Oil price: Britain’s North Sea Oil Industry ‘Close To Collapse’

We were perhaps mistaken in calling this page ‘Currency wars’ and focusing initially on American attempts to undermine Russia’s economy which is overly dependent on oil and gas. That of course is just a skirmish in a much wider economic war that is now hurting those nations that complied with Obama’s diktat and imposed economic sanctions on Russia in retaliation for Moscow’s refusal to surrender its strategically vital satellite state, Ukraine, to NATO and the EU.

Britain, because of our north sea oil interests is one of the hardest hit.

The price of crude oil began to collapse when The United states Of America, the swaggering bully of the world community decided to use its new status as a net exporter of oil, due to the shale boom, to flood world markets, finding because their oil is the most expensive to extract, that their wells were not economically viable, and damage Russia’s oil dependent economy. Naturally prices in world markets dropped due to the law of supply and demand. With typical stupid arrogance the Americans demanded that the Arabs and other traditional oil producers cut production to hold up prices.

The Arabs and other oil producing nations, sensing Amerca’s push to become gobal hegemon had run off track and what they were threatened with was the empty bluster of a bully whose cowardice and weakness has been exposed in effect said, “Fuck the fucking fuck off,” by pumping more oil and sending prices crashing even further. Result? Approximately $1trillion worth of new shale fracking projects planned in the USA have been cancelled. If it ended there the world would only have the minor problem of a US / Russia currency war.

Unfortunately the plunging oil price has brought about a “huge crisis” in energy markets, one of the worst hit is the UK’s North Sea oil industry, expert have warned. With North Sea oil now selling at below $60 a barrel, it is “almost impossible to make money”, Robin Allan, chairman of independent explorers’ association Brindex, told the BBC.

“It’s a huge crisis. This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs,” he said.

After several days of volatile trading in oil markets, Brent crude, the global benchmark, ended the day down 1 per cent at about $60 per barrel after having risen 3 per cent in early trading. In recent weeks, oil prices have crashed to their lowest levels in five-and-a-half years following falls demand due to weakening in major economies and concerns of a global oil glut.

Up to £55bn worth of North Sea oil projects scheduled for 2015 could be cancelled due to the falling prices, the Daily Telegraph reports.

Concerns over the financial state of the oil industry have increased since Opec voted not to cut production in an attempt to arrest sliding prices when they met in Vienna last month. Iran’s oil minister has publically criticised Opec’s inaction. Bijan Zanganeh told the country’s state petroleum news agency: “The prolongation of the downward trend of the oil price in world markets is a political conspiracy going to extremes.”

The US-based oil company ConocoPhillips has already moved to cut 230 out of 1,650 jobs in the UK and some analysts predict that other large firms will make similar cost-cutting announcements in the coming months.

However, the Department of Energy and Climate Change said yesterday that even though reductions in oil prices have proven “very challenging” for companies active in the North Sea, “we have seen very little evidence of new projects being cancelled or deferred in reaction to lower oil prices”.

[more]

The Obama Administration Just Accelerated The Demise Of The USA As Dominant Econimic Power

mistral helicopter landing ship
A mistral helicopter landing ship – at the centre of the bust up between France and the USA (source)

When we reported late last year that The Obama Administration in the USA was playing with fire by imposing fines on British (and German) banks because they handled transactions with Iran and other nations against which the USA has imposed sanctions, we did not expect an arrogant egomaniac like Barack Hussein Obama to take our warning on board. It might have been wise if Obama had listened to some of the international financiers and diplomats who were trying to remind the ego – in Chief he is president of the USA, not the entire world, but hey Obama knows that the colour of a man’s skin is the only measure of intelligence so I guess his critics just weren’t black enough for him to believe they knew what they were talking about.

The backlash began slowly enough, France, Britain, Germany and other European nations, along with governments in Africa, Asia and South America began making trade deals with Russia and China to conduct business in the currency of the vendor nation and undermine the status of the US$ as the global reserve currency.

