratio."
And apart from the strong political links between Gulf nations and the United States, the lack of convertibility for many Gulf currencies and the yuan tops the list of practical hurdles to making such a shift. Saudi Arabia and some other Gulf states now peg their currencies to the dollar.
"First, they will need to select a basket of currencies, and issues surrounding that are: which are the currencies to be included in the basket and what ratios to use," said Victor Shum, energy analyst at Purvin & Gertz Consultancy in Singapore.
"It's already a big hurdle just to move oil from one currency to another, let alone a basket of currencies. If there was already a significant proportion of global oil trade being priced in non-U.S. dollar now, than perhaps there would be more pressure to price crude in another currency. But we're still far from that."
Sources with refiners in Japan, China and South Korea all said they had not been approached by any oil suppliers about changing the terms of their settlement for crude oil purchases.
SECRET MEETINGS
"Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars," said the newspaper story, adding that France had also been involved in the talks.
The Independent said U.S. authorities were aware that the meetings had taken place but had not discovered the details and were "sure to fight this international cabal."
October 6th, 2009, 15:25
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
Quote:
Originally Posted by Beetle
I am wondering what Obozo will do about this? Maybe he should print more money. Seems to be the answer to everything.
The Progressives (useful idiots) are in the process of burying America's economy.
Although they are now in denial about the plan; China, Russia, Japan, France/EU and Arab States are working on a strategy to decouple the US Dollar from oil denominations. The parties involved are not ready to make the move yet but the necessary accommodations are quietly being put in place.
Here is a brief excerpt from an interview from 2007 (approximately 2 years ago) on the time frame of the coming decline of the dollar and dissolving American Hegemony.
JR is on target and reveals much more that is yet to happen.
October 7th, 2009, 23:17
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
LONDON (AFP) – The price of gold struck an all-time high Tuesday as the dollar fell on a news report of a plan by Gulf states to stop using the greenback for oil trading.
Gold hit 1,045.00 dollars per ounce on the New York Mercantile Exchange in late trades.
Hours earlier on the London Bullion Market, gold surged to 1,043.78 dollars beating the previous record high of 1,032.70 dollars an ounce struck in March, 2008.
Barclays Capital precious metals analyst Suki Cooper said dollar weakness appeared to be related to reported secret talks about oil being priced in a basket of currencies including gold rather than the dollar,
This "has added to concerns about the future role of the dollar in international financial markets," Cooper said.
The dollar's future as the world's top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Arab states have launched steps with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the report was denied by Kuwait and Qatar and reportedly by other nations.
The Independent's Middle East correspondent Robert Fisk wrote in his paper: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil."
They would instead switch "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 (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar," added Fisk.
Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.
The run-up in gold has been largely driven by weakness in the dollar, which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand.
Gold also wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.
Precious metals consultancy GFMS last month warned that the current upward trend in gold may not be sustainable should global stimulus packages fail to boost flagging demand in the battered world economy and inflation fall as a result.
The Group of 20 leaders of emerging and developed nations recently agreed at a summit in Pittsburgh not to roll back massive stimulus measures that helped contain a severe global recession.
October 8th, 2009, 09:29
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
Gold prices hit a record high of $1,040 an ounce today , as renewed speculation about the declining power of the dollar as the world's reserve currency sent investors stampeding into commodities.\
Reports that secret talks had been held between China and Middle Eastern states about changing the pricing of oil from dollars to a basket of currencies and gold sent the greenback into a renewed slide on foreign exchange markets, despite denials from the governments involved. By late afternoon the euro was up by 0.7% against the dollar at $1.47.
Share prices also rallied as investors' hopes that global recovery was gaining ground were boosted by news that the Australian central bank had become the first to increase interest rates since the world recession began.
The FTSE 100 closed up 113 points, at 5138, with mining, oil and gas companies contributing much of the increase. The Dow Jones industrial average of leading shares was up 157 points by lunchtime in New York.
Commodity prices from gold to sugar have jumped in recent weeks as Asia's rebound has fuelled hopes of global recovery. Investors have begun to fret about resurgent inflation, turning to natural resources as a "safe haven". Rumours of a shift in the pricing of oil helped feed this feverish mood.
