US dollar in trouble, oil market moving to Euro

Greetings all,

An interesting article about the US dollar and its place in the world economy talks about the oil market moving into Euros instead of dollars :
www.mises.org...

Anytime soon one may expect that countries like Russia or Venezuela and other oil producers will turn to the euro as the currency for their oil exports. The move to the euro as a currency for international transactions and reserves during the past couple of years may represent only the initial stage of long-lasting process. Currency shifts of such proportions start slowly but over time they will gain more momentum. By now, the euro may have passed the threshold that had limited its global use. Once a means of payment is widely accepted, it becomes increasingly more attractive for a wider use.


The move from the dollar to Euros is already happening -
news.neilrogers.com...
www.templetonthorp.com...

Russia is switching to Euros :
www.fourwinds10.com...
www.themoscowtimes.com...

Venezuela is fed up with the US and is leading the move to Euros :
www.thirdworldtraveler.com...

Several other oil producing countries have also agreed to sell oil in euros-Iran, Libya, Venezuela, Russia, Indonesia, and Malaysia (soon to join this group). In July 2003, China announced that it would switch part of its dollar reserves into the world's emerging "reserve currency" (the euro).

Indeed, China has formed a new oil deal with Venezuela:
news.bbc.co.uk...
english.chinamil.com.cn...


This is happening in part becaue the US dollar and the US economy is in such bad shape -

Greenspan's warnings :
www.msnbc.msn.com...

The IMF has been warning the US about the deficit for some time:
www.globalpolicy.org...
www.pwcglobal.com...

Bill Gates bets against the US dollar :
quote.bloomberg.com...

Bush is blowing so much money that Congress recently raised the US credit limit to 8.1 TRILLION so Bush could have another 800 billion to run his invasions :
republitarian.typepad.com...


A major shift in geo-politics is taking place that will leave the US out in the cold :

The third emerging alliance is BRICS - Brazil, Russia, India, China, and South Africa. The newly formed Russia-China alliance provides Putin the necessary critical mass to move ahead and formally create the BRICS alliance.
www.indiadaily.com...

Along with the alliances forming between China and Venezuela, and Russia and China, and Brazil and Venezuela, and Rusia and Venezuela, this is a major threat to US hegemony :
www.washingtontimes.com...
www.antiwar.com...


The future looks grim for the US.


Iasion

Execpt for one thing.
Saud Arabia, and Iraq, wll only sell oil in dollars. Snce those two alone account for some 50% or better of the worlds oil supply, not even mentioning Kuwait, The dollar will stay the defacto oil currency for many years to come.

Originally posted by mwm1331
Execpt for one thing.
Saud Arabia, and Iraq, wll only sell oil in dollars. Snce those two alone account for some 50% or better of the worlds oil supply, not even mentioning Kuwait, The dollar will stay the defacto oil currency for many years to come.

Saudi Arabia and Iraq's exports don't even account for half of OPEC's total, let alone the world's total.

Here's the data on the value of OPEC exports:

OPEC Members’ values of petroleum exports, 2002 (m $)
Iraq $12,593
Saudi Arabia $63,814
OPEC Total $207,796

Even if you add Kuwait's exports to that list it's still less than 50%


OPEC proven crude oil reserves, 2002 (m b)
Iraq: 115,000
Saudi Arabia 262,790
OPEC Total 881,679
Total World 1,126,108.0


World crude oil production by region, 2002 (1,000 b/d)
Total world 63,933.8
OPEC 24,322.5
OPEC percentage 38%



Information taken from:
Annual Statistical Bulletin 2003


Now as far as Iraq selling in dollars, they did switch to the Euro before the invasion of Iraq and only stopped because the US made them stop.
When their elected government gets into power they could switch it back.

I stand corrected.

Good info A of B
so then Iraq and Saudi account for 25% of opec?

Didn't anyone hear??

Bush said that a weak dollar is GOOD!! Don't worry about how the euro's stomping all over the dollar, we WANT it weak!!

BTW, this won't matter much longer. Oh, I guess no one has heard about the Amero...yes, they have plans for our own version of the euro AND the EU. Last time I heard they're calling it the Pan American Union.

Bring it on, non-believers. All you have to do is type "amero" into google and see for yourself...

You have voted Iasion for the Way Above Top Secret award. You have one more vote left for this month.

You may be interested in this story about Iran's plane to set up a Euro based Oil exchange:

Therefore, a potentially significant news development was reported in June 2004 announcing Iran’s intentions to create of an Iranian oil Bourse. (The word "bourse" refers to a stock exchange for securities trading, and is derived from the French stock exchange in Paris, the Federation Internationale des Bourses de Valeurs.) This announcement portended competition would arise between the Iranian oil bourse and London’s International Petroleum Exchange (IPE), as well as the New York Mercantile Exchange (NYMEX). It should be noted that both the IPE and NYMEX are owned by U.S. corporations.

