Oil Producing Nations Slowly Dumping Their Dollar Reserves

[FranG]

This is a sign of what's to come, a collapse in the value of the U.S. Dollar and thus, the U.S. economy. Unless we can invade another oil county and prevent this phenomenon. Iran is a prime target but I think the hold-up is the U.S. hasn't figured out a strategy to get in their and secure the oil fields. Anyway, the article is below.

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Oil producers shun dollar

By Haig Simonian in Zurich and Javier Blas and Carola Hoyos in London

Published: December 10 2006 20:11 | Last updated: December 10 2006 20:11

Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.

The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency. Read more... (http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html)

[immortalmack]

What would be cool is for somone to theorize what would be the effect of oil producing nations dumping all their dollars.

[sbw]

What would be cool is for somone to theorize what would be the effect of oil producing nations dumping all their dollars.

$2000 gold? more?

Scott

[ptGatsby]

$2000 gold? more?


Sure, why not... in USD, your income would be halved, your wealth halved.

In theory, dumping the dollar would crush dollar hegemony. If it happened all at once the US would cease to exist as a country, essentially. It would be the great depression on steroids; factories would grind to a standstill, you'd undergo hyper inflation (ie: germany after the WWs), resources would dry up, trade would stop... it would be a nightmare of epic proportions. The US has so leveraged it's world position that the situation would be catastrophic.

If it happens slowly, you'll just get poor slowly.

[sbw]

Sure, why not... in USD, your income would be halved, your wealth halved.

In theory, dumping the dollar would crush dollar hegemony. If it happened all at once the US would cease to exist as a country, essentially. It would be the great depression on steroids; factories would grind to a standstill, you'd undergo hyper inflation (ie: germany after the WWs), resources would dry up, trade would stop... it would be a nightmare of epic proportions. The US has so leveraged it's world position that the situation would be catastrophic.

If it happens slowly, you'll just get poor slowly.

I see you're an optimist like me--I'm rooting for 100-dollar SILVER mwahahahahahahahaha

Scott

[demagogic_schizoid]

Has anyone heard of the British comedian Rob Newman? He did a show called the history of oil, and he likened the fact that the oil trade is carried out in dollars as being the US's equivalent of Salvador Dali's infinite checkbbook. What he used to do was go to restaurants, and pay with a check - but he would do a picture on the back, knowing that this would be more valuable than the check itself, and that the owner would therefore never cash the cheque. Moving the oil trade away from the dollar would be like suddenly everyone deciding to cash Dali's checks - he would have been fucked.

So is this going to happen to the US?

[ptGatsby]

I see you're an optimist like me--I'm rooting for 100-dollar SILVER mwahahahahahahahaha

Scott

I'm indifferent... I only care about how I'm positioned when events happen...

There will be a shift and it will happen sooner rather than later (read: 15 years, not 50). It could be triggered by *anything* now... real estate? Oil? Gold? Some random geo-political event (think LTCM?)

It doesn't matter what comes along and bumps the table, if the house of cards is high enough, it falls. It could be really bad... really really bad... or it could be a slow 'off into the sunset' situation. Most likely somewhere inbetween.

[ptGatsby]

So is this going to happen to the US?

In a word: Yes.

The question is when. I suspect it will be around the time when China+others are driving up the price of oil, therefore forcing them to change the way oil is handled.

Just as the US bought the world by being consumers, so will China/India/etc.

[sbw]

I'm indifferent... I only care about how I'm positioned when events happen...

There will be a shift and it will happen sooner rather than later (read: 15 years, not 50). It could be triggered by *anything* now... real estate? Oil? Gold? Some random geo-political event (think LTCM?)

It doesn't matter what comes along and bumps the table, if the house of cards is high enough, it falls. It could be really bad... really really bad... or it could be a slow 'off into the sunset' situation. Most likely somewhere inbetween.

should I move to new zealand?

Scott

[ptGatsby]

should I move to new zealand?


The question is where your money is. If you own Euros and the USD crashes, you just doubled your QOL! If you live in NZ and you have USD, you just halved your QOL.

Live where you like the people, services and what not... Changes aren't always catastrophic... no reason to assume this one will be either.

And the impact would be felt all around the world. This is about equalization - the rich will become poorer (and by rich, I mean the top 25% of the population, ie: every western country, pretty much). If you have an exportable job, you'll be screwed.