Julian Jessop of research house Capital Economics said gold prices could push even higher, but he expected them to fall back in the longer term. "A mix of unfounded inflation fears, conspiracy theories and speculative demand looks more like the ingredients for a speculative bubble than the grounds for a sustainable increase in prices," he said.
He added that although gold supplies are finite – a quality that attracts die-hard enthusiasts nostalgic for the days of the Gold Standard – periods of unusually high prices tend to see used gold, such as old jewellery, put up for sale. "You can very, very quickly get a flood of gold back to the market," he said.
Since the credit crisis, there has been growing debate about the role of the dollar as the world's reserve currency, which has helped America to borrow cheaply from the rest of the world for decades. World Bank president Robert Zoellick warned last week that the US could not take the dollar's status for granted. "Looking forward, there will increasingly be other options," he said, and warned that confidence in the dollar would depend on how successfully Washington managed to deal with its deficits, and fix the world's largest economy without unleashing a bout of inflation.
Steps have already been taken to loosen the dollar's grip: Iran has begun pricing oil exports in euros; China recently launched the first yuan-denominated bond open to outside investors in a step towards making its currency exchangeable on international markets; and Asian central banks are piling reserves into gold as well as the Treasury bills that have been the favoured investment for the past decade.
China, Russia and other emerging market governments have complained bitterly at international gatherings about the overweening economic power of the US. "Throughout this year, China has questioned the dollar as the medium of exchange, and questioned the dollar as a store of value," said Gerard Lyons, chief economist at Standard Chartered bank.
China and other developing countries that have earned a vast bounty by exporting cut-price consumer goods to the US over the past decade have been infuriated by the way the collapse of America's banking system has sent shockwaves throughout the world economy.
However, analysts said it would probably take many years for the dollar to be replaced. "The decline of sterling really goes from the end of the first world war to the Wilson devaluation of 1967 – and the decline of the dollar probably began when Nixon broke the link with gold, so we've probably got a couple of decades to go," said Gabriel Stein, of Lombard Street Research.
"Currencies don't remain dominant forever," he said.
He added that China and the Middle Eastern oil producers are also still holding huge dollar-denominated reserves, so that they would suffer from a sudden decline in the value of the greenback.
Lyons said the most likely outcome was a continuation of China's policy of "passive diversification". Instead of dumping dollar assets, which could depress the currency's value, it uses surplus cash to buy other assets, including gold and euros.
October 8th, 2009, 09:35
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
Reports surfaced Tuesday of a conspiracy underway to bounce the dollar as the currency used to trade oil.
The chatter largely stemmed from an article in Britain's "Independent" newspaperthat said secret meetings were taking place between Arab states, China, Russia, Japan and France, to end dollar dealings for oil and moving instead to a basket of currencies.
And the newspaper goes on to say the nations intend to implement the change -- in as little as 9 years.
Although the reports were later denied, the news helps explains the sudden surge in gold prices[US@GC.1 1055.1 http://media.cnbc.com/i/CNBC/CNBC_Im...tchlist_up.gif 11.7999 (+1.13%) http://media.cnbc.com/i/CNBC/CNBC_Im...ltime_icon.gif] which would be included in the basket along with the Japanese yen and Chinese yuan, the euro, and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.”
Should you put any stock in this report?
"I’ve heard the story many times," explains strategic investor Dennis Gartman on Fast Money. "But what's different this time is that the story came out in the Independent, which is a pretty well respected newspaper."
Also, there's some new information in this report that makes it seem more credible. Specifically the fact that France and Japan were part of the discussion.
"Of course everybody denied being at the meeting, they have to," says Gartman. "But do I doubt for a moment that those talks have taken place somewhere? That leaders have talked behind curtains about the fact the world needs to diversify away from the dollar?"
"I don't doubt that for a moment," Gartman says.
October 8th, 2009, 09:39
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
Missed Tuesday's Cavuto? Catch "The Deal" right here on FOXBusiness.com
What the buck!
Here's the deal.
The dollar ain't the deal.
Or soon might not be.
Because even though a lot of countries were rushing to dampen a rumor, they didn't entirely deny it.
