132 posts in this topic

Posted

Several months ago, when Russia announced the much anticipated "Holy Grail" energy deal with China, some were disappointed that despite this symbolic agreement meant to break the petrodollar's stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but dollars. In doing so they admitted that while both nations are eager to move away from a US Dollar reserve currency, neither is yet able to provide an alternative.

This changed in late June when first Gazprom's CFO announced the gas giant was ready to settle China contracts in Yuan or Rubles, and at the same time the People's Bank of China announced that its Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin held a meeting in which they discussed cooperating on project and trade financing using local currencies. The meeting discussed cooperation in bank card, insurance and financial supervision sectors.

And yet, while both sides declared their operational readiness and eagerness to bypass the dollar entirely, such plans remained purely in the arena of monetary foreplay and the long awaited first shot across the Petrodollar bow was absent.

Until now.

According to Russia's RIA Novosti, citing business daily Kommersant, Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic; it will accept payment in rubles, and will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese yuan for the transfersMeaning Russia will export energy to either Europe or China, and receive payment in either Rubles or Yuan, in effect making the two currencies equivalent as far as the Eurasian axis is conerned, but most importantly, transact completely away from the US dollar thus, finally putin'(sic) in action the move for a Petrodollar-free world.

More on this long awaited first nail in the petrodollar coffin from RIA:

1 person likes this

Share this post


Link to post
Share on other sites

Posted

Maybe it's time to stop depending so much on oil.

4 people like this

Share this post


Link to post
Share on other sites

Posted

Did Americans really think their dollar was a world currency standard. What a load of utter tripe to try slam Obama.

1 person likes this

Share this post


Link to post
Share on other sites

Posted

Maybe it's time to stop depending so much on oil.

 

Sometimes I wonder what a real alternate energy solution would look like and what it would do to the economic markets. Would love to see more articles on fusion.

1 person likes this

Share this post


Link to post
Share on other sites

Posted

I'd hate to see major destabilization of dollar as an international currency.  I agree that not one currency should be de fact world currency but to destabilize american economy would be to destabilize the entire world.  

1 person likes this

Share this post


Link to post
Share on other sites

Posted

I'd hate to see major destabilization of dollar as an international currency.  I agree that not one currency should be de fact world currency but to destabilize american economy would be to destabilize the entire world.  

 

This may not be politically viewed well on here, but even as an American, I can understand that at some point we won't be #1 (be it real or perceived) in a lot of things.

That being said, I don't believe the bottom will fall out and we disappear / become irrelevant either.

 

An Example at one time the sun never set on the British Empire, but now the UK is still proud nation, that still has it's own unique culture, influence, political power, etc.

I think it's more the fear of change that have some people spooked, we still adapt, adjust, etc. 

 

That's not to say to give up, still work to improve, compete (although how is often highly debated), and pursue are dreams. In a lot of ways competition is a good thing, we been dormant / complacent with the space program, but now that other countries are trying, the political will to fund Nasa and spend money to due great things in space is coming back.

 

Keeping fireproof suit near by  :)

1 person likes this

Share this post


Link to post
Share on other sites

Posted

This may not be politically viewed well on here, but even as an American, I can understand that at some point we won't be #1 (be it real or perceived) in a lot of things.

That being said, I don't believe the bottom will fall out and we disappear / become irrelevant either.

 

An Example at one time the sun never set on the British Empire, but now the UK is still proud nation, that still has it's own unique culture, influence, political power, etc.

I think it's more the fear of change that have some people spooked, we still adapt, adjust, etc. 

 

That's not to say to give up, still work to improve, compete (although how is often highly debated), and pursue are dreams. In a lot of ways competition is a good thing, we been dormant / complacent with the space program, but now that other countries are trying, the political will to fund Nasa and spend money to due great things in space is coming back.

 

Keeping fireproof suit near by  :)

Also, the very reason Gazprom is accepting payment in rubles is because it has no other option.

 

Those sanctions that Russia is under (from both the US and EU) apply to Gazprom - which means that any hard currency (like dollars) that Gazprom has is - literally - useless to it.

While Gazprom can sell their products, they are basically stuck having to accept payment in a soft-by-comparison currency - the ruble - due to those sanctions.

