Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse

Petrodollars and Nuclear Weapons Proliferation: Understanding the Planned Assault on Iran

A year ago there were signs, duly reported by Seymour Hersh and others, that the United States and Israel were working out the targeting details of an aerial attack on Iran that it was anticipated would occur in June 2005 (see Hersh, Gush Shalom, Jensen). But as Michel Chossudovsky wrote in May 2005, widespread reports that George W. Bush had “signed off on” an attack on Iran did not signify that the attack would necessarily occur during the summer of 2005: what the ‘signing off’ suggested was rather “that the US and Israel [were] ‘in a state of readiness’ and [were] prepared to launch an attack by June or at a later date. In other words, the decision to launch the attack [had] not been made”

Peter Phillips and his colleagues in Project Censored explained very clearly in 2003 how the current U.S. dollar-denominated system of oil and gas marketing provides the U.S. with a highly advantageous system of exchange. In 1971, “President Nixon removed U.S. currency from the gold standard”:

“Since then, the world’s supply of oil has been traded in U.S. fiat dollars, making the dollar the dominant world reserve currency. Countries must provide the United States with goods and services for dollars—which the United States can freely print. To purchase energy and pay off any IMF debts, countries must hold vast dollar reserves. The world is attached to a currency that one country can produce at will. This means that in addition to controlling world trade, the United States is importing substantial quantities of goods and services for very low relative costs.”

“Because of huge trade deficits, it is estimated that the dollar is currently [in late 2003] overvalued by at least 40 percent. Conversely, the euro-zone does not run huge deficits, uses higher interest rates, and has an increasingly larger share of world trade. As the euro establishes its durability and comes into wider use, the dollar will no longer be the world’s only option.”

US Trade Deficit Hits All-Time High

America's trade deficit hits all-time high of $725.8 billion in 2005 on imports of OIL, food.

The US trade deficit soared to an all-time high of $725.8 billion in 2005, pushed upward by record imports of oil, food, cars and other consumer goods. The deficit with China hit an all-time high as did America's deficits with Japan, Europe, OPEC, Canada, Mexico and South and Central America.

The Commerce Department reported Friday that the gap between what America sells abroad and what it imports rose to $725.8 billion last year, up by 17.5 percent from the previous record of $617.6 billion set in 2004.

It marked the fourth consecutive year that America's trade deficit has set a record and was certain to spark increased debate in Congress over President Bush's trade policies. Since mid-2000 the country has lost nearly 3 million manufacturing jobs and Democrats blame the administration's policy of emphasizing free trade agreements.

Last year's deficit reflected the fact that imports rose by 12.9 percent last year to an all-time high of $2 trillion, swamping a 5.7 percent increase in exports, which were up 5.7 percent to a record high of $1.27 trillion.

For December, the trade deficit edged up a slight 1.5 percent to $65.7 billion, the third highest monthly figure on record.

Originally posted by Souljah
Well I guess that Iran going to PetroEuro would be a real Bummer to US Economy, huh?

Originally posted by Gools
Something I have been thinking about lately... Europe's economy is not exactly stellar. What if the currency for the Iranian bourse turns out to be China's currency?

What the market should be keeping an eye on instead is Iran’s plan to open a new International Oil Bourse which would trade oil in Petroeuros instead of Petrodollars. As the world’s third largest holder of oil reserves, Iran’s move could pave the way for other countries to offer oil denominated in Euro’s in order to compete with Iran. Looking ahead, there are a lot of reasons why countries within the Eurozone and Russia would prefer to trade oil in Euros over dollars. The volatility in the US dollar and the cost of converting currencies could make Petroeuros particularly attractive. source

Federal Reserve chair Ben Bernanke raised the spectre of higher interest rates on Wednesday in his first major speech since taking office two weeks ago.

He told the U.S. House Financial Services Committee that the U.S. economy was running so close to capacity that interest rates may have to be raised to tame an outbreak in inflation.
Ben Bernanke took over as Federal Reserve chairman two weeks ago

"The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately in the absence of countervailing monetary policy action to further upward pressure on inflation," Bernanke said.

Originally posted by soficrow
Did you get that?

"The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately in the absence of countervailing monetary policy action to further upward pressure on inflation."

Is there a translator in the house?

Originally posted by soficrow
Is there a translator in the house?

Originally posted by soficrow
Did you get that?

"The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately in the absence of countervailing monetary policy action to further upward pressure on inflation."

Is there a translator in the house?

Originally posted by Where2Hide2006
So he's saying that the govt will have to raise taxes, this way the FBR can keep the interest rates artificially low to keep the economy growing, while not mortgaging ourselves to Asia.

Why USFed Hikes, Unspoken
The USFed actually states they can afford the luxury of additional interest rate hikes because the USEconomy is robust and strong. It is amazingly resilient, provided a convenient bubble can be inflated in a major sector within that economy. An exaggerated growth rate and rising inflation pressures (housing, CPI, employment costs) are the spoken motives for further 25 basis point increases. They speak of a tight labor market, one where the jobless rate ignores all those who cannot find work or collect unemployment insurance. They talk about “full employment” of 4.9% jobless amidst rampant unemployment. Include the jobless and we see a 7.4% jobless rate....

