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Thread: Petro-Euros instead of Petro-Dollars?

  1. #1
    242_fair
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    Petro-Euros instead of Petro-Dollars?

    As most people know, oil is currently traded in dollars on the world market. What will happen if that changes to Euros?

    Today I saw a advertisement in downtown Cairo encouraging people to support Iran's future Oil Exchange, which will be exclusively in Euros. The ads are appealing to Pan-Arabism...

    We saw in the local news stations yesterday that several of the gulf states announced they will transfer out of the dollar exchanges in New York and London at the soonest possible date. There are growing rumors of this notion in the streets. There is both formal and informal publicity campaigns encouraging boycott of the Dollar.

    I tried to exchange some US dollars today, it wasn't fun. Whereas one year ago those notes were eagerly accepted, the traders just refused to accept them. They all used the same phrase "withdrawing consent from American dominion", I don't know where this comes from.

    Changing the Canadian money was no problem, except of course the rate has fallen and value is gone. I used to be able to buy 600 Egyptian pounds for $100 Cdn, now it only gets me 480 Egyptian pounds.

    An economist was talking about the possability that if all the arabs ditch the dollar, particularly house of Saud, there is a real chance to crash the American economy.

    I don't see this on any English channels so I thought I'd mention it...

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    Banned Melonie's Avatar
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    Default Re: Petro-Euros instead of Petro-Dollars?

    there's no doubt whatsoever that a co-ordinated effort is underway to undermine the 'reserve currency' status of the US dollar. This could have profound effects on the US dollar exchange rate ... but perhaps more importantly it could severely impact the willingness of foreign investors to loan back money in the form of US dollars at historically low interest rates to finance the US housing market, US consumer spending etc. After all, with the 'twin deficits' America requires 3 billion dollars worth of new foreign investment each and every day to 'keep the wheels from falling off'.

    As to why the US financial news media chooses to give this topic a very low priority ...

    Also, foreign financial media are reporting that China and Russia are also starting to migrate out of the US dollar, which will only add to the US dollar's future problems.

    In addition, strengthening the Euro is NOT a good thing from the viewpoint of many Europeans !!!



    ~

  3. #3
    242_fair
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    Default Re: Petro-Euros instead of Petro-Dollars?

    Co-ordinated is the key word.

    This is too well organized... not charachteristic of the part of the world... there are major players involved... its happening too fast... freakish really... this is the land where time stood still, and it is impossible to motivate change. Another example, I smoke Mistys, those cigs are only available in the hotels here. I went to get some last night and even the MARRIOT is not dealing with US dollars!! Everyone is saying this is a new policy for New Year.

    I saw a SUV from Katar and it actually had a bumper sticker about Americans burning their dollars to be warm because they will not be able to buy gas soon.

    I think persian new year is in March, I wonder if they can get this shit together to open the Euro-petro exchange in 3 months?

    ... The Mercedes crowd here already moved their money from Bank of America to the Dutch bank...

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    Default Re: Petro-Euros instead of Petro-Dollars?

    well I hesitate to go in this direction, but the US has been sending an inordinately high number of ground troops, aircraft carriers, battle groups etc. to the persian gulf since this trend first started to appear serious a couple of months back !!!

    At any rate, the withholding of persian gulf oil, while sending the price sky high again, won't actually jeopardize US oil supplies which come primarily from Canada, Mexico, Venezuela and domestic sources. However, it WILL have an immediate impact on Europe ... as will any games being played with Russian natural gas being pipelined to Europe (which is the subject of another thread).

    The 'tin foil hat' crowd are saying that this would be a very good time to reinvest in gold, especially if you have US dollars to invest.

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    God/dess Deogol's Avatar
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    Default Re: Petro-Euros instead of Petro-Dollars?

    I think it will effect the US. Simply because we source from those countries - their prices are still set by world prices on the entire oil supply. If the dollar falls - even the prices on those countries will be increased because they COULD get euro's for it and it's a decision that needs to be made by the oil owners.

    For the longest time, there hasn't been a good alternative currency. Rubles were always a mess though it had a super power behind it - European currencies had to small of a market to thrive in. Now with the Euro - and the massive market it represents - the dollar has a bit more competition.

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    Default Re: Petro-Euros instead of Petro-Dollars?

    Quote Originally Posted by 242_fair View Post
    Co-ordinated is the key word.

    This is too well organized... not charachteristic of the part of the world... there are major players involved... its happening too fast... freakish really... this is the land where time stood still, and it is impossible to motivate change. Another example, I smoke Mistys, those cigs are only available in the hotels here. I went to get some last night and even the MARRIOT is not dealing with US dollars!! Everyone is saying this is a new policy for New Year.

