Infinite Unknown

The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.

Traders at the Kuwaiti Stock Exchange

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now - irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency - dubbed “Gulfo” - is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk. Continue reading »

Tags: Bahrain, Dollar, Economy, Euro, Global News, Gulf States, Kuwait, Middle East, Oil, Oil Prices, Politics, Qatar, Saudi Arabia

Lord Davies of Abersoch, the Trade Minister, flew to Saudi Arabia last night to try to defuse a growing dispute that bankers say could do as much damage to the Gulf’s bruised financial reputation as the Dubai shock of ten days ago.

Bankers are furious that two defaulting Saudi conglomerates that owe $20 billion (£12.2 billion) appear to be favouring local banks over foreign creditors. State-owned Royal Bank of Scotland, HSBC and Standard Chartered are all understood to have exposure to Saad Group and Ahmad Hamad Algosaibi & Bros (Ahab). Dozens of other Western banks are also owed money, including Citigroup and BHP Paribas.

Bankers suspect that the two family-owned businesses, which defaulted over the summer, have privately reached agreement with local Saudi banks over restructuring their loans while leaving foreign banks in the cold. One senior banker told The Times yesterday: “Local banks appear to have been given preference.”

The dispute, unless resolved soon, is certain to trigger fresh concern about doing business in the Gulf in the wake of the Dubai calamity. Dubai World, a Government-owned conglomerate, stunned global financial markets last month by announcing a standstill on paying interest, sending bond markets into a tailspin.

Lord Davies is embarking on a trade mission with 40 senior British business figures, visiting Jedda and Riyadh. The trip was planned months ago, but the Saad row adds urgency.

Continue reading »

Tags: Banks, Economy, Government, Middle East, Politics, Saudi Arabia

Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange.

The decision by the world’s biggest oil exporter could encourage other producers to abandon the benchmark and threatens the dominance of the world’s most heavily traded oil futures contract. It is the main contract traded on Nymex.

The move reveals the growing discontent of Riyadh and its US refinery customers with WTI after the price of the price of the benchmark became separated from the global oil market this year.

Continue reading »

Tags: Economy, NYMEX, Oil, Politics, Saudi Arabia

From the article:
“These plans will change the face of international financial transactions,” one Chinese banker said. “America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.”

Robert Fisk’s report is accurate and the following denial is just disinformation:

-  Oil states say no talks on replacing dollar (Reuters):
ISTANBUL/SYDNEY (Reuters) - Big oil producing nations denied a British newspaper report on Tuesday that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.

The dollar eased in response to the report, which was written by The Independent’s Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.

The plan is to bring down the US. The US constitution is still a major threat to the ‘New World Order’ and the elite.

US citizens need to be disarmed, their freedoms and the dollar need to be destroyed, so that the new global currency and the ‘New World Order’ can be established.

The elite wants to turn the US into a Third World country.

Prepare yourself for the greatest collapse in history.

Got gold (silver, food, water, guns and ammunition)?

- Gold Jumps to Record High as Inflation Outlook Fuels Investor Demand

In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading

Iran announced late last month that its foreign currency reserves would henceforth be held in euros rather than dollars.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.

The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.”

This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region’s conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves.

Continue reading »

Tags: Abu Dhabi, Brazil, China, Dollar, Economy, Euro, France, Gold, Iran, Japan, Kuwait, Middle East, Oil, Politics, Qatar, Russia, Saudi Arabia, U.K., U.S.

The value of military hardware manufacturers has soared.

Global military spending rose 4% in 2008 to a record $1,464bn (£914bn) - up 45% since 1999, according to the Stockholm-based peace institute Sipri.

In contrast with civilian aerospace and airlines, the defence industry remains healthy.

“The global financial crisis has yet to have an impact on major arms companies’ revenues, profits and order backlogs,” Sipri said.

Peace-keeping operations - which also benefit defence firms - rose 11%.

Missions were launched in trouble spots such as Darfur and the Democratic Republic of the Congo.

“Another record was set, with the total of international peace operation personnel reaching 187,586,” said Sipri, or Stockholm International Peace Research Institute.

Growth industry

As the world’s aerospace and defence industry prepares for next week’s Paris air show centenary, it seems much of the focus is set to shift away from troubled civilian aircraft makers, which are struggling with reduced orders from recession-hit airlines, towards the companies that make fighter jets and other military hardware.

