China, Russia, France & Gulf oil producers plot demise of the dollar

October 6th, 2009 by stacyherbert

Stacy Summary:  Thanks all who sent this to me and posted in comments!  Yes, this is the most important story I have read in all the years that Max and I have been making films about the Death of the Dollar.  And it is because the author of the article, Robert Fisk, who will not only be very well connected in the region, doesn’t often (if ever) write about finance or commodities, he’s not going to have any particular position to promote.

Stacy:  Here’s the money quote from Fisk’s article.  To me, it sounds like China is vocally drawing a line in the sand.  After this, I don’t think there can possibly be any carpet bombing of Iran where China has major oil investments.

Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.“

Stacy: Fisk’s conclusion sounds an awful lot like some statements in Death of the Dollar made in 2006.

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars. Bankers remember, of course, what happened to the last Middle East oil producer to sell its oil in euros rather than dollars. A few months after Saddam Hussein trumpeted his decision, the Americans and British invaded Iraq.

At the time we made Death of the Dollar 2, I spoke to an oil analyst at a major oil research firm who told me that pricing oil in dollars wouldn’t matter if it were only Iraq or only Venezuela, for example; it would only matter, he said, if all nations move away from pricing in dollars. This opinion is echoed in Death of the Dollar 2 by Dr. Manouchehr Takin, former Senior Officer at OPEC, who says if oil were traded in other currencies but the dollar, then, of course, it would mean there would be less demand for dollars. Dr. Gerard Lyons, Chief Economist at Standard Chartered, also points out that they were advising Gulf nations to move away from the dollar and what the implications then would be for both the Gulf and the US. And then Dr. Paul Craig Roberts talks about the ‘exorbitant privilege’ and why it is important. And I am quite certain you could find headlines from early 1900′s through 1945 as sterling was losing its status as reserve currency. (It’s a multi-decade volatile process . . . but today no other single nation wants to take on the mantle of reserve status for along with the ‘exorbitant privilege’ comes apparently the ‘exorbitant burden’ of deficits).

Just as the US demonstrates overwhelming force against tiny nations like Haiti, Honduras or Cuba when they exhibit the smallest sign of defiance or independence, so too the US does the same with Middle East countries. It is not that they matter in any but the smallest of trade with the US, it is the precedence of defiance and independence that the US tries to nip in the bud before it spreads. It’s like Guiliani’s ‘broken window’ shock and awe policing.

The Original Death of the Dollar:

Death of the Dollar, Part 2 (stay tuned til the last few seconds when Max whistles in the graveyard!):

Updates:    Gold 1026.90 1028.60 1030.10 1035.60

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