Jim Willie CB, "Death of the Petro-Dollar"
"Death of the Petro-Dollar"by Jim Willie CB
"The story hit like a thief in the night, even bearing Biblical proportions. The end of the exlusive sale of MidEast oil in USDollars, the rise of Russian and Chinese influence in the Persian Gulf, the rise in importance for the Intl Monetary Fund basket of currencies, the final clarion call for the free ride by Americans on the Dollar Credit Card, and hidden implications that the Saudis must shop for a new security lord in the region with broad military might, these are revolutionary steps with profound geopolitical implications. The back-to-back stories in the UK Independent struck like powerful bolts of lightning in the middle of the night from a North American perspective. These articles by a highly respected journalist will be posted on the Banker Church Doors just like Martin Luther's demands for change in the Protestant Reformation that smashed the monopolistic power of the Catholic Church centuries ago. Enough of the mixed metaphors. This is truly incredible news. The US will soon no longer be permitted to sell its indulgences. This is major Paradigm Shift material.
This is the biggest story on the USDollar in decades, sure to further develop. This is the biggest financial story since Lehman Brothers was eliminated, since AIG was hidden under the USGovt roof, and since Fannie Mae fraud was shoved in the USGovt basement, one year ago. To say this is not orchestrated by China is professed ignorance. They warned the US not to monetize the federal debt. We did. They warned the US not to reappoint Bernanke as USFed Chairman. We did. Next is transformation with consequences. A new important alliance has formed, which does not involve the United States and Great Britain in decisions. Their nations will drift in isolation. The great majority cannot comprehend or envision such change. Give them time. The most visible changes will come with the value of Gold & Silver, and the demoted USDollar exchange rate. Foreigners were welcomed for their purchase of our vast rafts of debt, but next comes impact from debt failure.
When one combines the 0% US interest rate feeder system that shreds the USDollar with leveraged machinery designed by Wall Street itself, with the US$ rejection heralded by the Saudis side by side with their numerous global customers, the conclusion is easy. That is, easy except to the biased bankers who continue to occupy the corridors of finance on Wall Street. The conclusion is the death of the USDollar is written in stone, and a USTreasury default lies down the road. If you believe the 8-9 year timeframe cited by Fisk and denied by the Saudis, then you believe in fairy tales. This timetable is much more palatable to sell to the US/UK maestros, much less threatening in words for a total disruption with overturned tables. The timing of the transition away from the Petro-Dollar will not be 8-9 years, not in this world. The rapidly decaying financial platforms and structures will dictate a much more rapid timetable. Within a year, the Saudis with Russians and Chinese on each arm, will announce the further degradation and deterioration of the US and UK banks, if not entire financial system, dictate an accelerated timetable, more like 2-3 years. It will still seem like Chinese Water Torture into a golden barrel with silver lining, as the dollar typed water turns acidic.
By the way, the World Economic Forum Report just released their list of the most stable nations financially. They ranked the US & UK at #37 and #38. They give the maestros who manage their colossal busts far too much credit. A first hand inspection would reveal far more prevalent devastation and ruin.
The end of the de-facto standard carries enormous consequences. Two structural pillars have kept the USDollar in its primal position. Banking sysetms across the world are built around the USTreasury Bond reserves storage and management. Purchase & Sale of petroleum is conducted in US$ terms for almost all transactions globally. The former has been under attack for several months, as diversification of reserves is the theme. The latter will next be under attack for a couple years, as abandonment is the theme. Few seem to acknowledge the 'Other Side' to the Petro-Dollar de-facto standard. Sure, Saudis led the entire OPEC to price and sell crude oil in US$ terms. But the other side to the deal has been military protection for the Saudis, but also the Persian Gulf nations generally. The ravaging of Iraq can be seen as example of such protection. The Saudis must soft soap and tap dance in denials, so as to avoid a sinister attack of their nation. A Chinese banker has a great quote cited by Fisk in his article. He said, "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate." Or possibly the shattering noise from its total avoidance!!