It would be totally out of character for Obama to react to what is actually happening, the man is a solipsist and seems to believe he can bring about a situation by wishing it so. Thus the US compunded its error of believing the world must do its president’s bidding by imposing a multi-billion US dollar fine on France’s biggest bank, BNP, because the french government proceeded with delivery of a warship to Russia after the USA had declared military equipment trades with The Kremlin illegal after Putin made the Americans look like idiots over Ukraine. The French government took exception to this (well the ship was already built and warships don’t come cheap). In an interview given to French magazine ‘Investir’, the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, made this rather gobsmacking response to a question:

Q. Doesn’t the role of the dollar as an international currency create systemic risk?
Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. The fining ofBNP Paribas was the occasion for many observers to remember that there have been a number of sanctions (against non US banks) and that there would certainly be others in the future.

 

A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Moves towards towards a multi – currency trading system is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris.

 

We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. commercial law expanding to all USD-denominated transactions around the world can have an accelerating effect.

In other words, the head of the French central bank, and ECB member, Christian Noyer, just issued a direct threat to the world’s reserve currency, the US Dollar, and the Obama administration.

In a nutshell, by attempting bring France to heel after the French honoured contractual obligations taken on long before there was any threat of sanctions against Russia by completing the delivery of a Mistral amphibious warship, the US decided it had the right to punish France by imposing a large fine on BNP, its leading bank. Really the fine represented blackmail by the Americans ( Putin revealed the BNP penalty was a used as a carrot to pressurize France into scrapping the Mistral transaction at a very late stage: had Hollande scrapped the deal, the French were promised BNP would face a far lower fine, if any). The blackmail attempt backfired catastrophically for America when as a result, the head of the French central bank spells it out that not only is the Dollar’s reserve currency status not immutable, but the international community will be even more eager to avoid USD-transactions in order to escape the tentacles of America’s global trade police.

The biggest irony is that in “punishing” France for dealing with Russia, the key player in the Eurasian alliance of Russia, China and Iran, the US merely gave France (and all of Europe) an enormous push towards Eurasia, toward a multi lateral global trading environment, (sorry fanatic believers in a one world, totalitarian collectivist government, but it’s looking less likely to happen every day).

Like I keep saying, it’s impossible to do political satire these days. Nobody could ever make up anything as crazy as the truth.

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China – UK dump the US dollar for bilateral trades

Another “told you so” post from Boggart Blog. It’s gets sooooooo booooooooring being right all the time but being endowed with the handicaps of independent minds and an abundance of common sense its a burden we Boggart Bloggers must bear.

flushing dollarsPicture source

From Zero Hedge
Following the initial de-dollarization meeting, there has been a slew of anti-dollar moves around the world (including Gazprom’s shift of 90% of its clients to non-dollar payments). However, on the heels of the “anti-dollar alliance” discussions yesterday, DW reports that China would start direct trade between the renminbi and the British pound on Thursday. China’s Foreign Exchange Trade System (CFETS) confirmed Sterling and yuan would be directly swapped without using the US dollar as an intermediary.

And from Boggart Blog back in March this year:

Not long ago members of our little team posting on Boggart Blog, Little Nicky Machiavelli and The Daily Stirrer warned you that the USA and EU had a lot more to lose than Russia if they got into an economic war with The Kremlin.

One proud, patriotic and utterly stupid American loftily informed me that the America had nothing to fear because the world trades in US dollars. That used to be right, unfortunately it is no longer so because China and the rest of the BRICS along with Iran and several other significant holders of vast natural resources have been dumping the dollar and making bilateral trade agrements for several years.

Well as usual, drawing on our vast pool of business and life experience we were right at this information that came to us via News Beacon Ireland shows.

Read full article

The Biggest Secret About banking has Just hit Mainstream Media

debt burdenThe Debt burden – source financial helper

Mostly in my guise as Little Nicky Machiavelli, I’ve pointed out for years that banks create money out of thin air. With many economics pundits predicting another, bigger than 2008, financial crash as ustable currency floods the world it has now finally struck mainstream media that our money is worthless, the only thing underpinning it is debt, your debt, your neighbours debt, Old Uncle tom Cobbleigh’s debt, George Osborne’s debt my … oops; I have no debts, repugnantly sensible person that I am, I saw it coming. The outcome is inevitable when loans come first … and then deposits FOLLOW.

In fact the money you borrow is bundled with the debts of others and used as collateral by your bank to secure loans from investment banks which will be used to make further loans to punters like you. If you think this sonds a lot like creating money from air, it is exactly that. The global economy is a giant Ponzi scheme, thanks to ‘liberal’ and ‘socialist’ (for both read corporatist) politicians and fuckwit economists with the intelligence of turnips perverting Keynesian economics to justify the infinite public spending oligarchic collectivism requires.

