Petrodollar

[enrico514]

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[IrishLax]

You do understand the advantages having the petrodollar has provided the US right?

Yeah... and Russia trying to conduct some transactions in a different currency than the rest of the world would be nothing more than a blip... surely not a "devastating consequence." They're in no position whatsoever by being isolated to affect change in the global petrodollar "system." They're not the driver on that issue, just a player.

There are a lot of people who believe the petrodollar system is going to collapse soon regardless of anything Russia and is only perpetuated by our military might/aggression.

Again, "Russia might start conducting transactions directly in their unstable currency" is not a devastating consequence. It in fact just hurts them and their billionaires more than it would hurt us/anyone else.

 

[Cackalacky]

You do understand the advantages having the petrodollar has provided the US right?

I have to believe it would end up being converted to US dollars at the end of the line, so to be devastating they would have to trade in a currency and keep that money out of the hands of people who would eventually exchange it for US dollars. Tough to do and not a large enough volume of transactions to make that much of a difference.

 

[enrico514]

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[enrico514]

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[IrishLax]

If Russia, China, India and others start moving away from the US$ and trade in other currencies it will be a lot more than just a blip...

I totally agree. But an isolated Russia would do little to nothing to encourage something like that. No one views Russia as a paragon of stability and if they insisted on using only their currency and holding no USD in reserve... there is no logic that says that others would want to follow in their stead just because of that. Like Cackalacky said, unless there was an incentive to do otherwise, on one end of the line transactions would still be backed by USD.

As I said, the move away from USD as the universal reserve/commerce currency is something many consider inevitable, but it's completely independent of anything going on in Russia right now, and there is very little Russia could due to conceivably accelerate it.

 

[IrishLax]

Also while we're talking on petrodollar... there is no doubt that US enemies are trying to bring it down. Iran, in particular, has tried a bunch of end-arounds. Saudi Arabia is our friend. Iraq is our friend. Really, most members of OPEC are our friends save Venzuela. OPEC is the lynchpin... not Russia. And the deals we have with a lot of OPEC members are rock solid.

It should also be noted that most petrodollar "doom is imminent" stuff is nothing more than gold propaganda. There are a lot of people hedging/betting/invested on gold prices going up and/or completely replacing the USD as a reserve currency. It might happen, but it's not going to happen overnight, and I really doubt it happens as soon as the fear mongers are predicting it does.

Russia and Iran can work out as many deals as they want and scream threats from the rooftop to their heart's content. Unless OPEC completely changes direction or China makes a serious power move it's nothing but white noise.

 

[enrico514]

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[enrico514]

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[IrishLax]

You are dead wrong... China would want nothing more than to structure deals in their own currency. You are right... the end of the petrodollar is inevitable but it will get precipitated by the US trying unsuccessfully to isolate Russia.

I agree with this actually, and on a geopolitical landscape they've already been positioning for this...
-Incentivizing countries with development/trade deals if they replace some USD with Yuan.
-Building refineries in and importing extensive amounts of oil from Saudi Arabia. They might even be their chief export partner right now.
-The whole BRICS thing.

My point is that all of this is independent of what happens with Russia. OPEC is your primary linchpin, China is your second (or, to put it another way, they're primary linchpin from a "buyer" standpoint while OPEC is for the "seller").

Whatever happens with Russia I don't think accelerates or decelerates the death of the petrodollar at all. Just my opinion, you clearly disagree and think. I think Russia is going to do what Russia does regardless of whatever the hell we do.

The bigger questions are:
-How big of a deal would the death of the petrodollar be? Some think cataclysmic "great depression" style... I don't see that. I see it happening more gradually, and causing "cheap" imported goods to become more expensive... which in turn might force jobs BACK to the United States in industries where they've been shipped overseas.
-When will it happen? Some predict it happening swiftly in the coming months... I think probably by 2020 or 2025 at the latest.
-What will replace it? I don't think it will be Yuan or gold or any dumbass BRICS currency. I think it will be something set by the IMF, or something set by the "NATO" countries.
-Is this going to cause wars? I have no clue. But at the end of the day, there are still ZERO countries that want to fuck with us. Put some crazy Hawk as the President and I think it slows down this whole petrodollar collapse significantly.

