[AndyA]

http://www.zerohedge.com/news/2014-11-0 ... dy-noticed

A good analysis of what would happen if oil prices stayed depressed for a couple of years to capital markets.

$this->bbcode_second_pass_quote('', 'T')his decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.

But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012."

[americandream]

Capitalism is cyclical and will enter the next cycle in due course. The final cycle will be marked by unprecedented highs lulling many into a false sense of security but we are not quite there yet.

[misterno]

$this->bbcode_second_pass_quote('americandream', 'C')apitalism is cyclical and will enter the next cycle in due course. The final cycle will be marked by unprecedented highs lulling many into a false sense of security but we are not quite there yet.

[ROCKMAN]

Some interesting aspects of this new dynamic:

Reuters - Energy-exporting countries are set to pull their "petrodollars" out of world markets this year for the first time in almost two decades...the shift is likely to cause global market liquidity to fall, the study showed...Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling. At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out...That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer...the net withdrawal was small "What is interesting is they are draining rather than providing capital that is moving global liquidity. If oil prices fall further in coming years, energy producers will need more capital even if just to repay bonds."

The reversal is largely down to Russia and the rest of the ex-Soviet Union, which BNP estimates have withdrawn $57 billion from world markets. Russian companies have been shut out of global markets since Western countries imposed sanctions because of the conflict in Ukraine. Those companies are increasingly forced to rely on their own cash reserves or central bank funding to meet external debt repayments.

{So perhaps to just a small degree the sanctions against Russia will increase the cost of the monies the EU and US govts borrow to cover their deficits as well as increasing borrowing costs to western companies. Those dang unintended consequences again. LOL}

[sparky]

.
An interesting take , It certainly is well worth playing with .
Another down is that the oil exporters cut down on domestic spending ,which was often supplied by importing countries
those markets will shrink somewhat .

[onlooker]

I just was perusing a google book "The Death of Money: The Coming Collapse of the International Monetary System" Very interesting how the book supports the notion that their seems now to be a worldwide movement to move away from the dollars and other mainstream currencies among the poorer countries. Alternative currencies/barter systems are becoming ever more popular by those being left on the sidelines of the mainstream economy. What do others think of this trend?

[americandream]

$this->bbcode_second_pass_quote('onlooker', 'I') just was perusing a google book "The Death of Money: The Coming Collapse of the International Monetary System" Very interesting how the book supports the notion that their seems now to be a worldwide movement to move away from the dollars and other mainstream currencies among the poorer countries. Alternative currencies/barter systems are becoming ever more popular by those being left on the sidelines of the mainstream economy. What do others think of this trend?

[onlooker]

good points AD. However their appears to be a growing chasm or dichotomy in the world between the Haves and Have not. In the poor neighborhoods around the world the concept of markets and big money movers, banks and their facilitators is a foreign concept. These poor around the world who by the way is what my post really directs itself at are on the fringes of the economic landscape and their need to have a viable means of survivable is NOW it seems dependent on themselves rather than their government or foreign capital or even entrepreneurship etc etc. So they barter with themselves and are trying to find some other form of currency outside the mainstream. This falling out of the economic mainstream it seems is accelerating around the world. I mean even countries are victims now ie. Venezuela, Greece.

[americandream]

onlooker

The wolrd socially has never been better than it is at the moment. The system is delivering....its just doing it in a more meritorious fashion...now being white for example is no guarantee that you will be middle class. The Chinese have proven themselves to be as good in delivering accumulation and that is all that interests capitalists. Capitalists by and large dont lie in bed at night haviung tribal wet dreams....they are having too much of a good time.

Now all this refugee hulla baloo....wars are a tendency in capitalism....naturally....as it wants as many of the world to consume and labour. Duh.....pretty obvious. Irrespective of what the politicia,ns say, that is the sysyem and it is globalising a very happy class of multi couloured middle clkass people.

How..........everrrrrrr. The other nasty tendency of the system is the climate. It will fork up the climate and this wolrd. Which is why we all should get our thinking caps on and work out how best to make it circular.

But there is lotsa sha

[americandream]

onlooker

The world socially has never been better than it is at the moment. The system is delivering....its just doing it in a more meritorious fashion...being white for example is no longer any guarantee that you will be middle class....thats pissing off some slackers who are threatening all sorts of dire stuff but the system mostly just goes its own way....the last lot to try that got walked over in the globalisation process back in Deutchland.

The Chinese have proven themselves to be as good in delivering accumulation and that is all that interests capitalists. Capitalists by and large dont lie in bed at night having tribal wet dreams....they are having too much of a good time. Now all this refugee hulla baloo....wars are a tendency in capitalism....naturally....as it wants as many of the world to consume and labour. Duh.....pretty obvious. Irrespective of what the politicians say, that is the sysyem and it is globalising a very happy class of multi coloured middle class people.