That rumor?
The buck is bucked.
Gulf Arabs don't like it. Don't want it. And want to put a stop to pricing oil with it ...Never mind that Saudi Arabia’s central banker tells the IMF today that he expects oil to remain priced in dollars.
Swapping it not with a single currency, but actually a basket of them...Including the Japanese yen and Chinese yuan, and the Euro.
Ring a bell?
It should. Reports that secret meetings have already been held by finance ministers and bank governors in China, Russia, Japan and France...
All eager to end dollar dealings for oil.
I think we're far passed the debate "whether" this will happen...Just "when."
I think soon, because things are just moving too fast.
And the latest tee-up was that Olympic diss to the president...Flies half way around the world to get Chicago an Olympic bid and "as" the guy's traveling back home, he's informed Chicago’s the first city knocked "out" of contention.
Then look at what's been happening with gold prices.
Reaching a record high today of close to $1,039 an ounce.
Soaring as the U.K. newspaper, The Independent, continues reporting on mysterious meetings in Hong Kong involving gulf Arab and Chinese banking types.
No wonder why the dollar's swooning.
Because this is about more than a currency on the line. It's about a country on the line.
And it not only involves folks like China and Russia, who don't flip over us.
But Japan and France, who presumably like us.
Presume nothing of the sort.
This ain't personal. This is business.
And this ain't chump change.
This is serious change.
Try more than two trillion bucks in serious change...That's the dollar reserves of Abu Dhabi, Saudi Arabia, Kuwait and Qatar.
Talk about cash.
Talk about cabal.
And you thought losing the Olympics was tough.
I think we're losing something bigger.
Much bigger.
October 8th, 2009, 09:41
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
A switch from using the dollar as a world currency could hurt countries whose assets are mostly in dollars, says Ronald Smith, head of research at Alfa-Bank.
The UK’s Independent newspaper reported Tuesday that Middle-East countries joined by Russia, Japan, China and France are holding secret meetings to end oil trading using the dollar.
October 8th, 2009, 14:10
Beetle
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
Thanks for the data mining Vector. You do a great job at it. Keep up the good work!
October 8th, 2009, 20:54
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
National Post The loonie hit an intraday high of US95.19¢ before settling down to close at US95.04¢, an increase of US0.91¢.
OTTAWA -- The Canadian dollar climbed above the US95¢ level Thursday for the first time in over a year as weakness in the U.S. dollar intensified, prompting several central banks in Asia to intervene in an effort to cap the rise in their local currency.
The loonie hit an intraday high of US95.19¢ before settling down to close at US95.04¢, an increase of US0.91¢. The currency has gained US2.5¢ in the past week and is now at its highest level since Sept. 29 of last year, just before markets began to crumble amid the financial crisis. Analysts have suggested parity with the U.S. dollar is a possibility before the end of 2009.
The Bank of Canada has repeatedly warned of the impact of a higher dollar, and senior deputy governor Paul Jenkins did so again during a speech Wednesday in Vancouver in which he warned the currency's "persistent" strength threatened economic growth.
But analysts say the impact of the central bank's verbal interventions are beginning to wane.
"The central bank's shot across the bow has definitely subsided. There's not much they can do," said John Curran, senior vice-president with CanadianForex, a foreign exchange provider. "If we have commodity strength, and we see equities rallying, and steady strengthening of the Canadian dollar, then the dollar is not out of line with everything else that's going on."
Mr. Curran said the gain in currencies like Canada's was largely powered by the market's growing comfort with risk-taking, bolstered by events in Australia. Thursday, Australia reported 40,600 jobs were created in September and the jobless rate fell to 5.7% from 5.8% reinforcing the view the country's central bank will hike interest rates again. The Reserve Bank of Australia, raised rates on Tuesday, becoming the first major industrialized nation to do so following the financial crisis.
"That has given the green light for more risk to be taken. And people are just continuing on with that," Mr. Curran said.
Also a factor is the continuing weakness in the U.S. dollar, which Thursday hit a 14-month low against a basket of currencies. Overall, the U.S. dollar has dropped 12% from the peak it reached this year in March, and analysts don't expect any pickup until there is a sign the U.S. Federal Reserve might begin hiking its key policy rate.