We might need to open a new thread dedicated to this discussion.

 

[Cackalacky]

Why do you believe this? Many countries have already started moving away from the US$ and this would only accelerate it.

I believe it because it's the current status quo. Could it change? Sure. But as Lax has said it would need to be a move away from OPEC. Countries may exchange petroleum in other currencies but they will have cash out in USD. That is independent of the current crisis in Ukraine.

 

[Cackalacky]

Petrodollar

enrico got me thinking last night. If Russia (lots of natural resource capital) and China (labor/ financial capital) align, the USD petrodollar could be in real trouble. Particularly with regards to the United State's manageable and accumulated debt due to the strength of the petrodollar.

There are some good points here which also link to enrico's article sin post #358:

For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.

While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

Here is what will likely happen next, as explained by Reuters:

Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.
More details on the revelation of said "Holy Grail":

State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer.

"May is in our plans," a Gazprom spokesman said, when asked about the timing of an agreement. A company source said: "It would be logical to expect the deal during Putin's visit to China."
Summarizing what should be and is painfully obvious to all, but apparently to the White House, which keeps prodding at Russia, is the following:

"The worse Russia's relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you're isolated," said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank.
Bingo. And now add bilateral trade denominated in either Rubles or Renminbi (or gold), add Iran, Iraq, India, and soon the Saudis (China's largest foreign source of crude, whose crown prince also happened to meet president Xi Jinping last week to expand trade further) and wave goodbye to the petrodollar.

As reported previoisly, China has already implicitly backed Putin without risking it relations with the West. "Last Saturday China abstained in a U.N. Security Council vote on a draft resolution declaring invalid the referendum in which Crimea went on to back union with Russia. Although China is nervous about referendums in restive regions of other countries which might serve as a precedent for Tibet and Taiwan, it has refused to criticize Moscow. The support of Beijing is vital for Putin. Not only is China a fellow permanent member of the U.N. Security Council with whom Russia thinks alike, it is also the world's second biggest economy and it opposes the spread of Western-style democracy."


This culminated yesterday, when as we reported last night, Putin thanked China for its "understanding over Ukraine." China hasn't exactly kept its feelings about closer relations with Russia under wraps either:

Chinese President Xi Jinping showed how much he values ties with Moscow, and Putin in particular, by making Russia his first foreign visit as China's leader last year and attending the opening of the Winter Olympics in Sochi last month.

Many Western leaders did not go to the Games after criticism of Russia's record on human rights. By contrast, when Putin and Xi discussed Ukraine by telephone on March 4, the Kremlin said their positions were "close".
The punchline: "A strong alliance would suit both countries as a counterbalance to the United States." An alliance that would merely be an extension of current trends in close bilateral relations, including not only infrastructure investment but also military supplies:

However, China overtook Germany as Russia's biggest buyer of crude oil this year thanks to Rosneft securing deals to boost eastward oil supplies via the East Siberia-Pacific Ocean pipeline and another crossing Kazakhstan.

If Russia is isolated by a new round of Western sanctions - those so far affect only a few officials' assets abroad and have not been aimed at companies - Russia and China could also step up cooperation in areas apart from energy. CAST's Kashin said the prospects of Russia delivering Sukhoi SU-35 fighter jets to China, which has been under discussion since 2010, would grow.

China is very interested in investing in infrastructure, energy and commodities in Russia, and a decline in business with the West could force Moscow to drop some of its reservations about Chinese investment in strategic industries. "With Western sanctions, the atmosphere could change quickly in favor of China," said Brian Zimbler Managing Partner of Morgan Lewis international law firm's Moscow office.

Russia-China trade turnover grew by 8.2 percent in 2013 to $8.1 billion but Russia was still only China's seventh largest export partner in 2013, and was not in the top 10 countries for imported goods. The EU is Russia's biggest trade partner, accounting for almost half of all its trade turnover.
And as if pushing Russia into the warm embrace of the world's most populous nation was not enough, there is also the second most populated country in the world, India.