    I saw a SUV from Katar and it actually had a bumper sticker about Americans burning their dollars to be warm because they will not be able to buy gas soon.

    I think persian new year is in March, I wonder if they can get this shit together to open the Euro-petro exchange in 3 months?

    ... The Mercedes crowd here already moved their money from Bank of America to the Dutch bank...
    Money is very much under centralized control in many arab countries. In Saudi Arabia one cannot do anything of any size without the royal family involved in some way.

    This is an economic problem for capitalism operating in dictatorships and monarchies!

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    Banned Melonie's Avatar
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    Default Re: Petro-Euros instead of Petro-Dollars?

    ^^^ yes, but it's just as big of a problem for European capitalists vs US capitalists vs Japanese capitalists. Of course, the 'tin foil hat' crowd would point out the 'banana republic' analogy i.e. there once was a day that capitalists could count on the good ol' US army to guarantee that their foreign investments would never be 'nationalized' or and that exports would never be interfered with by 'local gov'ts' ! However, that died with JFK's refusal to oust Castro. Coincidentally or not, the value of the US dollar has dropped steadily ever since.

    The 'tin foil hat' crowd might also tell you that they suspect that the potential Islamization of currencies plays a bigger role than that of one paper fiat currency vs another paper fiat currency. There's an oldie but goodie discussion of the fundamental Islamic law re 'money' at

    (snip)"Vadillo’s Views On Paper Money

    Vadillo’s work on the subject appears in many websites; the one we found most useful was and this section is extracted from his work “Paper Money: A Legal Judgment”. In summary:

    1. Paper currency is NOT VALID MONEY in Islamic law.

    2. The Gold Dinar and Silver Dirham are the ONLY valid means of exchange that meet the requirements of the Koran as expressed in Sharia (Islamic religious law).

    3. The Arab world paper dinar is certainly, in their opinion, “better” than any western fiat currency, but still not “good” in the eyes of Allah.

    4. Trusting others outside the “House of Islam” (dar al-Islam) who are not believers (the “kuffar”, or “infidels”) with money, etc. is forbidden. They can’t be trusted to pay it back. A true Muslim would never trust a “kuffar” to watch over his money, either paper or metal. Arab world writers often cite the anecdotal evidence of seizure of Arab/Muslim wealth by American authorities during the current “war on terrorism” as proof of Allah’s warnings regarding what happens if “infidels” can find your piggybank.

    5. Paper money has no intrinsic value, therefore when given in exchange for any other valuable good (food, clothing, oil, material objects) it represents to a great extent “contractual fraud”. It isn’t a fair trade. Giving specie (gold or silver coin of known integrity/purity in agreed upon amounts) is a legitimate trade of “value for value”.

    An interesting and necessary conclusion is that it would be fraud to trade paper dollars of no intrinsic value for anything of true value, especially gold and silver. This dilemma, which is conveniently sidestepped by the Islamic banking experts, has not stopped them from trading dollars for gold as fast as they can drive their limousines to the back gate of the London Metals Exchange. It is justified before Allah….you are simply getting rid of the unrighteous for the righteous. It is accomplished by proxy with an inconvenient middle step. The original source of the dollar bills was the lawful, fair, free-market sale of oil, which is legitimate wealth given to the Arab/Muslim peoples by Allah. The dollars were obtained for this oil, and then traded for gold. So the net effect is already a trade of oil for gold. THIS IS WHERE THE RUBBER MEETS THE ROAD. YOU MUST UNDERSTAND THIS IS THE VERY MECHANISM THAT PERMITS THE FAITHFUL MUSLIM TO HAVE A CLEAN CONSCIENCE BEFORE HIS GOD WHILE SECURING RIGHTEOUS WEALTH AND THE EFFECTIVE RESULT OF THIS CORE TENET IS DESTABILIZING TO THE WORLD ECONOMY. They will continue until they succeed, even if they don’t get the whole thing right the first time. Or die trying. Any financial talking-head, speculator, currency trader, investor, or naysayer who ridiculed the “silly gold dinar” as an amateurish experiment with a handful of coins that will be DOA just does not “get” it."(snip)


    In the final analysis, Americans buying anything from foreign sources and paying them with US dollars (or with future US dollars in the case of spending borrowed money) is in fact a 'swindle' ... for exactly the reason that Sharia Law states ! If the US gov't or Americans in general want to spend more dollars than they can afford, all that is required is to start the printing presses and poof suddenly there are enough dollars to spend ! This has been the case since 1933 when FDR removed the links between the value of the US dollar and the value of precious metals.

