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

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."

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said in Istanbul ahead of meetings this week of the IMF and World Bank. But it is China's extraordinary new financial power – along with past anger among oil-producing and oil-consuming nations at America's power to interfere in the international financial system – which has prompted the latest discussions involving the Gulf states.

Brazil has shown interest in collaborating in non-dollar oil payments, along with India. Indeed, China appears to be the most enthusiastic of all the financial powers involved, not least because of its enormous trade with the Middle East.

China imports 60 per cent of its oil, much of it from the Middle East and Russia. The Chinese have oil production concessions in Iraq – blocked by the US until this year – and since 2008 have held an $8bn agreement with Iran to develop refining capacity and gas resources. China has oil deals in Sudan (where it has substituted for US interests) and has been negotiating for oil concessions with Libya, where all such contracts are joint ventures.

Furthermore, Chinese exports to the region now account for no fewer than 10 per cent of the imports of every country in the Middle East, including a huge range of products from cars to weapon systems, food, clothes, even dolls. In a clear sign of China's growing financial muscle, the president of the European Central Bank, Jean-Claude Trichet, yesterday pleaded with Beijing to let the yuan appreciate against a sliding dollar and, by extension, loosen China's reliance on US monetary policy, to help rebalance the world economy and ease upward pressure on the euro.

Ever since the Bretton Woods agreements – the accords after the Second World War which bequeathed the architecture for the modern international financial system – America's trading partners have been left to cope with the impact of Washington's control and, in more recent years, the hegemony of the dollar as the dominant global reserve currency.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

Chinese financial sources believe President Barack Obama is too busy fixing the US economy to concentrate on the extraordinary implications of the transition from the dollar in nine years' time. The current deadline for the currency transition is 2018.

The US discussed the trend briefly at the G20 summit in Pittsburgh; the Chinese Central Bank governor and other officials have been worrying aloud about the dollar for years. Their problem is that much of their national wealth is tied up in dollar assets.

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

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

I don't think the foreign currencies can move very quickly, and China has a vested interest in the US market doing well.

That said, I think we're poised for a double-dip recession and a gradual weakening dollar even more. The gold ship may have sailed, but other commodities are looking good right now.

I'm selling at 2009 highs right now and buying commodities and inflation-indexed funds.

I aint buying nuttin but time

For those that are worried I will help by buying your US$ with Bz$ at Bz$1.85 to the US$. Get it quick while you can. US$ soon to be pegged to the Bz$........

Phil - you are so generous. No doubt you will have many takers!

Doesn't the Mayan calendar end in 2012? If they are correct, we won't be around after 2012 to need the cash anyway

assuming we have enough money to last us til 2012

The Maya calendar doesn't end in 2012 any more than our calendar ends in December. This is one of the misnomers about the Maya calendar. To read what the Foundation for the Advancement of Meso American Studies, which is a group made up of scholars in the field, has to say about this subject check out this very interesting site. http://www.famsi.org/research/vanstone/2012/index.html

They also have produced a less wordy FAQ on the subject for those who don't want to do much reading called 'It's not the end of the world' at http://www.famsi.org/research/vanstone/2012/faq.html

basically life as we know it will be changed forever...

Is the world really going to end? Did the Maya really believe the world would end?

There is nothing in the Maya or Aztec or ancient Mesoamerican prophecy to suggest that they prophesied a sudden or major change of any sort in 2012. The notion of a "Great Cycle" coming to an end is completely a modern invention.

Maya inscriptions that predict the future consistently show that they expected life to go on pretty much the same forever. At Palenque, for instance, they predicted that people in the year 4772 AD would be celebrating the anniversary of the coronation of their great king Pakal.