 

Purchasing petroproducts from Gazprom is like doing the same from ISIL - you are doing so on the black market, and at your peril.  (You run the very real risk of NON-delivery of what you bought, regardless of how little you paid for it by comparison.)  (While there is LESS risk of Gazprom cheating you than ISIL, it can still happen; that is the nature OF the black market - and, to some extent, even the gray market - where you buy, and who you buy from, is typically mostly about risk.)

Meanwhile, accepting rubles shows that Gazprom IS under pressure to move product; what can be BOUGHT with Gazprom petrorubles?  (This is important, certainly to Gazprom.)  Markets selling anything in rubles are going to stick out like sore szebs - do you think that nobody is aware of that?

Basically, the squeeze is still on - Gazprom is merely, and expectedly, trying to end-run it.

Share this post


Link to post
Share on other sites

Posted

Also, the very reason Gazprom is accepting payment in rubles is because it has no other option.

 

Those sanctions that Russia is under (from both the US and EU) apply to Gazprom - which means that any hard currency (like dollars) that Gazprom has is - literally - useless to it.

While Gazprom can sell their products, they are basically stuck having to accept payment in a soft-by-comparison currency - the ruble - due to those sanctions.

 

Purchasing petroproducts from Gazprom is like doing the same from ISIL - you are doing so on the black market, and at your peril.  (You run the very real risk of NON-delivery of what you bought, regardless of how little you paid for it by comparison.)  (While there is LESS risk of Gazprom cheating you than ISIL, it can still happen; that is the nature OF the black market - and, to some extent, even the gray market - where you buy, and who you buy from, is typically mostly about risk.)

Meanwhile, accepting rubles shows that Gazprom IS under pressure to move product; what can be BOUGHT with Gazprom petrorubles?  (This is important, certainly to Gazprom.)  Markets selling anything in rubles are going to stick out like sore szebs - do you think that nobody is aware of that?

Basically, the squeeze is still on - Gazprom is merely, and expectedly, trying to end-run it.

 

Sanctions have not been targeted towards Gazprom.  What you're thinking of is Gazprombank.

1 person likes this

Share this post


Link to post
Share on other sites

Posted

Petrol will be purchased with BTC.

Share this post


Link to post
Share on other sites

Posted

http://www.telegraph.co.uk/finance/financialcrisis/11071388/Russian-rouble-hits-record-low-as-suffocating-sanctions-loom.html

Russian rouble hits record low as suffocating sanctions loom

Russia's currency has dropped 25pc over the past 18 months but Vladmimir Putin shows no signs of backing down over Ukraine

The Russian rouble has fallen to record lows against the dollar as the US, Europe and Japan prepare to launch a fresh raft of financial sanctions within days unless the Kremlin pulls its troops and heavy armour out of eastern Ukraine.

The currency has dropped 25pc over the past 18 months, raising the real cost of servicing almost $610bn (

Share this post


Link to post
Share on other sites

Posted

Precisely this, DocM.  Sanctions hurt in precisely this fashion - which is why they work.

 

Petrol will be purchased with BTC.

No; they will not.  No Russian-based business accepts BTC (illegal under Russian law).

 

Gazprom is a Russian-based company - therefore, the sanctions DO apply to it.

Share this post


Link to post
Share on other sites

Posted

Did Americans really think their dollar was a world currency standard. What a load of utter tripe to try slam Obama.

this has nothing to do w/ Obama.

 

in fact, the US dollar is the current world's reserve currency. The vast majority of Americans do not know this. The vast majority of Americans know nothing about how money works, or the economy. Foreign transactions, the sell of oil and other commodities are first converted to dollars, then traded. The US is desperately trying to hold on to this status, but it's just not working. Every week i read more and more about direct trade agreements between various countries - Russia and China, England and China, Brazil and Russia, etc. The list goes on and on. It's only a matter of time before the US loses control of their status.

 

What's also interesting is the coincidence that when a country tries to trade directly with another country, particularly oil, the US gets involved.... India, Pakistan, Libya, Iraq, Iran...

 

"The last 3 months have seen Russia's "de-dollarization" plans accelerate. First Gazprom clients shift to Euros and Renminbi, then the UK signs currency swap agreements with China, then NATO ally Turkey cuts ties and mulls de-dollarization, Switzerland jumps in the currency swap agreements, and BRICS create their own non-US-based funding vehicle, and then finally this week, Russia's oligarchs have shifted cash holdings to Hong Kong. But this week, as RT reports, Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments.