    However, this ability to create 'purchasing power' out of nowhere which stems from the US dollar being considered as the world's reserve currency is also virtually the only reason that Americans enjoy the standard of living that they do. If, as the 'tin foil hat' crowd speculates, Islamic oil sales switching to Euros is but a stepping stone on a path to gold/silver based pricing, both America and Europe are in deep s#!t !
    Last edited by Melonie; 01-03-2007 at 12:22 PM.

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    Default Re: Petro-Euros instead of Petro-Dollars?

    Gold Gold Gold.

    It has been repeatedly shown that matching a currency to a precious metal does nothing for the benefits of an economy. Plenty of European monarchies when bankrupt in a gold standard economy.

    Should a land that is gold rich be "wealthier" than another place simply because it can "dig money out of the ground?"

    Should a society be filled with innovator's or inventors be restricted from creating products and services for a society by it's restriction of gold available for competing products?

    No. The gold standard is not the answer. Sure it can act as a hedge in an investment portfolio - but it does not work as a means of currency - there is just to little gold for so many people with so many products and so many services.

    The problem is that the amount of money should represent the available market for products in the given country with a dash of what that market can create in products and services. It is becoming more and more obvious that the only thing coming out of the US is debt - not product or services useful to be purchased with all those dollars.

    It is not a fiat currency that is the problem - it is that the currency is slowly exposing it's self as not an accurate measure of what is happening in the US economy.

    The only "intrinsic" value gold has is it's electrical properties and softness for creating art.

    I do agree that if an Islamization of money happens - that is only gold or silver is accepted because the Qu'ran says so - then we are in a heap of trouble.

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    Default Re: Petro-Euros instead of Petro-Dollars?

    ^^^ Deo, you are absolutely correct about the potential effects of 'Islamic Money' i.e. gold and silver backed currency 'taking over the financial world' as a result of 'Islamic Money' becoming a future requirement to purchase middle eastern oil. This of course would bleed over into the pricing of other forms of energy i.e. natural gas, and in turn bleed over into the pricing of ethanol - the pricing of food - the pricing of plastics - the pricing of everything else that requires lots of energy and/or oil based content to produce.

    This of course would be reflected in the future exchange rates of various paper currencies based on how much gold / silver backing they actually have ... with the Swiss Franc probably remaining very strong, with the Euro staying even, but with the US dollar, Japanese Yen etc. dropping like a stone. Hmmm, this is exactly what's now happening - hell of a coincidence isn't it !!!

    'Islamic Money' aside, there has to be some sort of objective measure of the true 'purchasing power' of individual paper currencies. Even if gold / silver aren't the 'gold standard' for this purpose (pun intended), the world must use some other comparative measure to determine a 'fair price' for one country to hand over it's intrinsically valuable oil, other natural resources, manufactured products etc. in exchange for another country's intrinsically worthless paper money.

    Where the US dollar was concerned, in the past this comparative measure was based on the US dollar being accepted as the world's 'reserve currency' (thus requiring all other govt's central banks to buy/sell/accept US dollars to trade internationally) as well as on the implied threat that the US military would guarantee that vital exports would continue to flow. In combination, this allowed Americans to basically say to those with oil to sell ... 'here's how much oil I need and here's how much I can afford to pay for it in terms of green paper'. This of course started to fall apart in the late 70's after Nixon de-linked the last remaining linkage of the US dollar's value to the price of gold, and Ford/Carter removed any remaining credibility that the US military would ever again be used to 'regulate' foreign events which were not in the 'best interests' of America. In a way, America now finds herself in a similar position re oil (and related commodities) that Georgia finds itself in re natural gas, i.e. previous enjoying price levels that were well below the 'fair value' of their own paper currency and now confronted with a huge price increase in terms of their own paper currency to restore 'fairness' to the transaction.

    However, today both of these principles (US dollar as reserve currency, and US military as international 'regulator') are rapidly fading into obscurity, such that a 'basket of currencies' or a 'basket of commodities' are probably now the only comparative measures of 'fair value' ... and in both cases the US dollar is in a major downtrend. Unfortunately, most Americans still think in terms of the US dollar being a 'fixed' unit of value (which it clearly hasn't been for the past 30 years at least ... and arguably for the past 90 years), thus see rising US dollar denominated price increases for oil, natural gas, ethanol, food, plastics, manufactured goods etc. as the result of greed on the part of the sellers rather than a devaluation of the 'soundness' of their good ol US dollar.

    ~
    Last edited by Melonie; 01-04-2007 at 01:24 AM.

