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What About The Dollar: Russia, Iran Announce $20 Billion Oil-For-Goods Deal
Spot what is missing in the just blasted headline from Bloomberg:
- IRAN, RUSSIA SAID TO SEAL $20B OIL-FOR-GOODS DEAL: REUTERS
If you said the complete absence of US Dollars anywhere in the funds flow you are correct. Which is precisely what we have been warning would happen the more the West and/or JPMorgan pushed Russia into a USD-free corner.
Once again, from our yesterday comment on the JPM Russian blockade: "what JPM may have just done is launch a preemptive strike which would have the equivalent culmination of a SWIFT blockade of Russia, the same way Iran was neutralized from the Petrodollar and was promptly forced to begin transacting in Rubles, Yuan and, of course, gold in exchange for goods and services either imported or exported. One wonders: is JPM truly that intent in preserving its "pristine" reputation of not transacting with "evil Russians", that it will gladly light the fuse that takes away Russia's choice whether or not to depart the petrodollar voluntarily, and makes it a compulsory outcome, which incidentally will merely accelerate the formalization of the Eurasian axis of China, Russia and India?"
In other words, Russia seems perfectly happy to telegraph that it is just as willing to use barter (and "heaven forbid" gold) and shortly other "regional" currencies, as it is to use the US Dollar, hardly the intended outcome of the western blocakde, which appears to have just backfired and further impacted the untouchable status of the Petrodollar.
More from Reuters:
Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.
In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.
The White House has said such a deal would raise "serious concerns" and would be inconsistent with the nuclear talks between world powers and Iran.
A Russian source said Moscow had "prepared all documents from its side", adding that completion of a deal was awaiting agreement on what oil price to lock in.
The source said the two sides were looking at a barter arrangement that would see Iranian oil being exchanged for industrial goods including metals and food, but said there was no military equipment involved. The source added that the deal was expected to reach $15 to $20 billion in total and would be done in stages with an initial $6 billion to $8 billion tranche.
The Iranian and Russian governments declined to comment.
Two separate Iranian officials also said the deal was valued at $20 billion. One of the Iranian officials said it would involve exports of around 500,000 barrels a day for two to three years.
"Iran can swap around 300,000 barrels per day via the Caspian Sea and the rest from the (Middle East) Gulf, possibly Bandar Abbas port," one of the Iranian officials said, referring to one of Iran's top oil terminals.
"The price (under negotiation) is lower than the international oil price, but not much, and there are few options. But in general, a few dollars lower than the market price."
Surely an "expert assessment" is in order:
"The deal would ease further pressure on Iran's battered energy sector and at least partially restore Iran's access to oil customers with Russian help," said Mark Dubowitz of Foundation for Defense of Democracies, a U.S. think-tank.
"If Washington can't stop this deal, it could serve as a signal to other countries that the United States won't risk major diplomatic disputes at the expense of the sanctions regime," he added.
You don't say: another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.
Also, when did the "Foundation for Defense of Petrodollar" have the last word replaced with "Democracies"?
Finally, those curious what may happen next, only not to Iran but to Russia, are encouraged to read "From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran's Access To Gold."
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This deal gives our friends in Russia control of even more oil - to be distributed or sold to whomever THEY choose. Now about those EU sanctions...
While there has been theoretical speculation that the U.S. dollar (and perhaps Treasury Bonds as 'flight to quality" instruments) allow as much as one percent advantage over the remaining world currencies/bonds its not clear exactly what happens if the dollar becomes the not dominant currency or is possibly one of two currencies for their two respective world 'economic systems.'
With a group of countries moving away from the dollar to their grouping as an economy in contrast to a grouping around the dollar -- does this truly lead the two groups not interacting with each other economically?-is that possible? WIll there really be no point of contact between two such economic groups on one world globe? Who can say if this would be good or bad for either?
I suppose losing the full %1 advantage would be a loss for the U.S. but who can guess what separation economically from China and Russia would actually mean? Perhaps it would be a good thing for the U.S. not to be involved with China since its economic interaction with China drives CHina's economic rise and instead cutting China off economically would leave it without a significant portion of consumers of CHinese goods and stall or stop its growth. Europe and the rest of the world are in no position to finance China by exploiting and betraying their European workers by exporting production to China for cheap labor because Europe already has unhappy workers and basically along with most of the rest of the world is relatively broke already.
It all makes one wonder doesn't it?
Hey, we gave China all of our technology and manufacturing. They make the iphone, they make the engines for your car and the chip that runs it. They don't need the US, they own the US and we don't want to acknowledge that fact.
So dream on you exceptionalist losers, you exported your chance for survival decades ago.
As to JPMorgan. The simplest guess at an explanation of their apparent sort of pre-emptive action is that someone told them to do it; someone in the government called in a favor.
JPMorgan doesn't think or care about these political matters they just try to make money. And cutting off some Russian's money was probably easier than having to explain why they didn't later.
In the amoral world of banking all that matters is expediency in matters of profit and loss.
Lets not personify banks but instead seek out those bankers committing actual crimes of breaking laws and perhaps enter a new realm where they are shown to be committing moral crimes and disservice to their respective countries - if they have a country or not.
The US and EU consume more than they produce. The US has become dependent on the reserve currency rake. The EU is dependent on their buccaneer banking. The EU banks are into every crooked, crappy, speculative deal on the planet. They are more exposed than the US and Japan banks combined. So although the reserve currency rake is cost for them, it is a necessary cost. They need the status quo maintained. That requires the US military and influence. When instability arises they are dependent on the US Fed and/or US participation in the IMF for backstopping.