3 people like this

Share this post


Link to post
Share on other sites

Posted

China / Russia were never up to any good :/

Share this post


Link to post
Share on other sites

Posted

China / Russia were never up to any good :/

 

what?  any good for who?   for china? for russia? for europe?  for the rest of the world?

 

 

ohh...  i see....  you are sad it is no good for USA.  that is why!   for global markets, and human kind overall, it is actually a welcome development.  

the political monopoly is just like business monopoly.. no good for your normal human beings.

without healthy competition the customer is the one who suffers (global citizens)

1 person likes this

Share this post


Link to post
Share on other sites

Posted (edited)

what?  any good for who?   for china? for russia? for europe?  for the rest of the world?

 

 

ohh...  i see....  you are sad it is no good for USA.  that is why!   for global markets, and human kind overall, it is actually a welcome development.  

the political monopoly is just like business monopoly.. no good for your normal human beings.

without healthy competition the customer is the one who suffers (global citizens)

Those are two nations with poor standard of living / income, various human rights violations, and horrible impact on the environment.

One is red and the other is a source of propaganda and massive levels of corruption.

Who, in their right mind, would want these nations on top?

World currency should be the Euro or the USD.

Edited by _Alexander
1 person likes this

Share this post


Link to post
Share on other sites

Posted

Those are two nations with poor standard of living / income, various human rights violations, and horrible impact on the environment.

One is red and the other is a source of propaganda and massive levels of corruption.

Who, in their right mind, would want these nations on top?

World currency should be the Euro or the USD.

 

really? are you the pot calling the kettle black?

 

http://www.scientificamerican.com/article/american-consumption-habits/

 

 

3 people like this

Share this post


Link to post
Share on other sites

Posted

 

you points are just naive, to think USA sets the global standard.  dream on.  it has just as much problems as all the rest of the world. 

so stop thinking it is some god damn knight in the shining armour.

 

Plus most people don't realize just how much debt US is in.  Financing all these wars they never win with money they don't have.

2 people like this

Share this post


Link to post
Share on other sites

Posted

this has nothing to do w/ Obama.

 

in fact, the US dollar is the current world's reserve currency. The vast majority of Americans do not know this. The vast majority of Americans know nothing about how money works, or the economy. Foreign transactions, the sell of oil and other commodities are first converted to dollars, then traded. The US is desperately trying to hold on to this status, but it's just not working. Every week i read more and more about direct trade agreements between various countries - Russia and China, England and China, Brazil and Russia, etc. The list goes on and on. It's only a matter of time before the US loses control of their status.

 

What's also interesting is the coincidence that when a country tries to trade directly with another country, particularly oil, the US gets involved.... India, Pakistan, Libya, Iraq, Iran...

 

"The last 3 months have seen Russia's "de-dollarization" plans accelerate. First Gazprom clients shift to Euros and Renminbi, then the UK signs currency swap agreements with China, then NATO ally Turkey cuts ties and mulls de-dollarization, Switzerland jumps in the currency swap agreements, and BRICS create their own non-US-based funding vehicle, and then finally this week, Russia's oligarchs have shifted cash holdings to Hong Kong. But this week, as RT reports, Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments.

Share this post


Link to post
Share on other sites

Posted

Plus most people don't realize just how much debt US is in.  Financing all these wars they never win with money they don't have.

ctebah - how about the costs that other nations paid?  (Arab nations - such as Saudi Arabia, Kuwait, etc.)  The United States alone did not cover the costs of Desert Shield/Storm OR Iraqi Freedom  While we supplied most of the people and logistics, we did not to all the legwork - or even all the dying - because we didn't go it alone.  You are mad because we went and did any of it.  (Your opinion is that we should have left Saddam alive - you've been very forthright about that much.)

Share this post


Link to post
Share on other sites

Posted

Those "de-dollarization" (as you put it) plans have no choice BUT to accelerate, because Russia has zero choice in the matter.  As long as those sanctions are in place, Russia has two choices - continue to feel the pain OR do direct agreements where it can.  In short, it's in Russia's best interest due to the sanctions.  Other countries that deal with Russia (including NATO countries, such as Turkey) deal with Russia in their own national interests - it has nothing to do with the "national interests" of the United States.  Why would a nation - ANY nation - deliberately put the interests of another nation - even the interests of the United States - ahead of their own?  To expect a nation to do so would be both silly AND stupid.

