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China And Iran To Bypass Dollar, Plan Oil Barter System, And A Deeper Dive Into The Iranian Oil Bourse

Tyler Durden's picture




 

One of the more notable events in the past week was the previously discussed reopening of the Iranian Oil Bourse, an attempt by Iran to launch a venue that bypasses US sanctions against Iran which has prevented payment in the world's reserve currency for Iranian goods. "Big deal", some will say, this is not the first time Iran has attempt to upstage the Great Satan. Well, true, although as OilPrice said last week, "what it would take for Iran’s new exchange to survive and flourish are some heavy-duty customers that Washington would be wary of picking a fight with, and Tehran already has one – China... China, the world's largest buyer of Iranian crude oil, has renewed its annual import pacts for 2011. In 2010 Iran supplied about 12 percent of China's total crude imports. According to the latest report of the China Customs Organization, Iran's total oil exports to China stood at 8.549 million tons between January and April 2011, up 32 percent compared with the same period last year. Iran is currently China's third largest supplier of crude oil, providing China with nearly one million barrels per day." Still, the perceived provocation to Uncle Sam should China go ahead and slap America in the face by accepting the existence of the Kish exchange, would echo around the world. Which is why many don't think much if anything will happen. Until today, that is: according to the FT, China has decided to commence an barter system in which Iranian oil is exchanged directly for Chinese exports. The net result: not only a slap for the US Dollar, but implicitly for all fiat intermediaries, as Iran and China are about to prove that when it comes to exchanging hard resources for critical Chinese goods and services, the world's so called reserve currency is completely irrelevant. The implications of this are momentous, especially for US debt, whose indomitability is only predicated upon the continued acceptance of the currency it backs as a global reserve. If China is now openly admitting to the world that it does not need US monetary intermediation, and by implication, the "debt" backing said intermediation, what then? And who will follow China next?

From the FT:

Tehran and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20bn for oil imports.

The US sanctions against Iran, which make it extremely difficult to conduct dollar-denominated business, mean that China could owe the oil-rich nation as much as $30bn, according to people familiar with the problem.

They said the unpaid oil bills had built up over the past two years and the governments, which are in early-stage talks, were looking at how to “offset” the debt.

Some Iranian officials are growing increasingly angry about the inability of the country’s largest oil customers to pay cash, a problem that has contributed to a shortage of hard currency and has hindered the central bank from defending the Iranian rial, which has been sharply devalued over the past month.

China and India together buy about one-third of Iran’s oil, the country’s economic lifeblood. China’s oil imports from Iran have risen 49 per cent this year, according to Reuters.

While Iran can do without India, it needs China:

Iran last week threatened to cut off oil exports to India, which owes $5bn for oil but has not been able to move the money out of an escrow account to Tehran.

Unlike India, which exports almost nothing to Iran, China is dominant in Iranian business and could use a barter system to balance trade between the two countries. Beijing is involved in everything from building tunnels to exporting toys and has been expanding into Iran’s oil sector, where European companies such as Shell and Total have been deterred by the difficulties of operating without contravening sanctions.

China and Iran’s bilateral trade totaled $29.3bn last year, up almost 40 per cent from 2009. The two countries this month signed several infrastructure and trade collaboration agreements that would see Chinese companies invest in big infrastructure projects in Iran, while Iran would export large quantities of chrome ore to China, according to local reports.

“Both China and India are happy to keep Iran’s money in their banks and try to get Iran involved in barter deals to sell their junk, or give yuan and rupees instead of hard currencies,” said one Iranian former official, on condition of anonymity. Iran had not yet accepted the alternatives, he added.

While Iran would have very little use for a non-convertible Yuan (for now), direct barter is something that will be far more useful to the resource-rich country. Yet, as Isaac Newton once cautioned, "in order to measure, you must define your unit." What will China and Iran agree on as the unit of exchange, if not monetary intermediate, especially in those cases when there is no preset barter agreement?

If said neutral monetary "hard asset" ends up being a precious metal, look out US Dollar.

And for those curious to learn some more about the Iranian Oil Bourse, here is Grant Williams with his latest "Things that make you go hmmm."

Hmmm Jul 23 2011

 

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Sun, 07/24/2011 - 15:02 | 1487916 camoes
camoes's picture

Go east, bitchez

Sun, 07/24/2011 - 15:59 | 1488142 narapoiddyslexia
narapoiddyslexia's picture

This isn't exactly the doomsday scenario its painted to be above. If you read the FT article, the Iranians are not delerious about the trade deal with China. Here is what one Iranian official was quoted as saying, in the FT article -

“Both China and India are happy to keep Iran’s money in their banks and try to get Iran involved in barter deals to sell their junk, or give yuan and rupees instead of hard currencies,” said one Iranian former official, on condition of anonymity. Iran had not yet accepted the alternatives, he added."

So the deal does not appear to even be done, yet. And even if it is, its a big disappointment for Iran. Why not get gold for oil?

'Cause no one will make that particular trade...

Sun, 07/24/2011 - 16:10 | 1488196 magpie
magpie's picture

Like that "sell their junk" bit.

Commodity exporters hold the cards for the rest of the century, i'm afraid.

Sun, 07/24/2011 - 16:15 | 1488220 TaxSlave
TaxSlave's picture

In which the traders re-discover that money evolved to overcome the inconvenience of barter.

Only the inconvenience of paper money could be more inconvenient than barter.

Sun, 07/24/2011 - 16:21 | 1488256 AldousHuxley
AldousHuxley's picture

Pirates and Emperors (from SchoolHouse Rock makers of How a Bill becomes a law) http://www.youtube.com/watch?v=mEO3RWnHb4E&feature=related

Sun, 07/24/2011 - 16:24 | 1488277 magpie
magpie's picture

Yes, but only depending on bilateral deals gets you into the poor house, a point even the Iranians understand.

