Kuwait: Gulf States May End Dollar Pegs

Kuwait: Gulf States May End Dollar Pegs

www.bloomberg.com

Gulf states are considering dropping their pegs to the dollar after the U.S. currency's decline stoked inflation across the region, Kuwaiti Finance Minister Mustafa al- Shimali said.

``Yes, there are some'' Gulf Cooperation Council states considering dropping their pegs to the dollar, which has fallen 13 percent against the euro in the last 12 months, al-Shimali said in an interview in Kuwait late yesterday. ``Some countries will do what we are doing.''

(visit the link for the full news article)

Iran has already dropped dollar-denominated oil transactions and now the collapsing dollar is inciting high inflation throughout the oil states of the Persian Gulf.

If they break their dollar pegs one-by-one or en masse, this will further destabilize the dollar and the US economy, as oil is priced in dollars and its price will jump even higher as the dollar's value declines.

The short of it: Bad news they're even talking about this in public. Especially that our "friends" in Kuwait are doing the talking.



www.bloomberg.com
(visit the link for the full news article)

Yes this is a bad news

Iran dumps U.S. dollars in oil transactions

TEHRAN, April 30 (Xinhua) -- "The dollar has completely been removed from our oil trade....Crude oil customers have agreed with us to use other currencies (in the trade)", Oil Ministry official Hojjatollah Ghanimifard was quoted as saying by the state television.

"We make our transactions with euros in Europe, but yen in Asia," he added.

Source

Yeah, I was mentioning this a couple of months ago when OPEC was flirting around with switching over to the Euro because of the nose-diving dollar...Watch the already outragious cost of gas shoot from $4-5 a gallon up to about $8 in a hop, skip and a jump. That will be the final nail in the coffin for an already struggling nation.

Originally posted by DimensionalDetective
Yeah, I was mentioning this a couple of months ago when OPEC was flirting around with switching over to the Euro because of the nose-diving dollar...Watch the already outragious cost of gas shoot from $4-5 a gallon up to about $8 in a hop, skip and a jump. That will be the final nail in the coffin for an already struggling nation.

One of the nails, that's for sure. Since we have an oil driven economy and a fuel oil driven culture, this will lay down the final cobblestones on our road to ruin.

Thanks Mr. Bush.

This movement is perhaps the single biggest threat tot America and it puts the US in a very volatile position both politically and militarily. Iraq dropped its trade of oil in the US dollar and a year later the US invaded Iraq. I guess it is just a matter of time before the US goes into Iran.

Scary times..

TruthWithin does have the truth here.

The oil industry was founded by American interests, interests which guaranteed their control over Middle Eastern oil by agreements with the oil-producing countries that oil would be pegged to the dollar. For years our dollar has been backed up by a commodity, but it wasn't gold... it was oil.

I firmly believe that the reason for the attack on Iraq was Saddam Hussein wanting to unpeg his oil from our dollar. Iran was the next to publicly announce a desire to do so, and almost immediately Bush and Co. began beating the war drums. They didn't work, and now Iran has de-pegged. Now Kuwait as well, with others ready to do the same? Our dollar is done.

This will further free-fall our currency, and perhaps soon we will have a definable recession. Of course, by that time, we will have worse than a depression underway. Survivalists take note: the end is now near.

TheRedneck

edit to add:
I should mention here that there is no shortage of oil. The oil companies in the USA are busily drilling and capping wells as we debate in Montana. Why? Simple. The oil market is a bubble, just like housing, gold, the old dot-coms, but this bubble is completely artificial. The prices have been driven up by speculators in the commodities market in order to draw investors in. Once the market has taken all it can, these speculators will sell off, take their profits, and allow everything else to collapse. Did I mention that the speculators are the oil companies' executives?

Then they will open the new wells to continue their stranglehold on the public. Those who can survive the coming disaster financially will be welcomed with cheap fuel again. Those who do not... well, it's not the oil companies problem, is it?

