Iran Oil Bourse, I say Bring it on!

Originally posted by El Tiante
Additionally, America has 3x the growth, higher per capita GDP, a more productive work force and lower debt burden than the eu.

The Eu has a very slightly higher GDP (CIA factbook data), but do you have any debt figures? I'd be interested.

Originally posted by forestlady
Other countries have already started dumping dollars (and rather quickly) since the Iranian bourse started.

That is extreamly interesting, considering the Kish Island oil bourse hasn't even started yet, or at least investors can't buy through it yet.

Come on...

I don't think people understand just how plain dumb it sounds to say Iran is somehow about to break the US economy, or the US dollar for that matter. The US economy has become red hot in 2006, and I am not talking about the stock market either, and this time there is no internet bubble hanging over the US economic growth like there was in the 90s.

Originally posted by Violent
Protect the shipping lanes from who exactly??

Were the oil bourse to be successful, there would be a dumping of the dollar in favor of the euro for exactly the reasons stated above - thats the concern. If not a dumping of the dollar, the idea of a testing of the viability and relative stability of the euro vs. the dollar in the current geo-political climate could easily prove true. That instability and our current "???" actions against Iran are bad for the market, and bad for investments. But I'm sure you know that since you're so well educated on the economic front right, Tiante? You went to school....where?

The very shipping lanes you are concerned with would be necessarily protected by the countries trading in the bourse. China, Russia, EU, Iran and other parties for their mutual economic benefit would have an inherent interest in keeping those shipping lanes open.

You're beyond delusion if you think that the militaries of those above nations could not protect the shipping lanes from - who?! The U.S. is the only major threat that could affect the shipping lanes effectively and even then it would lead to direct all-out war of all parties.

So what boogeyman is going to threaten these shipping lanes? Your poor deluded puff of smoke argument has no substance. What is going to be the reserve currency of the Euro if they move away from the dollar?


Hmmm....dollar = propped by oil
Hmmm....euro = propped by oil

(oversimplification I know, and ignores the real assets and investments tied to the values of the currencies)

What do you think is going to happen to the 3% vs 1% growth of U.S. vs. EU when the U.S. currency is devalued by lack of reserve backing, and the E.U. is the new de-facto standard in which trade and the inherent profit and interest of the bourse gives the participating countries an increase in GDP and the inevitable increase in infrastructure, capital and investment.

You want to stick your head in a hole (take a guess which hole I think it is) and pretend this is a non-issue and impossible, but unfortunately the U.S. government and the rest of the world is under no such delusion. Hence Iraq and our soon come war in Iran.

The U.S. cannot afford to lose the strategic edge on the real assets of the world energy market, and as it pointed out in the OP the loss of market influence of the dollar in the oil trades would be a disaster.

[edit on 9-5-2006 by Violent]

Could it be that the US is actally forcing China to stand by Iran (because of importance oil supply) so that if Iran switches to the Euro en China goes along America has the excuse to cut ties with China completely, a boycot??
Sure the american and China econonmies (and the world economie) will surely get some heavy blows but now the US has the oppertunity to supply their own market and recover the quickest and leave China in ruins.

Originally posted by darksided

Originally posted by forestlady
Other countries have already started dumping dollars (and rather quickly) since the Iranian bourse started.

That is extreamly interesting, considering the Kish Island oil bourse hasn't even started yet, or at least investors can't buy through it yet.

heh, I was wondering the exact same thing - what countries are dumping the dollar exactly? and the fact that the Kish Island bourse isn't even open for trading makes this truly .

Hey darksided, I am trying to find CURRENT news on the issue - can you point me in the right direction? All I am able to come across are dated articles back to November 2005, or even 2003 and around that time. There seems to be plenty of material speculating the affect the bourse\euro would have against dollar valuation, but I'm leaning more towards it being empty fear mongering like you stated. Color me curious - what are the "think tanks" and experts so concerned about if the reality is that it is an ineffectual move? Surely they based their findings on SOMEthing??