The U.S. dollar has declined due to its weak economic fundamentals and large deficits, which will force Washington to flood debt markets with treasuries in order to finance day-to-day government operations.
The continuing fall in the U.S. dollar prompted a number of Asian central banks to intervene in foreign exchange markets by buying the U.S. dollar and selling their own currencies. These were said to include South Korea, Hong Kong, Taiwan, Thailand, the Philippines and, possibly, Indonesia.
Thailand's central bank confirmed its market activity. Its assistant central bank governor said the baht, Asia's fourth best-performing currency, was climbing at an unsustainably fast pace and it took action to slow its rise.
"Some days its strength is beyond economic fundamentals," Suchada Kirakul told reporters in Bangkok. "The baht is strong and we are still taking care of it."
Asian central banks intervene to keep their currencies from appreciating, which would hurt their export-oriented economies.
"One of these Asian central banks, on its own, wouldn't have material impact on the U.S. currency. You need a co-ordinated effort amongst a whole lot of central banks to have an impact," said Sacha Tihanyi, currency strategist at Scotia Capital.
He and other analysts add it is quite common for Asian policy makers to intervene in currency markets – a fact that has drawn considerable criticism from policy makers in the west, such as Canada's Finance Minister, Jim Flaherty, and Bank of Canada governor Mark Carney.
Indeed, few analysts expect the Bank of Canada to intervene directly in the markets to cap the loonie's rise. Many believe the U.S. dollar's decline is one of the eventual outcomes as the global economy attempts to correct so-called trade imbalances. The problem, they add, is that an undue amount of the so-called rebalancing is being put on Europe and Japan, while Asian economies – most notably China – are not doing their part.
October 9th, 2009, 22:56
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
The story hit like a thief in the night, even bearing Biblical proportions. The end of the exlusive sale of MidEast oil in USDollars, the rise of Russian and Chinese influence in the Persian Gulf, the rise in importance for the Intl Monetary Fund basket of currencies, the final clarion call for the free ride by Americans on the Dollar Credit Card, and hidden implications that the Saudis must shop for a new security lord in the region with broad military might, these are revolutionary steps with profound geopolitical implications. The back-to-back stories in the UK Independent struck like powerful bolts of lightning in the middle of the night from a North American perspective. These articles by a highly respected journalist will be posted on the Banker Church Doors just like Martin Luther’s demands for change in the Protestant Reformation that smashed the monopolistic power of the Catholic Church centuries ago.
Enough of the mixed metaphors. This is truly incredible news. The US will soon no longer be permitted to sell its indulgences. This is major Paradigm Shift material.
To say the Jackass was excited in the last few days would be a gross understatement. This is a lock for gold to hit $1500 within months, and $2000 within a year. This is a lock for silver to hit $30 within months, and some screaming figure within a year that cannot be fathomed right now, like $50. Be sure to see almost zero follow-up for this story in the crumbling US press networks, widely compromised, distrusted, and even mocked in recent months.
A quick read is required of two articles by Robert Fisk. He touches at the surface on a great many relevant and salient points. This story and its vast consequences will be discussed and analyzed for a full year. This is the biggest story on the USDollar in decades, sure to further develop. This is the biggest financial story since Lehman Brothers was eliminated, since AIG was hidden under the USGovt roof, and since Fannie Mae fraud was shoved in the USGovt basement, one year ago. To say this is not orchestrated by China is professed ignorance. They warned the US not to monetize the federal debt. We did. They warned the US not to reappoint Bernanke as USFed Chairman. We did. Next is transformation with consequences. A new important alliance has formed, which does not involve the United States and Great Britain in decisions. Their nations will drift in isolation. The great majority cannot comprehend or envision such change. Give them time. The most visible changes will come with the value of Gold & Silver, and the demoted USDollar exchange rate. Foreigners were welcomed for their purchase of our vast rafts of debt, but next comes impact from debt failure.