This is the most important secret about modern banking because it demolishes one of the biggest myths preventing a true economic recovery, challenges one of the main pork barrel profit centers for big banks. If finance ministers heed to common sense brigade and ignore the siren song of academics, running a national economy is just like managing a household budget but with much bigger sums involved and thus much bigger economic catastrophes as the consequence of continually spending more that your income opens up incredible opportunities for a prosperous economy.

This undeniable truth which stands conventional wisdom on its head has now gone mainstream, with not just bloggers like myself, financial market pundits like Tyler Durden of Zero Hedge and the Financial Times’ Martin Wolf – one of the world’s most influential mainstream financial writers – says that, since banks create money out of thin air, they should be stripped of this power, and limited to normal depository functions.

In other words they should not be able to lend money that is not underwritten by deposits or substantial assets, a bundle of debts is not a substantial asset, it is an effing debt, money owed which carries a risk that it will not be repaid. For example, The Deutschebank’s $75 trillion holdings of debt derivatives is worth absolutely eff all until people repay their debts. Simples. Or maybe not if you consider it amounts to 20 times Germany’s GDP.

Wolf indicates the centrality and importance of the issue with his subtitle: The giant hole at the heart of our market economies needs to be plugged.

Read more at Washinton’s Blog

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How Global Financiers Rigged the Bank Bailouts

Money From Rock Better Than Money From Air

Strange things are happening in the finance markets, very strange. As the FT and Dow Jones main indexes go up and down faster than a whores knickers, commodity prices are behaving weirdly too.

from Zero Hedge:

The last few days have seen Western anti-Russian rhetoric and red lines escalate dramatically as the military and economic issues come to light in any push back against Putin’s pressure. From NatGas export fallacies to “boomerang”-ing sanctions, the west seems stuck (for now).. which brings up the question – why is China and Russia making huge investments in commodity-miners? Russia’s largest gold miner Polyus Gold is considering a complete onshoring of its activities and China is buying a huge Peruvian copper mine from Glencore. The outcome would appear to enable both firms to do away with USD but not having to buy this resource in the market… just mine it? Continue reading

Well commodity backed currency is more stable than money from the air currrency we have had since the end of World War Two or the extreme version of fiat money, which involves city traders exposing themselves (Naked Finance). But who sets the exchange rates? And how many chickens are there to a goat.

RELATED POSTS:
Russia, Ukraine and the Petrodollar

Putin Flushes The Dollar Down The Toilet – We Told You So

putin toilet
Vlad knows the value of western co – operation (picture source)

Not long ago members of our little team posting on Boggart Blog, Little Nicky Machiavelli and The Daily Stirrer warned you that the USA and EU had a lot more to lose than Russia if they got into an economic war with The Kremlin.

One proud, patriotic and utterly stupid American loftily informed me that the America had nothing to fear because the world trades in US dollars. That used to be right, unfortunately it is no longer so because China and the rest of the BRICS along with Iran and several other significant holders of vast natural resources have been dumping the dollar and making bilateral trade agrements for several years.

Well as usual, drawing on our vast pool of business and life experience we were right at this information that came to us via News Beacon Ireland shows.

Russia announces that it will sell (and buy) his products and commodities – including oil – in roubles; not anymore in dollars.

Putin has been preparing this move — the creation of a payment system in roubles completely independent and protected from the Dollar and the killer speculations of the big Western financial institutions — for a long time.

After sanctioning several Russian banks to punish Russia for Crimea, the Washington politicians were told by the financial power-to-be to step back because obviously, the Wall Street vampires understand that putting Russian banks outside the reach of their blood sucking teeth is never a good idea.

For Wall Street and the city’s financial services, countries like Russia should always have an open financial door through which their real economy can be periodically looted. So Washington announced that it was a mistake to enforce sanctions on all those Russian banks; only one, the Rossiya bank shall be hit by sanctions, just for propaganda reasons and to make an example out of it.

It is what Putin needed. Since at least 2007, he was trying to launch an independent Rouble System, a financial system that would be based on Russia’s real economy and resources and guaranteed by its gold reserves. No tolerance for looting and financial speculation: A peaceful move, but at the same time a declaration of independence that Wall Street will consider as a “declaration of war”.