[FranG]

Good points ptGatsby. In short, total dumping of the U.S. Dollar would lead to hyperinflation in the U.S., same as what happened in Germany after the first World War. But the U.S. will never let it get to that point (Can anybody say extortion? :D). For U.S. citizens, it doesn't matter how you are diversified. The government will just come and take your shit. Kinda like what President Roosevelt did with gold in the 30s. Remember, we don't even own our homes anymore. They can be taken from us for both public and private development. It will undoubtedly lead to world war. It'll be nowhere to run or hide. And it's scary because the U.S. and its buddy Israel has all the world's nukes.

[immortalmack]

It reminds me of what Karl Marx said about capitalism and how that it needs new markets to survive and that it was willing to get aggressive to keep on growing and surviving.

[darlets]

What will be the new "Greenback" in which we purchase oil with?

Ladies and Gents, I give you the "Bushback"

http://www.intpcentral.com/uploads/bushback.jpg

I wouldn't worry if you live in a western country, it's not inflation leads to interest rates rises which will cause a major housing market correction.

"Morgagee repossessions are going great guns in the outer suburbs. During 2005 there were 4873 cases lodged in the Supreme Court of NSW of lenders taking legal action against borrowers who defaulted on mortgage repayments. That was 59 per cent more than was lodged in 2004 and about twice the long-term rate going back to 1990. Filing rates during the first half of this year are 9 per cent higher than last year.

The trend in Melbourne is in the same direction but not as pronounced.

In the first half of the year 1474 initiations of writs for the possession of property were made in the Victorian Supreme Court, compared to 968 in the first half of last year.

The figures suggest many people paid too much without factoring in rate rises and they are no longer able to maintain repayments and have become forced sellers.

"In Sydney's south-west and west there are more than double the number of auctions than at the same time last year," says Michael McNamara, a spokesman for Australian Property Monitors.

It isn't because real estate agents have suddenly decided to favour auctions over private treaty sales but because of mortgagee repossessions, he says. In Melbourne's outer north there are about 50 per cent more auctions than last year. "

It's important to bear in mind banks prefer the people to sell their houses "willing" than to be force to sell them via a mortgage auction, so this data is likely to be the tip of the iceberg.

People can do their own research into the U.S housing market but it doesn't exactly look strong.

I read some interesting articles yesterday about the rest of the world moving away from the u.s dollar. Interesting times indeed.

[darlets]

And a commodities boom
"According to calculations by the Mint, the metal value of pennies, which are made of copper-coated zinc, is now more than one cent. The metal value of 5-cent coins, made from a copper-nickel blend, is up to 7 cents. Adding in the costs of manufacturing means the Mint now spends 1.73 cents for every penny and 8.74 cents for every nickel it makes.

Until 1982, pennies were made of 95 percent copper. The commodity metal value of one of those coins, which still make up a large percentage of the pennies in circulation, is 2.13 cents, according to the Mint."

link (http://www.nytimes.com/2006/12/14/business/14pennies.html?_r=2&ref=business&oref=slogin&oref=slogin)

[sbw]

And a commodities boom
"According to calculations by the Mint, the metal value of pennies, which are made of copper-coated zinc, is now more than one cent. The metal value of 5-cent coins, made from a copper-nickel blend, is up to 7 cents. Adding in the costs of manufacturing means the Mint now spends 1.73 cents for every penny and 8.74 cents for every nickel it makes.

Until 1982, pennies were made of 95 percent copper. The commodity metal value of one of those coins, which still make up a large percentage of the pennies in circulation, is 2.13 cents, according to the Mint."

link (http://www.nytimes.com/2006/12/14/business/14pennies.html?_r=2&ref=business&oref=slogin&oref=slogin)

:wub:

silver, for instance, is up approximately 200% (USD) since 2001. and it seems like we're closer to the beginning than the end.

the housing stuff you posted above--foreclosures, inventory--is sort of exactly the same here in florida. and I've heard its the same elsewhere in other states.

Scott

[darlets]

:wub:

silver, for instance, is up approximately 200% (USD) since 2001. and it seems like we're closer to the beginning than the end.

the housing stuff you posted above--foreclosures, inventory--is sort of exactly the same here in florida. and I've heard its the same elsewhere in other states.

Scott

Yeah, the U.S housing market is looking increasingly shakey. There's lots and lots of articles on its correction.

