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Topic Originator: OzPar
Date: Fri 14 Jun 06:24
Any thoughts that de-dollarisation is a myth should be put to bed by the announcement that Saudi Arabia will not renew the 50-year petrodollar agreement with the United States. Instead, it will sell oil in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan.
The BRICS alliance`s strategy, which focuses on reducing dollar dependency and promoting multiple currencies for trade, is more than just a shift. It`s a potential game-changer in the global energy market. Saudi Arabia`s decision to align with BRICS` goals by ending oil transactions in dollars could enhance its influence and contribute to dollar devaluation.
The association`s ten members include Brazil, Russia, India, China, and South Africa. New members Egypt, Iran, UAE, Saudi Arabia, and Ethiopia joined the grouping in 2023. A dozen more countries, including Turkey and Venezuela, which holds the world`s largest oil reserves, have applied for membership this year.
Russia took over the chairmanship of BRICS on January 1.
In 1994, the Western economic grouping G7 (US, Canada, UK, France, Germany, Italy and Japan) represented 45% of world output. BRICS, as it is currently constituted, represented 18%. Now, it has flipped. The BRICS countries are about 36% of world output - double what they were 30 years ago, while the G7 countries are now about 29%.
It is no coincidence that Russia, China, Iran, and Venezuela have all been subject to US trade and economic sanctions in recent years. Therefore, it is with good reason they want to end the dollar`s dominance in trade negotiations.
The US economic outlook has never looked grimmer. With a debt of 34 trillion dollars rising by a trillion dollars every quarter, political leadership on both sides offers no alternative to rising debt. If the key commodity traders across the globe choose to abandon the dollar in favour of their own or other currencies, America`s goose will be cooked.
Those leaders in Russia, China, Iran, and Venezuela may be reflecting on the old saying, "Don`t get mad, get even!"
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Topic Originator: hurricane_jimmy
Date: Sat 15 Jun 02:02
Hate to tell you Oz, but it is.
How many countries keep reserves of Yuan or Roubles? How many countries store a chunk of their sovereign assets in Russia and China? The answers to these questions are key because consumer trust is an integral part of growth economics.
With regard to the Petrodollar, there are a few points to make:
- First and Foremost, Saudi Arabia are enacting Vision 2030, which is a concerted attempt to move their economy away from Oil. Whether they meet this in time or not, who knows but that is the direction.
- Demand for Oil will not be what it was and the US, EU and other large economies are moving toward EVs, hence why the Saudis are pushing vision 2030. China and India are both pushing in this direction too and their use of oil for development will be limited as green technology takes over. Lithium and Gallium are likely to be more prominent commodities going forward.
- The Saudis are attempting to take a stance to (rightly I would add) force the US to rethink its support for Israel over Gaza. It is quite likely that a new deal will be agreed. If not, then, as was the case with natural gas in Europe, the required oil will be sourced elsewhere such as from Canada, Australia or the North Sea.
- It is actually possible to buy oil in currencies other than the dollar as things stand - you can look into the mechanisms for this.
- This announcement was made several days ago and there has been virtually no reaction by the markets.
As for BRICS:
- India will be the next superpower and are playing their cards well by getting what they need from the West and natural resources from Russia and the Middle East. They are far more likely to put their eggs in the US/EU/Western basket when push comes to shove.
- China is in a REALLY bad state economically and much of their economic data is fabricated, which undermines a chunk of the figures you quote. They have largely failed to urbanise and about 30% of their economy (property) is being kept afloat by the Central Government. Their National Railway company is the most indebted company in history and the Government are already struggling to service that debt. Moreover, they have been quite successful in p*ssing off most of their neighbours and the West. It is predicted (by the same organisations that forecast the same in Japan and Korea) that China will lose almost half its population by 2100. These ingredients are not gonna create a recipe for growth.
- As far as I`m aware, Saudi Arabia are actually yet to join formally. Of the other countries, Ethiopia and Brazil are the ones that have big potential. South Africa have big problems with corruption, governmental organisation and crime which really holds them back. Egypt have massive problems with Governmental stability and really haven`t grown that much in decades as far as I`m aware. The UAE`s growth depends on how well they can transition away from oil.
India and China however...
Post Edited (Sat 15 Jun 02:02)
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Topic Originator: hurricane_jimmy
Date: Sat 15 Jun 02:02
India and China however DESPISE each other and you will have a massive power struggle in this organisation going forward particularly between these two and the Russians also suffer from never having had to reflect on their own Imperialism and will not take kindly to being relegated to junior partners.
We are likely to see a more multipolar world going forward with the EU, US leading the way and India and ASEAN becoming more and more prominent over the rest of the century. MERCOSUR will also be interesting to watch.
Asia is the continent to watch going forward and India, Indonesia, Vietnam and potentially the Philippines are the places to watch. And these countries are all potentially united by their dislike of the CCP.
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Topic Originator: OzPar
Date: Fri 21 Jun 06:38
I don`t know where to start with this stuff, HJ. It is way too challenging to take something so devoid of reality seriously.
I can only assume that you have been overdosing on the deranged rantings of that "geopolitical analyst" Peter Zeihan. He has spent the last couple of decades painting China as being on the edge of economic collapse, facing a demographic nightmare, and being universally hated; in other words, everyone`s bogeyman.
This is disaster porn. He is wrong on almost every measure. China faces economic challenges, but it has the wherewithal to respond. How come 35% of the world`s economic growth last year came from China (source: IMF)? Like most other countries, there are demographic issues, but the retirement age in China currently is 60 for men and 50 to 55 for women, based on their jobs. The retirement age can be raised, so there is leeway, and AI will likely pick up any slack.
Is China hated? Then why are over a hundred countries cooperating with China on its Belt and Road initiative? Some countries have signed multi-decade agreements with China in this respect. Ask the Africans if they prefer roads and railways and schools and hospitals to tanks, guns and patrol boats!
Zeihan forecasted Russia`s economic collapse after the Ukraine conflict. He praised the sanctions and was uncomfortably jubilant when the Nord Stream gas pipeline was blown up. Still, he couldn`t foresee China and India stepping up and buying more oil and gas from Russia, all paid for in their currencies. Not a US dollar to be seen.
You say the yuan and the rouble have no value. Really? Of course, they have value! For example, the yuan is one of the five elite currencies that make up the IMF`s Special Drawing Rights (SDR) basket. In international trade, SDRs represent a claim to currency held by IMF countries for which they may be exchanged. Even the Australian iron ore giants accept yuan as payment for their products.
You discuss countries like China, India, and Russia as mere pawns on a chessboard dependent on the guiding hands of US and European grandmasters. And you have the gall to suggest that we will likely see a more multipolar world going forward, with the EU and the US "leading the way" and India and ASEAN becoming increasingly prominent over the rest of the century.
In a jolly old colonialist fashion, you add, "MERCOSUR will also be interesting to watch."
Sadly, HJ, you just don`t get it. The earth has already tilted, and the centre of gravity has moved east. Did you not note the true significance of Putin`s visit to Pyongyang this week? This was Putin demonstrating to the West that his country spans much of the globe. It does not just face Europe. It faces the Middle East, South Asia and East Asia, where most of the world`s population lives.
(Continued...)
Post Edited (Fri 21 Jun 06:39)
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Topic Originator: OzPar
Date: Fri 21 Jun 06:40
BRICS is a practical demonstration of the new alliances forming across the global south. Before long, that familiar term, global south, will disappear and be replaced by a far more appropriate term: global majority.
Putin’s visit was also a timely reminder to Washington that Russia faces both coasts of America.
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