FINANCIAL SYSTEM IMPLICATIONS
When one combines the 0% US interest rate feeder system that shreds the USDollar with leveraged machinery designed by Wall Street itself, with the US$ rejection heralded by the Saudis side by side with their numerous global customers, the conclusion is easy. That is, easy except to the biased bankers who continue to occupy the corridors of finance on Wall Street. The conclusion is the death of the USDollar is written in stone, and a USTreasury default lies down the road. If you believe the 8-9 year timeframe cited by Fisk and denied by the Saudis, then you believe in fairy tales. This timetable is much more palatable to sell to the US/UK maestros, much less threatening in words for a total disruption with overturned tables. The timing of the transition away from the Petro-Dollar will not be 8-9 years, not in this world. The rapidly decaying financial platforms and structures will dictate a much more rapid timetable. Within a year, the Saudis with Russians and Chinese on each arm, will announce the further degradation and deterioration of the US and UK banks, if not entire financial system, dictate an accelerated timetable, more like 2-3 years. It will still seem like Chinese Water Torture into a golden barrel with silver lining, as the dollar typed water turns acidic.
By the way, the World Economic Forum Report just released their list of the most stable nations financially. They ranked the US & UK at #37 and #38. They give the maestros who manage their colossal busts far too much credit. A first hand inspection would reveal far more prevalent devastation and ruin.
THREAT FROM END OF PETRO-DOLLAR
The end of the de-facto standard carries enormous consequences. Two structural pillars have kept the USDollar in its primal position. Banking sysetms across the world are built around the USTreasury Bond reserves storage and management. Purchase & Sale of petroleum is conducted in US$ terms for almost all transactions globally. The former has been under attack for several months, as diversification of reserves is the theme. The latter will next be under attack for a couple years, as abandonment is the theme. Few seem to acknowledge the ‘Other Side’ to the Petro-Dollar de-facto standard. Sure, Saudis led the entire OPEC to price and sell crude oil in US$ terms. But the other side to the deal has been military protection for the Saudis, but also the Persian Gulf nations generally. The ravaging of Iraq can be seen as example of such protection. The Saudis must soft soap and tap dance in denials, so as to avoid a sinister attack of their nation. A Chinese banker has a great quote cited by Fisk in his article. He said, “America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.” Or possibly the shattering noise from its total avoidance!!
GEOPOLITICAL IMPLICATIONS
Russia is the quiet new player. They are often dismissed by the unaware US legions as a broken nation, as they cite autocrat leaders, with great resources to be sure, but with such frequent breach of contract in Western property confiscation (see Royal Dutch Shell, British Petroleum) that partnership seems unlikely for development with the vast engineering expertise offered by Western firms. When the dust clears in the next couple years, Russia will emerge in three key respects.
1) Russia will be the military protector to both sides in the Persian Gulf, both Arab and Iranian.
2) Russia will be the major commodity super market supplier to Europe, both energy and metals.
3) Russia will surprisingly present new financial systems to shock the West, in the form of barter systems, in the form of reliable commodity contract systems, in the form of precious metal vault facilities.
If there is one quintessential error made by the West generally and uniformly in the geopolitical shakeup extending from the Paradigm Shift away from the USDollar, it is the perception of Russia in the next chapter. They will provide tremendous follow-through for the Chinese spearhead to unseat and de-throne the USDollar. With Chinese shiny new industry, Chinese emerging consumer class, Russian commodity supermarkets, and Russian military presence, the face of the globe will change significantly, to the surprise of the compromised and failing US/UK former titans. The main question is how peacefully the fascists pass the baton of power to the East. Watch the hidden murder of bankers for clues.
MISCELLANEOUS IMPORTANT POINTS
Many other implications will be analyzed in the October Hat Trick Letter. They are numerous. Americans have blinders to the fact that since the Persian Gulf nations have been tied to the USDollar, their property market bubble & bust coincide with that of the United States. Many of their projects and banks are in ruins. See Dubai. A string of bank failures in that region comes very soon, whose ripples will extend to London and New York, maybe even Germany and Switzerland.
