How Iran's Oil Bourse Could Kill the Dollar/ Asia Times

[TexasLawyer]

Interesting... Scary...

Aug 26, 2005


Killing the dollar in Iran
By Toni Straka
Asia Times

Could the proposed Iranian oil bourse (IOB) become the catalyst for a significant blow to the influential position the US dollar enjoys? Manifold supply fears have driven the price of crude oil to its recent high of US$67.10 - only a notch below its highest price in inflation-adjusted dollar terms. With the world facing a daily bill of roughly $5.5 billion for crude oil at current price levels, it becomes apparent that sellers and purchasers of the black gold are looking into all ways that could lead to a financial improvement on their respective sides.

Non-US-dollar holders so far have been the victim of additional transaction costs in the oil trade. The necessary conversion of local currencies into oil-buying greenbacks can be considered a hidden tax, charged and enjoyed by the international banking sector. The IOB, by eliminating this transaction cost, will become a factor that could unsettle the dollar's dominant position. While the worldwide bottleneck of inadequate refining facilities and partly dramatic declines in production - for example in the North Sea - are two factors that cannot be eliminated in the short term, there is one area left which could result in smiling faces of oil producers as well as most buyers.

<snip>

Until now, oil has been solely priced, traded and paid for in the greenback on markets in both London and New York. But monthly worldwide oil revenues of over $110 billion (on a 20-trading-day basis) - a third of which ends up with OPEC (Organization of the Petroleum Exporting Countries) members - raise the question of what happens to these cash mountains.

According to the most recent data from the US Treasury Department, OPEC members have parked only a skimpy $120 billion in direct dollar holdings, which are almost equally split between equities and American debt paper. This is a clear indication that oil producers are investing their windfalls elsewhere. The yield spread between US and EU debt papers in favor of the EU is another hint where the petrodollars might be heading.

<snip>


http://www.atimes.com/atimes/Global_Economy/GH26Dj01.html

[rrrevolution]

1. Truly the Issue Driving the Attack Iran Plan

This is one of those events(switch from oil dollars to oil euros) that will reverberate throughout history which may slip by almost unnoticed by those who may be called to lay down their lives in an attack on Iran.

The real reason Bush and his buddies must attack Iran. Not nuclear weapons -- reported to be at least 10 years away.

[acmejack]

2. It has been the inevitable conclusion of * ineptitude.

"Greenspan's Fraud" is an interesting read. I'm past scared by this impending economic event, all aboard the Third World Express...

[welshTerrier2]

3. ahhhh, petrodollars ... HIGHLY RECOMMENDED !!

great article, TL ...

check this one out ... i posted it a few weeks ago and got about 5 responses ... the complexities of the Iranian oil bourse go way beyond mere economics ... understanding the issues you've raised here helps put much of the globe's geo-politics in perspective ... keep especially focussed on the heightening "confrontation" between the US and China ...

this article is long but VERY worth reading (second column from the left):
http://world.mediamonitors.net/content/view/full/17451

thanks for raising the issue ... the trick is how to get more DU'ers, and more Americans, invested in understanding the truth about what's going on here ... i hope your thread fares better than mine did ...

[MostlyLurks]

4. WelshTerrier: I read your thread...

I didn't response because I was too busy wiping the poop out of my pants.

Mostly

[welshTerrier2]

10. scarey, isn't it ??

(NOTE: just fyi, i also just posted this as its own thread after first posting it here)

we sit here in the US, in the "belly of the beast" ... the US wields massive power internationally; we are truly the world's only superpower ...

our institutions and our system of government, a system that purports to respond to the will of its citizens, has become totally dysfunctional ... the "checks and balances" built into the design of our government have badly failed; they have failed because the American people have taken their democracy for granted ... WE, the people, more than any other entity are to blame ...

we can point to centralized, corporate media ... they, too, share the blame for failing to tell the people the truth ... we can point to greedy corporatists who put their narrow commercial interests ahead of the national interest ... they are the most destructive force the planet has ever witnessed ... and their greedy, un-American goals would never be realized if Americans were more vigilant ... but we're not ...

one might even make an argument (although i'd never agree with it), that we "cannot afford to be nice" in taking whatever oil we need no matter who owns it or how we get it ... one could argue the very survival of the US hangs in the balance ... but what we have right now is a system that first and foremost caters to BIG OIL and other massively powerful trans-national corporate interests ... this is true EVEN IF the US indirectly derives some benefits ...

the bottom line here is that the American people play virtually no role in the policy decisions being made ... THIS IS NOT DEMOCRACY !!!

what has to change is that the American people need to hear the truth ... they need to want to hear the truth ... we have to fight for candidates who insist on telling the American people the truth ... without awareness, the American people are easily manipulated; they cannot become the force they should be to eradicate the evil corporate cabal that sits entrenched like a cancer in our government and in all our institutions ...

