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Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby Petrodollar » Mon 10 Sep 2007, 13:54:57

Not sure is this article was posted already, but it is certainly worth reading...IMO, this is a good synopsis of petrodollar warfare part III. FWIW: Iraq was the opening act, Iran is part II, and I suspect that China and the SCO members will be the 4th act (with Venezuela serving as a Wild Card) in this unfolding high-stakes game of geopolitics/economic warfare/oil depletion strategy...

http://www.progressiveexchange.com/inde ... Itemid=479

$this->bbcode_second_pass_quote('', '[')b]Ruble Rumble
August 30, 2007: page A10, WSJ

American fighter jets scrambled to intercept Russian bombers earlier this month near the island of Guam. It was the first time since the end of the Cold War that the Kremlin sought to provoke a U.S. response. It likely will not be the last. Fueled by revenues from energy exports, Russia appears bent on ratcheting up tensions.

But don't expect the next foray to take place over international waters. Vladimir Putin laid bare his ambitions at the St. Petersburg International Economic Forum in June by calling for a "new international financial architecture" to provide a base for economic development. Russia's next move is to challenge U.S. supremacy in world financial markets.

The notion of nudging America off its central perch in global economic affairs hardly seems plausible. But Russia's leader strikes a chord with other emerging-market economies -- Brazil, China, India -- when he describes current monetary and financial arrangements as "archaic, undemocratic and unwieldy."


...Indeed, this whole idea has been under discussion in the EU and Russia for a couple of years, but turning to the present day - one begins to wonder if the 'causes' of today's market turmoil could be artifacts of what the EU, Russia, China, the IMF et al have been thus far subtely stating about the US dollar since 2003...with evidence that some of those nations are slowly - or more rapidly- beginning to unload their dollars as reserve assets...

$this->bbcode_second_pass_quote('', '[')b]Given the recent turmoil in world financial markets, Mr. Putin can expect heightened interest in his pitch for new regional alliances "based on trust and mutually beneficial integration" versus continued dependence on global institutions like the International Monetary Fund. Both Europe and Asia blame U.S. credit woes for their own unsettled markets. And newly independent nations on the periphery of established trade and security blocs have their own reasons to align with powerful patrons. {Note: this article also mentioned several oil-rich and natural gas-rich nations in the Caspian as possible partners in Russia's gambit: Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan}

Mr. Putin even suggests that central banks should begin to hold reserves in a wider selection of currencies than dollars and euros in recognition of the "existing balance of power." It's hard to miss the implication: the ruble as a global reserve currency.

Is the man serious? The only reason the European Central Bank, say, or China's central bank, might hold reserves in rubles would be to pay for purchases from Russia. Today it is possible to buy Russian oil and gas using dollars or euros. The leading market exchanges for conducting international energy transactions are located in New York and London. But that is why officials at the White House, the Federal Reserve and the U.S. Treasury should be scrambling right now. {in other words, even the Wall Street Jounal is now calling attention to this new era of petrodollar warfare - which btw, began about 7 years ago...circa Sept 2007 when Iraq announced its "oil-for-euros only" proposal}

Mr. Putin is more than serious. He is determined to establish a world-class oil exchange on Russian territory and shift energy business away from existing global financial centers. A new facility is being readied in St. Petersburg's historic Bourse -- an imposing, white-colonnaded Greek Revival building that dominates the majestic sweep of the Strelka, or Spit, of Vasilievsky Island in the Neva delta and which is visible from the Winter Palace -- that will open to market traders within months and where transactions will be denominated in rubles.

It's a daring gambit and it constitutes no less than a demand for new international monetary arrangements on the scale of the post-World War II Bretton Woods agreement. "The global economy has experienced a transition," Mr. Putin notes pointedly. "Fifty years ago, 60% of world gross domestic product came from the Group of Seven industrial nations. Today 60% of world GDP comes from outside the G7."


...now for the most candid comments of the article...

$this->bbcode_second_pass_quote('', 'C')hina, like Russia, bristles at its second-tier status within the global financial architecture. Harangued by the U.S. over exchange-rate policies, China has recently been flexing its monetary muscle by hinting that it might dump a portion of its considerable dollar reserves. The prospect of such a shock to the U.S. economy in the midst of a housing slump threatens to bring the whole edifice crashing down. Throw in statements of support from oil-producers Venezuela and Iran, and you have the makings of a devastating dollar rout.

