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How The Petrodollar Quietly Died, And Nobody Noticed

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How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby AndyA » Tue 04 Nov 2014, 00:01:17

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 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."


In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Tue 04 Nov 2014, 03:34:48

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby misterno » Fri 21 Nov 2014, 11:32:38

americandream wrote: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.


Tell this to Roman Emperors who seemed to think the Empire will never collapse and they can borrow as much as they can, invade whichever country they want.

They were so blinded with their superior technology compared to other countries and never wanted to save or downsize and the debt kept piling up.

Does that remind you another country nowadays?

History always repeats itself...
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby ROCKMAN » Fri 21 Nov 2014, 12:55:35

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}
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby sparky » Fri 21 Nov 2014, 16:04:03

.
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 .
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Sat 15 Aug 2015, 00:36:14

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?
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 01:17:07

onlooker wrote: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?


One has to distinguish between the systems tendencies and subjective inputs such as that of politicians. If you will notice that where subjective inputs and systemic tendencies overlap, the system wins.

NOW

Seeing as the wizards who best understand the market and by this I mean the exchanges, reside in London and NY, it needs to be pointed out to many on here that these two centres can, in one swift move, demolish any challenge to their dominance.

Let it be understood, thr markets are a subtle machine that only a few can read. And everyone, exporters of cars to nappies, importers of cake to viagra, sellers of bibles to korans and buyers of hemp to recyclable cigarettes....everyone depends on these centres and their exchanges to facilitate trade. The banksters, Trumpsters, sail away on boatsters, everyone depends on just these two centres who have dominated and will dominate till we find a suitable alternative or else the climate does it for us.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Sat 15 Aug 2015, 01:31:16

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 01:55:44

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
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 02:03:28

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Sat 15 Aug 2015, 02:07:21

Yes AD, it seems only the Limits to Growth ie. the Environment will put the brakes on the SYSTEM.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 02:15:44

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


Yeap. Or else acting to preserve modernity which can be done as well.

My major concern is the methane issue as that is an unknown. But that aside, if the next decade passes and time is still on our side, we may well see the glimmerings of higher consciousness around the globe. A man whose stomach is not empty has the time to contemplate these issues in depth.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 02:32:10

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Sat 15 Aug 2015, 02:35:32

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby americandream » Sat 15 Aug 2015, 02:44:37

onlooker wrote: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.


Well that is the whole point of consciousness. Problem is we dont know whether the climate will preempt evolutions WIP. We can only really play this one by ear.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby phaster » Mon 17 Aug 2015, 17:52:19

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
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Mon 17 Aug 2015, 18:27:32

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.
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby Tanada » Thu 04 Feb 2016, 09:15:05

Somebody noticed.

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.

http://thenewsdoctors.com/goodbye-petro ... l-partner/
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby onlooker » Fri 21 Dec 2018, 13:44:01

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
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Re: How The Petrodollar Quietly Died, And Nobody Noticed

Unread postby Outcast_Searcher » Fri 21 Dec 2018, 14:11:34

AndyA wrote:http://www.zerohedge.com/news/2014-11-03/how-petrodollar-quietly-died-and-nobody-noticed
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."


In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.

Ah yes, the land of zerobrains, and nearly zero correct forecasts!

So let's pretend that the cumulative benefit to consumers re spending MUCH less for oil products is a BAD thing for them financially. :!: :roll:

And the perma-doomers eat this nonsense up of course! Because to them, ANY grasp at "bad" news to try and confirm their NEXT bad short term "collapse" forecast is a straw they simply can't resist. (Let's remember: A recession is NOT collapse. A stock market down cycle is NOT collapse. Even when the perma-collapse clown car crowd brays that it is, THIS time.)

You'd think the "people can't afford oil based products, even at low prices" nonsense spreading ETP zealotry crowd would at LEAST recognize the internal lack of logic in claiming that low oil prices are bad for consumers who are supposedly getting financially badly hurt by higher oil prices.

I suppose if oil prices went below ten dollars due to oversupply it would mean that the vast majority of people would have to quickly declare bankruptcy. :idea:

Maybe it IS a conspiracy. The "fast crash doom" crowd is trying to remove all trace of logic from the thinking process. :lol:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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