Post by Steve Gardner on Feb 4, 2008 13:23:46 GMT
Iran has, for quite some time, been talking about establishing its own oil bourse, to be known as the IOB.
The anticipated effect of the IOB was set out in an Energy Bulletin article back in January 2006. The relevant section reads (pay particlar attention to the bold section):
However, whilst it was originally scheduled to begin trading in March 2006, a series of 'glitches' pushed the date back. Meantime, the Iranians have already switched from US dollars to Euros when conducting their own oil trades, and have pretty much diversified away from $US-denominated investements..
It now appears the IOB is now finally going to be launched, and soon.
Source: Pres TV
Now, as we all know, over the past couple of years, the West and Iran have increasingly been at loggerheads. There's been talk of preemptive strikes and full-blown war. More recently, there's been some curious goings on in the world of submarine cable telecommunications systems serving the Middle East.
Source: Market Watch
Curiously Iran wasn't listed amongst those countries affected, acccording to CNN, though it's hard to see how this can be so.
Less surprising is the list of countries positivley identified as not being affected.
So, coincidence? Or is this all part of an overall strategy?
The anticipated effect of the IOB was set out in an Energy Bulletin article back in January 2006. The relevant section reads (pay particlar attention to the bold section):
II. Iranian Oil Bourse
The Iranian government has finally developed the ultimate “nuclear” weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam’s, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system:
· The Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans.
· The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar. One portion of their dollars they will still want to hold onto; a second portion of their dollar holdings they may decide to dump outright; a third portion of their dollars they will decide to use up for future payments without replenishing those dollar holdings, but building up instead their euro reserves.
· The Russians have inherent economic interest in adopting the Euro – the bulk of their trade is with European countries, with oil-exporting countries, with China, and with Japan. Adoption of the Euro will immediately take care of the first two blocs, and will over time facilitate trade with China and Japan. Also, the Russians seemingly detest holding depreciating dollars, for they have recently found a new religion with gold. Russians have also revived their nationalism, and if embracing the Euro will stab the Americans, they will gladly do it and smugly watch the Americans bleed.
· The Arab oil-exporting countries will eagerly adopt the Euro as a means of diversifying against rising mountains of depreciating dollars. Just like the Russians, their trade is mostly with European countries, and therefore will prefer the European currency both for its stability and for avoiding currency risk, not to mention their jihad against the Infidel Enemy.
Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace? Still, we should not forget that currently the two leading oil exchanges are the New York’s NYMEX and the London’s International Petroleum Exchange (IPE), even though both of them are effectively owned by the Americans. It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests. It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.
At any rate, no matter what the British decide, should the Iranian Oil Bourse accelerate, the interests that matter—those of Europeans, Chinese, Japanese, Russians, and Arabs—will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the operation’s exchange:
· Sabotaging the Exchange—this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.
· Coup d’état—this is by far the best long-term strategy available to the Americans.
· Negotiating Acceptable Terms & Limitations—this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d’etat fails, then negotiation is clearly the second-best available option.
· Joint U.N. War Resolution—this will be, no doubt, hard to secure given the interests of all other member-states of the Security Council. Feverish rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.
· Unilateral Nuclear Strike—this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The Americans will likely use Israel to do their dirty nuclear job.
· Unilateral Total War—this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will further alienate other powerful nations. Third, major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions. Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a separate pact with Syria.
Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis—between deflation and hyperinflation—it will be forced fast either to take its “classical medicine” by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.
The Austrian theory of money, credit, and business cycles teaches us that there is no in-between Scylla and Charybdis. Sooner or later, the monetary system must swing one way or the other, forcing the Fed to make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression and an adept Black Hawk pilot, will choose inflation. Helicopter Ben, oblivious to Rothbard’s America’s Great Depression, has nonetheless mastered the lessons of the Great Depression and the annihilating power of deflations. The Maestro has taught him the panacea of every single financial problem—to inflate, come hell or high water. He has even taught the Japanese his own ingenious unconventional ways to battle the deflationary liquidity trap. Like his mentor, he has dreamed of battling a Kondratieff Winter. To avoid deflation, he will resort to the printing presses; he will recall all helicopters from the 800 overseas U.S. military bases; and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency and from its ashes will rise the next reserve currency of the world—that barbarous relic called gold.
However, whilst it was originally scheduled to begin trading in March 2006, a series of 'glitches' pushed the date back. Meantime, the Iranians have already switched from US dollars to Euros when conducting their own oil trades, and have pretty much diversified away from $US-denominated investements..
It now appears the IOB is now finally going to be launched, and soon.
Source: Pres TV
Iran Oil Bourse to deal blow to dollar
Fri, 04 Jan 2008 20:45:41
The long-awaited Iranian Oil Bourse, a place for trading oil, petrochemicals and gas in various non-dollar currencies, will soon open.
Iran's Finance Minister Davoud Danesh-Jafari told reporters the bourse will be inaugurated during the anniversary of the Islamic Revolution (February 1-11) at the latest.
"All preparations have been made to launch the bourse; it will open during the Ten-Day Dawn (the ceremonies marking the victory of the 1979 Islamic Revolution in Iran)," he said.
The Minister had earlier stated that the Oil Bourse is located on the Persian Gulf island of Kish.
Some expert opinions hold inauguration of the bourse cold significantly devalue the greenback.
Now, as we all know, over the past couple of years, the West and Iran have increasingly been at loggerheads. There's been talk of preemptive strikes and full-blown war. More recently, there's been some curious goings on in the world of submarine cable telecommunications systems serving the Middle East.
Source: Market Watch
Third undersea cable reportedly cut between Sri Lanka, Suez
Last update: 5:10 a.m. EST Feb. 1, 2008
DUBAI (Zawya Dow Jones)--A third undersea fibre optic cable running through the Suez to Sri Lanka was cut Friday, said a Flag official.
Two other fiber optic cables owned by Flag Telecom and consortium SEA-ME-WE 4 located near Alexandria, Egypt, were damaged Wednesday leading to a slowdown in Internet and telephone services in the Middle East and South Asia.
"We had another cut today between Dubai and Muscat three hours back. The cable was about 80G capacity, it had telephone, Internet data, everything," one Flag official, who declined to be named, told Zawya Dow Jones.
The cable, known as Falcon, delivers services to countries in the Mediterranean and Gulf region, he added.
"It may take sometime to fix the cut but we are rerouting the traffic to another cable in the U.K. and U.S., the bandwidth utilization will go down," the official said.
There are conflicting reports of how the two Alexandria cables were cut. Oman's largest telecom, Omantel, said a tropical storm caused the damage while du (DU.AI:, , ) , the United Arab Emirates' second largest telecom, said the cables were cut due to ships dragging their anchors.
"It's ship anchoring," said the Flag official.
Curiously Iran wasn't listed amongst those countries affected, acccording to CNN, though it's hard to see how this can be so.
Reports say that Egypt, Saudi Arabia, Qatar, the United Arab Emirates, Kuwait, Bahrain Pakistan and India, are all experiencing severe problems.
Less surprising is the list of countries positivley identified as not being affected.
Nations that have been spared the chaos include Israel -- whose traffic uses a different route -- and Lebanon and Iraq. Many Middle East governments have backup satellite systems in case of cable failure.
So, coincidence? Or is this all part of an overall strategy?
