Threatening Petroeuro?

[Oliver]

If you posit 70 dollars per barrel, 532 million dollars per day, it takes about 2000 days to do that, during which time the price of oil can fluctuate considerably, and may if the dumping has any influence on price. (Not sure it would, but it might.)

Then, whoever sold them that oil now has dollars. Dollars possibly worth less if China's dump drove the value down.

Now what? China has just undiversified its foreign currency holdings, and now has to pay commissions on any trade with the US, their biggest market, who work in dollars.

Does this make sense to you? Maybe it does.

Can China afford to do that?

I don't know.

DR

I don't know if they can afford it right now. How much money did they lend to the US so far?

 

[Tailgater]

I don't know if they can afford it right now. How much money did they lend to the US so far?

The link in post 127 had some figures.

 

[Oliver]

The link in post 127 had some figures.

Thank you for the link, Tailgater.

Why is Beijing cutting back? I missed their reason for that:

Beijing's retreat from the US bond market and the threat to global inflation, from oil and food prices, are signs of a pending change in the low inflation, low interest rate environment.

This is bound to make further inroads into the troubled US subprime mortgage market.

Source: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=3900910

 

[Oliver]

Does this make sense to you? Maybe it does.

Can China afford to do that?

I don't know.

DR

I also don't know since my knowledge on this issue literally sucks.
Do you see a connection/conflict between Iran and US-economical interests?

 

[Tailgater]

Thank you for the link, Tailgater.

Why is Beijing cutting back? I missed their reason for that:

Investment diversity would be my knee jerk guess. Who knows why they invested so much in bonds for so long to begin with. Some crazy plan or a safe investment? I'd have to be a fly on the wall in a room full of Chinese leaders to know for sure.

 

[Oliver]

Investment diversity would be my knee jerk guess. Who knows why they invested so much in bonds for so long to begin with. Some crazy plan or a safe investment? I'd have to be a fly on the wall in a room full of Chinese leaders to know for sure.

Quite frankly - as more I learn about it - as more a connection between Iran-Politics and US-Economical interests make sense to me.

What do you think about such connections? "Woo"?

 

[Darth Rotor]

I also don't know since my knowledge on this issue literally sucks.
Do you see a connection/conflict between Iran and US-economical interests?

No, other than the usual American concern of ensuring the security of oil flowing out of PG and into the global economy. Cheap energy makes for better markets.

China, like the US, has to play a many vs many game in balancing where it acts, and with what emphasis. They are subtle and patient. The long term health of Iranian oil reserves is in some question, which makes an Iranian oil bourse a short term issue, and perhaps one Euro and European traders might not simply leap into just to screw with the Americans. Iran has refining issues, and other issues, that might tend to make their oil bourse a bit less attractive than, say, and Indian oil bourse or a Chinese oil bourse based in the Euro (oil reserves assumed.)

Stability helps when one wishes to be the center of international finance.

See;

Switzerland
Belgium
London
New York
Tokyo

Notice any particular similarities?

DR

 

[Tailgater]

Quite frankly - as more I learn about it - as more a connection between Iran-Politics and US-Economical interests make sense to me.

What do you think about such connections? "Woo"?

Depends on the connection you are citing. If you are still pushing the idea that the US invaded Iraq to change it back to the dollar, I say "woo". Feel free to post other connections that might be related.

 

[Oliver]

No, other than the usual American concern of ensuring the security of oil flowing out of PG and into the global economy. Cheap energy makes for better markets.

China, like the US, has to play a many vs many game in balancing where it acts, and with what emphasis. They are subtle and patient. The long term health of Iranian oil reserves is in some question, which makes an Iranian oil bourse a short term issue, and perhaps one Euro and European traders might not simply leap into just to screw with the Americans. Iran has refining issues, and other issues, that might tend to make their oil bourse a bit less attractive than, say, and Indian oil bourse or a Chinese oil bourse based in the Euro (oil reserves assumed.)

Stability helps when one wishes to be the center of international finance.

See;

Switzerland
Belgium
London
New York
Tokyo

Notice any particular similarities?

DR

I'm sorry, but no - I don't see the similarities or what you're saying here.

If, as you said, the flow of oil is a concern for America - how could you say that Iran is no concern concerning their oil? This sounds pretty contradicting, doesn't it?

 

[Oliver]

Depends on the connection you are citing. If you are still pushing the idea that the US invaded Iraq to change it back to the dollar, I say "woo". Feel free to post other connections that might be related.

Well, then I have to ask: Why did they switch back to Dollars anyway if it doesn't serve their or Opec's interests?

To me this sounds exactly like a purpose - even if I'm not able to estimate how big the financial difference is for Opec or America.

Do you know something about that the Oil-Trade coming from Iraq may have changed since the Invasion? Did something change in the "Oil-Flow" and concerning the countries who get the oil?

 

[Oliver]

The basic principles are actually not that complex. You are correct, there are probably thousands of ways to get rid of their Dollars. The problem is that throwing Dollars on the market would devalue the Dollar, which in turn means you need more Dollars to buy something. China would get less bang for the buck.