According to the Judo strategy, the sanction attack created the ideal situation for a “defensive” move that would redirect the brute force of the adversary against him. And now it’s happening. Bank Rossiya will be the first Russian bank to use exclusively the Russian rouble.”

Here’s a view of the current situation from another perspective from Zero Hedge:

“They Never Learn” – Russia’s Take On The “West” And The Shifting Geopolitical Balance Of Power

UPDATE – 31 March:
Dollar Hegemony Under Attack By Export-Superpowers Germany and China

‘The word dollar didn’t even come up. “The volume of transactions that can be carried out in the Chinese currency in international and German financial centers is not commensurate with China’s importance in the global economy,” the Bundesbank explained in its dry manner on Friday in Berlin, after signing a memorandum of understanding with the People’s Bank of China. President Xi Jinping and Chancellor Angela Merkel were looking on. It was serious business. Everyone knew what this was about. No one had to say it.

The agreement spelled out how the two central banks would cooperate on the clearing and settlement of payments denominated in renminbi – to get away from the dollar’s hegemony as payments currency and as reserve currency.’

Continue reading:

The world is run by insane people doing insane things – John Lennon

Journalism is reporting news somebody does not want reported, everything else is public relations – George Orwell

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As Crisis Deepens Ukraine Population Show They Still Have a Sense Of Humour

ukranie humour

Meanwhile as things on the ground take a turn for the worse in Ukraine, financial markets are suggesting the big banks do not see any easy way out of this one.

from Zero Hedge:

Foreigners Sell A Record Amount Of Treasurys Held By The Fed In Past Week
Submitted by Tyler Durden on 03/14/2014 – 10:51

A month ago we reported that according to much delayed TIC data, China had just dumped the second-largest amount of US Treasurys in history. The problem, of course, with this data is that it is stale and delayed. For a much better, and up to date, indicator of what foreigners are doing with US Treasurys in near real time, the bond watchers keep track of a far less known data series, called “Treasury Securities Held in Custody for Foreign Official and International Accounts” because it shows what foreigners are doing with their Treasury securities held, as the name suggest, in custody by the Fed. So here it goes: in the just reported latest data, for the week ended March 12, Treasurys held in custody by the Fed dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.
Continue reading …

Fire-sale of US Treasuries is a warning of acute stress across the world

Someone is offloading US treasury bonds as if the future is going out of fashion according to Daily Telegraph finance writer Ambrose Evans Pritchard.

Nobody seems to know (or they’re just not saying) who is dumping US bonds. It could be Russia of course, ahead of any sanctions imposed by the USA, a case of Putin getting his retaliation in first, it could just as easily be China, Turkey, South Africa, or Indonesia, or all frantically selling bonds at the same time for different reasons. Or even Malaya because although they are not letting on officially they’re sure the American government knows what happened to that missing Malaysian Airlines Boeing 777.

We don’t know for sure at the time of writing. All we do know is that the US Federal Reserve’s custody holdings on behalf of foreign central banks dropped to $2.855 trillion: a drop of $104.5 billion. This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling.

Russia’s central bank is undoubtedly dumping dollar reserves primarily to prevent assets being tied up by sanctions but also perhaps to prevent a collapse of the rouble, as foreign companies race to get all their cash out of Russian accounts before sanctions kick in next week clan.

Russia is certainly trying to move its assets beyond the reach of US regulators or the governments of their allies, not an easy task considering the tangled web of Rothschild controlled banks and investment houses.

What the Ukraine crisis may come down to in the end is this question: is the world more frightened of US regulators than it is of Putin’s tanks and polonium and China’s holdings of western debt.

The financial panic goes far beyond Russia, it is an indicator of the stress in the global financial system. “Countries are intervening all over the place to defend their currencies, (which means they are tightening their economies).

Meanwhile the Russians have quietly pulled their cash out of the USA to make sure it is not tied up in frozen accounts once the sanctions axe falls.

Yesterday Zero Hedge reported that China is suspected of having withdrawn (sold to the Federal Reserve) the near USD-equivalent in government debt bonds. a far likelier candidate was Russia, which as any fule kno, has had a bit of a falling out with the USA / EU and the global financial system in general.