Putin did take time, however, to thank one other country apart from China for its understanding over Ukraine and Crimea - saying India had shown "restraint and objectivity".

He also called Indian Prime Minister Manmohan Singh to discuss the crisis on Tuesday, suggesting there is room for Russia's ties with traditionally non-aligned India to flourish.

Although India has become the largest export market for U.S. arms, Russia remains a key defense supplier and relations are friendly, even if lacking a strong business and trade dimension, due to a strategic partnership dating to the Soviet era.

Putin's moves to assert Russian control over Crimea were seen very favorably in the Indian establishment, N. Ram, publisher of The Hindu newspaper, told Reuters. "Russia has legitimate interests," he added.
To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China | Zero Hedge

Russia has also made a $20 billion dollar goods for oil deal with Iran recently.

 

[IrishLax]

enrico got me thinking last night. If Russia (lots of natural resource capital) and China (labor/ financial capital) align, the USD petrodollar could be in real trouble. Particularly with regards to the United State's manageable and accumulated debt due to the strength of the petrodollar.

There are some good points here which also link to enrico's article sin post #358:

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China | Zero Hedge

Russia has also made a $20 billion dollar goods for oil deal with Iran recently.

Yeah, you can also do a bunch of reading on BRICS, etc. that shows this is a long time coming. There's also stuff in Nigeria and other places which points to China trying to position the Yuan as a reserve currency alternative for nations. They, and Russia to a degree, have also been starting to hoard gold.

My point was that things like the Iran deal were already going to happen regardless of what "pressure" applied. Iran has been trying to work deals like this, and people have been listening, for decades. The China-Russia deal was already close to being inked far before the Ukraine incident. It's been in its final "rubber stamp" stages for months where they've been simply adjusting the details.

For this all to swiftly come apart (i.e. by 2014 as some project), Saudi Arabia is going to have to tear up a deal that affords them protection from Israel among other things, Iraq is going to have to want to throw away a relationship with the nation currently occupying/stabilizing their country, Kuwait/UAE/etc. are going to have to want to shred relationships... I don't see that happening as quickly as some think. I just really don't, at least not until China's incentives to make a change reach new heights. They aren't there yet and I don't expect it to be "dead" by the end of the year like most doom-and-gloom blogs you will read.

As an aside... and maybe this should go in the "just curiosity" post... I'm FAR from an Obama hater, but this all got to an irreparable point under his watch. I don't know if someone else could've done a better job, and really people have been musing about the death of the Petrodollar since the advent of the Euro in 1997, so it's not like he should be blamed for something that was pretty inevitable. However, everything took a precipitous turn for the worst in recent years to the point where I don't think it can be saved now regardless of who the next guy is.

 

[IrishLax]

Here's the other thing to think about... what's going on right now in these eastern trade agreements is leaders of oppressive nations working out trade agreements so they don't have to listen to BS from the United States anymore. That's really all this is.

Russia, India, China, Iran, etc... these are countries that don't want to protect their citizen's rights, much less offer anything like a decent minimum wage.

Meanwhile in the West, you have a push the opposite direction. Look at policies in Europe and the direction policy is moving in the US. So right now due to disparate social and economic policies you really have the world about to be cut in half. On one half you'll have NATO/EU moving in a progressive direction, and in the other half you'll have the BRICS, etc. moving in another as they think that's what they need to be competitive in a new global market. In the middle is OPEC... where we have military bases everywhere, have one staunch enemy (Iran), and a whole lot of religious factors that could make stuff get crazy.

Stay tuned.

 

[Cackalacky]

Yeah, you can also do a bunch of reading on BRICS, etc. that shows this is a long time coming. There's also stuff in Nigeria and other places which points to China trying to position the Yuan as a reserve currency alternative for nations. They, and Russia to a degree, have also been starting to hoard gold.

My point was that things like the Iran deal were already going to happen regardless of what "pressure" applied. Iran has been trying to work deals like this, and people have been listening, for decades. The China-Russia deal was already close to being inked far before the Ukraine incident. It's been in its final "rubber stamp" stages for months where they've been simply adjusting the details.