  10. #10
    242_fair
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    Default Re: Petro-Euros instead of Petro-Dollars?

    Quote Originally Posted by Melonie View Post
    "Vadillo’s Views On Paper Money
    Who is Vadillo? I did an entire course in Islamic Banking Law at Al Azhar University and this person's name never came up!!

    Quote Originally Posted by Melonie View Post

    Vadillo’s work on the subject appears in many websites;
    Your 'work' also appears on the net, doesn't mean it is not crap.

    For example:

    Maybe he's like you. Rather than forming his opinions based on research with a high level of academic integrity and peer review, maybe he just picks bits and pieces of arguments from other websites to prop up his confused assertions?

    By what authority has he rendered a 'Judgment'? You act like this person is speaking on behalf of all muslims, meanwhile you just found him on another of your freak websites...

    No offence, I agree with where your argument is pointing, that is why I started the thread...

    But you could do better with your sources instead of always quoting the most absurd people.

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    Default Re: Petro-Euros instead of Petro-Dollars?

    The big worry for the USA is that the international dominance of the US dollar as a reserve currency is slowly but steadily being eroded. If and when that happens, i.e. if the US dollar becomes no different than the Brazilian Real or the Thai Baht or the Mexican Peso, then run, don't walk, for the exits ! The 'tin foil hat' crowd would tell you that this very point is the true reason that the US has been so persistent in its Iraq / middle east involvement - to stop the Arab oil shieks from deciding to price oil in terms of gold or Euros or something besides the US dollar. Were this to occur, the US dollar would indeed fall off a cliff, the assets of US citizens and businesses would be hugely devalued, and the US economy would quickly fall into a depression so deep it would make the 1930's look like a 'soft landing'.
    Melonie, you wrote this in another post I was just reading, seeming applicable to this post, so figured I'd throw it in...


    Scary.

    (I was doing a dollar den search of 'gold' and this was in one of the first posts to pop up, since I just read this...)
    Last edited by Melonie; 01-04-2007 at 04:02 PM.

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    Default Re: Petro-Euros instead of Petro-Dollars?

    Who is Vadillo? I did an entire course in Islamic Banking Law at Al Azhar University and this person's name never came up!
    since you asked, Dr. Sidi Umar Ibrahim Vadillo is the author of the most recent Fatwa on Banking and the use of Interest on Bank Deposits which was published last October --->

    in more general terms ...

    Trade & Finance, Applied Heideggerian Studies

    Umar Ibrahim Vadillo

    Professor Vadillo has studied Heidegger at the University of Freiburg, Germany and lectured at Universities in Malaysia, Indonesia and Morocco. He has acted as President of Islamic Trade Organisation and Islamic Mint, from 1995 to date. Since 2003, he is also Vice-Chairman of E-Dinar. His main publications are: Islamic Critique of Economics (1997), The End of Economics (1997), The Return of the Gold Dinar (1999), The Esoteric Deviation in Islam (2003).


    (snip)"SIDI UMAR VADILLO, the political leader of the Murabitun and the most important authority on Islamic economics in this time, takes, by Shari'a, the position that: one, paper money represents a debt [clearly an incontrovertible promise to pay the bearer upon demand ...] which is impermissible as a medium of exchange, either by transferal or trading it in any way; two, it will inescapably change value [by inflation, deflation or devaluation]; and three, it is a monopoly by banks [who are able to create it ex nihil, i.e. out of nothing, as credit], and, therefore, is haram, meaning harmful, lacking benefit, forbidden. The root of usury is in the false money. Its effects on the social organism are all the recognizable symptoms of insurmountable debt, disease, crime and civil disruptions. Pick a spot anywhere on the globe, and you will see it: one pustular blister after another. Sidi Umar Vadillo has not only advocated the return to the (gold) Dinar and (silver) Dirham, but has, under the guidance of his shaykh, Shaykh Abdalqadir as-Sufi, initiated the minting of coins that are being introduced into circulation. According to Sidi Umar's prescription, the use of the coins are combined with the reintroduction of Islamic Contracts that require shared participation when involving either an investment or loan, and declare null and void all usurious contracts that only protect the bank as the issuer of paper in exchange for collateral assets of actual wealth. Islamic Trade gives preferential treatment to someone with a good idea (for a business) as opposed to someone with good collateral (who is currently preferred by standard banking practices). It also would make, for example, South America, with its abundant natural resources, rich, while it would bring down the Wall Street stock-brokers and investment bankers. If someone really does want to oppose Islam then they should do it for real and accurate reasons. These are the genetics of life."(snip) from

    ~
    Last edited by Melonie; 01-04-2007 at 04:17 PM.

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