We will not know for certain what has happened until half yearly figures are reported in June but what Russian official institutions have done with their Treasury bonds and dollar reserves could be merely the beginning.

The Financial Times reports that in covert and not so covert preparations for financial sanctions (which would include account freezes and asset confiscations following this Sunday’s Crimean referendum) the Russian oligarchs have already pulled billions from banks in the west thereby essentially making the biggest western gambit – that of going after the wealth of Russia’s 0.0001% – moot. If that is the case, the world has more to fear from Russia and China than the American toothless tiger.
UPDATE

China Warns of ‘Retaliatory Action’ and ‘Unforeseeable Consequences’ Over U.S. Monday Deadline

From: Shit Hits The Fan

It’s quite obvious, based on Kerry’s statement, that the Obama Administration really has no idea what to do, as they are still talking through “various options,” something that probably should have been worked out well before President Obama began slinging rhetoric over the crisis.

What the Obama administration assumes will happen is that they’ll force Russia into compliance by coming after their economy. Obama will hit the Late Night TV circuit to tout his success, we’ll all laugh about it, and then go on our merry way. Putin will be left embarrassed and laying in the fetal position sucking his thumb. At least that’s the plan.

But two can play at that game and China, which has stood by Russia’s show of force in Europe since the get-go, has now upped the ante.

It’s a brilliant move designed, once again, to show the world that President Obama and the United States are no longer running the show.

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What We Are Not Being Told About Ukraine

Another day passes and there is now hardly a word in mainstream media print and broadcast news about Ukraine. Has it all blown over you might well ask. Actually while a localised and limited shooting war would have been tragic for the people of Ukraine, Russia and some surrounding territories it would have afected people in the EU, Britain and the USA very little.

What’s happening now poses a far greater threat to our prosperity both in the short and long term and to the kind of future we can look forward to. Jere’s a summary of some stories that were not reported in western media.

Russia Threatens to Drop The Dollar and Crash The U.S. Economy if Sanctions Are Imposed – West Goes Ahead With Sanctions Anyway

On Tuesday Reuters reported that a Kremlin aid Sergei Glazyev had announced that if the U.S. were to impose sanctions on Russia Moscow may drop the dollar as a reserve currency and refuse to pay off any loans to U.S. banks saying that Moscow could recommend that all holders of U.S. treasuries sell them if Washington freezes the U.S. accounts of Russian businesses and individuals.

“We would find a way not just to reduce our dependency on the United States to zero but to emerge from those sanctions with great benefits for ourselves,” said Glazyev. “An attempt to announce sanctions would end in a crash for the financial system of the United States, which would cause the end of the domination of the United States in the global financial system”

That statement is startling by itself, but the true gravity of this situation is only evident when you consider it in context. China has taken Russia’s side in the Ukraine conflict (they are after all allies) and China holds the lion’s share of U.S. treasuries. If Russia puts out the call to drop the dollar China would have a choice: either hold on to those treasuries while the dollar slides (losing their shirt in the process) or join Russia and dump their holdings as well. It should be pretty obvious which way China would go.

As The Guardian reports however, that the USA has unilaterally decided to go ahead with sanctions against Russsia in retaliation for Putin’s refusal to back down and withdraw Russian troops from Crimea.

US imposes visa restrictions on Russian officials as Obama signs sanctions order
Employing his favourite tool for by passing the democratic process, On March 6 The Emperor Obama signed an executive order extending US sactions against Russia. (Read More on sanctions story at The Guardian)

Getting into an economic war with Russia would create a pile of problems for the Obama Administration, first it would drive a wedge between the USA and it’s EU allies most of which are heavily dependent on Russian gas for their domestic and industrial supplies. Secondly, failing to consider the consequences of Russia’s allies responding to such a move by applying sanctions of their own is, typically asinine. When Obama signed the sanctions order, authorizing economic action against the Russians he may have performed his usual arrested adolescent feat of convincing himself that we he speaks, nobody could possibly disagree with him.

Experience of dealing with other world leaders has taught him nothing in this respect. So was the massianic one hoping that on realising they had incurred his displeasure Russia would capitulate, beg for mercy and start dancing to Washington’s beat. It’s hard to imagine The White House corps of diplomats, advisors and political scientists could be so thick, but Obama has had five years to fill key roles with his personal rent boys appointees. Maybe they were just too busy planning the next frat party to think things through properly.