Sun, 07/24/2011 - 18:20 | 1488756 Paladin en passant
Paladin en passant's picture

Correctomundo...what fool country would the Iranians trade their Chinese crap to in order to purchase goods their people actually want and can afford?  China's already sold that same crap to Iran's potential buyers.  I smell desperation in Terhan, the desperation of those ignorant of econ 101.

Sun, 07/24/2011 - 15:04 | 1487918 Doyle Hargraves
Doyle Hargraves's picture

 

We r no letting u not use our dollar.

expect our bombs to fall soon.

signed ur masters...

Sun, 07/24/2011 - 15:02 | 1487919 zorba THE GREEK
zorba THE GREEK's picture

I don't blame them. I have been bypassing the dollar for 11 years now using gold and silver. 

Sun, 07/24/2011 - 15:04 | 1487929 reader2010
reader2010's picture

Beijing has fired its first shot at Uncle Sam. The WWIII has already started quietly.

Sun, 07/24/2011 - 15:24 | 1487999 HamyWanger
HamyWanger's picture

Lol, what would the Chinese do? They are - simply put - poor and weak. 

In America, we have a very high-IQ (120+) and healthy population, solid principles and motivations, an incredibly strong economy (despite what all the doomers say), and high-grade equipment and technology. 

WWIII, if it happens, will only result in the complete annihilation of the Yellows.

Sun, 07/24/2011 - 15:28 | 1488026 Lord Welligton
Lord Welligton's picture

Must do better Hamy.

Sun, 07/24/2011 - 15:42 | 1488081 trampstamp
trampstamp's picture

All in due time Lord.

Sun, 07/24/2011 - 15:35 | 1488042 Bastiat
Bastiat's picture

"we have a very high-IQ (120+) and healthy population"

 

. . .and all the children are above average.

Sun, 07/24/2011 - 15:38 | 1488061 Kali
Kali's picture

Above average in obesity.  What is the military rejecting due to obesity again?  35%.  Don't even get me started on IQ.  American Exceptionalism?  Exceptionally stupid.

Sun, 07/24/2011 - 15:39 | 1488065 infinity8
infinity8's picture

Hahahahhahaa. . . yes! and they can all be whatever they want. . . brain surgeon, reality TV star - dare to dream brilliant babies!

Mon, 07/25/2011 - 13:43 | 1491136 Doyle Hargraves
Doyle Hargraves's picture

 

Yeah anything they want, BWAHAHAHAHA

http://www.youtube.com/watch?v=u8yoSAiwY18&feature=related

 

Sun, 07/24/2011 - 15:39 | 1488066 francis_sawyer
francis_sawyer's picture

recalculating... recalculating...

IQ now 119.9 (after that comment)...

 

Sun, 07/24/2011 - 15:43 | 1488082 malikai
malikai's picture

Glad to see you back Hamy. Don't worry, they'll figure out how to junk you soon enough.

Sun, 07/24/2011 - 15:50 | 1488102 IAmNotMark
IAmNotMark's picture

"solid principles and motivations"

I used to think that but I look at the crooks and shysters that are running and ruining our country and I no longer believe that is true. 

I think that almost every U.S. politician today would sell their mother, destroy the constitution, kill a million Iraqis, kill a billion asians...all to get re-elected.

Sun, 07/24/2011 - 16:07 | 1488183 cosmictrainwreck
cosmictrainwreck's picture

Hamy....muh Maaan! where you been?

Sun, 07/24/2011 - 17:17 | 1488486 SheepDog-One
SheepDog-One's picture

LOL Hamy good one! So funny.

Sun, 07/24/2011 - 17:31 | 1488552 reader2010
reader2010's picture

Illusions. 

Mon, 07/25/2011 - 00:00 | 1489703 Dugald
Dugald's picture
  • What the hell are you smoking cobber?....
Mon, 07/25/2011 - 02:01 | 1489849 Lord Koos
Lord Koos's picture

Hamy, let us know when you come down from the crack you've been smoking.  

Mon, 07/25/2011 - 11:44 | 1490665 matrix2012
matrix2012's picture

 

just woke up from a long hibernation :D duh world, so chaotic it's now... better get back to a long sleep again :)

 

 

 

Sun, 07/24/2011 - 15:55 | 1488129 Djirk
Djirk's picture

I think the dollar issue is secondary, this is China saying fuck your embargoes, we are going to trade and support Iran. US driving global policy is now officially over.

The US embargoes on Iran are like swiss cheese, over 10,000 special permits have been issued to US companies to do biz there. Biggest US export to Iran is tobacco, chemical warfare.

Sun, 07/24/2011 - 16:18 | 1488237 Hearst
Hearst's picture

"And who will follow China next?"  Definetely Russia..

Sun, 07/24/2011 - 16:38 | 1488331 Djirk
Djirk's picture

senor Chavez too

Sun, 07/24/2011 - 15:04 | 1487930 Cognitive Dissonance
Cognitive Dissonance's picture

20 years from today this span of time, from 2007 to 2017 will be seen as the time when America came apart at the seams. And not quietly either.

Sun, 07/24/2011 - 15:27 | 1488021 Landrew
Landrew's picture

CD, I believe this decade of 07/17 will be noted as well. The global connected failures being propped up killing one of the most important cores of capitalism (failed business fails) will be the number one topic of economic classes and the primary driver in the creation of a different type of economic system based on something like thermodynamics.

Sun, 07/24/2011 - 15:37 | 1488053 RockyRacoon
RockyRacoon's picture

You are wise enough, CD, for me to trust your opinion.

I'm preparing accordingly.

As for the upcoming debt ceiling default, bring that sucker on.

Per Ron Paul's comment in the article:  We've defaulted 3 times in the past.