I can find current editorials and commentary arguing that the impact of dumping the currency is occurring and that the economy is doing poorly and expected to have serious problems soon but then why is the Dow daily average breaking records...daily???

apnews.myway.com...

The housing markets are declining, and the added financial burdens on the average household are beginning to both affect house sales, property values and increased debt levels are going to force more and more people to default on loans. Flooding the already declining housing market, and causing interest rates to increase for banks to maintain ROI.

www.bloomberg.com...

The puzzling thing that gets me is Americans feel things are going poorly despite the record Dow levels. My take? The average American is not seeing as green a pasture as corporate america - Dow good, blue collar - eek!

Gold on the rise amid dollar valuation fears

Just investor jitters? Why the steady trend over the past several months if its all smoke?

I guess my curiousity can be summed up with - if its all just fear mongering and the dollar and U.S. economic future is so solid - why is there such an underlying fear and concern over the dollar value and economy tanking?

Market Scorecards
April 25 (Bloomberg) -- The Japanese yen registered the biggest gain against the U.S. dollar among 16 major currencies today, strengthening 0.48 percent as of about 5:00 p.m. Tokyo time. The worst performer was the New Zealand dollar, which fell 1.24 percent.

The following table ranks the best- and worst-performing major currencies against the dollar.


============================== ==============================
Percent
Best Performing: Change
============================== ==============================
Japanese yen 0.48
Brazilian real 0.40
Swedish krona 0.23
Euro 0.15
Danish krone 0.12
Swiss franc 0.08
Taiwan dollar 0.00
Singapore dollar -0.01
============================== ==============================

Originally posted by motionknight
Could it be that the US is actally forcing China to stand by Iran (because of importance oil supply) so that if Iran switches to the Euro en China goes along America has the excuse to cut ties with China completely, a boycot??
Sure the american and China econonmies (and the world economie) will surely get some heavy blows but now the US has the oppertunity to supply their own market and recover the quickest and leave China in ruins.

How does this make any sense to you? Maybe you just wrote it out wrong because as it stands it is just confusing.

Why would the US force China to back the euro\bourse\Iran? As in working together in forced agreement?

(FYI for anyone that didn't recognize bourse=stock exchange)

This also highlights a serious point about the trade deficit between China and the U.S. - if you don't believe me, go to your local stores and check how many things are "Made in China". Try to go shopping for a week and not buy ANYTHING from China and my point will be crystal clear.

Versimilitude for a moment - if the U.S. boycotts China and refuses to take in Chinese goods it puts the U.S. on worse footing than China potentially. The U.S. is the largest trade partner with China - but not the ONLY trade partner. It would drag their economy to lose that trade, but it wouldn't destroy the whole system - everyone wants cheap Chinese goods. Granted, it would be bad for both. I'd even like to believe that it would be GOOD for both in the longterm - I would love to see a more isolationist policy including tariffs to protect American businesses and fines against companies exploiting slave wage labor. But that is communist\socialist and anti-capitalism and idealogically while I like the idea of a stronger nationalist America returning to the roots of self-sufficiency I wouldn't want to see it come about through legislation and political mechanics.

The above scenario becomes particularly bothersome when the boycott goes into affect and Joe American realizes exactly why outsourcing our manufacturing capabilities and infrastructure was such a bad idea so that we can have cheaper plastic trinkets. Why American loss of manufacturing is a bad thing

The manufacturing jobs we are losing are the so-called family wage jobs — solid jobs with good benefits and wages that can support a family. These are the jobs that once made the nuts and bolts for tanks, steel beams for skyscrapers, and wooden planks for houses.

A much more in depth look at the real numbers behind manufacturing job decline and foreign trade deficits

Originally posted by Violent
Hey darksided, I am trying to find CURRENT news on the issue - can you point me in the right direction? All I am able to come across are dated articles back to November 2005, or even 2003 and around that time. There seems to be plenty of material speculating the affect the bourse\euro would have against dollar valuation, but I'm leaning more towards it being empty fear mongering like you stated. Color me curious - what are the "think tanks" and experts so concerned about if the reality is that it is an ineffectual move? Surely they based their findings on SOMEthing?