If Russia insists that its energy clients pay in rubles, we cannot expect our allies to strenuously resist. Europe purchases nearly 30% of its energy from Russia. Rising energy demand in Asia will likewise boost demand for rubles as Russia targets China, India and Japan. Last month, Japan quietly acquiesced to Iran's request that it switch from dollars to yen in payment for Iranian oil.

Can U.S. leaders and financial authorities meet the challenge from the Kremlin? Is America prepared to offer its own proposals for establishing more stable currency and financial conditions for global trade? Or are we just interested in protecting our turf? {...As for her rhetorical question, just look at the evidence: Iraq under Saddam HUssein, Iran 2002 to present day, the attempted CIA-sponsored overthrow of Venezuela circa April 2002, and various "color revolutiuons" around Russia's perphery - and the answer is clear...the neocons are pursuing "hard power" politics: covert coup attempts, warfare, unilateral sanctions and threats of air strikes as their primary "strategy"...instead of multilateral negotiations and international accords}

The next Bretton Woods should be launched as an earnest initiative from the nation that gave birth to democratic capitalism. Not as an act of aggression from a pumped-up Russian pretender.

***
Ms. Shelton is an economist and author of "Money Meltdown" (Free Press, 1994).
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby XOVERX » Mon 10 Sep 2007, 21:52:21

We may be witnessing the end of the beginning for the destruction of US economic hegemony.

Thanks for this.
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby MOCKBA » Tue 11 Sep 2007, 00:51:53

$this->bbcode_second_pass_quote('Petrodollar', '')$this->bbcode_second_pass_quote('', '[')b]Ruble Rumble
But don't expect the next foray to take place over international waters. Vladimir Putin laid bare his ambitions at the St. Petersburg International Economic Forum in June by calling for a "new international financial architecture" to provide a base for economic development. Russia's next move is to challenge U.S. supremacy in world financial markets.

The most technologically advanced stand at the Forum displayed to show that Russia is the leader in nano technology had those small letters stamped at the back "Made in USA"
Image
More about the Forum could be found here http://alekcei.livejournal.com/67533.html (in Russian)...
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby MOCKBA » Tue 11 Sep 2007, 01:19:23

$this->bbcode_second_pass_quote('', '[')b]China has recently been flexing its monetary muscle by hinting that it might dump a portion of its considerable dollar reserves.


I read quite an interesting commentary not that long ago about China dumping Treasuries that boils down to this - Yeah, Americans are in debt to the tilt, but nobody, it seems, have any problems coming up with tens of thousands of dollars... well, to spend. That sure could come from some poor lending practices, but even with poor lending practices nobody gives out money for nothing and thus at the very least Americans do have lotsa assets only unlike last century those assets are no longer savings accounts yielding nothing, but different type of assets giving better yields (not only in pure monetary sense). Call them Hummers, McMansions, 401-Ks, future earnings, whatever, they are still assets and nobody on the planet could match Americans on those assets.

Now, China is buying out every Treasury they could get their hands on to sterilize trade imbalances. As a result yields on Treasuries are pathetic. Simple supply/demand - great demand from China - low yields. Once China would stop buying everything they could get their hands on (we are not even talking about dumping yet), yields would grow. As they would grow there would be a point when it would be more profitable to lend money to the government then to spend them on new SUV and all of the sudden from the country of spenders America would once again become the country of "savers".

I cannot wait for China to start "dumping" - like many others (baby-boomers) I would love to pickup from Chinese obligations of the US government yielding 10% per year in the next 3-10 years. Go ahead already! I sure would be buying for penies on the dollar my fair share of printing press run of those worthless dollars.
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby Petrodollar » Tue 11 Sep 2007, 10:02:20

$this->bbcode_second_pass_quote('', 'N')ow, China is buying out every Treasury they could get their hands on to sterilize trade imbalances


I'm not so sure that is the case, take this article for example...

http://www.telegraph.co.uk/money/main.j ... ina105.xml

$this->bbcode_second_pass_quote('', '[')b]Is China quietly dumping US Treasuries?
By Ambrose Evans-Pritchard
Last Updated: 12:25am BST 06/09/2007


A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.

Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone."This comes as a big surprise and it is definitely worrying," said Hans Redeker, currency chief at BNP Paribas.

"We won't know if China is behind this until the Treasury releases its TIC data in November, but what it does show is that world central banks are in a hurry to get out of the US. They don't seem to be switching into other currencies, so it is possible they are moving into gold instead. Gold is now gaining momentum across all currencies and has broken through resistance at 500 euros," he said.


