On May 10, Russian President Vladimir Putin ignited a firestorm that is bound to sweep across the global economy. In his State of the Nation speech to parliament,, he announced that Russia was planning to make the ruble “internationally convertible” so that it could be used in oil and natural gas transactions. Presently, oil is denominated exclusively in dollars and sold through the New York Mercantile Exchange (NYMX) or the London Petroleum Exchange (LPE) both owned by American investors. If Russia proceeds with its plan, the ruble will go nose to nose with the dollar on the open market sending several billions of surplus greenbacks back to the United States. This could potentially send the American economy into freefall; triggering a deep recession and an extended period of hyper-inflation.

“The ruble must become a more widespread means of international transactions,” Putin said. “To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in rubles."

Currently, the central banks around the world carry large stockpiles of dollars to use in their purchases of oil. This gives the US a virtual monopoly on oil transactions. It also forces reluctant nations to continue using the dollar even though it is currently underwritten by $8.4 trillion national debt.

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A growing number of nations are now focusing on the empire’s Achilles’ heel, the dollar. Venezuela, Russia, Norway and Iran are all threatening to move away from the greenback. Is this a spontaneous uprising or is it a new type of asymmetrical warfare?

Whatever it is, Washington is bound to be reeling from the affects. After all, war maybe possible with Iran or Venezuela, but what about Russia? Would Bush be stupid enough to risk nuclear Armageddon to protect the drooping dollar?

The administration is exploring all of its options and is developing a strategy to crush Putin’s rebellion. (This may explain why Newsweek editor and undeclared spokesman for the Council on Foreign Relations (CFR), Fareed Zacharia, asked his guest on this week’s “Foreign Exchange” whether he thought Putin could be “assassinated”? Hmmm? I wonder if we’ll hear similar sentiments from Tom Friedman this week?)

Originally posted by Violent
We only get 12% of our oil from Iraq, and NONE from Iran right now. The rest of the world buys plenty, but we get our oil mainly from Mexico and Canada through the multi-nationals.

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Originally posted by rich23

Originally posted by Violent
We only get 12% of our oil from Iraq, and NONE from Iran right now. The rest of the world buys plenty, but we get our oil mainly from Mexico and Canada through the multi-nationals.

PDF Document

The point is that in order to buy oil, the rest of the world has to buy dollars first. That's what keeps the US economy afloat. If the rest of the world can buy oil in a harder currency, and if the ruble starts competing with the dollar, the US economy could be looking even shakier than it already is...

The OECD said in its world economic outlook that the depreciation faced by the dollar could be 'of the order of one-third to one-half.'

The adjustment in the deficit would 'need to induce a sharp slowdown in US domestic demand and that this would have adverse spill-over effects on other economies both through the trade and asset revaluation channels,' it said.

The rebalancing may be accompanied by an increase in risk premiums and a reversal of private capital flows, it added.

Countries with current account surpluses have been accumulating dollar reserves and 'their willingness to hold dollar assets on their balance sheets may diminish,' the OECD warned.