One more might be the charm?

Sun, 07/24/2011 - 15:05 | 1487933 DeadFred
DeadFred's picture

China is poised and in need of making a big power play. This could be part of it. Don't bet much based on the assumption China won't want to alienate the US.

Sun, 07/24/2011 - 18:22 | 1488765 New_Meat
New_Meat's picture

Dead: you bet that PRC is "poised and in need".  But consider TPMB http://thomaspmbarnett.com/

- Ned

Sun, 07/24/2011 - 15:06 | 1487936 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Yes, big big news.  Iraq tried this and was invaded.  Will the same fate hold for Iran?  Who knows?  Not good news for the dollar as you so eloquently, as usual, described.

Tuco Benedicto Pacifico Juan Maria Ramirez

Sun, 07/24/2011 - 17:14 | 1488472 sun tzu
sun tzu's picture

There aren't any troops left to invade Iran unless we reinstate the draft. Imagine trying to draft a bunch of inner city gangbanger to go to the desert and die. HAHAHA

Sun, 07/24/2011 - 17:41 | 1488582 irishlink
irishlink's picture

yea . Join  the dots and we now can see why so many are concerned with an Israeli move on Iran. The USA / Israel special relationship works both ways.

Sun, 07/24/2011 - 18:03 | 1488667 goldfish1
goldfish1's picture

Iran is not Iraq.

Sun, 07/24/2011 - 15:08 | 1487939 TideFighter
TideFighter's picture

Every time I pass a WalMart, I bi-pass China. My curiousity about what the markets are going to do tonight is killin' me. I snicker and think many ZH's are in the same boat. ZH is a great place to go when a storm is about to hit; best weather reports anywhere. 

Sun, 07/24/2011 - 15:44 | 1488084 trampstamp
trampstamp's picture

Not sure if you all have noticed, but Wamlart is starting to cary US made products. I guess underwear and socks is a start.

Sun, 07/24/2011 - 15:48 | 1488096 delacroix
delacroix's picture

food too

Sun, 07/24/2011 - 15:48 | 1488097 francis_sawyer
francis_sawyer's picture

underwear?

I'm guessing 'depends' would help their ebitda more...

Short WAL-MART...

Sun, 07/24/2011 - 17:16 | 1488480 sun tzu
sun tzu's picture

How about Target and Best Buy? Everything is made in China.

Sun, 07/24/2011 - 15:10 | 1487949 ciscokid
ciscokid's picture

He who holds the biggest stick rules.

Sun, 07/24/2011 - 15:13 | 1487957 snowball777
snowball777's picture

Only if he can swing it.

Sun, 07/24/2011 - 15:11 | 1487950 HungrySeagull
HungrySeagull's picture

We have our Artic/Canada Resources along with Shale in the middle of the USA as well as Coastal.

Iran is not going to be allowed to enrich at our expense. Russia will do well to reposition to become a major supplier to Europe off HER Artic resources.

Sun, 07/24/2011 - 15:24 | 1488002 anonnn
anonnn's picture

And then there's Denmark...Who knows what magnitudes of  resources lay under the Greenland ice?

At some point, exploration becomes feasible, folowed by development. Technology and desperation will combine at some point , probably as the desire to survive exposes the limits of profit-motive.

Sun, 07/24/2011 - 15:37 | 1488054 Negro Primero
Negro Primero's picture

...don't worry!

 

 


 


 

 

Sun, 07/24/2011 - 15:42 | 1488078 HungrySeagull
HungrySeagull's picture

I am well aware of the USSR Ambition to take the entire top of the artic.

We might have to fight Russia for it someday.

Sun, 07/24/2011 - 15:53 | 1488112 francis_sawyer
francis_sawyer's picture

Yeah right... The fucking 'community organizer' renting the WH digs can't even keep the Chinese from drilling (laterally) for oil in Cuba...

Fuck me - he can't even close GITMO... (which is probably - instead - being prepared as the GULAG for ZH'ers)...

 

Sun, 07/24/2011 - 16:10 | 1488195 cosmictrainwreck
cosmictrainwreck's picture

sneak attacks ! (bitchez)

Sun, 07/24/2011 - 15:41 | 1488074 Landrew
Landrew's picture

Everything you mention is over 100$+ oil which we know from experience is very painful. Even Canada doesn' make money with their synthetic crude when oil falls under 90$ a barrel.

Sun, 07/24/2011 - 16:14 | 1488218 Urban Redneck
Urban Redneck's picture

USD 100 isn't what it used to be.  Thanks to the FOMC there are significantly more foreigners who can now afford it.  The middle class in the USA, not so much, but they can always sacrifice the outsized percentage of global production they consume, for the benefit of the foreigner consumers who can now afford it. 

Sun, 07/24/2011 - 16:25 | 1488280 Kayman
Kayman's picture

 Landrew

And what pray tell is the cost of Mideast Oil ?  Over $200 / barrel

Add in the cost of the wars and ongoing "protection" of the Arab dictators and Israel Welfare and Mideast Oil is far more costly than any North American oil.

Sun, 07/24/2011 - 21:13 | 1489289 57-71
57-71's picture

Bull, as an employee in oil I know the spread.

Less than $35.00 is unit cost.

Mon, 07/25/2011 - 00:16 | 1489714 GoinFawr
GoinFawr's picture

Suncor? ~35/bbl was my understanding too, and it's been good to me. Heh, I bet those Albertanians are sure glad ol' steady Eddy clawed back the royalty regime to one of the worst deals on the planet (depending on your perspective). Most expensive place to fill up your vehicle in Albertia: 20 km from where they pull it out of the ground... What'ya figure, gonna keep him in the upcoming leadership race?

Sun, 07/24/2011 - 15:12 | 1487952 Sudden Debt
Sudden Debt's picture

If China reaches a deal with mongolia for resources, the shit will really hit the fan.