...here's a little more info about recent trends...albeit somewhat contrarian from the observations from a French currency chief quoted previously...

$this->bbcode_second_pass_quote('', 'D')avid Powell, an economist at IDEAglobal in New York, pointed the finger at Beijing as the main suspect in the sudden bond flight this summer.

In a client note entitled "Has China started to dump US Treasuries?", he said the sales appear to coincide with early moves by Beijing to launch its new $300bn sovereign wealth fund.

The scheme is part of the government's plan to diversify it $1,340bn reserves from bonds (mostly in the US) to a broader portfolio of investments and a better yield.

If so, the switch comes at a very delicate time, just as tempers flair on both sides of the Pacific over China's policy of holding down yuan by currency intervention. A bill in Congress calls for punitive tariff sanctions of 27.5pc against Chinese imports, and there has been a growing outcry over contaminated pet food and lead-tainted toys.

Two top advisers to the Chinese government gave strong hints in August that Beijing should use its estimated $900bn holdings of US Treasuries and agency bonds as a "bargaining chip", words taken as an implicit threat to trigger as US bond crash if provoked.

The Chinese government has since put out an official statement clarifying that it has no intention in taking such an irresponsible step, which would in any case backfire by devaluing China's remaining holding.

Mr Powell said the switch out of Treasuires was a purely commercial decision. "If if turns out that the Chinese are behind this, it is merely an attempt to increase returns on investment. It has nothing to do with settling protectionist scores," he said.

Any evidence that China was pulling out would risk setting off an unstoppable stampede, which is why such a policy would never be announced. It holds the world's biggest pool of resrves, followed by Japan. {now that is an understatement...}

Robin Bhar, a metals analyst at UBS, said there was little evidence yet that Asian central banks were switching heavily into gold. Most of the recent buying of gold has been on the COMEX futures markets, the playground of hedge funds.

Central banks tend to buy their bullion in London at the AM and PM fixings, leaving a footprint that is visible to experts. They seem to have been largely absent from the market so far. {...so this article is trying to create the impression that China "doesn't seem" to be switching to other currencies, but then offers some contradictory statements about potential gold movements? Regardless, it does appear that they are unloading some US dollars, but how much and and for how long is still too early to say....as are the potential effects on the dollar's valuation and status as world reserve currency...}
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby dissident » Tue 11 Sep 2007, 10:39:04

Gee, Russians use US equipment ergo they have no scientific capability. Following your 'logic", MOCKBA, the USA is in exactly the same boat since it uses equipment made in Japan and China! Your Russophobic drivel is pathetic.
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Russia to diversify oil fund gradually

Unread postby Ferretlover » Tue 11 Sep 2007, 11:58:00

MOSCOW (Reuters) - Russia will diversify its $133 billion oil stabilization fund investment portfolio towards riskier assets only gradually due to global financial turbulence, a senior Finance Ministry official told Reuters.
"I think this turbulence is not over," Pyotr Kazakevich, the ministry official in charge of overseeing the stabilization fund, said at the Reuters Russia Investment Summit on Tuesday. ...

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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby dissident » Tue 11 Sep 2007, 13:13:33

http://www.informationclearinghouse.inf ... e18350.htm
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby jboogy » Tue 11 Sep 2007, 14:51:21

I read that story about china dumping dollars linked from LATOC , coincidence it gets linked at 2 PO sites? Reading between the lines I think china is dumping dollars but at a pace slow enough so as not to start a panic , of course they say they're not unloading . Lots of central banks are buying bullion now , china is just buying from hidden positions so as not to arouse suspicions . They know they're in a bad way with all these dollars that are getting weaker all the time. Too bad we're their biggest customer. Mike Ruppert has been saying for years that this dollars for oil scam we've had going is the same as free money from foreign governments , he also warned that the U.S. will do everything they can to stop it from ending . Saddam was talking about switching out of dollars for oil purchases and many said this was anothrer reason to go to war , sounds plausable . Just think of how the demand for dollars will decrease if OPEC and other producers start asking for euros or whatever instead of U.S. dollars for purchases . All them dollars unloaded too fast would be instant death for U.S. economy.

MOCKBA , On what planet are you getting a good "yield " from hummers and oversized houses ? Check the date on that newspaper your reading , you might have inadvertantly picked up one from the archives.
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Re: Ruble Rumble (Russia'd bid for a petroruble option...)