 

The outright GLEE with which you are greeting these efforts, however, speaks to a clearly anti-US motive on YOUR parts.  YOU aren't making the point in the interests of any one nation - you are basically taking an anti-US stand to be grandstanding.  The question is how does the position benefit you in particular - not the effect - good OR bad - on the United States.

 

I don't think Jason is greeting this as much as he is showing that there is a world wide shift.

 

This has less to do about Russia feeling the sanctions as the transition away from the Dollar has been progressing for quite some time in the world prior to this conflict (I.E. way before the majority of people heard of the Ukraine) . Russia just happens to be one of the worlds top net exporters ... with nuclear capabilities and very very little debt.

 

This however has everything to do with the worlds economy and with " the "national interests" of the United States"

 

Why would a nation - ANY nation - deliberately put the interests of another nation - even the interests of the United States - ahead of their own?  To expect a nation to do so would be both silly AND stupid.

 

This is exactly why there is a shift in the global balance. This isn't as much about countries putting the "interests of the US ahead of their own". 

 

Simply put: the Dollar is the world reserve currency and is being used in trade whilst beneficial.

 

When countries see the Dollar not fit to play the role it will not be used in trade. (such as now, which has less to do with Russia but a lot to do with the value\accessibility and what the Dollar is pegged to ..)

 

If countries decide not to use the Dollar in trade it will essentially be like cutting out the middle man leading to a devaluation of the Dollar. 

 

In effect you are right: Why put another countries "interests/ambitions" in front of ones "own" when the Dollar can simply be used whilst it is in good standing, being able to reap the benefits and then moving onto something else. Albeit the hope is that the next reserve currency / or regional currencies will not be abused such as now.

 

Right now however the Dollar is not in good standing and is coming up to the eol as a reserve currency . .. I won't divulge into the current debt levels of the US, the Quantitative Easing .. the buying up of US treasuries through shell companies to keep it from devaluation etc.

 

So now there is a shift away from the Dollar, from SWIFT ... and above all else a shift away from a Petroleum backed Dollar.

 

 

ctebah - how about the costs that other nations paid?  (Arab nations - such as Saudi Arabia, Kuwait, etc.)  The United States alone did not cover the costs of Desert Shield/Storm OR Iraqi Freedom

 

You just answered your own question.

 

These countries are OPEC countries selling their product in which currency? Who are their customers? How does the produce get there? Why are they selling in that specific currency?

 

http://www.washingtonsblog.com/2013/10/the-real-reason-for-saudi-shift-away-from-u-s.html

 

http://www.huffingtonpost.com/daniel-wagner/is-the-us-losing-saudi-ar_b_4176729.html

 

They won't stick around to find out what it will be like to sell their petrol to other countries such as China in a currency that has no worth.

 

 

More attention should be paid to creating new industries/tech/skills to stay competitive and become a Net Exporter:

 

.. but now the UK is still proud nation, that still has it's own unique culture, influence, political power, etc.

I think it's more the fear of change that have some people spooked, we still adapt, adjust, etc. 

 

That's not to say to give up, still work to improve, compete (although how is often highly debated), and pursue are dreams. In a lot of ways competition is a good thing, we been dormant / complacent with the space program, but now that other countries are trying, the political will to fund Nasa and spend money to due great things in space is coming back.

 

Keeping fireproof suit near by  :)

Share this post


Link to post
Share on other sites

Posted

ctebah - how about the costs that other nations paid?  (Arab nations - such as Saudi Arabia, Kuwait, etc.)  The United States alone did not cover the costs of Desert Shield/Storm OR Iraqi Freedom  While we supplied most of the people and logistics, we did not to all the legwork - or even all the dying - because we didn't go it alone.  You are mad because we went and did any of it.  (Your opinion is that we should have left Saddam alive - you've been very forthright about that much.)

 

I'm sorry, but you were the one that "claimed" that Gazprom cannot trade in US dollars which is completely wrong.  As far as me getting "mad", this is internet, I don't get mad about internet discussions.  And yes, I think you should have left Saddam live but deal with him in a more diplomatic way.  Seeing Iraq the way it is today, there is no way the US can argue that removing Saddam was a wise choice.  