This Iran deal isn't that big for now. What will be bigger is if other oil countries join Iran.

Sun, 07/24/2011 - 15:45 | 1488089 trampstamp
trampstamp's picture

I think Iran will finally meet the new and improved Jackles.

Sun, 07/24/2011 - 15:12 | 1487953 cossack55
cossack55's picture

"and who will follow China next?" Anyone with either a brain or common sense.

Sun, 07/24/2011 - 15:12 | 1487956 PaperBear
PaperBear's picture

HOLY S**T !! The petro dollar standard that has been in place since the 1970s is beginning to unravel.

Sun, 07/24/2011 - 15:14 | 1487960 HungrySeagull
HungrySeagull's picture

It's been dead since the Oil Embargo.

Hell the Sour Crude from Saudi is not really emissions refinable here.

Sun, 07/24/2011 - 15:54 | 1488120 Landrew
Landrew's picture

I think you may be one of the very few who knows this. Very few people outside the refining industry know this including O'Bummer and a man I very much respect DOE secertary Dr. Steven Chu. I am impressed:) I have a feeling you know even more that would shock most of us.

Sun, 07/24/2011 - 17:24 | 1488518 sun tzu
sun tzu's picture

What are you talking about? Valero based in San Antonio specializes in refining sour crude. They are the largest independent refiner in the US.

Mon, 07/25/2011 - 10:06 | 1490317 WellingtonDowd
WellingtonDowd's picture

More info on this?  First I'm hearing/reading...

Sun, 07/24/2011 - 15:14 | 1487963 cossack55
cossack55's picture

Yes, soon to known as the "putro dollar".

Sun, 07/24/2011 - 15:14 | 1487959 anonnn
anonnn's picture

"... US debt, whose indomitability is only predicated upon the continued acceptance of its reserve status."

Awesome choice of word...

indomitable = untamable

Sun, 07/24/2011 - 15:14 | 1487961 snowball777
snowball777's picture

Show of hands: how many feel the debt-ceiling limbo kabuki is a ploy to keep more important things like this off the radar?

Sun, 07/24/2011 - 15:15 | 1487966 cossack55
cossack55's picture

Right hand raised (towards DC, middle finger extended)

Sun, 07/24/2011 - 15:19 | 1487984 fuu
fuu's picture

Quicker to ask who thinks the debt ceiling theater is real. I am guessing the majority here feel that anything on tv is a distraction.

Sun, 07/24/2011 - 15:55 | 1488128 francis_sawyer
francis_sawyer's picture

my $$ is on the kabuki being a ploy to keep thoughts towards the kabuki off the OTHER kabuki...

But that's just me...

Sun, 07/24/2011 - 15:16 | 1487972 CrashisOptimistic
CrashisOptimistic's picture

This is likely a non event.

Iran is far, far past peak, and their domestic consumption is rising sharply.

The result: They will have less and less to export for hard currency of any sort.  They are producing less and burning more at home.  It leaves nothing to sell.

This is the future for most oil exporters, and it's a grim reality for importers.

Sun, 07/24/2011 - 15:21 | 1487980 Ignorance is bliss
Ignorance is bliss's picture

I read that Israel was planning on attacking Iran...Could be the beginnings of the next proxy war.

I didn't realize that Iran was China's 3rd largest oil supplier. I wonder if that is why the west hasn't bombed Iran before now. Bombing Iran would create a slew of unintended consequences. Everything from exasperating the energy crises to direct intervention from China to protect its major oil supplies.

I believe China and Russia already have a bilateral trade agreement that bypasses the dollar. We are a super power on the decline.

 

Sun, 07/24/2011 - 15:18 | 1487982 cossack55
cossack55's picture

The absolute best, IMHO, rendition of A Hard Rains Gonna Fall is off the Bangladesh album. Great freakin' ballad.

Sun, 07/24/2011 - 15:19 | 1487985 HamyWanger
HamyWanger's picture

This is a very serious and grave event, a clear attempt to undermine American interests (and thus democracy, human rights, freedom and justice across the world). 

How can you applaud this??? 

I know your frustration and hate over the markets constantly going higher and higher (thus confirming the global economic recovery) have evolved into a very sick hate of your own country, but don't you think enough is enough???

Sun, 07/24/2011 - 15:39 | 1488031 MethodMan
MethodMan's picture

Bait is getting a little juicier, Hamy.

Sun, 07/24/2011 - 15:38 | 1488056 Lord Welligton
Lord Welligton's picture

Better Hamy.

Need to cook it a little longer next time.

Sun, 07/24/2011 - 15:42 | 1488077 Kali
Kali's picture

LOL.   YOu can only go hmmmm, if you understand what's going on.  C'mon, Hamy at least gets us going, in jest, better than Harry ever did, in sincerity.  His bait is better tasting, less filling.

Sun, 07/24/2011 - 15:51 | 1488105 knukles
knukles's picture

How do we junk people?

Sun, 07/24/2011 - 15:53 | 1488114 Lord Welligton
Lord Welligton's picture

Can't.

This is a great loss.

 

Sun, 07/24/2011 - 15:57 | 1488137 francis_sawyer
francis_sawyer's picture

My saddest moment... Not because I was a JUNKER...

But rather that I wore my JUNKS as a badge of honor...

Sun, 07/24/2011 - 16:35 | 1488320 Kayman
Kayman's picture

francis_sawyer

 I wore my JUNKS as a badge of honor

Exactly. Aside from the Trolls and the Jew Baiters, junks were drawn by adding anything outside the norm.  I loved it.

Sun, 07/24/2011 - 16:36 | 1488324 Kali
Kali's picture

I think TD wants you to keep your junk to yourself.  : )

Sun, 07/24/2011 - 18:52 | 1488933 Lord Welligton
Lord Welligton's picture

What happened to "cut & Paste"?