Keep things in perspective. Do a google news search for Iranian Oil Bourse and you won't find anything but Middle Eastern news, investor (skiddish) commentary, and fringe economic groups who promote socialism talk about how the sky will fall for the US. But if you happen to check the Wall Street Journal, or the business section of the NY Times, you'll notice any discussion of the topic, when it actually happens, makes it out to be a non issue.

I can't find any real credible economic Think Tank opinion on the subject, one way or the other, only political think tanks which always skew towards an agenda. This ultimately has me believing it is a non issue.

The housing markets are declining, and the added financial burdens on the average household are beginning to both affect house sales, property values and increased debt levels are going to force more and more people to default on loans. Flooding the already declining housing market, and causing interest rates to increase for banks to maintain ROI.

The debt is supposed to have investors concerned about the economy, after all, the political noise is designed to scare Americans regarding the increasing debt, but it is clear those who invest money in the markets reflect the reality that ultimately that is not the case. I think the housing market decline and increase in property values needs to be examined closer than a line in a media report. The housing market was at an all time high, with more Americans owning a home than ever, and the property value increase reflects local governments reassessing local property values in several wealthy states including both the east and west coasts.

For example, I live in upstate NY, and my house was reassessed up by $50,000 this year, as were most houses in my town. While that sounds amazing on paper, the reason this happened is because the last assessment was in 1995, but mostly because my local government wants me to pay higher property taxes. It should be noted though, that because I bought my house 2 years ago when I could get a mortgage with an extreamly low, locked interest rate this increase in property value has no impact on my loan whatsoever. My situation is extreamly common nationwide, not the exception by any stretch, after all, like many, many Americans I bought my house sometime over the last few years during what has been the biggest real estate boom in decades.

While Manufacturing is a concern, I am starting to see the pot of gold at the end of the rainbow. I think America is on the verge of a major energy revolution in technology that will ultimately make oil dictators powerless, and create capability for cleaner manufacturing with large quantities of energy readily available. High availablity of energy will change the way small business can manufacture, because it makes it more affordable for smaller operations. When/If this happens, it will happen quickly, after all, it took less than a decade for the US to hit stride in the internet revolution, an energy revolution will occur just as quickly.

We're both in wholehearted agreement over the impact of an energy revolution and its affect on the U.S. economy.

I strongly believe that the energy issue would make all others points moot - being the first on the block with cheap energy would turbo charge this economy and if it were accessible to small business, the American entreprenuer spirit would be something inspiring to see at work.

Hey, I hope you're right- I'd love to live in that future.

And you're completely right about the financial news, WSJ, and other articles dismissing the bourse\euro issue. The only ones supporting it has a clear political slant and little facts to support the idealogy.

Consider me a somewhat reluctant convert, I urge caution at blind faith in the U.S. economic supremacy but "rumors of its demise have been greatly exaggerated" seem apt.

One thing still does concern me, and maybe you can help me get a better grasp of it. Inflation and the buying power of the dollar on decline concerns me. Is there anything that could be done on a macroeconomic scale that is sound? This is a simple economics question, but I'll post it anyway and find the answer for myself in hopes that if you answer it it would be interesting to people following the discussion - what could increase the buying power\value of the dollar? What would be the negative effects\road blocks behind such action?

I already know the answer on the basic level, but I'd like your take on it and am going to delve a bit deeper behind the nuts and bolts financial realities of the question for myself.

[edit] en.wikipedia.org... You're still welcome to answer my question from your perspective, but reading this brought all my economics courses back. heh

Ack /embarass - I need to start reading some more financial news and less ATS\political CRAP. It's all flooding back to me....ahhh the comfort of a world based on solid principles and reality and knowledge from a top5 business University....must....get....MBA......



[edit on 10-5-2006 by Violent]

[i[from Violent
That instability and our current "???" actions against Iran are bad for the market, and bad for investments. But I'm sure you know that since you're so well educated on the economic front right, Tiante? You went to school....where?

