The demise of the dollar

[TwixVoy]

Source: The Independent (UK)

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years


Read more: http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

---

I have said for the past several months here on DU that I don't see a second great depression happening.... only a slow decline in the standard of living over the next 10 years.

However I have always said an event like this would put us in long term debtor depression nation standing. The good news is these plans take effect several years from now.... bad news is we are screwed then.

[indepat]

1. Culmination of the gipper's "voodoo economics" also practiced by GHWB and then by junior

with vengeance: the 'pukes gift to America that just keeps on giving. Don't we all feel so much safer? :P

[caseymoz]

12. And to a scandalous degree by Clinton.

I just hope Obama realizes how much for the birds it is.

[tomm2thumbs]

2. thanks Republicans for bringing shame upon America - thanks for suffocating our country

oh, but they are in denial, so I'll just say 'thanks for everything you did' and they'll smile and say 'oh, your welcome'.

(let us remember, all their brains broke after Obama won the election.)

[safeinOhio]

3. So, it's a global market

labor has to compete, so does the dollar.

[ret5hd]

4. If only labor and capital were equally free to travel.

[Pavulon]

5. Shotgun blast in the mouth of china..

they have a massive position in the dollar. If it fails or falters they are quite fucked. Who will pay their position in the dollar, who will buy their export based economy's plastic trash. I am planning to win the lottery too. Oil is priced in dollars.

[Dreamer Tatum]

10. Pretty much spot on

China can bluster and posture all it wants, but this move would be more reactive than proactive for them.

In the meanwhile, a weak dollar will have the effect of improving our balance of trade and the boost in aggregate demand should help with unemployment.

[BlueMTexpat]

11. Demand for what?

What do we still manufacture in the US?

[Dreamer Tatum]

17. Self hatred and self righteous indignation, evidently nt

[BlueMTexpat]

37. Wow ... my very first ignore candidate.

[Dreamer Tatum]

38. Someone had break your cherry.

Glad it was me.

[Pavulon]

35. Non plastic trash. The best tooling equipment in the world

(germans do well too), aircraft, aerospace, basically anything that is important to life. Would you use a chinese parachute, scuba gear, pacemaker. So i digress, they are a body shop, having lots of meat puppets to use for slave labor doe not a diversified economy make.

[buffalowings]

43. blustering journalists

<<China can bluster and posture all it wants>>


What? That from their "enlightened leaders."

There is only one thing worse than one-party autocracy, and that is one-party democracy, which is what we have in America today.

One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today,

Robert Friedman (that article is enough to make me want to turn Republican.) But I can't, because we're a one party .... democracy? I forgot.


Read more: http://www.post-gazette.com/pg/09253/996837-109.stm#ixzz0THOs8CSV

But not so enlightened when it comes to human rights it seems.

http://report2009.amnesty.org/en/regions/asia-pacific/china

[buffalowings]

44. More on Blustering journalists

Mr. Thomas Friedman talks about the enlightened leaders of China in an early September article in the NY Times.

In a later article he informs us that these enlightened leaders are "engineers." Oh, wow!

In June he writes this:

<<China is also courting trouble. Recently — in the name of censoring pornography — China blocked access to Google and demanded that computers sold in China come supplied with an Internet nanny filter called Green Dam Youth Escort, starting July 1. Green Dam can also be used to block politics, not just Playboy. Once you start censoring the Web, you restrict the ability to imagine and innovate. You are telling young Chinese that if they really want to explore, they need to go abroad.>>

Backup a few months and he doesn't see these leaders as so enlightened. I'm sure this has something to do with the American dollar. Apparently, Mr. Friedman only views enlightened engineers when they subscribe to "green porn."

From an independent one party member.

[caseymoz]

14. Believe me, it's going to phase out its investment in dollars.

It has a vested interest in making sure the economy doesn't sink completely before that. It's hard to know while it's phasing this out, what use it is going to find for the US in the meantime.

It is an end of an era, and I am thinking, we're reaching an end to Republicanism.