It will be interesting to see if
A) the demand for commodities from China and India continue
B) if the price comes down at all as supply continues to ramp up.

[AKULACLASS]

I have long been interested in this subject and I've theorized that the end of US hegemony is at hand. Between Chalmers Johnson, Ravi Batra, Noam Chomsky and similar writers, it all portends towards only one possible end.

Given the skyrocketing US National Debt that's approaching US$9 Trillion and the equal rising trade deficit, I would give America another 10-15 years at the most. But as Paul Volcker noted, anything that spooks the market (terrorist attacks, LTCM-style problems) could potentially set the whole fireworks off tomorrow.

At the risk of antagonizing American users of this forum, I can't say that I'd be all that sad. Kind of looking forward to it actually. Not the suffering of millions, potentially billions of innocent civilians worldwide (American or otherwise) of course, but rather the end of American dominance.

[Krill]

I can't say that I'd be all that sad. Kind of looking forward to it actually. Not the suffering of millions, potentially billions of innocent civilians worldwide (American or otherwise) of course, but rather the end of American dominance.

Because whatever nation is dominating is more important than people's lives.

You think "American dominance" ending will bring anything other than the rise of another equally dislikeable nation? Congrats, you just justified being happy over a transition of power that will achieve nothing while disrupting and destroying the lives of millions.

It's absurd to try and make an ethical distinction anyways.

[Dom]

It reminds me of what Karl Marx said about capitalism and how that it needs new markets to survive and that it was willing to get aggressive to keep on growing and surviving.

Someone ion my history seminar said, "that now that Marx had been proved wrong..." I intterupted him "History isn't over yet, some of the Marxist contradictions in capitalism haven't yet been answered"

Slowly into the sunset worked for us Brits... I suggest that route, the sooner you guys realise it's inevitable, and thus plan for it peacefully the better. If you don't then the potential for fighting for it is expanded.

[AKULACLASS]

To be fair, I wish the same end to every predecessor and successor of America. It's nothing personal, I just don't like the idea of being controlled or watching anybody get controlled.

American/Western European dominance also results in great suffering. Just because it isn't happening is New York on a massive scale doesn't mean that it doesn't warrant any less attention than a second Great Depression that will certainly leave the streets of NYC and most other American cities in shambles.

Not trying to be a troll, just expressing the natural dislike of the the abuse of power that all INTPs (and most humans) share.

[Dom]

To be fair, I wish the same end to every predecessor and successor of America. It's nothing personal, I just don't like the idea of being controlled or watching anybody get controlled.

American/Western European dominance also results in great suffering. Just because it isn't happening is New York on a massive scale doesn't mean that it doesn't warrant any less attention than a second Great Depression that will certainly leave the streets of NYC and most other American cities in shambles.

Not trying to be a troll, just expressing the natural dislike of the the abuse of power that all INTPs (and most humans) share.

Whoever dominates, there would be great suffering, and there will always be a dominate player, it is in human nature to compete and to gather wealth and resources as a selfish act..

The biggest problem is that there is currently only one of these superplayers...

[Krill]

To be fair, I wish the same end to every predecessor and successor of America. It's nothing personal, I just don't like the idea of being controlled or watching anybody get controlled.

American/Western European dominance also results in great suffering. Just because it isn't happening is New York on a massive scale doesn't mean that it doesn't warrant any less attention than a second Great Depression that will certainly leave the streets of NYC and most other American cities in shambles.

Not trying to be a troll, just expressing the natural dislike of the the abuse of power that all INTPs (and most humans) share.

I understand where you're coming from, but I was somewhat surprised and strongly in disagreement with your attempt to detach desireable consequences from undesireable ends.

I apologize if I came off too strongly.

[darlets]

Whoever dominates, there would be great suffering, and there will always be a dominate player, it is in human nature to compete and to gather wealth and resources as a selfish act..

The biggest problem is that there is currently only one of these superplayers...

I want to disagree with this, I really do, but I can't, as I think it to be true

:(

[AKULACLASS]

I understand where you're coming from, but I was somewhat surprised and strongly in disagreement with your attempt to detach desireable consequences from undesireable ends.

I apologize if I came off too strongly.

Not at all. Your objections are perfectly moral.

However, I wish to emphasize that I do not want to see millions of people suffer. I would prefer a fall in American hegemony without any suffering. After all, if I wished suffering on American citizens for the actions of their government, how would I be any more moral than this government that I accuse of being immoral?