Either way, the outcome is the same. The U.S. government’s constant meddling in the domestic affairs of sovereign states has now embroiled it in a geopolitical game of chicken and if one side or the other does not blink soon there will be an almighty fracas.

Unfortunately though they initially picked a fight with the corrupt but democratically elected government of Ukraine in the hope of humiliating Russia by drawing its neighbour and close ally into the US / EU / NATO sphere of influence, by sponsoring regime change the USA has brought itself into conflict with the world’s 8th largest economy (by GDP), having already for a while been at loggerheads with China, the second largest economy and holder of huge amounts of US debt.

In the latest development India sided with Putin by announcing Russia’s interests in Crimea are legitimate (Times of India).

The question now is how will the rest of the world react. Iran’s position is a foregone conclusion and Saudi Arabia will demand a heavy price for its support, even from a traditional ally. With Japan, like the EU, hamstrung by economic difficulties and Australia and Canada likely to offer token support while Britain’s David Cameron’s hands will be tied by Parliament that in the wake of futile wars in Iraq and Afghanistan has become somewhat isolationist.

The lines of economic warfare have been drawn up, and as sides are being picked it looks as if the USA is backed by weaklings, wusses and economic basket cases. Get ready to kiss your savings goodbye. And find a good recipe for bone broth.

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Songs Of War

How Saddam Hussein May Yet win The War

OK I know that title sounds strange, Saddam was executed for war crimes long ago, even so the ultimate victory in his war against U.S. Dominance in the middle east may yet be his.

SaddamHussein

It is ten years now (the anniversary was yesterday 13 December, 2013) since Saddam Hussein was captured form his hiding place in a hole in Iraq and some time before that he made his most astute move in his economic battle with the United States which had started during the 1980s. We should not give too much credit to the dictator however, although his move is now deeply damaging his enemy, it was probably done in a fit of petulance rather than with tactical foresight.

Possibly however some Iraqi economists did know the true state of the American economy when they advised their president to demand payment in Euros for Iraq’s oil. The U.S.A. far more than any other nation except perhaps Switzerland depends on the strength and stability of its currency. Exports are weak, the government debt is out of control and trade deficits are insupportable. If the dollar was not the currency of international trades, the U.S.A would be, if not quite a basket case of African levels, then certainly in no better economic shape than other “walking wounded” economies like Brazil and Mexico.

The American economy is both beneficiary and victim of the fact that the dollar is the reserve currency. Whatever nations buy from across national borders they must pay for in dollars and whatever they bring to the world market to trade they want to be paid in dollars for. So it does not really matter how big the US deficit on oil, steel, food crops and chocolate because what Uncle Sam is really selling in the world market is the dollar. This means the Federal Reserve Bank can print dollars to buy whatever the consumers demand.

The situation had persisted since the British economy crashed and burned in the early nineteen – sixties. The pound is still a trading currency but mostly within the British Commonwealth. In the world market a wodge of British wonga no longer begs the question “how much of our stuff would you like, sir?” but “how many dollars will that monopoly money buy, schmuck?”
The happy situation of dollar supremacy would have continued but for the push towards European integration. After the fall of the Soviet Union certain economists and political philosophers (mostly in France and Germany) decided that to have only one superpower would be bad for the world community. Another trading bloc was needed and the European Union could easily be adapted to fill the void.

It is easy to follow the reasoning, around 70% of the world’s currency reserves are held in dollars which of course means that essential commodities, particularly oil, are valued in dollars. While the U.S.A. controls the money supply in effect it gets imports for free. As a bonus most of the dollars that other nations have worked hard to earn have to be invested back in the U.S. economy. It is so smart we should be surprised the Mafia did not think of it first.

In spite of its recent troubles the EU economy suffers from different the systemic weaknesses to the American economy. This being so, the Euro is the only serious competitor to the Dollar as a world currency. There we have one of the true , but unmentionable reasons why The White House was so anxious to bring about regime change in Iraq. Now American interests control Iraq’s oil it is once more priced in dollars.

The lesson has not been lost on people who are not friends of America however.

Since 2011 China has concluded deals with oil producers Saudi Arabia, Iran, the United Arab Emirates and with trading partners including Japan, Australia, India and a number of south east Asian and African nations to settle cross border trades in the currency of the vendor nation. Iran has moved to place the Petrodollar with Petrogold by agreeing to accept gold as payment for its oil (it is interesting to note that China now demands gold in payment for the interest on US debt it holds.