WTF is going on with ZH?

Sun, 07/24/2011 - 22:53 | 1489541 Mesquite
Mesquite's picture

All "junk" now belongs to the TSA...??

Sun, 07/24/2011 - 18:49 | 1488912 Lord Welligton
Lord Welligton's picture

I'll say it again.

You can't.

Without junks this is not Fight Club.

Has ZH sold out?

Under cover of a "New Format"?

Sun, 07/24/2011 - 23:13 | 1489593 contagiousNY
contagiousNY's picture

 im for one liking it, this is better than junking. now youve got to verbalize that junk!

shine on trolls!

Mon, 07/25/2011 - 04:28 | 1489939 w a l k - a w a y
w a l k - a w a y's picture

now youve got to verbalize that junk!

Best comment of the day in my book.

Sun, 07/24/2011 - 23:41 | 1489657 Cistercian
Cistercian's picture

The whole kinder, gentler fight club sucks.Bigtime.

 

Sun, 07/24/2011 - 16:18 | 1488233 cosmictrainwreck
cosmictrainwreck's picture

I'm right behind you, Hamy [as in "you first"....]

Sun, 07/24/2011 - 16:31 | 1488300 Kayman
Kayman's picture

Uh... Harry... do you mean American Bankster interests or the American Public Interest.  The two are strangers to each other.

Sun, 07/24/2011 - 15:28 | 1487986 Chief KnocAHoma
Chief KnocAHoma's picture

Some many issues and so much tension in the system.

Reminds me of the old Jerry Clower coon hunting story -

"Just shoot up here amongst us... one of us has got to get some relief!"

I am The Chief

Sun, 07/24/2011 - 15:41 | 1488072 RockyRacoon
RockyRacoon's picture

Coon hunting?  That's not funny!  Although I do like Mr. Clower.

Sun, 07/24/2011 - 18:28 | 1488792 Chief KnocAHoma
Chief KnocAHoma's picture

LOL

Sorry Rocky... no offense, and in that particular story Mr. Clower was telling a story about Big John being in a tree and tangled up with a Bob Cat. So no Coons got it that night.

I am The Cheif

Sun, 07/24/2011 - 15:23 | 1487998 ThirdCoastSurfer
ThirdCoastSurfer's picture

Ha, ha, what a joke. How stupid is Iran?

Bartering works on a small scale of a singular good for another but not a singular good worth $100 million a day for a boat load of tainted toothpaste, lead toys and fowled sheetrock.

When Iran finally figures it out they'll find out their "exchanging" their oil for $26 a barrel. 

Sun, 07/24/2011 - 15:42 | 1488079 RockyRacoon
RockyRacoon's picture

They make sheetrock outta chickens?

Sun, 07/24/2011 - 16:37 | 1488329 Kayman
Kayman's picture

RockyRacoo

Only sulphur fed chickens.

Sun, 07/24/2011 - 16:23 | 1488276 Urban Redneck
Urban Redneck's picture

Oil for food worked so well for the USSR and Iraq that the TBTB copied it for the private sector.  MIC has doing arms for commodities since before they were the MIC.  The people who ply these trades don't measure wealth or power in terms fiat banknotes conjured at will by central banks. 

Sun, 07/24/2011 - 15:24 | 1488001 Soda Popinski
Soda Popinski's picture

*Well gents.  It appears the US is out of options  This coming war will be sold to the Sheeple of the US as unavoidable.  The puppet Obama will give the bankers their conflict.

Just stay with me, safe and ignorant,
Go back to sleep
Go back to sleep

Lay your head down child
I won't let the boogeyman come
Count the bodies like sheep
To the rhythm of the war drums

Swayin to the rhythm of the new world order and
Count the bodies like sheep to the rhythm of the war drums

The boogeymen are coming
The boogeymen are coming

 

Sun, 07/24/2011 - 15:25 | 1488007 f16hoser
f16hoser's picture

In your face Obama! Guess America abused their privilege of owning the reserve currency. What goes around comes around. Too funny! Good news is, politicians money is the same color as mine……

Sun, 07/24/2011 - 15:25 | 1488009 ParaZite
ParaZite's picture

If you think gas / oil is high now, wait until we have to exchange something of real value, like gold or silver, for it... instead of worthless funny money fiat with pictures of dead presidents on them. 

Sun, 07/24/2011 - 15:25 | 1488011 ParaZite
ParaZite's picture

If you think gas / oil is high now, wait until we have to exchange something of real value, like gold or silver, for it... instead of worthless funny money fiat with pictures of dead presidents on them. 

Sun, 07/24/2011 - 15:37 | 1488055 Flakmeister
Flakmeister's picture

That putative 8000 tonnes of Au in Fort Know buys one year of imports....

Sun, 07/24/2011 - 16:57 | 1488392 Crisismode
Crisismode's picture

They moved it from Fort Knox to Fort Know? When did that happen?

Sun, 07/24/2011 - 17:03 | 1488422 Flakmeister
Flakmeister's picture

Thats what happens when you have 2 kids vying for your attention while trying to post.....

Mon, 07/25/2011 - 22:56 | 1493191 GoinFawr
GoinFawr's picture

I like your new name for it better anyway.