The macroeconomic implications of a successful Iranian Bourse are noteworthy. Considering that Iran has switched to the euro for its oil payments from E.U. and ACU customers, it would be logical to assume the proposed Iranian Bourse will usher in a fourth crude oil marker – denominated in the euro currency. Such a development would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounts for 45% of imports into the Middle East (2002 data).

Acknowledging that many of the oil contracts for Iran and Saudi Arabia are linked to the United Kingdom’s Brent crude marker, the Iranian bourse could create a significant shift in the flow of international commerce into the Middle East. If Iran’s bourse becomes a successful alternative for oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX),

read more

This is the real reason the US is chomping at the bit to attack Iran.

It's a more logical reason the world's largest nuclear power hypocritically denying the same weapons to other countries.
.

NO, NO, NO!

USA IS #1!

Peace out niggas

Originally posted by truthseeka
Didn't anyone hear??

Bush said that a weak dollar is GOOD!! Don't worry about how the euro's stomping all over the dollar, we WANT it weak!!

BTW, this won't matter much longer. Oh, I guess no one has heard about the Amero...yes, they have plans for our own version of the euro AND the EU. Last time I heard they're calling it the Pan American Union.

Bring it on, non-believers. All you have to do is type "amero" into google and see for yourself...

If a weak currency is always a bad thing, why does China intentionally undervalue the yuan?

And yes, I already know the answer.

Well, Vor, I didn't say that weak currency is always bad. It leads to more exports because your currency is weaker than others. Maybe that's why so much $hit is "made in China."

Problem is, our exports haven't improved like they should have since the dollar has been getting beat down by the euro. Don't believe me, try going to Europe and spending money, you'll see for yourself.

Do you have any friends who go to Mexico? Do they tell you how much stuff they buy with relatively little US currency? Now, why is that...wait, "I already know the answer."

Originally posted by truthseeka
Well, Vor, I didn't say that weak currency is always bad. It leads to more exports because your currency is weaker than others. Maybe that's why so much $hit is "made in China."

Problem is, our exports haven't improved like they should have since the dollar has been getting beat down by the euro. Don't believe me, try going to Europe and spending money, you'll see for yourself.

Do you have any friends who go to Mexico? Do they tell you how much stuff they buy with relatively little US currency? Now, why is that...wait, "I already know the answer."

Exports have actually been rising quite rapidly in the last year and a half. Its simply that the growth in exports is being overwhelmed by rapid acceleration of imports, leading to record trade deficits.

And finally, someone who realizes why a weak currency isn't always a bad thing. My apologies for assuming you did not know this. The fact is, too few people realize the effect of dollar valuation on imports and exports. In fact, the vast majority of people fail to realize that there are two sides to every coin in economics.

Well, thanks Vor. It's nice to have someone disagree with me on some points who actually uses their brain in the dispute. Sadly, you don't find that much, even here on ATS...

I stand corrected on the exports thing. I honestly know little about economics, I heard this from an economic expert. But, that doesn't really mean much because both sides have their experts. What I do know is that the people in our govt who could prop up the dollar don't want to. I also know that MANY jobs are going overseas.

I just heard that Buffett made somewhere over 3 bil by dumping dollars. I had heard that he, Bill Gates, and other superrich people were saying that the dollar isn't any good anymore. I'm sorry, but if superrich people don't want the dollar anymore, what does that say about it? I mean, if you have what it takes to make billions of dollars, surely you understand them more than the average person???

hey truthseeka and vor78...thanks for the respect being shown towards each other. it's very refreshing to see people take part in a civilized debate. KUDOS!!!

Originally posted by truthseeka
I just heard that Buffett made somewhere over 3 bil by dumping dollars. I had heard that he, Bill Gates, and other superrich people were saying that the dollar isn't any good anymore. I'm sorry, but if superrich people don't want the dollar anymore, what does that say about it? I mean, if you have what it takes to make billions of dollars, surely you understand them more than the average person???

The problem with the dollar is that it's value is dependent on the US government being able to back it up. It is basically a debt note. Well, as I am sure you know, when you already have a lot of debt, and then increase your debt, your credit rating usually does not rise.

What I think is being overlooked here though is what Warren Buffet changed to....It wasn't the Euro or any other national monotary note - it was the oldest currancy in the world, GOLD!

If you look at economies, especially at the macro level, things run in cycles.

Well, when was the last world depression? It seems to me we are do.

This brings me to another point, and that is many people blame Bush for the drop in the US economy after CLinton. This is simply not true. The fact is that our economy had a huge artificial buble - the internet boom. Once everyone realised that there was way too much hype, the market self corrected.

As they say, history repeats it's self.

