[PB2K]

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

source

So eventually Britain might adopt the Euro too.

[Warren Pease]

There have been rumors about this for several years. If it makes more sense for them to switch, then do it.

This rumor is a powerful (and possibly lucrative) card for somebody to play.

[Big Mac]

It was also strongly denied today. China for one (and Saudi Arabia for two) has no interest in seeing the dollar plummet in value, at least not right now while they hold tons of our crappy Entitlement-fueled debt notes.

I'd like to find FDR and LBJ's graves and piss on them both. Lousy Socialists.

[Cold Warrior]

Some of those countries may want to dork with the US, but some are allies that need the US for economic (Japan) or geopolitical (France) goals. Additionally, transitioning to many currencies instead of one would create chaos.

This report is shockingly illogical.

[PB2K]

Originally Posted by Cold Warrior 

Additionally, transitioning to many currencies instead of one would create chaos.

I'm happy to trade a lousy share to a couple of good ones if I was offered some

[Big Mac]

The USD is going to be under significant pressure and lose substantial value unless we boot the Socialists out of office and get Entitlements in check. But there are two additional factors that just occurred to me that make the switch from dollar denomination of oil unlikely:

1. The gulf states would be playing right into Iran's hands (a country that wants that to occur), and the last time I checked they're wary of growing Iranian influence. (It would also obviously benefit Commie dictator Chavez in Venezuela.)

2. If the switch ever would have happened, it should have occurred during the Cold War when there was a Soviet Union, perhaps during the Carter years during the oil crisis.

The world has too much invested in our currency to let it tank, even if D.C. shows that it's increasingly mentally deficient. We saw proof of that during the financial crisis. It would take nothing less than a true Depression to make a change like that viable, IMO.

[turtle777]

Originally Posted by Big Mac 

The world has too much invested in our currency to let it tank,

This is simply not true.

Right now, the US is planning to accumulate trillion $ deficits over the next years, which need to be funded by other countries. At this point (AFAIK), the current US$ holdings of foreign countries are less than the need of the US to borrow over the next 10 years.

So, how dumb do you guys think are China and others going to be ? Do you really think they will to continue lending us money ?
They are NOT that dumb.

What we will see is a gradual decline of the US$ over the next 5 years. It's unlikely that we will see big drops (double digit % within a few days), but the US$ losing half it's value over 5 years (i.e. a 10% drop each year) is absolutely possible and expected.
(Btw, the US$ index dropped from 89.49 to 76.34 yesterday, that's a 15% drop in 6 months!!!).

It comes down to the frog in the boiling water analogy. If you heat the water slowly, the frog will stick it out and die.

-t

[PB2K]

"The developments come on top of speculation that the Obama administration is operating a policy of benign neglect of the dollar, engineering a devaluation that could help repair some of the economic damage caused by the recession"

today's news : dollar drops 0.7%

it's nothing funny, loads of economies will bear the consequences too if the dollar falls.

[OreoCookie]

Originally Posted by Big Mac 

China for one (and Saudi Arabia for two) has no interest in seeing the dollar plummet in value, at least not right now while they hold tons of our crappy Entitlement-fueled debt notes.

No. China likes its currency undervalued (because it is directly coupled to the US$), because it can cheaply export stuff to the rest of the world (in particular to the US). If the dollar sinks in value, China's economy soars. Of course, this doesn't work ad infinitum, eventually China will have to decouple the Yuan from the dollar.

[Big Mac]

No, I think you have it backwards: If the dollar weakens (such against the Chinese Yuan, as it has been), Chinese exports become more expensive. China wants a relatively strong dollar to purchase its cheap goods. Chinese exports to America are down on a non-trivial percentage basis this year. But beyond that, my point was that since China holds hundreds of billions in US treasury notes, it doesn't want to see a dramatic drop in the dollar.

Anyone who is concerned about this issue should be for drastically cutting Entitlements rather than expanding them, since the Entitlements are the cause of our deficit spending.

[OreoCookie]

Originally Posted by Big Mac 

No, I think you have it backwards: If the dollar weakens (such against the Chinese Yuan, as it has been), Chinese exports become more expensive. China wants a relatively strong dollar to purchase its cheap goods.

You're wrong on several accounts:
(1) First of all, the exchange rate between dollar and Yuan is not free, the Chinese set it at their convenience. The Yuan is undervalued. If the exchange rate wasn't pegged by the Chinese, the Yuan would be more expensive and the dollar would lose in value compared to the Yuan.
(2) If the Yuan rises, dollar prices for our favorite toys rise as well and Americans wouldn't consume as much (for each dollar they have to spend, they get less Chinese goods). Exports would go down, not up.