Sun, 07/24/2011 - 15:26 | 1488014 Lord Welligton
Lord Welligton's picture

Maybe they could barter a few of these.

http://www.wired.com/dangerroom/2008/04/us-cant-stop-ch/

Sun, 07/24/2011 - 15:47 | 1488016 gangland
gangland's picture

interesting article here about china's taiwan denial strategy:

"China’s build-up is driven by a two-pronged strategy. First, China seeks to deny access by the United States and other naval powers to the Yellow, East China and South China Seas, thereby (1) establishing its own equivalent to the way the United States saw the Caribbean in the 20th century, from which its blue water navy can operate globally; (2) dominating the natural resources and disputed island chains such as the Spratly and Senkaku Island chains in those seas; and (3) giving it the capacity to reunify Taiwan with the mainland by force and without US interference, if necessary."

http://the-diplomat.com/2011/07/24/china%E2%80%99s-two-pronged-maritime-...

they just launched their first carrier, they now have a 3 satellite over the horizon comms system for their anti-ship df-21d missile over the pacific/taiwan straits. they can assymmetrically attack and deny us navy at will against taiwan.

http://www.strategypage.com/dls/articles/USN-Believes-The-DF-21D-Is-Live...

http://www.washingtontimes.com/news/2011/jul/21/beijing-develops-radiati...

China can reach out and hit the U.S. well before the U.S. can get close enough to the mainland to hit back,” said Toshi Yoshihara, an associate professor at the U.S. Naval War College.

He said U.S. ships have only twice been that vulnerable - against Japan in World War II and against Soviet bombers in the Cold War.

http://www.washingtontimes.com/news/2010/aug/6/pacific-power-may-shift-w...

pakistan has recently turned to china. excellent great game perspective here:

http://indiatoday.intoday.in/site/story/chinas-relationship-with-pakista...

 

and now kish, and now this trade pact.  russia and china have a similar arrangment conducting trade in rubles-renminbi exclusivley.

so i dont know, not good. I would not want to live in taiwan or persian gulf. iran will start something in bahrain if attacked to say the least. so many moving pieces, game theory buffet. pakistan is the absolute wild card. who will they side with saudis? iranians? china? us? unreal.

 

Sun, 07/24/2011 - 15:27 | 1488020 MethodMan
MethodMan's picture

Foot, meet bullet. Bullet, meet foot.

Did you know Afghanistan shares a tiny border with China? It looks like a... pipeline right-of-way.

Sun, 07/24/2011 - 16:47 | 1488365 Kayman
Kayman's picture

Modern day Flying Tigers might make it but convoys wouldn't stand a chance.

Sun, 07/24/2011 - 15:37 | 1488032 PulauHantu29
PulauHantu29's picture

Does this mean China will buy fewer Treasury Bonds...and the Bond rate therefore will rise?

This looks like China's "two tier" approach. Tier I is receiving oil from Iran. Tier II is China sending "stuff" and workers to Iran.

By-passing the dollar...."No one could have seen this coming," they testified.

Sun, 07/24/2011 - 15:32 | 1488033 Yes_Questions
Yes_Questions's picture

What will China and Iran agree on as the unit of exchange, if not monetary intermediate, especially in those cases when there is no preset barter agreement?

Does Iran need Drywall?

Dog food?

Toys?

 

Sun, 07/24/2011 - 15:41 | 1488075 Ignorance is bliss
Ignorance is bliss's picture

Iran needs...Anti aircraft missiles, tanks, combat jets, nuclear expertise, intercontinental ballistic missiles, and of course flat screen TVs.

Sun, 07/24/2011 - 16:54 | 1488369 Kayman
Kayman's picture

Yes_Questions

Iran needs American technology. What better place to get stolen American technology than China.

And, of course, let's not forget that as a lifetime member of the Bill Clinton Foundation, China can get a discounted membership for IdinnaJackoff.

Sun, 07/24/2011 - 15:34 | 1488034 firefighter302
firefighter302's picture

Hmmm... musings continued.

"She walked up to me so gracefully, and took my crown of thorns.

"Come in", she said, "I'll give you shelter from the storm."

Dylan.

 

Sun, 07/24/2011 - 15:35 | 1488036 UP4Liberty
UP4Liberty's picture

Don't we typically use this type of activity as an excuse to bomb the crap out of a sovereign nation?

Sun, 07/24/2011 - 18:31 | 1488811 goldfish1
goldfish1's picture

Yes. China's relationship with Iran complicates things.

Sun, 07/24/2011 - 21:40 | 1489374 Cathartes Aura
Cathartes Aura's picture

be sure to forward that important message to Israel.  before September, preferably.

Sun, 07/24/2011 - 15:35 | 1488044 slewie the pi-rat
slewie the pi-rat's picture

china & iran are talking about what to do. 

the banks have their "orders" from their puppet nations.  what can the banksters do0do0?  this is the law.

like libya;  apparently bilary & prez0 now control those billions?  the rebels are always asking them for the money, b/c it belongs to libya, and the rebels are the legit goobermint in the eyes of just abt evryone. 

maybe after august 2?

if they asked me how to do it, i would tell them.  so, they probably can see what to do, also.  maybe they can spin a wheel and decide what "currency" to value everything in, each month.  maybe the chinese would like that.

the FED will take all the USD downside it can get, fighting deflation.

benzelbub's gotta be a happy camper!  timmah's going broke, not him!

Sun, 07/24/2011 - 15:36 | 1488045 Akrunner907
Akrunner907's picture

Here is my feeling...........

 

 

 

Sun, 07/24/2011 - 17:01 | 1488413 Crisismode
Crisismode's picture

+1

Very well said.

Sun, 07/24/2011 - 15:36 | 1488050 samslaught
samslaught's picture

This deal will mean war.  Not using our currency to sell oil is like not paying the bank on a loan.  We will then repossess your land and install a new tennant.  Bad timing for Iran to be building nuclear plants.  Provides the perfect excuse although we would have just come up with a less than perfect excuse if need be.  This will probably be a war that we enter, not start, since Isreal will probably strike them before the year is up.