For this all to swiftly come apart (i.e. by 2014 as some project), Saudi Arabia is going to have to tear up a deal that affords them protection from Israel among other things, Iraq is going to have to want to throw away a relationship with the nation currently occupying/stabilizing their country, Kuwait/UAE/etc. are going to have to want to shred relationships... I don't see that happening as quickly as some think. I just really don't, at least not until China's incentives to make a change reach new heights. They aren't there yet and I don't expect it to be "dead" by the end of the year like most doom-and-gloom blogs you will read.

As an aside... and maybe this should go in the "just curiosity" post... I'm FAR from an Obama hater, but this all got to an irreparable point under his watch. I don't know if someone else could've done a better job, and really people have been musing about the death of the Petrodollar since the advent of the Euro in 1997, so it's not like he should be blamed for something that was pretty inevitable. However, everything took a precipitous turn for the worst in recent years to the point where I don't think it can be saved now regardless of who the next guy is.

100% true. Not disagreeing with you and I think a lot of what I posted supplements what you have been getting at. The scary thing for me is the US national debt is leveraged by the value of the petrodollar. If that goes away, the economic impact will be troubling. It may take a while to get there, but someone in our government needs to tack back onto a course of sustainability.

 

[Cackalacky]

The Global Financial Tsunami End Game: The Petro-Dollar Regime is Finished? | Global Research

Pretty good article by Mathias Chang tying all this together. Russia is using the US backed Ukrainian coup as a springboard to undermine the petrodollar.

 

[IrishLax]

The Global Financial Tsunami End Game: The Petro-Dollar Regime is Finished? | Global Research

Pretty good article by Mathias Chang tying all this together. Russia is using the US backed Ukrainian coup as a springboard to undermine the petrodollar.

Actually don't think that's an even-handed article at all. It's in fact quite the opposite, but it's indicative of what you find when you Google "petrodollar"... a bunch of people who hate America hoping beyond hope that the end of the petrodollar will destroy the United States. They're the ones talking about it the most, because they're the ones who want it to happen. It's semi-informative, even with all the rhetoric. But very slanted.

I mean just look at this...

But, the silly Obama announced that he will impose a new phase of sanctions against Russia!

You don't find this in a scholarly or objective article.

 

[Cackalacky]

Actually don't think that's an even-handed article at all. It's in fact quite the opposite, but it's indicative of what you find when you Google "petrodollar"... a bunch of people who hate America hoping beyond hope that the end of the petrodollar will destroy the United States. They're the ones talking about it the most, because they're the ones who want it to happen. It's semi-informative, even with all the rhetoric. But very slanted.

I mean just look at this...


You don't find this in a scholarly or objective article.

Well Chang really is not pro-america nor for the current financial system. Should have disclosed that.

 

[IrishLax]

100% true. Not disagreeing with you and I think a lot of what I posted supplements what you have been getting at. The scary thing for me is the US national debt is leveraged by the value of the petrodollar. If that goes away, the economic impact will be troubling. It may take a while to get there, but someone in our government needs to tack back onto a course of sustainability.

This is really the big concern with an "overnight" shift. A shock to the system, as the doomsday bloggers are projecting, would be pretty huge. I personally think it comes more gradually and has far less shock. If that happens, it would just result in a slight recession or necessary changes to the Government spending/tax code. I mean... we're uniquely positioned as the one nation whose currency is used as reserve right now... and everyone else gets on just fine. There's obviously a way to run a country that's economically viable in a global economy without the crutch of everyone desiring your specific monetary note.

One thing for certain is that we cannot sustain current spending and debt levels without an "infinite" demand for our currency. So if/when the petrodollar becomes irrelevant, some hard decisions are going to have to be made by a bunch of incompetent people in DC. Not looking forward to that.

 

[IrishLax]

Some other food for thought... while the US has a tremendous demand for energy, we're very well positioned to operate independently of even OPEC if we had to.