Unread postby Petrodollar » Tue 11 Sep 2007, 17:59:07

$this->bbcode_second_pass_quote('', 'M')ike Ruppert has been saying for years that this dollars for oil scam we've had going is the same as free money from foreign governments , he also warned that the U.S. will do everything they can to stop it from ending.


...here's an update re Iran, and some interesting comments about emerging trends in multiple petrocurrencies....

http://www.upi.com/International_Securi ... llar/6990/

$this->bbcode_second_pass_quote('', '[')b]Analysis: Iran moves to ditch U.S. dollar
Published: Sept. 10, 2007 at 6:07 PM

By DEREK SANDS
UPI Correspondent

WASHINGTON, Sept. 10 (UPI) -- Faced with U.S. economic sanctions and a weak dollar, Tehran is demanding foreign energy companies do business in yen and euros, despite increasingly desperate need for investment.

In a deal announced last week, Japan’s Nippon Oil agreed to buy oil from Iran using yen instead of the traditional U.S. dollars. The agreement comes after years of Iranian efforts to shift its petroleum exports away from dollars and toward yen and euros.



...and here is the confirmation of the full scale economic war that the US launched against Iran in 2004 - just after Iran annouced its plans to open an international oil bourse for oil transactions in the euro...interesting coincidence even if still censored by the five US coporate media conglomerates....

$this->bbcode_second_pass_quote('', 'U').S. Treasury Undersecretary for Terrorism and Financial Intelligence Stuart Levey has been in charge of coordinating U.S. sanctions against Iran since 2004. In recent months the U.S. Treasury has increased pressure on foreign banks not to deal with Iran, including so-called U-turn transactions, which “allow U.S. banks to process payments involving Iran that begin and end with a non-Iranian foreign bank,” according to the U.S. Treasury.
Shifting to euros and yen allows Iran some relief.

“Overall it does lower some of their exposure to this successful yet informal pressure from the U.S.,” Kirsch said.

Iran has the world’s second-largest reserves of crude oil, is the world’s fourth-largest exporter of oil, at 2.5 million barrels per day, and depends on export revenue for almost half of its government revenue, estimated at about $46.9 billion in 2006. Japan is Iran’s largest customer for oil.

Iran’s turn to the yen or euro may help in some ways, but U.S. sanctions are still a danger.

“For them, I think it will make it easier, simply because the banks that it deals with won’t be under the threat of the U.S. prohibiting turn-around transactions. They may still be under threats. Of course, the U.S. has successfully put some pressure on some European-based banks to stop transactions with Iran. That still remains a threat,” Kirsch said.


...now for the most interesting comments about the erosion of petrodollar hegemony...

$this->bbcode_second_pass_quote('', 'T')he economic consequences of sanctions are not Iran’s only motivation. The declining value of the dollar has also made the euro and yen attractive, if not for sales, than at least for saving.

“There is also another key issue that you are seeing, not just in Iran, but in other oil producers, especially Gulf oil producers, is given the depreciation of the dollar, it is better to hold their reserves at least in euros, it is a better store of wealth. Some of the other Gulf producers will accept payment in euros. They won’t price their oil in euros or yen, and even if they are receiving payments in dollars, most likely they are converting a substantial share of that every month into other currency,” Kirsch said.
{..of course the US mass media will NEVER attribute that trend to the dollar's devaluation relative to other currencies, but along with Japan and China, this is the other "leg" that is propping up the Federal Reserve's ability to expand the US dollar/credit supply and finance the US trade account deficit...}

Holding cash reserves in euros and yen may be a trend for the region, according to Kirsch, but a large-scale market conversion away from dollars in unlikely.

“I think the producing states are becoming increasingly sophisticated in how they hold their foreign currency. But in terms of whether, is oil formally going to be priced in yen, renminbi, or the euro, I don’t think that is going to happen. Simply because you would have to establish a whole new contract and an exchange for that, and that can be quite costly. It is also, you have to find a contract that the investment community is willing to embrace, and until you need to do that, I think they will be satisfied sticking with the contracts from the NYMEX and the International Petroleum Exchange,” Kirsch said.

Much of the world’s oil is sold through the New York Mercantile Exchange, NYMEX, or the International Petroleum Exchange in London, both of which trade in U.S. dollars. Tehran has for years planned an oil exchange that would operate in euros but has yet to realize the scheme.