The nations of the Middle East do more trade and have better political relationships with Europe than the USA, the EU imports more oil and the European economies are cashflow based rather than debt based and so are more sustainable in adverse trading conditions. There have already been rumblings from within OPEC (the Organisation of Petroleum Exporting Countries) that a switch from dollars to Euros or gold for pricing oil could be a serious option. Recently Russia made trades in US dollars illegal.

Should Europe’s two main oil producers, Britain and Norway start to accept the Euro (or Pounds Sterling and Norwegian Kroner) it could well be the tipping point at which a switch by OPEC becomes not possible but inevitable.

The American currency is already weak in world markets, the past five years have seen a decline of around 15% against traded commodities. Though this is not reflected in exchange rates we should be aware that as the Obama administration has tried to use inflation via quantitative easing to reduce the debt burden, other nations have driven down the value of their currencies against the $ to protect the value of their dollar holdings. Should control of the oil trade slip from America’s grasp the decline would accelerate. Central banks would start to shift reserves into more stable currencies and create a snowball effect.

With demand for its main trading commodity destroyed the US economy would collapse and America’s position as the world’s strongest nation would dissolve. The consequences of a U S economic collapse would be disastrous for the global economy The message that must be sent to the White House is that the world needs a strong and confident America but America needs a supportive world community in order to regain its confidence and its sense of moral duty. If that message is not heeded then Saddam will truly have won the war.

Right now Washington seems to be doing its best to piss off its natural allies and cosy up to its most implacable enemies.

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Sanctions backfire, Iran Pulls America’s Pisser. I Told You So.

Iran Sanctions Kick the USA in the bollocks as Iran responds with Petro Gold system and pulls America’s pissser.

It’s almost impossible to do satire these days, the world is so insane it is impossible to use irony and exaggeration to ridicule it.

It was back in 2011 in The Daily Stirrer I started warning that American belligerence and bullying were well on the way to destroying the only thing keeping the US economy afloat, the Petrodollar.

In spite of many warnings from people who were awake to the effect that that as long as Iran was on good terms with China and Russia all the bluff and bluster of the Obama administration was only undermining the position of the USA, America continued trying to meddle in Iran’s internet affairs.

The move to dump the dollar started back in 2001, not with Iran but Iraq when Saddam Hussein began accepting payment for his country’s oil in Euros, Pounds, Australian dollars, Yen, food, etc. There has been talk since then about Iran circumventing American sanctions by circumventing SWIFT (Society for Worldwide Interbank Financial Telecommunications) agreements which stipulate oil must be paid for in US Dollars.

The Iranians took over when Saddam fell and gave impetus to the move to dump the US Dollar as the world’s reserve currency by initiating what could now be called the PETRO GOLD system. The move, on top of the economic sanctions caused great hardship, devastating inflation and civil unrest in Iran Iran has taken the hits from the sanctions but founded . It has however allowed Iran to sell oil to China, India and Japan for gold and now other oil producing nations are following suit.

The Chinese, Russians, the Arab oil states and their trading partners have been concluding private deals to trade oil and other commodities using the currency of the vendor nation.

Iran has been shipping oil in shadow (no GPS) tankers and receiving bulk shipments of grain and edibles or transfers of gold in exchange. Dubai, and several tax haven states served as the international exchange route for these deals with Turkey as a transhipment point the gold payments.

Now Iran has demonstrated the system can work without the dollar, the USA may find itself paying a high price for the arrogance of its leaders. Once the Petrodollar is out of the picture, American Presidents can no longer impose a political price on top of the normal currency exchange rate. The ride of Petrogold fits nicely into China’s plans to replace the USA as the dominant global economy.

We should never underestimate the ability of Americans to shoot themselves in the foot. In the Bush administration the Vice President did it literally, President barack Hussein Obama does it metaphorically but no less spectacularly on a daily basis. Perhaps this is because The Rent Boy President is more concerned with gay rights, abolishing immigration controls, opening the border to Mexican drug cartels and throwing extravagant parties for Hollywood and music industry celebrities than with running the country.

What you need to know about Petrogold and the Petrodollar system
Will Iran Kill The Petrodollar

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