The top 10 global arms producers - Boeing $30.5bn - BAE Systems $29.9bn - Lockheed Martin $29.4bn - Northrop Grumman$24.6bn - General Dynamics $21.5bn - Raytheon $19.5bn - EADS (West Europe) $13.1bn - L-3 Communications $11.2bn - Finmeccanica $9.9bn - Thales $9.4bn Source: Sipri All figures from 2007.

In total, the 100 leading defence manufacturers sold arms worth $347bn during 2007, the most recent year for which reliable data are available.

Almost all the companies were American or European. Some 61% of the total was accounted for by 44 US companies, with 32 West European companies accounting for a further 31%. Other companies were Russian, Japanese, Israeli and Indian.

“Since 2002, the value of the top 100 arms sales has increased by 37% in real terms,” Sipri said. “The US presidency of George W Bush… was a period of continuity in the arms industry. This followed a period of consolidation in the 1990s and early 2000s.”

The US aerospace and defence giant Boeing remains the world’s largest, with arms sales of $30.5bn during 2007. The UK’s BAE Systems ranked a close second, with arms sales of $29.9bn, while Lockheed Martin was third with $29.4bn in sales.

Big spender

The US remains the biggest spender, accounting for 58% of the total global spending increase during the decade, though China and Russia have reduced the gap.

The top 10 military spenders -USA $607bn -China $84.9bn - France $65.74bn - UK $65.35bn - Russia $58.6bn - Germany $46.87bn - Japan $46.38bn - Italy $40.69bn - Saudi Arabia $38.2bn - India $30.0bn Source: Sipri. All figures from 2008.

Both tripled military spending over the decade, and Russia “is maintaining plans for further increases despite severe economic problems”.

Military spending in the Middle East fell slightly during 2008, but Sipri saw this as a temporary drop. “Many countries in the region [are] planning major arms purchases,” Sipri said.

One exception was Iraq, whose military budget rose 133% during 2008 when compared with 2007. “Iraq remains highly dependent on the US for ams supplies, with numerous orders planned,” Sipri says.

US military spending accounted for 58% of the total global spending increase during the decade, with extra funds set aside to fight the “war on terror”.

In addition, the wars in Afghanistan and Iraq cost the US $903bn.

“The idea of the ‘war on terror’ has encouraged many countries to see their problems through a highly militarised lens, using this to justify high military spending,” said Sam Perlo-Freeman, head of the military expenditure project at Sipri, or Stockholm International Peace Research Institute. Continue reading »

Tags: China, France, Germany, Government, India, Italy, Japan, Military, Politics, Russia, Saudi Arabia, U.K., U.S.

Saudi Arabia dwarfs other states in the region and analysts say there is concern that a common currency would serve to concentrate power in Riyadh

A project to establish a common currency for the Gulf has been dealt a near-fatal blow with the decision by the United Arab Emirates to abandon monetary union after disagreement with Saudi Arabia over the location of a future central bank.

The loss of the Emirates to the currency project could accelerate decisions within some Gulf states to diverge from Saudi Arabia’s desire to maintain a currency peg with the dollar. This could lead eventually to the UAE, the Gulf’s most sophisticated economy, floating its dirham, analysts in the region said.

The UAE attributed its decision to quit the Gulf Cooperation Council (GCC) project to the choice of Saudi Arabia as host of the key monetary institution.

Evidence of mounting rivalry and distrust between the Gulf’s two biggest economies emerged two weeks ago, when a meeting of the GCC voted to locate the central bank in Riyadh. UAE officials expressed reservations about the decision. The choice of Riyadh would enhance the physical presence of Saudi Arabia within the GCC, as the organisation’s secretariat is already headquartered in the Saudi capital.

The UAE is the second state in the six-member GCC to pull out of the common currency, which was due to be launched next year. Oman had said already that it would not take part, but the loss of the Emirates, which has the greatest international trading links, makes it unlikely that the project will get off the ground.

Continue reading »

Tags: Bahrain, Economy, Gulf Cooperation Council, Kuwait, Politics, Qatar, Saudi Arabia, United Arab Emirates

by Prof. Michael Hudson

I am traveling in Europe for three weeks to discuss the global financial crisis with government officials, politicians and labor leaders. What is most remarkable is how differently the financial problem is perceived over here. It’s like being in another economic universe, not just another continent.