List of countries by oil production - Wikipedia, the free encyclopedia
List of countries by natural gas production - Wikipedia, the free encyclopedia
List of countries by coal production - Wikipedia, the free encyclopedia

We're also projected to overtake the #1 spot in oil production by 2015. So with just the US and Saudi Arabia we'd produce 20-25% of the world's oil... meaning if just our two countries continued to trade in USD we'd still have a quarter of the market share and the dollar would be far from dead. Add in Iraq, Canada, and UAE... you're looking at 35% of the market share. Include all currently friendly nations like Mexico, Qatar, etc. and you get up over 50% of people tied strongly to USD.

Saudi Arabia is by far and large the single most important country to keep an eye on. If they tear up our agreements in favor of similar/better terms from China (plus China won't give them grief about human rights) then it's game over.

In another vein, Iran is a bit terrifying if what this all leads to is Russia backing Iran more than financially. That's the kind of crap that leads to WWIII after someone in Israel or Iran gets trigger happy.

 

[Cackalacky]

This is really the big concern with an "overnight" shift. A shock to the system, as the doomsday bloggers are projecting, would be pretty huge. I personally think it comes more gradually and has far less shock. If that happens, it would just result in a slight recession or necessary changes to the Government spending/tax code. I mean... we're uniquely positioned as the one nation whose currency is used as reserve right now... and everyone else gets on just fine. There's obviously a way to run a country that's economically viable in a global economy without the crutch of everyone desiring your specific monetary note.

One thing for certain is that we cannot sustain current spending and debt levels without an "infinite" demand for our currency. So if/when the petrodollar becomes irrelevant, some hard decisions are going to have to be made by a bunch of incompetent people in DC. Not looking forward to that.

History point here:
As I understand it - Post World War II, it was determined that gold was the standard exchange in which the US dollar would be the accepted paper currency since most developed countries were rocked by WWII and America was strong and stable. This continued until the late 1960s and countries began exchanging the USD back in for gold for numerous reasons. Nixon went off the gold standard and instead struck a deal with the Saudis to tie the dollar to oil instead of gold. By 1973 this was the deal. You buy oil you must buy it with USD. Both of these actions have contributed to the US's global financial power and its necessity as a global police force.

Taking this history context and your point above, I don't know what other valuable commodity the US could use for leverage should the petrodollar go away other than labor to compete with China (not even sure the US could compete with .75 billion workers). America may end up having to join with the EU as one of the progressive countries and accept a more stable progressive democracy (to the chagrin of conservatives), but it also seems to me that the banks are trying to accumulate as much wealth as possible and corporations are trying their damndest to drive labor and wages down to compete with China.

Also, you mentioned earlier that many are investing in gold recently for safety. This seems to me to be much like what happened in the late 1960s.

edit: Just saw that Lax posted the US oil reserves. Outside of that I will let my post stand.

 

[Ndaccountant]

Here's the other thing to think about... what's going on right now in these eastern trade agreements is leaders of oppressive nations working out trade agreements so they don't have to listen to BS from the United States anymore. That's really all this is.

Russia, India, China, Iran, etc... these are countries that don't want to protect their citizen's rights, much less offer anything like a decent minimum wage.

Meanwhile in the West, you have a push the opposite direction. Look at policies in Europe and the direction policy is moving in the US. So right now due to disparate social and economic policies you really have the world about to be cut in half. On one half you'll have NATO/EU moving in a progressive direction, and in the other half you'll have the BRICS, etc. moving in another as they think that's what they need to be competitive in a new global market. In the middle is OPEC... where we have military bases everywhere, have one staunch enemy (Iran), and a whole lot of religious factors that could make stuff get crazy.

Stay tuned.

I have a hard time believing that this will result in the calamity that some prognosticate (not you nor directed at you, just referencing the post).

China is interested in one thing and that is sustainable growth. China is embarking on an incredibly delicate task of transforming it's economy from producer driven growth to consumer driven growth. This is quite the challenge given the distinct differences between those that live in Eastern China versus Western China.

Why is that relevant? When the focus is on consumption, price stabilization becomes even more important. Hsitorically, Russia is antipodal to stability. China would be quite foolish to tie their gas consumption to the whims of Russia. Any sort of disagreement could challenge China's true mission.

