U.S. Economy, Iran and Russia's Oil Markets

I think it's time we, the members of ATS, finally get it out there that things are starting to break down. I know that this is an economic issue, but I was going to discuss some current events that related to this.

First and foremost, the major oil producing nations of the world are shunning the Dollar left and right. Iran has announced that it is going to be opening a Euro-based oil bourse, and Venezuela is feeling pretty sympathetic towards the cause and will more than likely jump on board. Russia and China seem like they'll be meeting each other's needs in the near future, and on June 8th Russia will be opening its very own Ruble-based oil market.

The U.S. is in a tight spot since we're not drilling our land like we used to. Any country in the world that wishes to purchase oil has to have billions of Dollars in reserve to make them. When these other oil markets open the countries with Dollar reserves will dump them for these other currencies, and this will be the fatal blow to the U.S. Dollar. This is exactly where things are headed, but I never ever ever ever ever hear anyone talking about it.

We're staring down the barrel of an economic meltdown and all the terrible things it will bring out in people, so what needs to be done to prevent this?

Whoa, whoa, whoa.... First, this subject is already being discussed in multiple threads on ATS. But more importantly you can't isolate one kind of economic activity from all the others. Remember, we are the largest international consumer of goods and, in addition, we spend almost $20B annually on foreign aid. Clearly, any devastating affect on the dollar is going to be felt internationally and no one wants that.

Back in the 1980's we were all freaked-out because Japan was buying-up huge amounts of real estate and there were calls to ban it and warnings that our economy would collapse. But here we are... 20+ years later and coming off one of the largest economic expansions in our country's history. \

No question, things are unsettled at the moment but they'll re-balance. Of course it would help if we had a little better talent at the wheel IMHO.

Yawn…

Q1 2006 US GDP growth was revised UP this morning to 5.3%! I’ve been reading scare stories about the imminent collapse of the US economy for more than twenty years. Meanwhile, I just sold my house IN A DAY and walked away with $300,000 PROFIT and my 401K and other stocks are kicking butt

Professionals with an ACUTAL UNDERSTANDING of these sort of things, have LONG SINCE priced all of this into the markets. Besides, oil is actually a rather small part of the daily transactions in dollars.

Originally posted by iamjman
First and foremost, the major oil producing nations of the world are shunning the Dollar left and right.

‘Shunning’ or not the three largest exchanges Singapore, New York and London are no where near converting…

Originally posted by iamjman
Iran has announced that it is going to be opening a Euro-based oil bourse, and Venezuela is feeling pretty sympathetic towards the cause and will more than likely jump on board.

Please…very briefly… the logistics of a market are one thing, the business environment and political environment another...please explain why anyone would trade crude in either these countries which provide little to no legal recourse in international conflicts, one applies Islamic law to business transactions, both have absolutely no infrastructure to produce a viable functioning marketplace of any merit, trust or stability….the list goes on and on…it is a pipe dream of a feather weight.

Why is there no big deal about Nordpool’s entry to oil in Euro’s? They have a robust energy market already in Euro’s with a fantastic infrastructure….and really it just does not matter…currency elements, in truth, are bank guarantees or credits...pricing is a unit of measurement people.

No one walks-up with a bag of cash to buy oil. If a market is in Yen I do not have to amass hard Yens to make a transaction period. Transactions are rarely in the currency as invoiced anyway…the demand for the dollar is by those acquiring wealth and not simply the oil marketplace.

If a US$10.00 deposit is made in a London bank does it remain a US dollar, no…it is converted and counted as an equivalent asset or held until it is repatriated.

Also, don’t forget refined products are sold all over the world by thousands of markets, in literally hundreds of currencies…big deal.

Originally posted by iamjman
The U.S. is in a tight spot since we're not drilling our land like we used to.

The US is the fourth largest producer of crude in the world. American companies are buying lease rights all over Thailand, Vietnam and the Pacific Rim, oil shales production leases in Colorado and Utah are being negotiated right now etc….

Originally posted by iamjman
When these other oil markets open the countries with Dollar reserves will dump them for these other currencies, and this will be the fatal blow to the U.S. Dollar.

Why? Most are holdings are in T-notes or credit and these are not so easily ‘dumped’, they still will exist and no one is going to let billions in FV go for simply pennies and they will always exist.

Originally posted by iamjman
We're staring down the barrel of an economic meltdown and all the terrible things it will bring out in people, so what needs to be done to prevent this?

Again, why?



mg

Originally posted by El Tiante
Yawn…

Q1 2006 US GDP growth was revised UP this morning to 5.3%! I’ve been reading scare stories about the imminent collapse of the US economy for more than twenty years. Meanwhile, I just sold my house IN A DAY and walked away with $300,000 PROFIT and my 401K and other stocks are kicking butt

Professionals with an ACUTAL UNDERSTANDING of these sort of things, have LONG SINCE priced all of this into the markets. Besides, oil is actually a rather small part of the daily transactions in dollars.

Woah woah woah, now I was just trying to get simple for all the folks out there who DON"T ACTUALLY UNDERSTAND these sort of things.

Growth is going up?! OMG! It's not like they couldn't add a lot of glam to those numbers, or find new ways of measuring growth that make the situation look prettier. Besides, most of the growth in the last 5 years has been in housing or housing related industries like construction, and if you're all up in the housing market then you should know about the bubble.

No question, things are unsettled at the moment but they'll re-balance. Of course it would help if we had a little better talent at the wheel IMHO.

And that's the part that hurts. A sharp and sudden readjustment is called a crash. Anyways, it's coming...

Originally posted by iamjman
And that's the part that hurts. A sharp and sudden readjustment is called a crash. Anyways, it's coming...

So in that last six years the America economy has withstood a stock market crash, terrorist attacks, oil shocks, two wars and devastating hurricanes, but we're going to collapse because housing prices fall a bit?

Whatever…