...and this is percisely why the US has been trying to undermine Iran since 2004 when their plans for an oil bourse were first announced...and why the US is threatening Iran, while at the same time tying to keep international oil producers and investors from doing business with Tehran for fear of some disasterous "Operation Iranian Freedom"...Welcome to petrodollar warfare, the Second Act.[/i]
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IHT: Russia quietly prepares to switch oil from dollars

Unread postby mattduke » Mon 25 Feb 2008, 21:47:21

Russia, the world's second-largest oil-exporting nation after Saudi Arabia, has been quietly preparing to switch trading in Russian Ural Blend oil, the country's primary export, from the dollar to the ruble. But the change, if it comes, is still some time off, industry analysts and officials said.

http://www.iht.com/articles/2008/02/25/ ... /place.php
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Re: IHT: Russia quietly prepares to switch oil from dollars

Unread postby Bas » Mon 25 Feb 2008, 22:05:29

I think there has been quite some mainstream media exposure to the plans of opening a rubel based oil market in Russia.
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Re: IHT: Russia quietly prepares to switch oil from dollars

Unread postby Ta_Tyana » Thu 28 Feb 2008, 14:47:07

The first rumors concerning ruble or oil based market in Russia were concerned with the Eastern pipeline. Some spoke about rouble, others said the Euro possibility remained one of the most probable. Now there is still no enough reliable information or officially announced plans on this topic. The first line of the Easten pipe should be put into operation in 2008, so we’ll see very soon.
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Trading in Russia suspended to halt slide.

Unread postby dorlomin » Wed 17 Sep 2008, 07:09:57

Link I guess with the fall in comodities and the general panic around the world Russia is taking an absolute pounding. Ugly days. Perhaps the best thing about posting here for over a year, I got my panicking over and done with a year ago.
But all the same many many very poor Russians will become poorer.
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Re: Trading in Russia suspended to halt slide.

Unread postby EnergyUnlimited » Wed 17 Sep 2008, 07:16:21

Poor Russians may hold some vodka but not shares. They will remain entirely unconcerned about these events.

If oil drops further $20 (quite likely) then alternative energy bubble will surely collapse and that will be interesting to watch.
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Re: Trading in Russia suspended to halt slide.

Unread postby oxj » Wed 17 Sep 2008, 08:02:32

Yes, the struggle of the poor is uninteresting, for it is common.
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Re: Trading in Russia suspended to halt slide.

Unread postby MrBill » Wed 17 Sep 2008, 08:24:49

Your average Russian does not own shares. Those that do are those who can afford to take losses. This downward momentum is actually being caused by those Russians that pledged local shares and ADRs against loans, so that they could buy more shares and/or property. As they cannot meet margin calls their banks are selling that collateral on their behalf to pay-off the loans.

This is truly ugly, but it is not hurting or affecting the poor. I believe that some of TPTB are actually profiting from this rout in share prices. If they sold in May they can now afford to buy back a roughly half. That alone should pay for the Georgian conflict, although they might have over-estimated themselves their ability to stop this fall in stock prices. Sometimes these things take on a life of their own what with the public fight over BP-TNK, comments about Mechel, the credit crisis, the Georgian conflict, the bursting of the commodity bubble and now major players and liquidity providers imploding.
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Re: Trading in Russia suspended to halt slide.

Unread postby AlexdeLarge » Wed 17 Sep 2008, 08:58:16

As oil revenues diminish, they will get royally screwed again. But Putin will use this "crisis" to consoldate his power even more.

Got to love those KGB guys!
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Re: Trading in Russia suspended to halt slide.

Unread postby Specop_007 » Wed 17 Sep 2008, 09:02:28

So much for Ivan's military expansion dreams. :lol:
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Stock market melt down in Russia????

Unread postby IslandCrow » Wed 17 Sep 2008, 10:14:02

Trading Halted in Russian shares
$this->bbcode_second_pass_quote('', 'T')rading on Russia's main stock exchanges has been suspended following steep falls in shares prices this week.
The shock developments on Wall Street this week spurred a sell-off in Russian shares, which sank to three-year lows on Tuesday.
Following a plunge of 6%, the dollar-denominated RTS index halted trading on Wednesday until further notice. It is down 60% since its May peak.
Trading on the rouble-denominated Micex was also suspended. This comes after shares on the Micex slumped by almost 18% on Tuesday

Added to this the "collapse" in crude oil prices must be hurting Russia.
What does this all mean? Do you have other links to help us sort out what is happening? Thanks
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