Whoa, whoa. No need for that tune, OK? You may be a lot more financially astute than most of us, and I personally welcome any posts that can help me to understand dollars and cents, but let's do it civilly. We all benefit from calm, reasoned info exchange.



[edit on 10-5-2006 by jsobecky]

MOSCOW, May 10 (RIA Novosti) - President Vladimir Putin said Wednesday that a ruble-denominated oil and natural gas stock exchange should be set up in Russia.
Speaking before both chambers of parliament, cabinet members, and reporters, Putin said: "The ruble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for with rubles."
"Our goods are traded on global markets. Why are not they traded in Russia?" Putin said.

en.rian.ru...

Originally posted by Violent
Inflation and the buying power of the dollar on decline concerns me. Is there anything that could be done on a macroeconomic scale that is sound?

That is a good question, all I can say is look at how the European Central Bank is increasing interest rates, and probably will by another point, to hold back potential inflation in Europe, and watch the news tonight to get an explination regarding how the Feds are handling the interest rate to control inflation in the US.

Ironic you asked the question, since today is a great example of how the Fed manages inflation on a macroeconomic scale, one way or the other.

Originally posted by Violent
MOSCOW, May 10 (RIA Novosti) - President Vladimir Putin said Wednesday that a ruble-denominated oil and natural gas stock exchange should be set up in Russia.
en.rian.ru...

The link you gave returns a 404 File Not Found error.

Back on topic, Putin was not serious, do you think? I mean, there's no chance of a ruble bourse, right?

Putin link

try this - en.rian.ru...

I am not an economist but I wanted to add something to this debate over the dollar/euro/Iran bourse concerns:

The dollar, even on the decline, will be maintained as a relative level to the euro. It has been the same with the yen being a relative level to the dollar for years.

Last year, do you recalled that China unpeg its currency from the dollar? This has a subtle meaning that very few economists are recognizing outright: China wanted its yuan to be on the competitive level as the yen, the euro and the dollar, depending on the conditions of the Chinese economy and factors associated with the Chinese government's economic policies in the next several years.

With all the focus on Iranian bourse with an euro-dominated oil market and the euro, we should not ignore China's active role in getting the yuan on par with the euro and the dollar, though it would have an uphill battle with the higher-valued yen on the economic fronts. Furthermore, just note what China have been doing for the past 2 years: negotiating and securing deals with Iran and Venezuela, two of the major oil players in the world.

China have the largest population in the world and a booming economy, meaning it would need... maybe demand more oil supplies to satisfy such demands in the long term. Resources will be produced and consumed at a much greater level, at least in the manufacturing and retail levels (think producing stuff for Chinese consumers shopping at Chinese Walmarts) than that of the United States. China wanted more oil and is willing to pay more for oil.

China have a vested interest in seeing the success of an Iranian bourse's euro-dominated oil market: to make the euro look more attractive and cheaper, to make the dollar more expensive but devalued, to weaken the yen and to strengthen its own currency: the yuan.

This is all about the competition of sovereign currencies. May the best currency wins in the 21st century as to "retire" the dollar.

However let's not forget the old favor that used to be the top dog on the block: the British pound.


Eventually there will be a global currency to come out of this current economy-depressive currency competition.

[edit on 10-5-2006 by Peruvianmonk]

Originally posted by jsobecky


Back on topic, Putin was not serious, do you think? I mean, there's no chance of a ruble bourse, right?

Why WOULDN'T he be serious? This is current news, developing right now and underlines the point I have been trying to make - the U.S. dollar dominance in exchange markets is not infallible and furthermore, it is in the best interest of foreign soverign nations in the long term to move their currencies off a dollar standard.

Doing a little digging brought me to this discussion about New Oil Bourses show power shifting from West to East
www.peakoil.com...
Interesting background information

More on potential economic activity generated by an Iranian bourse:

Here's how Dr. Asemipur has termed it (the man repsonsible for setting up the Kish International Oil, Gas and Petrochemical Bourse, or IOB):

Quote:
"The exchange will play an important role in increasing [Iran's] GDP and foreign exchange revenues, making trading transparent, providing experience in oil trading and risk management, and establishing a regional and international market."