The falling USDollar that comes in the next several months will lift the entire cost structure to the USEconomy, further hampering the mythical recovery. Talk of export trade vitalization is just that, all talk. Domestic producers and banks are being squeezed, as the production supply capacity will shrink, economists all the while oblivious. See the fateful car industry and its supply chain. See the technology industry and its further shift to Asia. See the tragic collapse of California. See the inevitable liquidation of commercial property, from foreclosure and impossible mortgage refinance in rollover. See the unwise USCongress tax hikes to small business. See the cowardly FDIC fee hike (14-fold in two years) to banks. On the other side of oceans, foreign customers are hurting. The big story from the USDollar impact will be rising higher costs throughout the US lands, where incomes will continue to fall. It is called a cost squeeze.
The broad list of nations involved in the secret talks testifies to two important factors. They do not wish to include the US/UK. The list of Russia, China, Japan, and France pretty much covers the important regions of the world. These factors testify to the further isolation of the US/UK, which bear rising risk of entry into the Third World in a forced march. The British will be forced eventually to abandon the British Pound and join the Euro, according to Fisk.
News flash! Robert Fisk gives a very credible interview regarding the background leading up to his story about the Arabs, Russians, and Chinese decision to reprice crude oil in a basket of currencies other than the USDollar. He also mentions Germany as being one of the participants. The Germans are the important transition design brain trust in the backgroud, like with their counsel for Dubai to demand gold bullion from corrupt London custodians, after Germany did the same to corrupt New York custodians.
The financial trade war forecasted by the Jackass in 2005 and 2006 between the United States and China is finally here in fever pitch. The departure and dismantle of the Petro-Dollar standard will usher in a more dangerous phase of that trade war, one to include a battle of the crude oil in the Middle East region. The US leaders have been so pre-occupied with adventures in foreign lands, that they have lost sight of the US isolation in its own hemisphere. See the missing $50 billion from the Iraqi Reconstruction Fund that nobody is even searching for.
See the Chinese deals to capture new Athabasca oil sand output from Western Canada. See the upcoming halt of Venezuelan oil shipped to the US. See the new Chinese protectors of the Panama Canal. See the depletion of Mexican oil deposits and rapid deterioration into a failed state. By the way, another motive for the Iraq War liberation was to disconnect (illegally of course) China from its oil product concessions with Saddam, that are in the process of reversal and remedy. The USGovt foreign policy does not remotely have citizen interests in mind.
The emergence of the Intl Monetary Fund is a strange story, one that seemed unlikely a year ago. But the big push by Russia, China, India, Brazil (the BRIC nations), and others has resulted in more credibility for the IMF basket of currencies. The big wrinkle for the IMF currency basket is that it will include a gold component. Some clarification. The IMF ‘gold sales’ in recent years have been actually closure of past short gold transactions between nations, usually the US as borrower. Their short covers have been described erroneously as new sales, when they are actually purchase buybacks to end the short position. The next chapter for IMF in the Gold Halls could easily be large scale gold bullion purchases.
The byline of the past year could be written as the ‘End of US Lackeys’ quite accurately. The Japanese have a new #1 trade partner in China.
After the surprise election of Hatoyama in Tokyo, his first state visit as Prime Minister was with Beijing. Take that as a hint that Japan will no longer act as US Lackey. Watch the Bank of Japan and Yen currency management. The Japanese Yen is a key signal to the transition of the US$ to the trash heap. The other nation soon to shed its lackey role is Saudi Arabia. They have crawled into bed with the Kremlin, in a necessary step to maintain military protection. They need it in order to continue their control of the last resource wealth the nation offers. The Saudi Royals are setting up shop in the south of Spain for retirement homes. The Saudis might open the first big new foreign bank accounts in Russia’s emerging financial system that Western analysts are blind to.
Talk about a tall breeze from a mammoth shift of funds! The deal between Saudis and Russians is certain to have many sides.
The deal to support the shutdown of the Petro-Dollar contract between the US and Saudis represents the latest big piece to the Comprehensive Chinese Plan. Note the Yuan Swap facility to aid global trade (check Brazil). Note the transition to the Yuan in the Chinese banking deposits.
Note the ASEAN emergency fund in Yuan accounts. Note the announced dishonor of OTC derivative contracts with a declared Stop Loss. Note the accumulation of gold by the Chinese central bank and permission for citizens to save in gold also. The Chinese have embarked on a comprehensive plan that escapes Western financial media analysts. This latest development is a climax step that changes gears of the transition.