Of course, astronomers expect the Sun will eventually blow up into a red giant, then collapse and eventually burn out, but not for several billion years. Although the Maya did cast some predictions into the far distant future, we have not yet discovered any that reach that far. As to whether our world will end in 2012, the answer is, well, yes and no. Americans' sense of invulnerability ended on 9-11-2001. Everything is getting darker and more desperate. Wall Street is crashing. The prospect of peace in the Middle East dims year by year. Some Russian nuclear weapons are unaccounted for. Oil consumption has outstripped our oil production capability. Don't even start with global warming or overpopulation. By any measure, the world after 2012 will certainly look much different than it does today. Statistically, some significant change for the worse is bound to happen in 2012 –or in 2011, or 2013, or 2020, or whatever year you choose.

Even if we were to find evidence of actual Maya prophecies about 2012, that doesn't make them true. Apparently all of Christendom expected Jesus to return in the year 1000, for example. And maybe the most important question to ask was voiced to me by Bill Saturno, discoverer of the San Bartolo murals. If the Maya were such skilled prophets, how could they have missed the Conquest? "Didn't see that one coming, did they?" The single most devastating disaster to befall the peoples of the Americas of all time, and not a word about it in the entire corpus of Mayan prophetic literature. source

Whodunit? Sneak attack on U.S. dollar

It’s the biggest mystery in global finance right now: Who conducted a sneak attack on the U.S. dollar this week?

It began with a thinly sourced but highly explosive report Monday in a British newspaper: Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.

Is it true? Everyone from the head of the Saudi central bank to U.S. officials scrambled to undercut the story, but no matter.

With the U.S. economy on the ropes and America by far the world’s biggest debtor, investors aren’t feeling as secure about the dollar as they used to. And the notion of second-tier economies ganging up on Uncle Sam didn’t sound so far-fetched.

For American officials, the possibility of the dollar losing its long-term dominance in global commerce is a nightmare scenario because it would likely mean sharply higher interest rates at home and a declining ability to finance the U.S. debt. No one believes it could really happen right now, but stories like the British report this week make it seem incrementally more likely.

So the piece by Robert Fisk of the Independent shocked currency traders around the world and almost instantly sent the value of the U.S. dollar spiraling downward and the price of gold skyrocketing to an all-time high, as a hedge against a weakened dollar.

The website drudgereport.com quickly amplified the impact of the story with a headline atop the site: ARAB STATES LAUNCH SECRET MOVES WITH CHINA, RUSSIA, FRANCE TO STOP USING DOLLAR FOR OIL TRADING ...

“You read that story, and you do two things: You sell the hell out of dollars and you buy gold,” said Les Alperstein, president of the financial research firm Washington Analysis. “The story has a lot of credibility, with some caveats.”

So who wanted dollars diving and gold rising? In other words, who is Fisk’s source, and why did he or she want to tank the dollar? It’s the global currency version of the old Washington parlor game of speculating on the real identity of Deep Throat.

No one knows.

But one thing is for certain: With the price of gold jumping to $1,048.20 per ounce, traders who moved early enough stood to make millions.

So in government circles in Washington, speculation immediately centered on gold traders: With the skyrocketing price of gold, they’d be the biggest beneficiaries of the article.

Fisk’s story itself isn’t much help in solving the mystery — it is sourced vaguely to “Gulf Arab and Chinese banking sources in Hong Kong,” and it included one blind quote, attributed to “a prominent Hong Kong broker.” That doesn’t narrow down the pool very much.

Read more: http://www.politico.com/news/stories/1009/28091.html##ixzz0TU4EcKYW

I guess its not USA chat unless someone says it is.

H20dog a/k/a clover - short posted this topic - go bother someone else. hopefully you won't be crapping up an otherwise civil thread with your urge to cause turmoil amongst posters.

...its true...I was clover long before I was h2odog......but what I posted was a simple statement...not meant to cause turmoil...just an observation. Please accept my humblest apology for somehow offending you.

aha. all makes more sense now. Thanks for letting us/me know iluvbelize (not to be confused with luvinlife). I thought he might be acting as someone else.

Obviously an admin helped you with that one(so much for privacy)......when Marty changed the format for the board I changed my username (as did LA) to protect my surname....but hey that's long gone now.....feel free to check posts by clover for their truly sinister nature! LOL

PS What other information did that admin share with you? My name, email address? I think someone stepped over the line.