Only fools think this nation is broke.  Debt is only a liability if it is secured.  Everyday that goes by that the American government can finance their needs with fiat is another day they furthur enrich themselves.  It's like running up credit cards (unsecured debt) that one day you will just charge off.  When the reset comes we will still have all of our resources, infastructure, gold, oil, land, military, ect and nobody will be able to take it from us.

Sun, 07/24/2011 - 15:46 | 1488091 Ignorance is bliss
Ignorance is bliss's picture

unfortunately, we've outsourced a lot of our war manufacturing to other nations...including China. If a global war were to truly occur, how long before fuel shortages (Mideast), electronic and equipment replacements (Asia / Japan) crippled our war effort. We are good for one big pop, but a sustained war effort on a global scale is beyond the U.S., thanks to globalization and expectant supply chain disruptions.

Sun, 07/24/2011 - 16:39 | 1488336 Kali
Kali's picture

An old lion whose teeth are no longer supported by its rotting gums?

Sun, 07/24/2011 - 17:03 | 1488420 Kayman
Kayman's picture

A lion being bled dry by Parasites, foreign and domestic.

Mon, 07/25/2011 - 00:30 | 1489747 Dugald
Dugald's picture

Don't sell them short, in many ways she is still a sleeping giant, jab in the right place, and the result may well take your breath away..

Sun, 07/24/2011 - 18:04 | 1488671 samslaught
samslaught's picture

Just my opionion but I believe we have the capability, capacity, and expertise of manufacturing here, we just don't bother because other countries will do all the work for us in exchange for paper and a promise.  When the fiat scam ends we will turn away from globalism and become an industrial manufacturing giant once again.

In an emergency it would not be difficult for the US to control the oil of many regions in the middle east.  we are already there.  We would also coincidently discover a bunch of oil in several locations in the US that just happen to be located under federally protected soil.  The US is not short on oil domestically.  We just choose to trade worthless paper and a promise for the most precious resource in the world while simultaneously draining our biggest threat of the same said resource.  Sure we over consume now but those kinds of habits can be modified if need be.

We used our oil to get rich and establish the dollar as the reserve currency, now we use our reserve currency dollar to get oil and other precious resources from other nations.  We built the mightiest military the world has ever seen and have maintained most of our precious resources while consuming everyone elses.

Sun, 07/24/2011 - 18:38 | 1488851 goldfish1
goldfish1's picture

We would also coincidently discover a bunch of oil in several locations in the US that just happen to be located under federally protected soil.  The US is not short on oil domestically. 

You make a lot of good points. Ones I've heard before. Also I've heard that war starting means war on this country's soil. Comments?

Sun, 07/24/2011 - 16:47 | 1488363 Urban Redneck
Urban Redneck's picture

The US can't mount a sustained offensive against Iran without the UN Security Council (the US Congress has already proven its irrelevance).  Currently all four permanent members other than the US would veto such an action.  Not only does Russia supply a significant and increasing share of Europe's energy needs, but along with China, it provides the bulk of the FDI in the Iranian energy sector.  So in addition to the shelves at Wal Mart suddenly running bare and alarming the proletariat, the MIC would run into the issue of not having not-so-much-rare-but-definitely-monopolized raw materials to rebuild war inventory in the event of an escalation between the major powers.  Furthermore, the fat lazy American Idol couch brigades would actually take notice when the manufacturing facilities for their iPhone, iPod, iPad, iSlave existence were suddenly nationalized along with most of the outsourced manufacturing facilities of the S&P 500 which would do wonderful things for corporate earnings (before FASB comes up with a new allowance against inflated non-existent future earnings in the event of expropriation by a foreign power).  Message to Barry- "Let me be clear - you are in over your head, and this is above your pay grade." 

Sun, 07/24/2011 - 15:39 | 1488064 anonnn
anonnn's picture

China demonstrates  accountability:

"The Chinese government relieved the head of the Shanghai railway bureau, his deputy and the bureau's Communist Party chief of their responsibilities on Sunday, a day after the deadly crash, in which a high-speed train smashed into a stalled train and derailed."

 Also a demo of leadership.

Sun, 07/24/2011 - 16:59 | 1488403 Kayman
Kayman's picture

Also a demo of leadership

I guess Made in China parts can be immediately discounted.

Sun, 07/24/2011 - 15:44 | 1488071 NumNutt
NumNutt's picture

Well better get ready to start serving the new masters because if you thought our Tax system is complex now, just wait until it is all written in Chinese.

Sun, 07/24/2011 - 15:42 | 1488076 Soda Popinski
Soda Popinski's picture

Does anyone else notice that Mossad has been taking out Iranian nuclear scientists for some time?  Iran is obviously pissed.  This story published from yesterday, turned out to be student in Tehran who was mudered, in the apparent targeting of a nuclear phsysicist.

http://news.yahoo.com/iran-blamed-u-israel-killing-scientist-072424920.html

Sun, 07/24/2011 - 15:44 | 1488087 HungrySeagull
HungrySeagull's picture

Never you mind Mossad. They do good work.

Mon, 07/25/2011 - 04:53 | 1489938 4horse
4horse's picture

good work

and godswerk . . .

Sun, 07/24/2011 - 15:54 | 1488104 sabra1
sabra1's picture

the largest war, is what your president is doing to  the US population. why are you all just sitting back and taking it? DO SOMETHING ALREADY!!!

 

Tyler, i trust you remove all IP addresses before posts are placed?   

Sun, 07/24/2011 - 16:36 | 1488302 Wild tree
Wild tree's picture
We are the hollow men We are the stuffed men Leaning together  Headpiece Filled with straw.  Alas! Our dried voices, when We whisper together   Are quiet and meaningless As wind in dry grassOr rats’ feet over broken glass.  In our dry cellar Shape without form,  shade without colour, Paralysed force, gesture without motion; ... This is the way the world ends This is the way the world ends This is the way the world ends Not with a bang but a whimper.- T.S. Elliot

 , The Hollow Me

Sun, 07/24/2011 - 18:43 | 1488877 goldfish1
goldfish1's picture

why are you all just sitting back and taking it? DO SOMETHING ALREADY!!!