Finally, we really need to look at the totality of natural gas here. There is currently a proposal in process that would allow companies to export 42B cubic feet per day from the US. Europe imports roughly 30B feet per day from all sources, Japan imports 12B and China imports 4B cubic feet per day (ties back to the article stating Russia to supply China with 38B cubic meters per year). Even if China agreed to a deal here, Russia stands to lose much more in Europe than what it would gain with China. Of course, it would take time and money for both the EU and US to reach those figures, but even taking away half of Russia's business would be devastating.

 

[IrishLax]

I hope enrico hops back in to this thread, as I imagine he has a lot of really good stuff to add.

To your post NDAccountant, I think those are some really great points. I really agree with that general viewpoint and think most of the alarmism comes from people who have a vested interest (emotionally or economically) in some hypothetical US collapse.

To elaborate on a point being discussed earlier about devastating/not-devastating if USD is no longer "tied" to petroleum... it's important to note that there are basically no countries with "backed" currencies. There is practically no one on the Gold Standard or anything like that (except maybe a handful of lesser nations).

So no one uses commodity backed currencies. No one else has an exclusive reserve currency. And they all manage just fine.

The biggest tangible impact that the end of the Petrodollar would have, IMO, is with foreign policy. We'd no longer need to be interventionist if it went away completely, whereas the current economic system almost demands a worldwide interventionist policy. The second largest impact would be to how we manage our national debt... without a limitless demand for USD, we'd have to be more careful with the trillions we tack on. In a sense, the credit card would have a "limit" whereas it hasn't in the past.

 

[Guest]

Few things:

If the US moves to natural gas for transportation energy, then it can reach 'relative' energy independence. Thorium nuclear also has much promise (more abundant than uranium, burns cleaner, designs exist since 60s that are safer than uranium nuclear designs). Reducing dependence on oil includes finding alternative power sources, not just drilling for more oil by itself.

China and Russia are slowly dumping US debt (so as NOT to crash the dollar while they exit over a number of years, perhaps a decade). They are also forming alliances for oil trade in non-dollars. Other countries are also working on similar agreements. In other words, the end of the dollar is nearer than before, but won't happen tomorrow either.

China Announces That It Is Going To Stop Stockpiling U.S. Dollars - Seeking Alpha
The Federal Reserve Is Monetizing A Staggering Amount Of U.S. Government Debt - Seeking Alpha
China and Russia Dump Dollar in Mutual Trade - No Big Deal in the Short Run - Seeking Alpha

Russia is stockpiling nuclear weapons and chemical weapons and has violated treaties with the US. The US knows this. China is building it's second aircraft carrier, and has divulged plans to have 5 by 2020 (for which they are behind in their plan about 1 year).

China Training For "Short, Sharp War" With Japan, US Navy Warns | Zero Hedge
China Expands Military "With Peace In Mind" | Zero Hedge
China Building Second Aircraft Carrier, Two More In The Pipeline | Zero Hedge
Admiral Warns that Risk of Nuclear Conflict Is Growing | Washington Free Beacon
A Serious Threat to Western Nations | JR Nyquist | FINANCIAL SENSE
(audio/text) Joel Skousen: With a Growing Russian Missile Threat, US is Still Disarming — “Russia says their missiles are for “containment” of the US, but we know they are preparing for a nuclear first strike on America” | tobefree
Russian Missile Modernizationevelopments and Implications for U.S. Security
Russia Stations Tactical, Nuclear-Capable Missiles Along Polish Border | Zero Hedge

China and Russia want to dethrone the US, but need to upgrade their Navies and missile systems. Once those are in place, they may use North Korea as a beligerent catalyst for war.

Will all of this happen by 2020? Not sure, but it is heading in that direction by all signs.

A good read from someone who has a credible background in the subject:

Welcome to the World Affairs Brief (best)

or

Paul Craig Roberts - Official Homepage (ok, but biased politically)

 

[IrishLax]

Few things:

If the US moves to natural gas for transportation energy, then it can reach 'relative' energy independence. Thorium nuclear also has much promise (more abundant than uranium, burns cleaner, designs exist since 60s that are safer than nuclear).

China and Russia are slowly dumping US debt (so as NOT to crash the dollar while they exit over a number of years, perhaps a decade). they are also forming alliances for oil trade in non-dollars. Other countries are also working on similar agreements. In other words, the end of the dollar is nearer than before, but won't happen tomorrow either.

