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

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posted on Jan, 30 2006 @ 09:02 PM
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Foreign reserves are kept in whatever currencies are globally recognized and traded because of the size and stability of the domestic economies of the country, and the widespread global availability of financial instruments in that currency, and a perceived lack of political risk, i.e. exchange controls, in those currencies.

This applies to euros and dollars equally, so accepting payment in euros versus dollars makes little difference.

If suddently they were to accept only Chadian pesos or whatever, then that would be qualitatively different. But Iran wouldn't do so because nobody would transact on that basis.

Recall that in a commodity exchange, the most important risk by market participants is honest settlement. If they believe the trades will not be settled, then they will flee from trading and go somewhere else.

Oil trades are settled with old-fashioned physical delivery. If political or military actions involving Iran make the trades likely to be broken, then people will refuse from trading on that commodity exchange. (note the previous article is about the Tehran stock market for domestic Iranian companies, not oil).

Therefore, if Iran were to have a major oil commodity exchange with signficant domestic profitability for Iran, then it would be a moderating force on Iran's political international position. Why? Because then rich and powerful people in Iran would have an interest in keeping stability and the oil flowing.




posted on Feb, 11 2006 @ 01:46 PM
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Here's an Interesting Article I found on this Topic.

Check it out in full:


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.”

It is most Interesting to read the following News, posted yesterday by the Associated Press:


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.

US Trade-Deficit all time High?

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



"General - we must not ALLOW that to Happen!"



posted on Feb, 12 2006 @ 12:32 AM
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Dollar Collar


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

If this thesis is correct, then it's not just the U.S. economy that's at risk, but the economies of pretty much every nation on earth -- even North Korea and Cuba.

And yes, even Iran.

If this thesis is correct, that is.



posted on Feb, 13 2006 @ 06:15 PM
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Reuters: Syria switches to euro amid confrontation with US

Syria has switched all of the state's foreign currency transactions to euros from dollars amid a political confrontation with the United States, the head of state-owned Commercial Bank of Syria said on Monday.

"The move is also needed to avoid complications with our correspondent banks, which have expressed a preference to deal in euro under these circumstances," he said.

Most of the government's foreign currency flows goes through the Commercial Bank, whose U.S. assets were frozen by Washington in 2004 as relations with Syria deteriorated.

The bank, which dominates the Syrian market, also stopped dealing with dollars for international private flows, such as imports, exports and letters of credit, Durgham said.

He said the switch would mean euro pricing for crude oil sales, a major foreign currency earner for Syria.

The latest official figure show Syria imported $6.7 billion goods in 2004 and exported $5.4 billion. Oil output is around 400,000 barrels per day.


Please visit the link provided for the complete story.


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?
.



posted on Feb, 13 2006 @ 08:13 PM
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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?


Considering the yuan is pegged to the dollar and doesn't float, I don't see much benefit in that. What they do with all those euros is the main question...as in purchasing equities, bonds or real estate in China rather than the US.

Another point to ponder:

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




[edit on 13-2-2006 by Regenmacher]



posted on Feb, 15 2006 @ 11:37 AM
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GOOLS - This may not be where this belongs, but it is an update on one of your interests.

Federal Reserve chair hints at higher interest rates



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.


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?





posted on Feb, 15 2006 @ 01:07 PM
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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?


In Short:

We're Screwed!




posted on Feb, 15 2006 @ 03:28 PM
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Business As Usual


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

Translation: "I can put the average American to sleep even better than Greenspan, so fear not, my fellow obfuscatory policarians!"

...and the financial markets heaved a great sigh of relief.



posted on Feb, 15 2006 @ 03:56 PM
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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?


Well I might be able to help. I got a 2.0 in economics 101!

"
The risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path"

TRANSLATION:

The risk exists that, with the total amount of Demand (consumption of goods and credit creating more debt) is


"exhibiting consierable momentum"
... means that its continuously getting worse and building speed.


"output could overshoot its sustainable path"


output does not mean our exports, but our exports are already in the tank. He is talking about the DOLLARS that are going out of this country...


"could overshoot its sustainable path"


means that he feels that something can still be done to stop the destruction of the dollar,...which i see as a good sign actually.