Originally posted by truthseeka
Well, thanks Vor. It's nice to have someone disagree with me on some points who actually uses their brain in the dispute. Sadly, you don't find that much, even here on ATS...

I stand corrected on the exports thing. I honestly know little about economics, I heard this from an economic expert. But, that doesn't really mean much because both sides have their experts. What I do know is that the people in our govt who could prop up the dollar don't want to. I also know that MANY jobs are going overseas.

I just heard that Buffett made somewhere over 3 bil by dumping dollars. I had heard that he, Bill Gates, and other superrich people were saying that the dollar isn't any good anymore. I'm sorry, but if superrich people don't want the dollar anymore, what does that say about it? I mean, if you have what it takes to make billions of dollars, surely you understand them more than the average person???

Myself, I think the dollar is going to bounce back as soon as the Fed starts tightening up its monetary policy. The current low interest rates aren't going to attract much attention from overseas investors of US Treasuries and I suspect there's a lack of demand that is probably hurting the dollar. I don't know that for sure, but I suspect its part of the reason. But aside from that, they've also given the US Treasury the green light to increase the money supply, which they've been doing like there's no tomorrow. Once some inflation starts creeping into this economy and the Fed puts the brakes on the rock bottom rates and money supply growth, its going to become attractive to hold US dollars again. The only problem is that it may be a couple more years before it happens. If I were a currency trader, I wouldn't want US dollars right now, either.

One thing I'd point out is that although the dollar is weak against the Euro, the Euro is a new currency and we're only just now getting a feel for where the equilibrium between the two should be. I think its more prudent to look at its standing against some other currencies with a long term history to see if this is an unusually bad performance for the dollar. I've done a quick look and my own opinion is that while the dollar has declined in value, it appears similar to past changes in dollar valuation against many of those currencies.

Originally posted by American Mad Man

Originally posted by truthseeka
I just heard that Buffett made somewhere over 3 bil by dumping dollars. I had heard that he, Bill Gates, and other superrich people were saying that the dollar isn't any good anymore. I'm sorry, but if superrich people don't want the dollar anymore, what does that say about it? I mean, if you have what it takes to make billions of dollars, surely you understand them more than the average person???

The problem with the dollar is that it's value is dependent on the US government being able to back it up. It is basically a debt note. Well, as I am sure you know, when you already have a lot of debt, and then increase your debt, your credit rating usually does not rise.

What I think is being overlooked here though is what Warren Buffet changed to....It wasn't the Euro or any other national monotary note - it was the oldest currancy in the world, GOLD!

If you look at economies, especially at the macro level, things run in cycles.

Well, when was the last world depression? It seems to me we are do.

This brings me to another point, and that is many people blame Bush for the drop in the US economy after CLinton. This is simply not true. The fact is that our economy had a huge artificial buble - the internet boom. Once everyone realised that there was way too much hype, the market self corrected.

As they say, history repeats it's self.

Since we're on the subject anyway, if you're looking for the next big market correction, watch the oil markets. The fact is, US oil and gasoline inventories are significantly higher than they were last year at the same time. The catch? Oil is currently almost $20/barrel more expensive than last year. Greenspan called the tech boom 'irrational exuberance'. I think it applies here as well. I can't believe I'm going to defend them, but the OPEC ministers are right. If they ramp up production, the bottom is going to fall out of the oil market and it may anyway. Speculation and panic are driving these prices right now, and many investors are going to get soaked when the bubble bursts.

Originally posted by truthseeka
Bring it on, non-believers. All you have to do is type "amero" into google and see for yourself...

This is BS!

www.google.com...

Iasion - this is REALLY good! Would you PLEASE write it up as a news piece? ...u2u me if you need any help.

Re: the Pan American Union, aka Free Trade Area of the Americas

FYI - the FTAA is dead. Which is why the US is trying to destabilize Venezuela, etc. ...The fallback position is NAFTA super-sized, complete with military oversight under NORTHCOM.

What goes up will eventually come down.

NAFTA....
FTAA....
NORTHCOM....

As such, please, please may the already overvalued Euro continue to climb and climb and become so overbloated, that when it (the Euro) does finally begin its fall, many upon many better pray that the fall doesn't happen at break-neck speed.

The overvalued Euro is doing nothing from the EU and those nations that come under its coverage. As such, the continuing rise of the Euro harms who worse: the US or those within the EU? With the evidences presented, it is pretty self-evident just who is exactly and truly being hurt by the continued overvaluing.

Please continue to think otherwise though. After all, it is your right to do so. The great "switch" is superficial, at best, for those nations "switching" are still pegging the dollar.

Of interest to which I refer to, please see last page of this 'fine and upstanding' discussion:
Dollar Under Fire




seekerof

[edit on 13-3-2005 by Seekerof]