Wow . . .

Once again, I have absolutely NO interest in you, your email, your address, your favorite color, etc., nor have i received any such information from anyone. You sound like a real nut job as usual, and once again I will have to put "clover" on ignore, just as i have "H20dog" on ignore. Move along, please. We all have better and more interesting pursuits.

Seashell...you never fail to enjoy drama, whether real or imaginary LMAO:)

thanks Colly. i get real tired of the erroneous statements how the Maya thought the world would end in 2012. sure hear that BS a lot....

clover, OBVIOUSLY SOME ADMIN narcked you out? HARDLY OBVIOUS. not even true.

no admin coughed up any data. more than likely, folks can tell by your writing style. I can ID many many posters by their language.

What is the conversion rate today?

1CDN$=0.96US$ Great for those of us travelling to Carribean countries for the winter! Should be par or better by Christmas.

Strong Canadian dollar = expensive for Canadians living in Canada.

Not sure why you think that. Anything we import from the US or Europe will be cheaper for us. Any Canadian product will be the same. If we travel to a country tied to the US dollar it will also be cheaper (ie Belize) as will the flight on an American carrier. As I see it, it will be more expensive for the US to buy Canadian products and natural resources. Am I missing something???

I agree, since when does having a strong dollar equate to more expense?

It means that it costs more to travel in Canada and buy Canadian for Americans. It means I lose money when I wire transfer my USA $ to my Bank of Montreal account.

Sure... just like in the reverse but that doesn't make it more expensive for Canadians to live in Canada, just Americans to visit. The only sector I can see it harming is the manufacturers/gas/oil production. If they sell to the US in Canadian then they should reduce their prices accordingly if they sell in American then no difference to the US but cheaper to sell elsewhere. Maybe tourism will decrease from countries tied to the US dollar. With the mess the US economy is in and your debt load I see it as a good thing for the US since Canada is your largest trading partner and with cheaper US goods and services Canadians will be able to buy more... meaning cash for you!

2012 isn't the end of the world, Mayans insist

Oct 11, 3:58 AM (ET)

By MARK STEVENSON
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MEXICO CITY (AP) - Apolinario Chile Pixtun is tired of being bombarded with frantic questions about the Mayan calendar supposedly "running out" on Dec. 21, 2012. After all, it's not the end of the world.

Or is it?

Definitely not, the Mayan Indian elder insists. "I came back from England last year and, man, they had me fed up with this stuff."

It can only get worse for him. Next month Hollywood's "2012" opens in cinemas, featuring earthquakes, meteor showers and a tsunami dumping an aircraft carrier on the White House.

At Cornell University, Ann Martin, who runs the "Curious? Ask an Astronomer" Web site, says people are scared.

"It's too bad that we're getting e-mails from fourth-graders who are saying that they're too young to die," Martin said. "We had a mother of two young children who was afraid she wouldn't live to see them grow up."

Chile Pixtun, a Guatemalan, says the doomsday theories spring from Western, not Mayan ideas.

A significant time period for the Mayas does end on the date, and enthusiasts have found a series of astronomical alignments they say coincide in 2012, including one that happens roughly only once every 25,800 years.

But most archaeologists, astronomers and Maya say the only thing likely to hit Earth is a meteor shower of New Age philosophy, pop astronomy, Internet doomsday rumors and TV specials such as one on the History Channel which mixes "predictions" from Nostradamus and the Mayas and asks: "Is 2012 the year the cosmic clock finally winds down to zero days, zero hope?"

It may sound all too much like other doomsday scenarios of recent decades - the 1987 Harmonic Convergence, the Jupiter Effect or "Planet X." But this one has some grains of archaeological basis.

One of them is Monument Six.

Found at an obscure ruin in southern Mexico during highway construction in the 1960s, the stone tablet almost didn't survive; the site was largely paved over and parts of the tablet were looted.

It's unique in that the remaining parts contain the equivalent of the date 2012. The inscription describes something that is supposed to occur in 2012 involving Bolon Yokte, a mysterious Mayan god associated with both war and creation.