Share this post


Link to post
Share on other sites

Posted

I'm sorry, but you were the one that "claimed" that Gazprom cannot trade in US dollars which is completely wrong.  As far as me getting "mad", this is internet, I don't get mad about internet discussions.  And yes, I think you should have left Saddam live but deal with him in a more diplomatic way.  Seeing Iraq the way it is today, there is no way the US can argue that removing Saddam was a wise choice.  

ctebah - your own attitude while making those sorts of posts literally gives your position away.

 

Notice that I am FAR from upset about this positioning, because - when it comes down to brass tacks - it does not affect me in the least - despite my residing in the United States.

 

National interests change - in the short, middle, AND long term.  (That is true of every nation.)

 

Besides, moving away from being the "world's default currency" could actually be beneficial TO the United States - and even to the average American.

 

How has being the "world's reserve currency" actually benefitted the United States domestically?  Quite honestly, I don't see where it has.

 

If anything, that position - that we didn't want OR ask for - has only encouraged a lack of responsibility, and especially on the part of Congresses, and Presidential administrations, of all stripes.

 

You may THINK you want to be where the United States is - you may well change your mind if (or when) you actually get there.

 

Being thought of as "all that and a bag of crisps" is not exactly fun - ask the UK; they were the nation the United States displaced.

 

Ask the Eastern Holy Roman Empire - they were whom the UK displaced.

 

Wanting to be the biggest dog is one thing - however, consider what the biggest dog has to deal with.

1 person likes this

Share this post


Link to post
Share on other sites

Posted

ctebah - your own attitude while making those sorts of posts literally gives your position away.

 

Notice that I am FAR from upset about this positioning, because - when it comes down to brass tacks - it does not affect me in the least - despite my residing in the United States.

 

National interests change - in the short, middle, AND long term.  (That is true of every nation.)

 

Besides, moving away from being the "world's default currency" could actually be beneficial TO the United States - and even to the average American.

 

How has being the "world's reserve currency" actually benefitted the United States domestically?  Quite honestly, I don't see where it has.

 

If anything, that position - that we didn't want OR ask for - has only encouraged a lack of responsibility, and especially on the part of Congresses, and Presidential administrations, of all stripes.

 

You may THINK you want to be where the United States is - you may well change your mind if (or when) you actually get there.

 

Being thought of as "all that and a bag of crisps" is not exactly fun - ask the UK; they were the nation the United States displaced.

 

Ask the Eastern Holy Roman Empire - they were whom the UK displaced.

 

Wanting to be the biggest dog is one thing - however, consider what the biggest dog has to deal with.

 

Give up my position?  I don't think I've ever tried to hide my position in any way.  One of the huge benefits of having dollar as the reserve currency is that US can borrow at lower costs which gives them a great advantage when servicing their trillions of dollars of debts.  But you're right, there are drawbacks on it as well, as higher dollar impacts exports and we all know where the US industrial output went.  

Share this post


Link to post
Share on other sites

Posted

I'm sorry, but you were the one that "claimed" that Gazprom cannot trade in US dollars which is completely wrong.  As far as me getting "mad", this is internet, I don't get mad about internet discussions.  And yes, I think you should have left Saddam live but deal with him in a more diplomatic way.  Seeing Iraq the way it is today, there is no way the US can argue that removing Saddam was a wise choice.  

And letting him continue his brutalities would have been wise "how"?

 

Saddam alive was a major embarrassment - to ALL of his allies - not just the US and UK, but even to the Russians.  (Note that the Russians voted DA to take him down - at the UN.)

 The United States and the UK caught major flak - quite well deserved - for backing him in the Iran-Iraq War.  (Unfortunately, not taking a side in THAT mess was not an option - however, it was a choice that I expected WOULD come back and bite the United States - AND the UK - and it did; the result was the invasion of Kuwait.)

 

As much as you (or I) would have wanted otherwise, when it gets down to cases, you have to sometimes clean up a mess you helped create - and since we (the United States and United Kingdom) backed the dictator, we had to help clean up the mess by helping take him down.  (That was, in fact, ALL we did - while we DID dig him out of his "spider hole", the United States didn't try him; the Iraqis did.  They tried him under their laws - which were enacted under his regime.  In short, he was executed by his own rulebook.)

 

Finally - remember what has ALWAYS been said about hindsight (it is always 20/20) - was that predictable?

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0

  • Recently Browsing   0 members

    No registered users viewing this page.