But my gut feeling is that it the collapse of American dominance will not be orderly like that of the British Empire but anarchic. Partly this is because of the size of the global economic imbalances that are building... imbalances that will probably insist on levelling themselves suddenly and drastically.

In the chaos that results, people will suffer. Perhaps more people than are presently suffering due to American imperialism. I am resigned to the inevitable suffering of people. But you must forgive me, I was too eager at the thought of the fall of the strongest neo-colonial power today. I don't know why, another EU or China will only take its place :mad:.

[sbw]

Not at all. Your objections are perfectly moral.

However, I wish to emphasize that I do not want to see millions of people suffer. I would prefer a fall in American hegemony without any suffering. After all, if I wished suffering on American citizens for the actions of their government, how would I be any more moral than this government that I accuse of being immoral?

But my gut feeling is that it the collapse of American dominance will not be orderly like that of the British Empire but anarchic. Partly this is because of the size of the global economic imbalances that are building... imbalances that will probably insist on levelling themselves suddenly and drastically.

In the chaos that results, people will suffer. Perhaps more people than are presently suffering due to American imperialism. I am resigned to the inevitable suffering of people. But you must forgive me, I was too eager at the thought of the fall of the strongest neo-colonial power today. I don't know why, another EU or China will only take its place :mad:.

another optimist, how refreshing :joft:

Scott

[immortalmack]

To be fair, I wish the same end to every predecessor and successor of America. It's nothing personal, I just don't like the idea of being controlled or watching anybody get controlled.

American/Western European dominance also results in great suffering. Just because it isn't happening is New York on a massive scale doesn't mean that it doesn't warrant any less attention than a second Great Depression that will certainly leave the streets of NYC and most other American cities in shambles.

Not trying to be a troll, just expressing the natural dislike of the the abuse of power that all INTPs (and most humans) share.

Do you think the canadians have perfectly clean hands?

[Dark Razor]

I think we live in very interesting times, I have a feeling that the collapse of American hegemony will either result in all encompassing World War 3 ,or in the rise of either the European Union or China to hegemonial status. Whether the world will be better off under their rule is at least doubtful.

[charred_heart]

The system has been set up so that oil producing nations cannot take out all their money all at once.

Rest assured Americans, the world is safe... for another day.

http://content.answers.com/main/content/wp/en-commons/thumb/1/1a/250px-Fleishersuperman.jpg

[AKULACLASS]

Do you think the canadians have perfectly clean hands?

Nope. The Canadians have at least aided and abetted America in return for material benefits.

[darlets]

""Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters."

That's a significant difference to the last statement after the October decision.

This time the Fed acknowledges that the slump in housing in the US is now "substantial" and that "recent indicators have been mixed".

Central banks do not choose their adjectives lightly and for the Fed to upgrade the housing slump to "substantial" is an acknowledgement of how serious it has become. "


link (http://www2.shawstockbroking.com.au/egoli/egoliEconomicsPage.asp?PageID=%7BDA82BA7B-F9EB-4C2F-BC33-5A12CCA73698%7D)

[sbw]

link (http://www2.shawstockbroking.com.au/egoli/egoliEconomicsPage.asp?PageID=%7BDA82BA7B-F9EB-4C2F-BC33-5A12CCA73698%7D)

you might enjoy this:

http://www.rgemonitor.com/blog/roubini/

Scott

[darlets]

The main stream media has now announced it.

6 strategies to survive the real estate bust (http://money.cnn.com/magazines/fortune/fortune_archive/2006/12/25/8396764/index.htm?ref=patrick.net)

:mellow:

[darlets]

I think our Politicians need to take a walk down the yellow brick road and ask for a brain.

housing stress in Oz (http://www.abc.net.au/am/content/2007/s1845494.htm)

Just need Japan to crank up rates and things will get "interesting"

[drdolittle]

I've seen a couple of people saying the EU or China will take over hegemony. How many people think China will not be next. One trillion US dollars in reserve and growing. Producing trade surplus with the EU and US. Building their military up and trying out weapons in Iraq vs the US.
I think it will take another ten years depending on how much oil we can buy cheaply without any military coercion at all wink wink.
My biggest concerns. Gold, farmland, land/money in another country? Brazil seems kind of sexy to me and sort of has stable law. (apart from those slums outside rio).
Oh, and the next dollar devaluation will be the Amero. The Americas answer to the Euro.