"leading ultimately in the absence of countervailing monetary policy action to further upward pressure on inflation."


There are 2 sides to economics, there is "Monetary Policy" and there is "Fiscal Policy". Monetary Policy is the control the Federal Reerve Bank has over its member banks and interest rates. Fiscal Policy is the control the Govt. has to Tax its population. More Taxes means less money in circulation and therefor less inflation.

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.

Sounds like a good plan... if you're not an american tax payer!


At least thats what I got out of it... anyone else wanna give this a try?



posted on Feb, 15 2006 @ 04:39 PM
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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.


I didn't get that perception from Bernanke.

Ben Bernanke Says Federal Reserve Is Ready to Boost Interest Rates if Needed to Combat Inflation


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



Meanhwhile Bernanke prays the sheep are dumb.


Benanke Part II: Same batty channel, same batty time...stay tuned for more exciting adventures in Federal Reserve crpytospeak.

Bernanke appears before a Senate panel on Thursday.









BTW, been watching the oil and precious metals fall and a reversal of this trend may signal an attack on Iran is going to be soon.





[edit on 15-2-2006 by Regenmacher]



posted on Feb, 20 2006 @ 05:59 PM
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See this recent thread for a new report comming out of a European think tank warning of dire consequences:

Beginning of major world crisis?


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.


Beware the Ides of March

.



posted on Feb, 21 2006 @ 04:48 PM
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Dollar is going to take a major hit if this plays out as feared.


Rep. Ron Paul - The End of Dollar Hegemony


Economic war on the US? Iran, Venezuela join forces










World War III Or Bust

In the eyes of the Bush administration, however, Iran’s worst transgression has less to do with nuclear ambitions or anti-Semitism than with the petro-euro oil bourse Tehran is slated to open in March 2006. Iran’s plan to allow oil trading in euros threatens to break the dollar’s monopoly as the global reserve currency, and since the greenback is severely overvalued due to huge trade deficits, the move could be devastating for the US economy.

So we remain pedal to the metal with Bush for an attack on Iran.

Please visit the link provided for the complete story.




[edit on 21-2-2006 by Regenmacher]



posted on Feb, 22 2006 @ 09:08 AM
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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.



posted on Feb, 22 2006 @ 12:03 PM
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The Spirit Of Demosthenes


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

Excellent speech.


Gotta love Ron Paul.


Of course as he points out, this isn't everything, just one piece of a larger puzzle. But it's an important piece.

And yeah, Beware the Ides of March!



posted on Feb, 22 2006 @ 12:20 PM
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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.

Most Excellent 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.

Big Thanks for that Link mister TheBandit79 !

Very Educational I must Admit.




posted on Feb, 22 2006 @ 02:18 PM
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Don't thank me, thank Gools & Regenmacher. Gools showed me the link and Regenmacher posted it first here. IMO this should be much bigger than Serpo here on ATS because of the personal impact this will have to all of us in the near future.



posted on Feb, 23 2006 @ 06:08 PM
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“I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”
-Thomas Jefferson









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.


Today marks the 10th coupon pass by the Federal Reserve since the first of this year. The fed as become such a market manipulator it's just a matter of time before the cracks appear and the whole facade comes crumbling down. www.ny.frb.org...


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.



Meanwhile the Fed loads its sleeves with aces.
Are Fed and Treasury preparing massive intervention in currency markets?





[edit on 23-2-2006 by Regenmacher]



posted on Feb, 24 2006 @ 04:45 PM
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Damn you Regenmacher! I was just about to post a few of those articles


This certainly doesn't look good. Is the U.S. going to invade Norway aswell?



posted on Feb, 25 2006 @ 12:47 PM
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And now for the deeper conspiracy angle...interesting.


Phantom “al-Qaeda” Attacks Saudi Oil Infrastructure -uruknet
(the following snippets doesn't do justice as the entire article is better.)

