Wednesday, October 11, 2017

Mainstream media acknowledges China will likely compel Saudi's to sell oil in RMB, causing major hit to dollar and Petrodollar

In an interview on CNBC on Oct. 11, economist Carl Weinberg told the business network that China is going to compel Saudi Arabia to sell them their oil in the Yuan currency, which will have a serious consequence to the dollar and the Petrodollar system.

Beijing is likely to “compel” Saudi Arabia to sell crude oil in yuan, and others will follow, according to the chief economist and managing director at High Frequency Economics Carl Weinberg. This will hit the US dollar, he says. 
In an interview with CNBC Weinberg said China has become a key player in the oil market since overtaking the US to become the world's largest importer. 
Saudi Arabia has "to pay attention to this because even as much as one or two years from now, Chinese demand will dwarf US demand,"Weinberg told the media.
"I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them," he added. 
A 1974 agreement between US President Richard Nixon and Saudi King Faisal meant Riyadh has been accepting dollars for all its oil exports. 
However, recently, countries like China and Russia have been looking to exclude the greenback from bilateral oil trade. Russia and Saudi Arabia are the most significant exporters of oil to China, alternating in top spot. 
China has already said it wants to start a crude oil futures contract priced in yuan and convertible into gold. – Russia Today


Even if the Saudis accepted yuan this would have no impact on the dollar as the petrodollar died years ago and this is why Congress threw them under the bus allowing families of 9/11 to sue. The whole purpose was to flood the international financial system with dollars and treasuries and this has been accomplished decades ago. Countries do not like to hold large amounts of foreign currencies reserves as they pay no interest so they buy treasuries because they have the second most liquid market on the planet and are in great demand as these are as good as cash. China is at least 10 years away from having a large enough and liquid enough bond market to compete with treasuries and this is when treasuries and dollars have problems.Another factor is that another record amount of dollar denominated loans outside the US was posted which always creates demand for dollars. 75% of all international financial transactions are done in dollars. 50% of all trade in still in dollars. Another factor is that for over a year international capital flows has been moving into dollars. Dow and the other dollar based assets especially from Europe as the euro, the EU, most of the banks there and countries are all toast. The ECB has destroyed the traditional banking model and accelerated the collapse. Folks this is capital flight. The largest consulting firm on the planet, Armstrong Economics has computer models that track domestic and international capital flows and then make forecasts without any human intervention. The models are forecasting that as we move into 2018 both the Monetary and the Sovereign Debt Crisis will hit along with the pension crisis. This will accelerate the capital flight out of Europe and move into dollars and dollar based assets. There a few places left that large amounts of capital can park hence dollars and dollar based assets. looking at the Target 2 settlement mechanism capital is fleeing southern Europe to the north especially Germany and then flowing to the US. Just Italy and Spain owe the Bundesbank over 400 billion each and investors have woken up to the fact none of will be repaid and all countries in southern Europe are insolvent along with their banks. Armstrong Economics clients which include institutional investors are all still moving out and to the US. They are all bracing for 2018 and the collapse there. Even many EU banks have opened branches in the US converting euros to dollars and parking at the FED as the ECB charges banks to park capital. This also accelerates the collapse.
Now if you have notices the FED is aware of all of this and went into panic mode to attempt dollar weakness and stopping the capital flight from flowing into dollars and dollar based assets. They have been trying to jawbone markets down by using the banks, Greenspan and Rickards. The later has been popping up everywhere claiming the dollar is doomed and gold is going to $10,000. They even marched out the head of the CME claiming gold should be at $5000. Then they had a BoA analyst claim gold was ready to take off. Then Goldman claimed gold is a currency and your best hedge with its head claiming all markets are overvalued. Then of course the fake Chinese story that they would allow the yuan to be fully convertible to gold and back the new crude futures contract. All fake. Folks are we seeing a pattern here yet? This all shows how desperate the FED is in creating dollar weakness.
Banks have lent trillions in dollar denominated loans to foreign entities and already this are difficult to service and when we see dollar strength this will make it even more difficult. This will collapse US exporters especially commodities as these become to expensive in foreign markets.
All of the above is what the FED is fighting and again is in panic mode!

Post a Comment