It's the oil burse, stupid!
- Thread starter Pekelo
- Start date
Libertrad,
Good points. Irrational is the word of the day. But then again --as you point out --it is hard to be rational with your ars is on the line. Frankly, I find Iran be acting too rational and too mouthy. If I were in their position and I thought the Bushies were going to Nuke me. I would get up one morning and let Isreal have it. I would NOT say a word. I would just do it. Just put the package on Isreal as well as the US forces in the Middle East. After all, if Iran waits till the US strikes first ---it may too late. I would hit them first and go out like heroes (at least heroes to the Muslims). I think the Iranians just want to verbally torture the Jews with the "extermination" talk. But who knows what they got up their sleeve.
I knew that Venezuela was on the enemy list. However, I did not know the military was doing anything about it. Thanks for pointing that out.
Good points. Irrational is the word of the day. But then again --as you point out --it is hard to be rational with your ars is on the line. Frankly, I find Iran be acting too rational and too mouthy. If I were in their position and I thought the Bushies were going to Nuke me. I would get up one morning and let Isreal have it. I would NOT say a word. I would just do it. Just put the package on Isreal as well as the US forces in the Middle East. After all, if Iran waits till the US strikes first ---it may too late. I would hit them first and go out like heroes (at least heroes to the Muslims). I think the Iranians just want to verbally torture the Jews with the "extermination" talk. But who knows what they got up their sleeve.
I knew that Venezuela was on the enemy list. However, I did not know the military was doing anything about it. Thanks for pointing that out.
Iranian talk of destroying Israel is just their talk. They are just pleasing their population while their eyes and minds plan the real target. THE VATICAN. , which they will hit hard. It is the heart of the west. The new world order has to be ready because destroying the Vatican will awaken the totally selfish disinterested europe.
Quote from Pekelo:
If it doesn't matter if oil is sold in dollars or euroes, why the US government is worried shitless about it? After all, you are not arguing against me, you are arguing against the neocons....
This might clarify it:
When you think about an individual transaction to buy oil (or any other commodity), you simply exchange your Euros for USD and buy it. So it all seems very transparent and liquid.
But. How many transactions like that are occurring right this second? All priced in USD, all requiring USD in some bank account somewhere. Every tanker full of oil in route is backed by an account with USD in it, not Euros.
How much is Iran's oil trade worth? That's the minimum amount of demand for USD that would disappear if they priced it in Euros. Right now those dollars are "parked" in Iran's oil transactions, but if Iran no longer needs those dollars, they're sold on the open market and must find another home.
In reality, this goes deeper than just current transactions and USD is held for planned transactions, potential transactions and hedging and general trade. That's trillions of dollars in demand for USD. And this effect trickles all the way down to a bartender in Thailand happily accepting USD.
The USD became an oil-backed currency after we defaulted on our gold-backed currency in the 70s. Remove that oil backing, and what stands behind the value of each dollar?
Excellent Commentary....
Good points about oil transactions and dollar holdings...
However what is the logic if you are selling product A...
and customer X now buys 58% of your product...
Your product flow ascertains a certain price level...whereby if customer X payment capability declines by 40%...your price declines by 40%...thus by cutting X buying capability...the seller of product A suffers accordingly....
Thus what is the rational economic logic of providing a Euro oil bourse?
Good points about oil transactions and dollar holdings...
However what is the logic if you are selling product A...
and customer X now buys 58% of your product...
Your product flow ascertains a certain price level...whereby if customer X payment capability declines by 40%...your price declines by 40%...thus by cutting X buying capability...the seller of product A suffers accordingly....
Thus what is the rational economic logic of providing a Euro oil bourse?
Anything that undermines the petro-dollar undermines the US dollar dominance. Thus the thinking goes that this undermines the political class (ruling class) of America and the Atlantic establishment. It would also hammer all establishment folks ---or at least the dislocations from it would. That goes for Europe as well. There would be massive political changes all over the planet.
Oil has been priced in Dollars since the Great Depression. Prior to the Great Depression ---all natural resources were priced in British Pound Sterling. The dislocations from this switch are talked about to this day. Change hurts ---so any change would hurt the US.
incidentally, high oil prices DO not necessarily hurt the US at first. It creates a demand for more dollars. If oil goes too high too fast and we get an oil shock that is not good. It kills US consumers (and global consumers) But as long as they can print ---to offset the rise (ie. the rise is NOT overnight) ---it can be a net positive and they can allow a 'managed' decline in the dollar.
As long as there is NO alternatives fighting to take the place of the dollar. The dollar is the best of the Worst and the US can hang in there.
The US economy is a consumer SUV ridden bag of con tricks. We need more consumers. One of reasons the Mexicans are wanted is so they can get Credit Cards and Home Loans and Car loans etc... AND they ARE getting them with their Matricula Visas! The American Consumer is tapped and the Housing Market is tapped. It is a precarious situation.
Can it hold together? Who knows?? Can there be a successful attack on the Petro-dollar??? Who Knows????
We will see. WTF do I know---I just trade.
I think what your saying is: If Iran changes their transaction currency, the dollar will drop, raising the price of oil for the US. Possibly pricing the US out. So why would they want to open a bourse that would do this?
Maybe:
- Iran isn't interested in maximizing profits and would rather hurt the infidels.
- or maybe... they want to force out a major customer, drop the demand for oil, thereby extending the longevity of their supplies.
- or maybe it was all just a threat and they'll back off now that they understand the extent of the US reaction.
I don't know. Do you have another idea?
all v.interesting but looking ahead, iranian oil bourse or not, its pretty clear that the demise of $ hegemony is a matter of years... now does that mean that the $ is going to collapse because a larger chunk of international trade flows are effected in euros? i dont think so... wont happen overnight, but gradually, even if we observe panic moves on the fx markets... there'll be sharp adjustments because every year or so the euro will choke as a result of the monetary pressures alone... plus politically there will be huge tensions, count on italy & france for that, guaranteed! in any case, all this will lead to is some sort of balance, with prob 80% of the flows remaining priced in $ on average, because of the relative confidence factor... or so says my crystal ball...