Well, you know
We all want to change the world

You say you got a real solution
Well, you know
We'd all love to see the plan

Mon, 07/25/2011 - 04:38 | 1489943 4horse
4horse's picture

everybody got a plan till they get hit

                                                 -joe louis

                                                                -george foreman

                                                                -mike tyson

 

                                                                -anybody hit

Sun, 07/24/2011 - 15:54 | 1488109 JW n FL
JW n FL's picture

"China" Maybe the Republicans can give those Job Creators some Tax Breaks?

"Iran" Maybe the Republicans can give those Job Creators some Subsidies?

"China and Iran" Republicans are sooooooo Pro Business! that is doesnt even matter if they are the enemy! just fucking pass out those dollars collected from the Sheep! quick, Fast and in an Hurry! YEEEEEEEE HAAWWWWWWWW

Sun, 07/24/2011 - 15:53 | 1488115 magpie
magpie's picture

How pathetic is that. China not paying ? Rather do barter than let anyone accumulate yuan, huh...

Sun, 07/24/2011 - 15:54 | 1488118 svendthrift
svendthrift's picture

Barter trade is *exactly* what the National Socialists did in Germany. It was a delerious success for them (really) and bypassed the need to participate in the "Anglo-American" (it's not) banking system, thereby ensuring war.

Sun, 07/24/2011 - 16:38 | 1488326 magpie
magpie's picture

But even the Nazis didn't want it to last forever...

Die europäische Aufgabe der Deutschen Reichsbank [...] die Wiedereinsetzung der arbeitswillig und arbeitsfähig gebliebenen Zentralbanken in ihre Funktionen oder auch durch die Neugründung von Noteninstituten. Die Beiordnung von deutschen Kommissaren sorgt dafür, daß die Politik dieser Institute den deutschen Interessen entsprechend geführt wird. Darüber hinaus gilt es, den Weg für eine ersprießliche Zusammenarbeit aller Länder im zukünftigen europäischen Wirtschaftsraum durch einheitliche Ausrichtung ihrer Geld- und Kreditpolitik zu ebnen.
Der zweite Teil der europäischen Aufgabe besteht in der Schaffung einer neuen Form der Zahlungsausgleichungen von Land zu Land innerhalb des europäischen Wirtschaftsraumes, die sowhol die Nachteile des freien Zahlungsverkehrs im überkommenen Sinne als auch die des streng zweiseitigen Verrechnungsverkehrs vermeidet. Dieses System muß also einmal der Planung und Lenkung der Produktion und des gegenseitigen Leistungsaustausches Rechnung tragen. Zum anderen muß es so gestaltet sein, daß das einzelne Land nicht mehr wie beim zweiseitgen Verrechungsverkehr gezwungen ist, siene Zahlungsbilanz mit jedem einzelnen Vertragspartner auszugleichen, sondern nur noch mit der Gesamtheit der ihm gegenüberstehenden Länder.
Dieses Ziel wird in vielen Fällen nur durch eine gewisse Anpassung der Währunsverfassungen an das deutsche Vorbild errreicht werden können. Jedenfalls werden sich jetzt und in Zukunft für die Länder Europas auf dem Gebiete der Währung mehr oder weniger dieselben Problem ergeben, den die Deutsche Reichsbank selbst schon einmal anläßlich der Abkehr von überlieferten Anschauungen gegenüberstand. Entsprechend ihrer europäischen Verp0flichtung erachtet die Reichsbank es als ihre selbstverständliche Aufgabe, durch organisatorische und personelle Hilfeleistung den übrigen Notenbanken die Überwindung der Umstellungsschwierigkeiten zu erleichtern.
from Puhl, Emil Die Aufgaben der Deutschen Reichsbank, Probleme und Aufgaben des deutschen Geld- und Kreditwesens, Berlin 1942, pg.7

Sun, 07/24/2011 - 17:13 | 1488465 Kayman
Kayman's picture

The Nazis were addicted to debt and printing.  Ultimately, as their own Ponzi scheme sputtered, plundering their neighbors was their only alternative.

And in the Fatherland itself, confiscating Jewish property and selling it to their sympathisers had a twofold benefit.  First it enriched the property purchaser and secondly it provided funding to the Nazi state, which funding was otherwise not available.

Theft and Plunder was not invented by Hitler and his henchmen, but they were damn good at it.

Sun, 07/24/2011 - 17:29 | 1488542 magpie
magpie's picture

An irony that without debt ponzi and re-armament Germany would have been foreign debt free sometime early 1945.

Mon, 07/25/2011 - 04:45 | 1489944 4horse
4horse's picture

versailles

   weimar

                         ___not nazi

Mon, 07/25/2011 - 15:48 | 1491719 Kayman
Kayman's picture

4horse

versailles

   weimar

                        AND ___nazi

Your understanding of Nazi finance is a little bit limited.

Sun, 07/24/2011 - 15:54 | 1488119 PenGun
PenGun's picture

 The comment section here used to be a good place to learn. Now I just come here for the spectacle. Pity.

Sun, 07/24/2011 - 15:58 | 1488139 JW n FL
JW n FL's picture

Iraq's prime minister has paid a landmark visit to the Chinese capital, where he and his Chinese counterpart signed two accords on the expansion of bilateral cooperation.

http://www.presstv.ir/detail/189724.html

there you learned something..

its to fucking bad you dont have a fucking thing to offer other than bitchin!

Sun, 07/24/2011 - 16:10 | 1488167 gangland
gangland's picture

 

pen i junked ya for trolling. learn anything?

 

 

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