Russia is stockpiling nuclear weapons and chemical weapons and has violated treaties with the US. The US knows this. China is building it's second aircraft carrier, and has divulged plans to have 5 by 2020 (for which they are behind in their plan about 1 year).

China and Russia want to dethrone the US, but need to upgrade their Navies and missile systems. Once those are in place, they may use North Korea as a beligerent catalyst for war.

Will all of this happen by 2020? Not sure, but it is heading in that direction by all signs.

A good read from someone who has a credible background in the subject:

Welcome to the World Affairs Brief (best)

or

Paul Craig Roberts - Official Homepage (ok, but biased politically)

To add onto the bolded, China has been waging a "cyber war" on the United States over the past decade or so that would shock most people. The extents of espionage and sabotage they have engaged in is absurd.

I fully agree that the Petrodollar will be done by 2020, or 2025. My biggest question is whether or not the US sits back as an energy independent, nom-interventionist nation when that time comes. It's either that or someone domestic or abroad does something really stupid (i.e. Iran blows some shit up with Russia pledging support, China let's North Korea move on the South, etc.) to spark the whole powder keg.

 

[Fbolt]

You do understand the advantages having the petrodollar has provided the US right?

Why hasn't the petrodollar been provided to the US left?

 

[Whiskeyjack]

Russia is stockpiling nuclear weapons and chemical weapons and has violated treaties with the US. The US knows this. China is building it's second aircraft carrier, and has divulged plans to have 5 by 2020 (for which they are behind in their plan about 1 year).

China and Russia want to dethrone the US, but need to upgrade their Navies and missile systems.

I see no plausible evidence that China and Russia seek to become global rivals to the US; we are at the center of the global economy, and our military might outstrips theirs by a massive margin. Most of their actions are consistent with great powers attempting to reestablish their natural spheres of influence; US actions in the Baltic, Caucasus and East Asian regions are responsible for much of the hostility.

Once those are in place, they may use North Korea as a beligerent catalyst for war.

Why do people find it easy to believe that our "enemies" are both irrational and insane? That would be suicidal. Russia and China stand to lose far more than they could ever hope to gain from such a conflict.

Why hasn't the petrodollar been provided to the US left?

Wake up, sheeple! The Koch brothers have monopolized all the petrodollars!

 

[enrico514]

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[Buster Bluth]

Thank for bringing the sense Whiskey.

WW3? GTFO.

 

[IrishLax]

This is what I don't get in your post Lax...

#1: Yeah China has been engaged in "cyber war" but so has the US. I have actually been flabbergasted by what has recently come out about how the US "spies" on their friends and on their citizens.

I'm not saying they're wrong to do so, I'm just saying that they have been taking many measures recently that could be viewed as adversarial or, at minimum, aggressive.

Speaking relative to other nations, there are no other nations (Rrussia included) that even do 1% of cyber attacks on our secure systems that China makes on a daily basis.

#2: Russia and China aren't governed by a bunch of idiots that want to end modern civilization. Yes, they have been bullies at times but then again so has the US. I would also argue that lately the US has been the bully and that Russia has just been standing up for itself.

I'm not saying that China or Russia have any interest in that. Remember, all of this started by me saying I didn't think the collapse of the Petrodollar would be anything close to cataclysmic.

What I do think is possible, and maybe this was a little unclear, was that conditions that could arise in a post-Petrodollar geopolitical landscape are more susceptible to chaos. For example, let's say Russia and Iran enter into a huge economic (and ergo political) union. Then let's say that Iran does something stupid... either by state sponsored terrorism or actual aggressive action towards a Muslim neighbor or Israel. Or let's say Israel does something stupid at Iran after they get the bomb. As things currently stand, there is no one that would go to the mat for Iran. Project out 10 years, and it's plausible that Russia stands up for Iran to protect their economic interests.

There is no doubt that both Russia and China are positioning to be able to stand up for themselves and not be dictated to by Team America: World Police. Whether that ever becomes an actual issue depends on a lot of factors, most of which are very improbable.