[mbperrin]

36. All they have to do is buy American assets here, denominated in dollars.

Trade paper worth nothing internationally, readily accepted locally, for hard assets. The way local chambers work, they can probably get tax abatements indefinitely on their purchases, as communities continue their race to the bottom, urged on by corporatists of every stripe.

[DallasNE]

6. This Was Entirely Expected

This basket of currencies concept has been widely discussed for quite some time. What is new here is the expansion of currencies in the basket. Key here is the inclusion of the Yuan. China has been slow to unwind the peg to the American dollar. This will force their hand. It should also help offset some of the fears expressed in the top post by Twixvoy.

[KurtNYC]

7. I think China is too weak at the moment to unpeg

and I am not sure they want to. They have kept the Yuan down. Even Canada devalues their currency when it goes above the US dollar (and I would take Canada's economy over China's any day).

[troubledamerican]

8. Can the crazed, rabid lash-out at Iran be far away?

[ShortnFiery]

9. Yes, the media whores are already ramping up the rhetoric about how

Iran is filled with "thought criminals" based on interviews with people who THINK they know how to make a nuclear weapon. Can the balsa wood gliders be far behind? :crazy:

[Cobalt-60]

20. Fission Weapons are 1945 technology

Any good physics grad student could whip up a gun bomb.
I know I could.
This weapon would be too heavy for anything but a transport or bomber aircraft.
The same is true for any of their first generation implosion devices.
A warhead to pack into one of their SCUD based missiles will take decades.

[ProudDad]

13. The "lower standard of living" is permanent!

That's the good news...

The bad news is that you'll have to learn to live with it...

www.transitionus.org

[Cobalt-60]

21. Another reason to thank the Torture Party

With pitchforks!

[bjobotts]

15. The Bush/Cheney/Republican disaster lingers on. Screwed us for years to come in the name of greed

[bjobotts]

16. No credit default swaps now.Wall street milks us to the last drop

[Double T]

18. Rome lost it power and it was never regained.

So goes the United States of Greed.. Mc Shanties and Mc Cycles will be the new American Dream.

[hokies]

19. Once oil isn't traded on the US dollar, China could feel free to dump US treasuries

on the open market. Obviously China can't dump our treasuries right now since it would cripple OPEC which would respond by cutting off oil shipments to China.

[kpete]

22. The demise of the dollar-Arab states have launched secret moves with China, Russia & France to stop

Source: Guardian UK

Exclusive report by Robert Fisk
The demise of the dollar

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

By Robert Fisk

Tuesday, 6 October 2009

Dollar Collapse Warning


In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."



Read more: http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

---

http://www.reuters.com/article/newsOne/idUSTRE59507620091006
http://www.bloomberg.com/apps/news?pid=20601087&sid=awIrc5vK4RyU
http://www.reuters.com/article/newsOne/idUSTRE5950DV20091006

[xchrom]

23. here's a large grain of salt to go with your secret moves. nt

[FrenchieCat]

24. Doesn't sound too secret to me......especially if it is being posted here!

[bhikkhu]

29. Its been well established that we can keep a secret.

All we have to do is agree that its a secret, then we can talk about it all we want and its still a secret.

[Ozymanithrax]

25. From other sources, this is more of a move by China...

China is moving to secure Chinese interests. It will hasten the demise of the Empire of the United States. If the dollar looses reserve currancy status, it could be anything from just runaway inflation to a redux of the Wiemar Republic. Even the rumor of this will drive the dollar down.

[Old and In the Way]

26. Another reason to invest in a decentralized energy grid that

is labor intensive....national-strategic and domestic-economic security issues. There will be consequences to the US if we act like Republicans and deny reality, squandering the 9 year "heads up" that we have to react and correct the trading value of the USD. Hint: reductions in military budget and investment in infrastructure, public healthcare, and education are needed to increase consumer confidence and jumpstart this economy.

[peacetalksforall]

28. It is really hard to think positive when there is a lingering question about

secret armies and intelligence, financed from where? Our own people at the top-top dispise us because we expected to live better than this, we expected to have more say based on the promises of our Constitution, because we tend not to believe the lies and plots, because we unionize, because we are gullible, because we are above hating the people they want us to hate and perhaps hate them instead, because we can't be sure what is going on. We are all not strong together because they did a pretty good job with their new reality. I regret posting this, but I need to get this out - having to put out the news about allies plotting around is also something regrettable, also.