TheRedneck


[edit on 1-5-2008 by TheRedneck]

reply to post by TheRedneck



Hey, Redneck...what do you think of stories that the uber-rich are, and have been, converting their wealth into other currencies? Like the Euro. or Yen? Dire implications, indeed.

reply to post by weedwhacker

I think they're probably smart enough to know that this economy cannot continue... I just wish I was able to follow their lead. I am too tied to this country (and too money-poor ) to do so.

Those in power knew all along this was a possibility. They didn't become wealthy by being stupid. Bush was their hope to correct the situation before it collapsed, but collapse is now imminent. They're hedging all their bets.

TheRedneck

I don't know, I'm a bit dubious over the timing of this statement by Kuwait.

Over the last couple of days (today oil being down by $2.56 as of this writing), oil has been dropping through the floor.

I'm thinking that someone wants to keep the price of crude inflated to maximize profits. What better way to drive the price back up by scaring the investment world.


AB1

This further proves why we need to quit policing the world and be more self reliant...the fact is we lost a lot of treasure kicking Sadam out of Kuwait and this is how we get paid...how many more "friends" have to backstab us for us to wake up and realize we need to let these people fry and stay our of their business...the fact is yes we made an agreement with them..we will make them very rich they just have to peg in dollars...now that they have gotten rich the agreement is off...Oh and it doesnt help the FED is printing money like mad..

[edit on 1-5-2008 by mybigunit]

Originally posted by weedwhacker
reply to post by TheRedneck

 

Hey, Redneck...what do you think of stories that the uber-rich are, and have been, converting their wealth into other currencies? Like the Euro. or Yen? Dire implications, indeed.

It's worse than that: the money is going into farmland (I kid you not, hedge fund managers are buying up farmland at a huge rate) precious metals, and commodities. Real, hard things.

The dollar is a mess, but so are all currencies. The Euro is king of the trash heap, in a way. On top for lack of anything better, and there are already serious concerns that the dollar's collapse is putting unbridgeable strains between the core EC countries (Germany, France, the Netherlands) and the southern tier, who are falling into an economic hole. The Euro could well be a victim of its success and come unglued.

In any event, if oil goes, the dollar goes. Without it, it's just paper--and more of it every day.

And what of the 'rest' of the world, as it were? I mean China, for example, has an enormous stake in the financial stability of the American economy (or maybe I'm mistaken), as well as others, including our fair weather friends.

Shouldn't there be other interests 'working' to avoid the total melt-down of the dollar?

(I am not being sarcastic here, I genuinely can't reconcile the whole - "let's destroy America" angle) A concerted effort to pummel the American economy should be considered 'hostile' by many non-American interests too, no?

I stand ready to receive an 'education'

[edit on 1-5-2008 by Maxmars]

reply to post by Maxmars


China is a rival, not our friend. They, like the Gulf oil producers with their oil, have been giving us their goods in return for our paper dollars, but that "recycling" is coming to an end. They've created sovereign wealth funds and are now investing in US companies--they want to own real assets, not hold vast amounts of depreciating US paper. Same in the ME.

No one wants to see the US economy tank, its a symbiotic relationship that no one is happy about, but all indications are that everyone is preparing for the worst--that's exactly the point of this latest announcement from Kuwait.

reply to post by Maxmars

China is sitting back with a big smile on their faces. If the dollar tanks completely and the US slips into SitX (as some here have called it), they won't have to worry about that sleeping giant that Japan woke up when they tried to take the planet over. If we recover, they simply own us, as they have so much American cash they can buy us outright. He who has cash when a depression hits becomes a billionaire overnight.

Either way, they win. It's called 'checkmate' in the game of chess.

TheRedneck

Originally posted by Maxmars
And what of the 'rest' of the world, as it were? I mean China, for example, has an enormous stake in the financial stability of the American economy (or maybe I'm mistaken), as well as others, including our fair weather friends.

Shouldn't there be other interests 'working' to avoid the total melt-down of the dollar?