which brings me to the Democratic Party ... some say the Democrats have become a Party of corporatists not much better than the republicans ... perhaps this is so; perhaps not ... either way, though, what is needed is an opposition Party committed to rallying the American people to fight to reclaim their democracy ... we need to stop supporting candidates who are afraid to be labeled as anti-American ... nothing could be more American than what i espouse ... we need a new American revolution that restores the best interests of the American people to controlling the levers of power and the oversight of our systems of checks and balances ...

there is a difference between the major parties ... the Democrats hold the only real hope that a renewed energy to sweep the corporatists from power can be re-kindled ... the current hoopla about the DLC is very well founded ... for too long, they have been able to divide the Party's left and its center ... the issues we all must face together are far greater than the "small issue quibbling" we've allowed to distract us ... the DLC must go to allow a reunification of left and center ...

and then we must get back to the central business of reclaiming our country and restoring our foreign policy to one of good global citizenship ... until we can make the others understand, we have failed the rest of the world, our own country and our own party ...

[icymist]

11. Kick and recommended!

I'm sending a link to this article to other people I know. The article is rather lengthly for American's ninety-second attention spans!

[Gregorian]

13. That says it all.

Everything I've been saying for thirty years. That says it all. Thank you for the snip, because I too am lazy. It's not only that we have taken things for granted, but that we only have 24 hours in a day.

I always say- be vigilant and be frugal.

What a relief to read your post. I feel validated and informed. Now if we can just get the rest on board before either a civil war, or China (et al.) destroy what is left.

[MostlyLurks]

16. A little anecdote, just to highlight how screwed we are.

I was having lunch with my mom this weekend. Mom and I have had a rocky relationship, owing largely to her strident Christianity and my strident resistence to strident Christianity. Since 2000, she's been a raging Bushbot.

So we're sitting there talking and I start telling her about the Iranian bourse and how it will affect the dollar and the US economy, etc., etc. I concluded by saying something like "Keep in mind, that's all speculation - nobody knows for sure that the bourse will draw other countries" and so on.

Her response? Paraphrased, she said she thought the Iranians were doing it largely, if not solely, to screw over the good old US of A. Not because it makes economic sense for them to do it, and not because the petro-US-dollar scheme is outdated in the wake of the Euro and Chinese growth. Nope, none of that at all. The Iranians are setting up their bourse just to piss us off.

Man, we're just so completely screwed. SCREWED I SEZ!

Mostly

[TexasLawyer]

6. Thanks, WelshTerrier

Good article, with good quotes. I had forgotten about this insane Bush quote from earlier this year.

"This notion that the United States is getting ready to attack Iran is simply ridiculous...Having said that, all options are on the table."

-- President George W. Bush, February 2005

[cliss]

7. Welsh, I gotta take off.....

but when I get back I'm going to read your thread. Thankx for reviving this. (There's so much awesome information here at the DU, sometimes it's hard to keep up!!).

So....the plot thickens. Here's my take on Bush and his Boogey Man Routing: NO ONE, absolutely NO ONE believes Bush when he gets up there and starts spouting about Iran and nuclear weapons. He doesn't even believe it himself.

You KNOW world leaders are talking amongst each other and fill each other in on what's really happening. Count on it.

So when Bush gets up there, starts raving and ranting, Putin and Schoeder and Chirac and Musharraf and world bankers call each other and discuss the REAL situation.

Thanks!

[welshTerrier2]

8. here's a link to my earlier thread with a recap

KUDOS again to TexasLawyer for breathing some life back into this very critical topic !!!

link: http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=132&topic_id=1993819#1993913

the whole article below is VERY WORTH READING but for you headline readers out there, here are the basics:

1. neo-cons and big oil have maintained their global power by keeping the dollar as the currency standard for international oil transactions
2. Saddam "sealed his fate" in 2000 when he said he was going to move Iraq to euros
3. Iran plans to open a "bourse" (an oil trading market) that would likely "end the petrodollar's hegemonic status as the monopoly oil currency"
4. Cheney has threatened to nuke Iran ... the pretense of terrorism and Iran building nuclear weapons is a smoke screen for the need to help big oil maintain control of international oil markets
5. China has a massive interest in Iran and US attacks on Iran could bring about a confrontation with China
6. all of this is beyond the radar of most Americans because "five U.S. major media conglomerates control 90% of information flow in the U.S"
7. Peak oil is putting increasing pressure on the US and making it more difficult for the US to control "petrodollars"

[donsu]

5. kick

nt

[AuntPatsy]

9. kick people need to take note..

[NinetySix]

12. Another kick for this important topic

[welshTerrier2]

14. for the night folks ...

kick ...

[Nikki Stone 1]

15. Thanks. It was a good read

Pretty clear