[KurtNYC]

27. I wish I had a dollar for every time I have heard that oil is going to be traded

in something else. Here is a clip from 2003:

The oil-dollar nexus is one of the foundations of the world economy that inevitably filters through to geopolitics. Recycling so-called petrodollars, the proceeds of these high oil prices, has helped the United States run its colossal trade deficits. But the past year has seen the quiet emergence of the 'petroeuro'.

http://www.guardian.co.uk/business/2003/feb/23/oilandpetrol.theeuro

And how many U.S. dollars is China holding right now? At least $772 billion (some say $1.53 trillion) and they want to devalue the dollar? No, they want the Yuan devalued. It is a whole complicated mess.

[bhikkhu]

30. If you look at the value of oil tracked against the euro & the $

in the time period since, the article was more correct than not - vs. the Euro oil held a more stable value, while it fluctuated quite a bit vs. the dollar. So whatever the official version says, the reality has been that oil has been trading against a Euro standard, not a dollar standard, for some time.

[girl gone mad]

31. It's already happening.

" A UBS Investment Research report says that while it would be wrong to write off the U.S. dollar as the global reserve currency, its roughly 90-year iron grip on that position is loosening. “The use of the U.S. dollar as an international reserve currency is in decline,” said UBS economist Paul Donovan.

“The market share of the dollar in international transactions is likely to decline over the coming months and years, but only persistent policy error – or considerable fiscal strain – is likely to cause the dollar to lose reserve currency status entirely.”

The UBS report maintains that the gradual slide of the U.S. dollar is being driven not by the world’s central banks, but by the private sector, as individual companies increasingly abandon the greenback as their international currency of choice.

“The private sector’s use of reserves is more important than official, central bank reserves – anything up to 20 times the significance, depending on interpretation,” Mr. Donovan said. “There is evidence that the move away from the dollar as a private-sector reserve currency has been accelerating since 2000.”"

Another blow to the dollar’s standing is a effort underway by the Gulf States plus China, Russia, Japan and France to denominate oil sales not in dollars but a basket of currencies. This is not completely new. Iran’s oil sales to Japan are quoted in yen.

From the Independent:

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars…

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.”

[snot]

32. US-based oligarchs are actively engineering the dollar's replacement:

"Special Drawing Rights" issued by the IMF. See http://cryptogon.com/?p=11411 .

[TheWatcher]

41. Save It.

the tiny choir that will even click that already agrees with you, and has seen the light long ago.

The best you can expect from the rest of GD is giggling, snickering, and "It doesn't exist."

We are witnesses to history at this point.

because we can't be bothered to change it.

[The abyss]

45. Love that quote! "We are witnesses to history at this point"

I plan on paraphrasing and using it.

“We are a mere witness to history at this point because we can’t be bothered to change.”

I love your choice of words!

I’m going to shamelessly steal that quote.

I will always admit that I stole it :-)

Wow – good words!

[AlienGirl]

33. "Death of the Dollar." I knew it was coming. nt

[Pavulon]

34. Like the oil bourse invasion of Iran, inebitabble...

i am ready to submit to my new chinese overlords.

[Octafish]

39. Poppy hearts People's Republic of Walmart

Know your BFEE: Olympic Games Show Who’s Best Friends Forever with Authoritarians and Dictators

[Old and In the Way]

46. It really is Corporate Communism.

Look how businesses are consolidating/expanding....like....WalMart....pretty soon, we won't need to go anywhere, but WalMart.

How different is that from a centralized economy that Mao envisioned? It's a little more efficient, but we end up in the same place.

Hey, it's happening in China, too. WalMart will become the single point of distribution there...superior marketing/scale-of-economics model.

Ain't Capitalism Grand?

[Romulox]

40. If a strong currency is so desirable, why do most of our trading partners devalue their currencies?

:hi:

[New Dawn]

42. Kick, very informative.