This is the underlying driver behind western policies towards Russia, MENA, etc. Controlling as much resources and as many markets as possible isn't just part of the equation anymore, it's paramount. It's way, way more important than during the Cold War.
We lost China. Ho hum. We lost Vietnam and Cambodia. Big whoop.
Funny thing about success, about winning, life. All those myriad morality tales and plays and here we are down the imperial rabbit hole.
I am becoming moar and moar convinced the Bath House Regime is doing this* on purpose
To Kill the Dollar
*foreign 'policy'
Sometimes it looks that way.
But who is in the shadows pulling the levers? And why?
Do these people have an alternative ready to go?
Bought, paid for, and done. All that White House/bankster sound and fury was the the show so that OB and his puppetmasters can point at, and blame, Russia/Putin for collapse of petro$.
Putin's gotta do what Putin's gotta do!
Good for Iran and Russia. What the fuck business is it of "ours" not that DC represents my interests in anything that it does. Let a 1000 flowers bloom. Free market, may the best freely chosen currency/economic policy win --- sans secret spying, corporate espionage, and threat of military force. Whatever the case, I am against any uni-polar hegemon.
I'll trade Putin every US politician and every soldier that wants to get in the way for goods.
Don't fault the soldiers. They're just following orders because that's their job and they're getting a nasty pay cut. But yes, we can trade our politicians for Putin anyday. Putin has friendlier environments to businesses.
Ahem... a 15M oz t Au deal...
And now you have your answer. These people are really that fucking stupid.
Liberty2012 I've noticed that sometimes can't vote for comments either. ?
I don't think we are going to make it to the end of bath House Barry's 2nd term. Billy Jeff set our house on fire... Bush the Dumber poured gas on the flames... Bad BO is a friggin' napalm bomb. Greenspan and Bernank emptied the fire extinguishers.
Your allegory is tops, sir.
Spot on.
Only thing I'd change: Billy Jeff to Slick Willy
So... to rhyme with history we go from Tiberius to Nero.
To push the analogy what rhymes with Tiberius : scabious, odious, delirious, vainglorious.
What rhymes with Nero : zero, euro, weirdo, pharoah.
How long did you search for Ugly Angry Faced Putin?
It's amazing how many articles start from the position that you are in the least bit in agreement with the premise.
We're NOT!
And in the other news:
Vladimir Putin instructed to establish Russia's national payment system within a month. (Google Translation)
If you can, stock up on fuel, food, drink, meds and supplies when they're on sale. Hide them from looters and the food police.
The sale is ending. If you're not buying canned goods by the 24 can case, you're not really stocking up. Someday those 100 can cases of sardines are going to feed me and make a hell of a good barter item.
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2...
Yes, GAME OVER! bye bye Petrodollar......Hello inflation in the US. Its going to come like a Tsunami (people need to stack to get out of arms way thx to the US Fed and its crooks).
Good add! Inflation in hidden areas not covered in "Core" inflation stats like FOOD has already begun. Hamburger in fall 2008 was $1.29 now $3.50 do the math. See if it equals stated rates of inflation. The dollars purchasing power is affected by this.
I beg your pardon Tyler, but i guess Russia won't use that oil for consumption but rather sell it outside. In case China acts as a buyer the deal might take place without dollars, but unless Russia finaly starts selling natural gas/oil for rubles, those barrels worth $20 bln have a great chance to be sold for USD
Decisions to trade away from the dollar have been ongoing for some time. The BRIC countries have agreements to trade with each other in their currency. China's "Official Press" came out some months ago decrying continued use of the US dollars as a reserve currency. The IMF added two new reserve currencies to their short list. China and Japan sold back for the first time treasury securities not matured. All signs of unrest for the dollar.
And why not?
And boom goes the dynamite. Russia buying USD it doesn't need to buy oil from Iran, which now has USD it doesn't need is just stupid. Barter trade is just about the only thing that actually makes sense, swapping one surplus for a desired good. No money need change hands internationally. Funny, how this probably doesn't boost "GDP" of course, that wonderfully retarded metric which is all fake anyways.
Even somebody that only has a "grade2 education" knows the basics of how vulnerable the U.S. Dollar has become.Tyler has done an excellent job of explaining the recycling of Dollars and now all foreign governments understand that U.S, military debt along with skyrocketing deficits can only exist if the present system continues.The Obama administration is bragging about how the current budget deficit is shrinking,however it is just a minor smokescreen.From what I understand the U.S. Dollar system becomes more vulnerable when world trade is done currency to currency which strengthens direct trade and purchasing poer parity without devalueing against the Dollar which makes even minor currencies becoming more legitimate.That's how simple it is,just trade in another systen besides SWIFT.It's not rocket science to know that U.S. government debt is the problem.It can only go on as long as foreigners keep financing the debt.That's why you see Central Banks playing it safe and buying gold as well.It's a hedge against corruption.I've always said that morons at the Pentagon don't understand that it's become an economic war.The longer that socialism can encourage the neocons of the right wing element to continue the belief that the U.S. must be the world's policeman and try to dominate foreign countries,you'll see debt keep expanding which contributes to the vulnerability of U.S. society.Translated,it also means less money for social programs,education and needed infrastructure to revitalize the local economies at the State level.The States understand this and now we see the 34th State sign on to change the Constitution.We'll see more spying to discredit local officials in response to change.