"In 1973, the powerful men grouped around Bilderberg decided to launch a colossal assault against industrial growth in the world, in order to tilt the balance of power back to the advantage of Anglo-American financial interests. In order to do this, they determined to use their most prized weapon—control of the world’s oil flows. Bilderberg policy was to trigger a global oil embargo in order to force a dramatic increase in world oil prices. Since 1945, world oil trade had, by international custom, been priced in dollars. American oil companies dominated the postwar market. A sharp sudden increase in the world price of oil, therefore, meant an equally dramatic increase in world demand for US dollars to pay for that necessary oil" (see Pepe Escobar, Asia Times May 10, 2005).

In essence, the recent attack on the exposed Saudi oil infrastructure by "al-Qaeda in Saudi Arabia" (a covert black op similar to "al-Qaeda in Iraq" or for that matter "al-Qaeda" in Toledo, Ohio) is an effort to convince us "our" oil is at risk, as it will be at risk late next month when the Iranian oil bourse is introduced as direct competition to New York’s NYMEX and London’s IPE (see William Clark, The Real Reasons Why Iran is the Next Target: The Emerging Euro-denominated International Oil Marker).

In addition to a possible neoliberal effort to more effectively control and thus profit from oil, there is the antagonism of the Straussian neocons, who hate everything Muslim. One need look no further than Laurent Murawiec, who told the Straussian neocon infested Defense Policy Board at the Pentagon precisely what they wanted to hear: Saudi Arabia is the "kernel of evil" and "the strategic pivot" of the Middle East (see Gary Leupp, "On Terrorism, Methodism, Saudi 'Wahhabism’ and the Censored 9-11 Report"). In a plan that probably warmed the cockles of neoliberal hearts far and wide, Murawiec "declared Saudi Arabia an enemy of the United States and advocated that the United States invade the country, seize its oil fields, and confiscate its financial assets unless the Saudis stop supporting the anti-Western terror network," as Jack Shafer of Slate characterized it. Of course, the Straussian neocons are not sincerely concerned about this last part since the CIA created what is now called "al-Qaeda," with more than a bit of help from Pakistan and plenty of money from Saudi Arabia.

Please visit the link provided for the complete story.


Could even twist in the Dubai ports deal as being an alternative setup for crude transfer, if the house of Saud falls. As I said before, commodity price trend reversals usually signal something is about to happen soon and oil is up $2/bbl. Watch if the metals follow. www.forexpf.ru...

Al Qaeda claims attack on Saudi oil plant -Middle East Times
Al Qaeda in Saudi Arabia vows more attacks: Web -Reuters
ANALYSIS - Al Qaeda set to keep Saudi oil in sights - analysts -Reuters India

I'll leave you with a couple satirical economic articles:


THE PARADIGM SHIFT IS HERE, OR, EVERYBODY MUST BE STONED
If we can get through the end of next month without serious economic havoc (say, the whole planet blowing up, or a full-tilt outbreak of the bird flu pandemic in Arkansas) it might be safe to dig a few of those rat-holed Maple Leafs, Morgan dollars and Krugerrands out of that backyard coffee can and trade them out for Fednotes at your local pawnbroker or coin-dealer.

Please visit the link provided for the complete story.



The Oil Plans of Iran by The Mogambo Guru

Perhaps this huge use of dollars is what has everyone worried about the new Iran oil bourse (trading center) that is scheduled to crank up in March, and probably rightfully so. Instead of an American-controlled oil market and American friends and insiders getting rich making their slimy little backroom deals, now it will be an Iran-controlled oil market and Iranian friends and Iranian insiders making their little deals.

It’s all mox nix to me, as oil is going to rise mightily in price anyway, but all of those American oil-business scumbags have families to care for, bills to pay and these big, fancy cars that speed by me as I sit with my "Will work for food" sign around my neck. So, you can bet that they are all crapping in their pants at the thought of the end of a very long, very cozy and very profitable deal. Ergo, you can certainly make a case that George W. Bush and the U.S. Congress will OK a plan to invade Iran and take over the place, because that is the kind of treacherous, thieving, murdering scumbag that my beloved America has become in its increasing desperation.

Please visit the link provided for the complete story.





[edit on 25-2-2006 by Regenmacher]



posted on Mar, 4 2006 @ 01:19 PM
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Oooops, delete post.

I hadn't noticed Regenmacher had got there first.

[edit on 4-3-2006 by sminkeypinkey]





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