[mmasters]

Surely you don't think the government along with many US companies are funding black market trade for which the profits are converted into US treasuries?

[shakespear1]

That is impossible

[MrBill]

$this->bbcode_second_pass_quote('mmasters', 'S')urely you don't think the government along with many US companies are funding black market trade for which the profits are converted into US treasuries?

[Petrodollar]

MrBill stated:

$this->bbcode_second_pass_quote('', 'I') think 2007 is too soon to speak of these type of changes. Or at least I have seen no sign that these changes are being implemented on the ground where they count the most?

[MrBill]

Two points.
$this->bbcode_second_pass_quote('', 'I') would have agreed a year ago, but given that Putin et al successfuly transitioned the ruble to a convertible currency on July 1, 2006 (six-months ahead a schedule), and all the talk from the finance ministers and upper echelons of Russia's political class about the need to enhance the ruble's position in international trade - and concurrent goal of removing the "unstable" dollar from Russian commerce - it appears that 2007 is indeed the target date for full-blown ruble trades.

[Scactha]

I wish I had Professors as skilled at illuminating complex issues like this. Thanks again for taking the time to explain in laymans terms MrBill and MOCKBA.

In the view of my skills as an historian I am fascinated of the obvius power struggle. I belive that in hindsight will my future collegues consider this period a shifting of weapons from very overt military and ideology posturing to economical warfare.

[MrBill]

$this->bbcode_second_pass_quote('Scactha', 'I') wish I had Professors as skilled at illuminating complex issues like this. Thanks again for taking the time to explain in laymans terms MrBill and MOCKBA.

In the view of my skills as an historian I am fascinated of the obvius power struggle. I belive that in hindsight will my future collegues consider this period a shifting of weapons from very overt military and ideology posturing to economical warfare.

[Petrodollar]

$this->bbcode_second_pass_quote('', 'C')hina does not have petrodollar holdings.

[MrBill]

I would argue that the FED and the BOJ flooding the world with excess dollars and yen contributed a great deal to a run-up in prices in base metals, commodities and petroleum prices; that China has kept the yuan artificially undervalued relative to the dolllar to stimulate exports to keep the Chinese economy growing quickly without overly stoking domestic inflation; and that China could stop buying so many US treasuries, if the yuan was allowed to appreciate.

Why so many petrodollars still find themselves invested in US assets I am not sure, although a weaker dollar and higher interest rates now, do seem to lend support to the dollar versus the euro or yen alternatives. The GBP has also benefited, appreciating quite markedly against the dollar since 2001, less so against the euro where it has been much more stable.

By the way, this article addresses EUR/USD exchange rates on US trade deficits as well as shows how many Chinese imports the EU is taking in, I assume due to a strong euro against the yuan as well.

the euro/ dollar does matter

I am unaware that China has actually started to fill their SPRs. The article refers to building the storage tanks, not filling them.

I have read no industry reports to this effect. I have seen no physical flows, like a jump in imports month on month, so show that Chinese imports are high enough to accomodate reserve accumulation. I do know that Chinese importers/refiners are losing money on every barrel of oil imported as domestic prices are still subsidized. I will post those links later. Right now, I have to run. Cheers.

Looking for the actual links]
$this->bbcode_second_pass_quote('', '"')Chinese petrochemical companies'
refining losses doubled in the first half of this year
as record oil prices eroded earnings from processing crude.
Refiners lost a combined 43.9 billion yuan ($5.5 billion) in the first six months, 109 percent more than a year earlier, the Beijing-based China Petroleum and Chemical Industry Association said in a statement on its Web site today.
China's government, which controls fuel prices to limit their impact on inflation, authorized an increase in May to help refiners cut losses. Prices for gasoline, diesel and jet fuel rose more than 10 percent. That's less than the 22 percent gain in New York oil prices so far this year.
``The government's fuel price increases are not enough to cover losses at refiners because of surging international oil prices,'' the industry association said in the statement. ``More companies recorded losses in the first half than a year ago.''"