(I am not being sarcastic here, I genuinely can't reconcile the whole - "let's destroy America" angle) A concerted effort to pummel the American economy should be considered 'hostile' by many non-American interests too, no?

I stand ready to receive an 'education'

[edit on 1-5-2008 by Maxmars]

The powers that be dont care about the dollar keep in mind who has all the assets (Gold, Real Estate, etc etc) if the dollar crashes. It just makes those assets that much more valuable. China will be fine because they have all the manufacturing. They provide services...we here in America dont anymore because we gave our backbone (our manufacturing industry) to the Chinese and what not so China will do just fine because we will always need producers. The dollar crash hurts one group and that is the middle class and poor Americans...keep in mind the dollar can be and is being depegged at any time.

Well, wait a few hours and here comes confirmation of my prior post on sovereign wealth funds: Bloomberg reports:

Kuwait's $250 billion sovereign wealth fund may boost its stakes in Citigroup Inc. and Merrill Lynch & Co. as it pursues investments in companies battered by subprime-mortgage related losses.

"The valuation in the markets in the U.S. and Europe, we think, has created a lot of opportunities,'' Bader al-Saad, the Kuwait Investment Authority's managing director, said in an interview with Bloomberg Television today.

They've had it with US paper; they want to dump their dollars in exchange for real assets.

*sigh* remember when there were spoils of war? (Rhetorical question as only a very few here could have possibly been alive when the victors of wars still claimed spoils.) The idea of rebuilding a country you destroyed after (or in Iraq's case, during) the war instead of claiming the spoils of the war for your own country has to rank right up there alongside giving back the Panama canal and taking us off the gold standard among the dumbest ideas ever enacted in this country. We should right now be enjoying the lowest oil prices in our history, relatively speaking. We control the world's second largest oil field which sits under a desert half a world away from us and is being defended by our tax dollars and our military. But what do we do? We give the crap back to the Iraqis. Whoo-hoo! Bush isn't a fascist, he's a bleeding heart that cares far too much about world opinion and international policies.

Originally posted by burdman30ott6
*sigh* remember when there were spoils of war? (Rhetorical question as only a very few here could have possibly been alive when the victors of wars still claimed spoils.) The idea of rebuilding a country you destroyed after (or in Iraq's case, during) the war instead of claiming the spoils of the war for your own country has to rank right up there alongside giving back the Panama canal and taking us off the gold standard among the dumbest ideas ever enacted in this country. We should right now be enjoying the lowest oil prices in our history, relatively speaking. We control the world's second largest oil field which sits under a desert half a world away from us and is being defended by our tax dollars and our military. But what do we do? We give the crap back to the Iraqis. Whoo-hoo! Bush isn't a fascist, he's a bleeding heart that cares far too much about world opinion and international policies.

LOL your half right here...there are spoils to the war my friends its just you and I arent seeing them...have you seen big oils profits these days? Yes Yes Yes theres spoils to war but unfortunately the only people are that are seeing the spoils is Big Oil, Blackwater, Haliburton, and other security firms and cronies of this administration...Bush IS a fascist and doesnt care at all for world opinion.

Originally posted by gottago
Well, wait a few hours and here comes confirmation of my prior post on sovereign wealth funds: Bloomberg reports:

Kuwait's $250 billion sovereign wealth fund may boost its stakes in Citigroup Inc. and Merrill Lynch & Co. as it pursues investments in companies battered by subprime-mortgage related losses.

Well, you see (as i interpet it) is the diversion/distraction--used by magicians & sleight-of-hand artists.....

You focus on the 'subprime-mortgage losses'...but the real 'Target'
is getting into the inner-workings and bumping elbows with the significant percentage holders of the Federal Reserve itself... Citigroup has almost a 10% Say-So on the Federal Reserves' board-of-Governors....

thats Why this Gulf State decided to ""invest"" a number of Billions - under the public Cover of a 'Soverign Wealth Fund'


IM?HO