Just have a look at history: around 2000, the Euro was down compared to the dollar and there were quite a few Europeans complaining about their `weak' currency (I put quotation marks around it, because inflation was very well controlled). Exports soared big time (e. g. German cars were selling like hot cakes), the growth of the European economies was good and inflation was stable.

Originally Posted by Big Mac 

Chinese exports to America are down on a non-trivial percentage basis this year.

Yes, but that's not because the dollar has lost value, but because the US economy has tanked.

Originally Posted by Big Mac 

But beyond that, my point was that since China holds hundreds of billions in US treasury notes, it doesn't want to see a dramatic drop in the dollar.

China's top priority is to temper the growth of its economy and develop all parts of the country.

Originally Posted by Big Mac 

Anyone who is concerned about this issue should be for drastically cutting Entitlements rather than expanding them, since the Entitlements are the cause of our deficit spending.

The `Entitlements' you speak of have nothing to do with America's and Europe's dependence on fossil fuels and cheap labor from China and -- compared to the other factors -- have a very tiny impact on the overall situation. You still may find them problematic, but they're just a separate issue.

Uncontrolled budget deficits is not a new phenomenon, Reagan, for instance, has left his successor a pretty bad budget deficit. America has a long history of running up large deficits. These days it's the wars in Iraq and Afghanistan that cost hundreds of billions and the bail outs. Add to that the banking crisis as well as a systematic outflow of dollars (oil + other imports) and you have a recipe for economic problems. Please don't inject it into a different discussion.

[PB2K]

oktober 8th 2009 : 1 US$ = 1.47€
february 18th 2009 : 1 US$ = 1.25€

gold has never been so expensive

[BadKosh]

IF the world reduces it's oil usage, the Saudi's want financial help!!!!

Linky:

Saudis ask for aid if world cuts dependence on oil | Energy | Chron.com - Houston Chronicle


"There are plenty of needy countries at the U.N. climate talks in Bangkok that make the case they need financial assistance to adapt to the impacts of global warming. Then there are the Saudis.

Saudi Arabia has led a quiet campaign during these and other negotiations — demanding behind closed doors that oil-producing nations get special financial assistance if a new climate pact calls for substantial reductions in the use of fossil fuels.

That campaign comes despite an International Energy Agency report released this week showing that OPEC revenues would still increase $23 trillion between 2008 and 2030 — a fourfold increase compared to the period from 1985 to 2007 — if countries agree to significantly slash emissions and thereby cut their use of oil. That is the limit most countries agree is needed to avoid the worst impacts of climate change.

The head of the Saudi delegation Mohammad S. Al Sabban dismissed the IEA figures as “biased” and said OPEC's own calculations showed that Saudi Arabia would lose $19 billion a year starting in 2012 under a new climate pact. The region would lose much more, he said.

“We are among the economically vulnerable countries,” Al Sabban told The Associated Press on the sidelines of the talks ahead of negotiations in Copenhagen in December for a treaty to replace the Kyoto Protocol, which expires in 2012.

“This is very serious for us,” he continued. “We are in the process of diversifying our economy but this will take a long time. We don't have too many resources.”

Saudi Arabia, which sits atop the world's largest proven oil reserves, is seeing economic growth slide because of fallout from the global meltdown, but experts still expect the country, flush with cash from oil's earlier price spike last year, to be better able than other nations to cope with the current crisis.

Al Sabban accused Western nations of pursuing an agenda against oil producers, under the guise of protecting the planet.

“Many politicians in the Western world think these climate change negotiations and the new agreement will provide them with a golden opportunity to reduce their dependence on imported oil,” Al Sabban said. “That means you will transfer the burden to developing countries, especially to those highly dependent on the exploitation of oil.”

[Shaddim]

Originally Posted by turtle777 

It comes down to the frog in the boiling water analogy. If you heat the water slowly, the frog will stick it out and die.

-t

I thought Mythbusters, or someone like that, proved this wrong.

Edit: Ah, here it is.

[turtle777]

Originally Posted by Shaddim 

I thought Mythbusters, or someone like that, proved this wrong.

Edit: Ah, here it is.

Well, obviously, the Fed hasn't heard about it. Thee US economy in the same boat pot, and they don't realize, that it's being killed.

-t

[turtle777]

Btw, US Dollar Index dropped to 52 week low

DXY Index Quote - US Dollar Index Future - Spot Price Index Quote - DXY Quote - DXY Index Price

Gold reached another all time high.

-t