As to the estimated financial turnover, Asemipur said: "The maximum financial turnover in the oil exchange - based on the National [Iranian] Oil Company's total revenue of 60bn dollars last year and the 20bn dollars from the sale of petrochemical products over the next 10 years, and assuming a minimum trading of 10 times - will exceed 800bn dollars per year which will play a fundamental role in the growth of the gross domestic product."

More on Russian markets and rising trends
www.sptimes.ru...
(I know its a media source and not hardcore number crunching financial, the link is meant for general background information without being too heady)

We've talked about the snowball in summer chance that the EU would fully back an Iranian bourse - but here's food for thought - what if Iran decides to do its energy exchange market trading tied in to the Russian rouble, or even the Chinese yuan?

Originally posted by darksided

Originally posted by forestlady
Other countries have already started dumping dollars (and rather quickly) since the Iranian bourse started.

That is extreamly interesting, considering the Kish Island oil bourse hasn't even started yet, or at least investors can't buy through it yet.

OK, honest mistake, it keeps delaying its opening. Last I heard it was supposed to open first week in May, oh well.

However, countries ARE dumping their dollars in anticipation of IOB. Some of them are:

China
Russia
Iran Iraq
India
Indonesia
Venezuela
There are others, too, but I couldn't find them very quickly. Here are some URLs talking about other countries dumping dollars.

www.rinf.com...

www.inthesetimes.com...

www.tbrnews.org...

And, China is dumping its dollars by turning dollars into gold, meaning no matter what the dollar does, it won't wipe out China's finances. In that respect they are doing much better than we are, since we don't have gold or silver standard any more.

iraqwar.mirror-world.ru...

And if our government isn't concerned about it, why are they planning to go to war against Iran? Why did they invade Iraq when Hussein talked about changing to Euros?

Violent:We've talked about the snowball in summer chance that the EU would fully back an Iranian bourse - but here's food for thought - what if Iran decides to do its energy exchange market trading tied in to the Russian rouble, or even the Chinese yuan?

That's the whole point of what China is trying to do. Since its currency isn't strong enough to take on the dollar, it would just depend on the strength of the euro to be on par with the US dollar for maximum value. With China siding with Iran, China's best hope of weakening the dollar is through the euro and hope for the success of the Iranian bourse with all possible opportunities in the future.

The Russian rouble, however still on the recovery mend, is still not valuable enough on the world markets.

[edit on 5/12/2006 by pawnplayer]

Originally posted by pawnplayer
With China siding with Iran, China's best hope of weakening the dollar is through the euro and hope for the success of the Iranian bourse with all possible opportunities in the future.

I think that statement is inaccurate. If China has sided with anyone, it is the US. The US continues to allow China to undervalue their currency. If the US stopped selling bonds to China, while the US economy would take a hit, China's economy would hit a brick wall.

The US can go anywhere to find cheap labor and goods, particularly in the current global market. Remember, while China has a huge trade surplus with the US, China has a trade deficit with every other country in the world. Ths #1 reason for a strong chinese econmy is the US, not Iran.

So if the US and China trade is disrupted, where is China going to find a new market with the size and wealth of the US to keep their economy growing That market doesn't exist, which is why China has fewer choices than people make them out to have.

I would advise never confuse the Iranian nuclear issue with the Chinese economic issue, if there was anyone who has economic leverage in a US, China, Iranian power struggle, it is US over China, China over Iran, and Iran only has leverage over the US and China at the expense of the Iranian regime. That only works if you have good diplomacy, but US diplomacy under Bush has been horrible, with India being the only positive on the entire Bush 5 year record.

[Mod Edit: removed unnecessary quote of Entire preceeding post]


china has a trade surplus with europe too,although not as great as the surplus with the US.






Quoting – Please Review This Link.

[edit on 5/15/2006 by 12m8keall2c]

I believe dark was referring to this argument:

www.suijuris.net...

This is all a little above my non-economic/foreign-policy mind, ... but it is seriously interesting.

Just wish the western countries actually had some leadership at this time...