...The USFed cannot be honest, since its credibility would be shattered. Go figure. They must defend their position of strength, and continue to describe the USEconomy as strong. They must maintain the notion that their monetary policy has managed to keep the economy robust, healthy, balanced, flexible, and full of vitality. And yes, expert monetary policy under the near perfect aegis of Alan Greenspan has enabled the USEconomy to avert a recession since 1990. What is the best device to avoid a recession in the world of public reality? Basically, FRAUD & LIES.

The unspoken motives for continued USFed rate hikes are several:

* to counter and defend against a rising gold price
* to counter and defend against a rising crude oil price
* to encourage Asian exporters and Persian Gulf oil producers to recycle surpluses
* to deter Asians and Persian Gulfers from diversification in their reserve

From the LEAP site:

An Alarm based on 2 verifiable events

The announcement of this crisis results from the analysis of decisions taken by the two key-actors of the main on-going international crisis, i.e. the United States and Iran:

--> on the one hand there is the Iranian decision of opening the first oil bourse priced in Euros on March 20th, 2006 in Teheran, available to all oil producers of the region ;

--> on the other hand, there is the decision of the American Federal Reserve to stop publishing M3 figures (the most reliable indicator on the amount of dollars circulating in the world) from March 23, 2006 onward [1].
[see my thread The Plunge Protection Team]

These two decisions constitute altogether the indicators, the causes and the consequences of the historical transition in progress between the order created after World War II and the new international equilibrium in gestation since the collapse of the USSR. Their magnitude as much as their simultaneity will catalyse all the tensions, weaknesses and imbalances accumulated since more than a decade throughout the international system.

Originally posted by TheBandit795
I strongly recommend all ATS'ers to either read that text or listen to that speech.

Originally posted by TheBandit795
Here's the Ron Paul speech again in text and video (the video link is on the center-right part of the page:

Ron Paul: The End of Dollar Hegemony

I strongly recommend all ATS'ers to either read that text or listen to that speech.

From the "Ron Paul: The End of Dollar Hegemony"

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system – like Iraq, Iran and Venezuela – become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

Norwegian Bourse Director Wants Oil Bourse - Priced In Euros

"We have performed market studies and both Russia, which is a large oil exporter, as well as the countries of the Middle East have large parts of their economies in Euros. They would be able to view such a bourse as a contribution to balancing their economies in a better manner than at present, where their products are traded solely in dollars," says Andersen.

The Bourse Director holds out the Scandinavian power bourse, Nordpool, as an example of how a successful bourse is constructed. And he believes that this ought to be included in a Norwegian or Scandinavian energy bourse.

"We currently we have the leading power bourse in Europe. It is large, well-respected and efficient. Nordpool would be natural to consider as being important in the establishment of an oil and energy bourse," says Andersen.

The plans have been discussed for years, but have never gone past the stage of being just talk.

Please visit the link provided for the complete story.

The Economic Trail of Tears, Part II

A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world's rejection of the dollar. It's bound to come and create conditions worse than 1979-1980, which required 21% interest rates to correct.

Please visit the link provided for the complete story.

The End Of Dollar Hegemony, Part II _Hon. Ron Paul of Texas

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today’s “gold.” This is why countries that challenge the system - like Iraq, Iran and Venezuela - become targets of our plans for regime change.

Please visit the link provided for the complete story.

How can the dollar collapse in Iran? An explanation

The essence of the problem is the fact you need a special currency to buy oil. As long as the world needs dollars to buy oil, the US makes abuse of the situation and buys on tick from the rest of the world.

The euro contains the same risks. As long as there would be a motor for a permanent demand for euros like, for instance, an euro denominated oil bourse in Tehran, the eurozone could make debts and let it increase indefinitely.

To avoid such debts, the eurozone would have to export the equivalent of all euros needed outside its borders and keep the same amount in foreign currencies in their central bank. Why would they? The credit trick worked fine for the US during more than 30 years!

When oil producing countries would sell oil in two or three different currencies, this simply means that the three involved countries can do the same trick as the US does now. In the long run it would multiply the problem by three.

The only solution for this problem would be that oil selling countries accept all currencies on the market. Tehran has already taken into consideration to accept more than one currency and not just the euro. Step by step.

For the outside world the diplomatic joust is about nukes, which seems more exciting. However, since 9/11 the whole world knows that rather inexpensive terrorist solutions are much more effective to do harm and that even a big arsenal of nukes does not offer any protection. We are asked to believe Iran did not notice that and still wants such old fashioned nukes.

Please visit the link provided for the complete story.

The Federal Reserve - today:
•Added $949 Million in a coupon pass
•$21 Billion in TOMO 9B in overnight 12B in 14 days
•$6.071B in Security Lending which is a type of overnight lending, they tried to lend out 12.092B.

So $27B was lent by the fed short term and almost $1B that will never be removed and has no loan loss reserve requirements. I am getting a feeling that the liquidity is no longer working.