Russia is the quiet new player. They are often dismissed by the unaware US legions as a broken nation, as they cite autocrat leaders, with great resources to be sure, but with such frequent breach of contract in Western property confiscation (see Royal Dutch Shell, British Petroleum) that partnership seems unlikely for development with the vast engineering expertise offered by Western firms. When the dust clears in the next couple years, Russia will emerge in three key respects. 1) Russia will be the military protector to both sides in the Persian Gulf, both Arab and Iranian. 2) Russia will be the major commodity super market supplier to Europe, both energy and metals. 3) Russia will surprisingly present new financial systems to shock the West, in the form of barter systems, in the form of reliable commodity contract systems, in the form of precious metal vault facilities.
If there is one quintessential error made by the West generally and uniformly in the geopolitical shakeup extending from the Paradigm Shift away from the USDollar, it is the perception of Russia in the next chapter. They will provide tremendous follow-through for the Chinese spearhead to unseat and de-throne the USDollar. With Chinese shiny new industry, Chinese emerging consumer class, Russian commodity supermarkets, and Russian military presence, the face of the globe will change significantly, to the surprise of the compromised and failing US/UK former titans. The main question is how peacefully the fascists pass the baton of power to the East. Watch the hidden murder of bankers for clues.
The falling USDollar that comes in the next several months will lift the entire cost structure to the USEconomy, further hampering the mythical recovery. Talk of export trade vitalization is just that, all talk. Domestic producers and banks are being squeezed, as the production supply capacity will shrink, economists all the while oblivious. See the fateful car industry and its supply chain. See the technology industry and its further shift to Asia. See the tragic collapse of California. See the inevitable liquidation of commercial property, from foreclosure and impossible mortgage refinance in rollover. See the unwise USCongress tax hikes to small business. See the cowardly FDIC fee hike (14-fold in two years) to banks. On the other side of oceans, foreign customers are hurting. The big story from the USDollar impact will be rising higher costs throughout the US lands, where incomes will continue to fall. It is called a cost squeeze.
The broad list of nations involved in the secret talks testifies to two important factors. They do not wish to include the US/UK. The list of Russia, China, Japan, and France pretty much covers the important regions of the world. These factors testify to the further isolation of the US/UK, which bear rising risk of entry into the Third World in a forced march. The British will be forced eventually to abandon the British Pound and join the Euro.
The financial trade war forecasted by the Jackass in 2005 and 2006 between the United States and China is finally here in fever pitch. The departure and dismantle of the Petro-Dollar standard will usher in a more dangerous phase of that trade war, one to include a battle of the crude oil in the Middle East region. The US leaders have been so pre-occupied with adventures in foreign lands, that they have lost sight of the US isolation in its own hemisphere. See the missing $50 billion from the Iraqi Reconstruction Fund that nobody is even searching for. See the Chinese deals to capture new Athabasca oil sand output from Western Canada. See the upcoming halt of Venezuelan oil shipped to the US. See the new Chinese protectors of the Panama Canal. See the depletion of Mexican oil deposits and rapid deterioration into a failed state. By the way, another motive for the Iraq War liberation was to disconnect (illegally of course) China from its oil product concessions with Saddam, that are in the process of reversal and remedy. The USGovt foreign policy does not remotely have citizen interests in mind.
The unavoidable truth is that the major global currencies are in a long process of destruction, as central banks continue their debauchery with ultra-low interest rates to salvage their insolvent banks and provide constant stimulus for moribund economies. The global monetary system is in a long process of crumbling, as the USDollar undergoes a long process of abandonment. The urgent message is clear. The first nations to discard the USDollar and embrace even an IMF global currency basket, will emerge as the next leaders. The basket is a Straw Man transition device toward global gold-backed currencies, of which there will be at least three eventually."
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