Article continues here:
http://apnews.myway.com/article/20091011/D9B8P09O0.html

Yep, we've had a lake front cottage in Canada (Southeastern Ontario) for the last dozen years. Bought it when the USD was strong and the Canadian real estate market was depressed. Best purchase we've ever made. But the area where it's located is very tourist dollar dependant and the Canadians who live there year-round have seen their income recede since the USD started to deflate. Canadian gas is especially expensive compared to US gas prices at the moment and for the past couple of years. Summers are when tourism oriented businesses (from chip wagons to river tour operators) make most of their annual income. My neighbors say when the Canadian $ goes down to about 80 cents US, they'll be better off. Of course, they live in very rural surroundings with little happening job-wise, otherwise.

Purely for my personal use, I love it when the Cdn dollar is close to parity with the US dollar. I only love it for my travel budget. My work being in the oil and gas industry, parity is not good for the industry in Canada. We sell the product in US dollars, ergo, much more profit when Cdn is at .$80, than at parity.

My province also looks forward to a certain amount of tourist dollars (ie: Banff, Calgary Stampede, etc.) and when it costs Americans as much to stay at home, as to come up and enjoy the bang for their buck, well, it is directly inverse to how pleased I am to be able to travel outside of Canada.

But when at parity hasn't the profit you have made over say the last 5 years just increased 20% in value (from the $.80)? It could be used to buy US$ in hopes that it rebounds or another currency that is more stable.

To make profit by trading in foreign currency, you have to be fast. My daughter lives in Berlin where the euro can buy $1.50 USD for $1 euro. She's buying USDs to bank in her US account for travel to the US! But that's for this Christmas and not for five years hence.

Uh, no, Northern. It doesn't work like that.

But I'm with ckocian, on a personal level, this is a great time to buy US to put into one's travel fund.

You can open a brokerage account and buy and sell currency just like any commodity. How good are you at figuring out what currency will be going in what direction? You can even buy it without taking possession of the money, it's almost like going to a casino and betting in roulette. People and financial institutions do this everyday you probably aren't going to win. But good luck.

Bottom line is the profit seashell made over the last 5 years is still 20% higher in value than when the CDN$ was $0.80USD. Yes to buy US$ now for travel is perfect or to go across the border and buy a car etc is a much better deal than a year ago. Buying US when it was weak then converting back to CDN when it was high has worked for me....

Ron, I'm not that good at trading currency or any other commodity. What I do know, is that when CDN and US $ are close to par, or better, it is a good time for a Canadian to stock up the travel fund with US currency.

Ben Bernanke's dollar crisis went into a wider mode yesterday as the greenback was shockingly upstaged by the euro and yen, both of which can lay claim to the world title as the currency favored by central banks as their reserve currency.

Over the last three months, banks put 63 percent of their new cash into euros and yen -- not the greenbacks -- a nearly complete reversal of the dollar's onetime dominance for reserves, according to Barclays Capital. The dollar's share of new cash in the central banks was down to 37 percent -- compared with two-thirds a decade ago.
Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.
Getty Images
Fed boss Ben Bernanke may be forced to raise rates in order to restore faith in the dollar — and help bring the euro and the yen back to earth.

Currently, dollars account for about 62 percent of the currency reserve at central banks -- the lowest on record, said the International Monetary Fund.

Bernanke could go down in economic history as the man who killed the greenback on the operating table.

After printing up trillions of new dollars and new bonds to stimulate the US economy, the Federal Reserve chief is now boxed into a corner battling two separate monsters that could devour the economy -- ravenous inflation on one hand, and a perilous recession on the other.

Here is the link to the story,

http://www.nypost.com/p/news/business/do...70F8D6530791C5

For those who may be intersted in making a little cash have a look....
http://www.bloomberg.com/apps/news?pid=20601082&sid=amc_eiYT_BXE

Good news for Canadians that like to travel to other countries, but not good news for Canadian economy.

Kinda Loonie!

sorry couldn't help myself