The U.S. media are silent about the most important topic policy makers are discussing here (and I suspect in Asia too): how to protect their countries from three inter-related dynamics: (1) the surplus dollars pouring into the rest of the world for yet further financial speculation and corporate takeovers; (2) the fact that central banks are obliged to recycle these dollar inflows to buy U.S. Treasury bonds to finance the federal U.S. budget deficit; and most important (but most suppressed in the U.S. media, (3) the military character of the U.S. payments deficit and the domestic federal budget deficit.

Strange as it may seem ­ and irrational as it would be in a more logical system of world diplomacy ­ the “dollar glut” is what finances America’s global military build-up. It forces foreign central banks to bear the costs of America’s expanding military empire ­ effective “taxation without representation.” Keeping international reserves in “dollars” means recycling their dollar inflows to buy U.S. Treasury bills ­ U.S. government debt issued largely to finance the military.

Continue reading »

Tags: Bailout, Banks, Barack Obama, Ben Bernanke, Bonds, Central Bank, China, Debt, Dollar, Economy, EU, Fed, Federal Reserve, Financial Crisis, Government, Japan, Military, Obama administration, Politics, Saudi Arabia, Stock Market, Treasury, U.S., Wall Street

I have not published this to criticize Peter Schiff. He just tells it like it is. This is not unpatriotic. This is the truth. The truth ranges far above patriotism.

(I could get carried away here by saying that: “Truth is the basis of love, without truth love cannot grow.”)

And NO, I am not a follower of Peter Schiff either. I disagree with him in several points:

1. I know that there is an elite out there, that manipulates the economy into the Greatest Depression ever. He believes that the government and the Fed are only ignorant and incompetent.

2. I am pretty sure that the price of oil will not go up for a while.

3. I told everybody to get out of the stock markets in Oct./Nov./Dec. 2007 and move into gold and invest into self-sufficiency. (Peter Schiff also advised to buy gold and thinks that gold will rise above $ 2000 an ounce in the very near future and then higher and I totally agree on that.)

With everything else that comes to my mind right now, Peter Schiff is in my opinion spot on and will be proven right again in the future.

I am grateful that there are at least some great minds left that speak their truth, no matter what mediocrity thinks about them. If you want to learn something about economics, then listen to Ron Paul and Peter Schiff.

14. Februar 2009
Source: YouTube

Tags: Dollar, Economy, Food, Food shortages, Gold, Peter Schiff, Politics, Saudi Arabia

Saudi Arabia Bond Offering

Saudi Arabia has begun its third bond offering in a month in money markets unsettled by rising dollar interest rates and uncertain oil prices.

The Saudi Arabian Monetary Agency, in a telex Saturday, offered banks 1.5 billion riyals, or $400 million, worth of Government development bonds in one-to-five-year maturities.

Related articles:
- Saudi minister calls low oil prices unsustainable (Houston Chronicle)
(Saudi Arabia needs oil prices to be above $ 70/barrel to survive.)
- Saudi Arabian banks may cut their foreign assets (Emirates Business):
(Saudi Arabia is going down, that is why the banks cut their foreign assets. Soon Saudi Arabia will have to sell U.S. Treasuries and that is when all hell will break loose.)

The offering came amid strong speculation among bankers that the Government, squeezed by falling oil revenues and a dollar firming on international exchanges, would soon devalue the riyal.

Continue reading »

Tags: Bonds, Economy, Saudi Arabia

Don’t miss:
- Lindsey Williams: The Dollar And The US Will Collapse; Saudi Arabia And Dubai Will Fall; US Will Be Third World Country; The Greatest Depression Is Coming
- Ron Paul on Glenn Beck: Destruction of the dollar
- Jim Rogers: I Would Sell All Government Bonds
- Jim Rogers: US creditor nations to shun Treasuries
- Time to Sell Treasuries, Biggest Korean Fund Says
- U.S. Treasuries bubble about to blow: Societe Generale
- The Bond Bubble - Marc Faber, Peter Schiff, Max Keiser
- Peter Schiff: We are the United States of Madoff
- Peter Schiff: The World Won’t Buy Unlimited U.S. Debt
- China’s US bond appetite to slow: economists
- Willem Buiter warns of massive dollar collapse

1 of 4:

Source: YouTube

Continue reading »

Tags: Alaska, California, Congress, Dubai, Economy, Fed, Federal Reserve, Government, Lindsey Williams, New World Order, Oil, Oil Prices, Politics, Saudi Arabia, Taxes, Treasury, U.S.