How..........everrrrrrr. The other nasty tendency in the system is the climate. It will fork up the climate and this world in due course. Cid has threads on the methane risk. Which is why we all should get our thinking caps on and work out how best to make it circular, quickly.

But there is lotsa shaking out going on at the moment amongst the workers and if you dont cut the mustard, yoiu get moved along...that does not mean the end of the wortld as two other efficients will replace the one lazy arse.

[onlooker]

Yes AD, it seems only the Limits to Growth ie. the Environment will put the brakes on the SYSTEM.

[americandream]

$this->bbcode_second_pass_quote('onlooker', 'Y')es AD, it seems only the Limits to Growth ie. the Environment will put the brakes on the SYSTEM.

[americandream]

onlooker

The takeaway from all of this is that capitalism is what capitalism does. If we want change, we have to work for it.....no amount of sitting there crying woe is me or threatening all sorts of dire stuff will do fig all.

It aint gonna happen. What we do risk happening tho is that the spread of these social relations put such a load on the atmosphere that it literally flips in an instant and the methane stores are that risk.

[onlooker]

True AD, for so long in despotic and feudal systems few were the educated and privileged class. The many were illiterate and could not fathom higher issues as their concern was the day to day of survival. Today mankind sits on the age of information with the internet and the spoken and read word. I hope your right that mankind will achieve thus a higher order of consciousness especially before what may be once again be a world whereby survival mandates bring forth the beast in us.

[americandream]

$this->bbcode_second_pass_quote('onlooker', 'T')rue AD, for so long in despotic and feudal systems few were the educated and privileged class. The many were illiterate and could not fathom higher issues as their concern was the day to day of survival. Today mankind sits on the age of information with the internet and the spoken and read word. I hope your right that mankind will achieve thus a higher order of consciousness especially before what may be once again be a world whereby survival mandates bring forth the beast in us.

[phaster]

thought I'd drop in an see what others though about the slight devaluation of the RMB (last week) w.r.t. oil prices and noticed the zero hedge correctly pointed out:

The stronger US dollar is having an inverse impact on dollar-denominated commodity prices, including oil. This will affect emerging market (EM) credit quality in various ways.

my reading of the tea leaves is, oil prices are dropping because there is excess global production capacity for oil and/or the world economy is slowing thereby decreasing the demand for oil so for the time being it's BAU till the eventual period when the SHTF

[onlooker]

The devaluation of the RMB, seems to me to be a calculated move by the Chinese to try and spur exports. After all, the biggest thing China has going for it is its huge manufacturing base. Overall, the world economy is slumping is so is oil thus.

[Tanada]

Somebody noticed.

$this->bbcode_second_pass_quote('', '[')b]Goodbye Petrodollar: Russia Accepts Yuan, Is Now China’s Biggest Oil Partner

Russia reaps the rewards of dumping the dollar.

Russia is now the top crude exporter to China, the largest (or second largest, depending on whom you ask) oil demand growth country in the world, Russia Insider writes.

At the start of the decade, Saudi Arabia enjoyed a 20% share of Chinese crude imports, while Russia was lagging far behind with 7%. Now the Saudis find themselves neck and neck with Moscow for the lead in Chinese market share, with both performing in the 13-16% range. But Russia’s share continues to rise, as The Kingdom struggles to maintain a foothold.

Why? Analysts attribute Russia’s huge market share growth to its willingness to accept yuan, while Saudi Arabia is still clinging to blood-soaked dollars. As Business Insider notes:

Interestingly, part of Russia’s success in China has been attributed to its willingness to accept Chinese yuan denominated currency for its oil.

This is consistent with earlier forecasts about Russia’s market share in China. Bloomberg reported back in July:

“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said in an e-mail, referring to the Chinese currency. “If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar.”

As both the head of the Eurasian Economic Union (and founding member of BRICS), as well as a major energy exporter, Russia is leading the charge against the dollar. And now other nations are following suit: Iran and India announced last month that they intend to settle all outstanding crude oil payments in rupees, as part of a joint strategy to dump the dollar and trade instead in national currencies.

The dollar is slowly losing its privileged place in international transactions. What this means for the United States is anyone’s guess.

[onlooker]

The Petrodollar is not dead. That is why we can continue to conjure up money and it is still accepted around the world. The real reason really that the world accepts our money is they wish to avoid WWIII. When has an Empire died a graceful death in the annals of history? The answer to that is probably never

[Outcast_Searcher]

$this->bbcode_second_pass_quote('AndyA', 'h')ttp://www.zerohedge.com/news/2014-11-03/how-petrodollar-quietly-died-and-nobody-noticed
$this->bbcode_second_pass_quote('', '
')But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012."