What if China would invest in Oil markets that trade in Dollar?
Then the Oil-Price wouldn't dump - the Dollar would.

Or what about the example to trade in Euro-Stoxx? Could they dump the dollar there? I don't know for sure if they would have to change their dollars into Euro's first or is it the trading-firms (or Shareholders) responsibility to change the money into Euro's after accepting dollars?

 

[Oliver]

I asked if you are OK with the prediction as I formulated it.

This one? :

"If Iran switches to trading oil in Euros, the USA is going to invade. Is that OK with you?"

Iran IS trading in Euro already. Maybe you phrase your question in German - because I don't know what you actually meant.

 

[danielk]

What if China would invest in Oil markets that trade in Dollar?
Then the Oil-Price wouldn't dump - the Dollar would.

Indeed. The fact that the Dollar would decline as a result of China selling Dollars was the point of maybe the last 20 posts in this thread.

Or what about the example to trade in Euro-Stoxx? Could they dump the dollar there? I don't know for sure if they would have to change their dollars into Euro's first or is it the trading-firms (or Shareholders) responsibility to change the money into Euro's after accepting dollars?

Oliver, is this really so hard to understand? On the macroscopic scale it simply doesn't matter much where and how China dumps its Dollars. The more Dollars China sells the less it will get in return, thus continually reducing the incentive to do so. Darth Rotor has already explained that sellers paid with Dollars would anticipate further decline of the Dollar.

 

[Oliver]

Indeed. The fact that the Dollar would decline as a result of China selling Dollars was the point of maybe the last 20 posts in this thread.

Oliver, is this really so hard to understand? On the macroscopic scale it simply doesn't matter much where and how China dumps its Dollars. The more Dollars China sells the less it will get in return, thus continually reducing the incentive to do so. Darth Rotor has already explained that sellers paid with Dollars would anticipate further decline of the Dollar.

I completely understand that! - As long the Dollars don't come back to the US.
As long the Dollars are in foreign hands - no matter where - the dollars value wouldn't sink. Do you understand that?

 

[danielk]

This one? :

"If Iran switches to trading oil in Euros, the USA is going to invade. Is that OK with you?"

Yes, except that "Is that OK with you?" is not part of the prediction.

Iran IS trading in Euro already. Maybe you phrase your question in German - because I don't know what you actually meant.

Read my posts. I already answered this:

Great! So when is the US going to invade? Remember, you said previously that they would use this as a reason to invade.

So if the US does not invade Iran before, say, the end of this decade, your hypothesis is toast. Of course if the US does invade it does not necessarily follow that your hypothesis is correct. It would, however, gain in credibility since it survived a potential falsification. Is that OK with you?

 

[danielk]

I completely understand that! - As long the Dollars don't come back to the US.
As long the Dollars are in foreign hands - no matter where - the dollars value wouldn't sink. Do you understand that?

No. What gives you this strange idea? Dump a commodity on the market and its price will go down. Supply and demand.

 

[Oliver]

Yes, except that "Is that OK with you?" is not part of the prediction.

Read my posts. I already answered this:

So if the US does not invade Iran before, say, the end of this decade, your hypothesis is toast. Of course if the US does invade it does not necessarily follow that your hypothesis is correct. It would, however, gain in credibility since it survived a potential falsification. Is that OK with you?

Your prediction lacks. You forgot that America already lost a lot of sympathy.
To invade Iran would be a major "vertrauensbruch [eng?]". That's indeed a major hurdle, isn't it?

I thought you have a better comprehension regarding foreign politics. And this isn't meant as a "Beleidigung (Insult)".

 

[Grammatron]

I completely understand that! - As long the Dollars don't come back to the US.
As long the Dollars are in foreign hands - no matter where - the dollars value wouldn't sink. Do you understand that?

That makes very little to no sense.

You would want dollars for 2 reasons:

1) Because you are or anticipating doing business with US and they accept only US dollars as the currency.

2) Because you want to do business on the black market where US has the dubious honor of being the de facto currency.

Those are the same reasons why you would not have dollars in your wallet when going shopping for groceries in Germany.

 

[Oliver]

No. What gives you this strange idea? Dump a commodity on the market and its price will go down. Supply and demand.

That's not how it works. As long the Dollars are in foreign Hands - and please explain to me why it matters if these are Chinese or Fidschi-Hands - the Dollars value doesn't change because it's foreign owner.

And I don't know why that is - it simply is this way according to what I've read so far. Sorry, since I didn't bookmarked all I've read so far, I can't point to sources spontaneously.

 

[Grammatron]

Your prediction lacks. You forgot that America already lost a lot of sympathy.
To invade Iran would be a major "vertrauensbruch [eng?]". That's indeed a major hurdle, isn't it?

I thought you have a better comprehension regarding foreign politics. And this isn't meant as a "Beleidigung (Insult)".

So let me see if I have your argument so far:

US is destabilizing its ties with Iran so it will be angry and in turn switch to petro-Euros to hurt US which then US will use as excuse to invade Iran to force them to switch to petro-dollars. Only US can not do this because it lost a lot of sympathy when it invaded Iraq for the same reasons.

Let me know if I missed something.