GOLD BREAKOUT COMES IN SLOW MOTION
The biggest object investments to the newly hatched Dollar Carry Trade are gold, crude oil, and perhaps the long-term German Bund. Gold has a share of the investment using free US$ money borrowed at near 0%.
The US$ inherent risk is minimal, since carry trade players will ensure the US$ decline, even strong-arm policy makers. The USFed will thereby fund the demise of the USDollar with free money, as Saudis, Russians, and Chinese manage the global abandonment project. Gold is breaking out. It is doing so at the slowest possible pace in order to minimize the passengers aboard the train, in order to maximize the acquisition of physical gold by China. They do NOT want a rapid rise during their powerful and very hidden accumulation. Recall that China is in control of the gold price nowadays, since the US-China trade war has its central feature the battle over Gold and the USDollar in global banking supremacy.
Gold is working toward the initial 1130 target. The next important target remains 1300 on the horizon. Then comes the moon shot! They will both come as sure as the sun rises. The USTreasury bubble is finally being recognized as the biggest bubble since US housing. It has no future upside, only downside. The USTreasury bubble constitutes a feeder system for Gold & Silver, alongside the Dollar Carry Trade. The financial networks offer humorous downplay of gold, as they continue in their failure to recognize the broken USDollar, the bubble in USTreasurys, the broken US banks, the broken USGovt finances, and the broken US homeowner, and probably the broken US industry.
In recent days, talk on the financial networks is heard of the Gold price still down from the 1980 peak in inflation adjusted terms. Focus on peak ignores the twenty more recent years. How shallow! They ignore the historical developments underway. Gold will be taking a role in the new IMF basket, a requirement for crude oil purchase in the global marketplace. The unavoidable truth is that the major global currencies are in a long process of destruction, as central banks continue their debauchery with ultra-low interest rates to salvage their insolvent banks and provide constant stimulus for moribund economies. The global monetary system is in a long process of crumbling, as the USDollar undergoes a long process of abandonment. The urgent message is clear. The first nations to discard the USDollar and embrace even an IMF global currency basket, will emerge as the next leaders.
The basket is a Straw Man transition device toward global gold-backed currencies, of which there will be at least three eventually.
The gold breakout will receive an extra powerful jet assist when the USDollar descends into the depths, like below 72. It is written in stone. It will come. BUT GOLD LEADS THE CURRENCY PARADE, as the Competing Currency War joins many currencies in the downward march. The ultimate long-term goal for the DX index is 53, with a pit stop at 67. The wretched USGovt finances and worsening insolvency of US banks will guarantee it. The only favorable factor working on behalf of US$ support is the almost equally horrendous condition of foreign currencies. The Dollar Carry Trade will ensure the US$ will decline without mercy, via leverage, those wondrous devices that have turned against their masters in the financial engineering laboratories. The Dollar Carry Trade assures both the end of the US$ as Global Reserve Currency, and the relentless decline in its value.
Capital controls might eventually be attempted on US shores, but a tragic practical fact of life will be clear. The USGovt will experience great difficulty to execute a single national program ever again. Credibility is on the wane. Watch various publicized initiatives and other hidden programs. Further games and gimmicks played with gold will be obstructed by the same team that sponsored the Saudi Petro-Dollar story. In fact, gold is about to go to FRONT ROW.
JACKASS SKEIN OF FORECASTS
The only way out, but kicking and screaming, is a return of real money and real notes used as legal tender. It will probably occur in the distant future, but against a backdrop of probable USTreasury default and a reconstruction of America. If you doubt such an outrageous forecast, just wait. Debt collapse does strange things. Credit supply cutoff does strange things. End to US$ free credit card does strange things.
Past important Jackass forecasts, entered years before they occurred, include the following. In 2004, called for rising US trade gap even despite falling USDollar. In 2005, called for endless housing bear market.
In 2006, called for heated trade war with China. In 2006, called for a broken insolvent US banking system. In 2007, called for absolute bond crisis in the United States if not the world. In 2007, called for rejection and end of the de-factor Petro-Dollar standard (sale of Saudi oil exclusively in US$). In 2008, called for lost USDollar global reserve currency status, and eventual USTreasury default. Get ready for change.
This is Grand Paradigm Shift on a global scale. Prepare for it or be ruined by it!! Ride the TSUNAMI of change or be drowned and crushed by it!!
See the King World News series on ‘Systemic Failure’ in its four parts where the Jackass is interviewed in a logical comprehensive argument.
The third segment is to be posted before this weekend of October 10th.
One final segment will be added next week, the conclusion. The King World News has had a stream of stellar guests from the highest tiers, that recently included Jim Sinclair, Gerald Celente, and Chris Whalen.
See their front page for numerous interviews They slipped in the Jackass to kick up some sand, and to add spice.
October 12th, 2009, 17:42
vector7
Re: Secret moves launched with China, Russia, Japan, France Arab States to end the Do
The dollar's position as the world's leading reserve currency faces increased pressure as the financial crisis allows emerging economies greater influence on the world stage, analysts said. A report last week in The Independent claiming that China, Russia and Gulf States are among nations prepared to ditch the dollar for oil trades has heightened the uncertainty surrounding the US currency's future.
The dollar slumped against rivals last week in the wake of the British daily's controversial report.
"The US dollar is being hurt by the continued talk of a shift away from a dollar-centric world," said Kit Juckes, an analyst at currency traders ECU Group.
"Three conclusions stand out very clearly. Firstly, the shift in economic power away from the G7 economies is continuing. "Secondly, there is a growing acceptance amongst those winners that one consequence of this power shift will be to strengthen their currencies.
"And finally, as long as the US economy is not strong enough for any rise in interest rates to be conceivable for a long time, the dollar's underlying downtrend will remain in place," added Juckes.
The Independent, under the front-page headline "The Demise of the Dollar", reported last Tuesday that Gulf states, together with China, Russia, Japan and France, were considering replacing the dollar as the currency for oil deals.
"In the most profound financial change in recent Middle East history, Gulf Arabs are planning -- along with China, Russia, Japan and France -- to end dollar dealings for oil," wrote The Independent's Middle East correspondent Robert Fisk.
They would switch "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," added Fisk, citing Gulf Arab and Chinese banking sources.
The report was denied by a host of countries, including Kuwait, Qatar and Russia, while France dismissed it as "pure speculation."
Even so, the United Nations itself last week called for a new global reserve currency to end dollar supremacy, which had allowed the United States the "privilege" of building up a huge trade deficit.
UN undersecretary-general for economic and social affairs, Sha Zukang, said "important progress in managing imbalances can be made by reducing the (dollar) reserve currency country's 'privilege' to run external deficits in order to provide international liquidity."
Zukang was speaking at the annual meetings of the International Monetary Fund and World Bank, whose President Robert Zoellick recently warned that the United States should not "take for granted" the dollar's role as preeminent global reserve currency.
Meanwhile at a G20 summit in Pittsburgh last month, world leaders unveiled a new vision for economic governance, with bold plans to fix global imbalances and give more clout to emerging giants such as China and India.
Following the summit, US Treasury Secretary Timothy Geithner repeated Washington's commitment to a strong dollar.
But last week the finance chief was left to watch as traders used The Independent's report as an opportunity to push lower the troubled US unit.
The report "has helped concentrate the minds of traders and investors alike, and has given them another excuse to take the dollar lower," GFT Global Markets analyst David Morrison told AFP.
"Despite what the Fed and other central bankers say, a weaker dollar is desirable because it is necessary to rebalance the global economy.
"As long as the decline is gentle and orderly, then they're happy. But aggressive selling would spook the markets," he added.
Commerzbank currency analyst Antje Praefcke agreed that the market's reaction was significant because it showed that the dollar was on a downward trajectory.
"The questionable article in the Independent was of course disclaimed," Praefcke said.
"It is nonetheless an interesting study of the pscychological factors which are currently putting pressure on the dollar. Even if conspiracy theories turn out to be nonsense, the dollar is subsequently able to retrace only some of its losses."
