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The Chinese Govt is greatly irritated by the requirement
to use USDollars in payment for crude oil in the global market. The Beijing
officials finally have some leverage in arranging for a major deal to pay for
crude oil in RMB currency, their Yuan. The negotiations have been in progress
for a couple months. The development is not covered well in the financial
press, not even in the alternative media. It will happen, just a matter of
time. Its effect will be far reaching and likely devastating.
The global currency reserve status for the USDollar is at
severe heightened risk. It will not be deposed via financial markets, like
with a bond market failure or a COMEX gold market default with bust. Such is
folly to imagine as likely to occur. The Western bankers are expert at
rigging the financial markets, one and all. Their central bank bond support
has extended to stock market support, soon to corporate bond wide support
also. The USGovt is hanging onto its power base in increased isolation. The
assaults are on many flanks and platforms.
ESSENCE OF PETRO-DOLLAR
Its essence is the sale of crude oil universally in
USDollar terms. Typically the payment form is the USTreasury Bill. The OPEC
crew typically sock their surplus petro dollars in USTreasury Bonds. The sale
proceeds never exit the USD form. The deal was struck in 1973 by the
Rockefeller agent named Heinz Kissinger. It came in the wake of the abrogated
Bretton Woods Gold Standard, which Nixon violated with force and audacity. In
fact, the arrangement was suggested by the US side of the table. Nevermind
that it was Rockefeller who hatched the idea of a tripled oil price, the
exact opposite of what has been inscribed in the historical annals. The other
little item in the Petro-Dollar defacto standard treaty is that the Saudis,
along with the Gulf Arab neighbors, would buy USMilitary hardware
exclusively. The USGovt would provide them with plenty of regional conflict.
Over the four decades since, the Arabs have accumulated a few cool $trillion
in USTBonds. The TIC Report on foreign bond assets is a gigantic fabrication.
Most Saudi bond holdings have been hijacked and stolen, used as the core to
the USDept Treasury�s vaunted Exchange Stabilization Fund. They will never
see at least $3 trillion in sequestered bonds. A joke here, since the ESFund
is the most secretive multi-$trillion fund in human history.
WEAK LINK IN GLOBAL CURRENCY RESERVE
The global currency reserve consists of the trade
payments done in USD terms, together with the banking systems holding
USTBonds as core assets. The West controls the financial markets, but the
East increasingly controls the global manufacturing capacity. The USEconomy
is heavily dependent upon imported goods within its massive supply chain. To
some extent the producers in Asia, the Pacific Rim, and the Emerging Markets
can dictate terms on trade payment.
SAUDI VULNERABILITY
The Saudis are the subject of occasional debate for a
failed kingdom, a collapsed monarchy, a bankrupted nation, with finances
bleeding red ink like never before in its brief history. Infighting has
occurred to wrest the title of crown prince for Mohammed bin Salman (MbS),
certain to have caused internal resentment and worse. The kingdom is
depleting it financial reserves faster than it is the oil reserves. Deficits
are at astounding levels. The lower crude oil price has resulted in half as
much in revenues, while the filthy Yemen War has aggravated the costs within
the financial ledger. The Saudis have issued bonds to finance their deficits,
breaking new ground and angering some hardline Moslems. Their currency swaps
are occasionally showing danger signals. The incidents with Qatar have left
the Saudis with few if any friends, even in the Arab world. The arms deal
charade with President Trump was one for the comic books. Even Langley is
angry, as MbS screwed up their plans to stabilize the kingdom and region,
with the goal of less terrorism. The other violent clown, Mohammed bin Zayed
(MbZ) is the crown prince of Abu Dhabi in the UAE. Both might soon become
expendable.
LIAR LIAR OILFIELDS ON FIRE
The big fat liars in the oil room are the Saudis. They
have lied about their spare production capacity since the year 2000 or so.
Such lies are used in attempts to move and to control the oil price. They
have lied about their oil reserves for years also. That they have depleted
oil reserves is the perfectly fitting motive for their predatory war in
Yemen. They wish to steal the Yemeni oil & gas reserves, which are enormous
and plentiful, even as not ever mentioned in the dutiful lapdog Western
press. After 50 years of oil production, the Ghawar field is pumping over 98%
water and brine. Other elephant fields are equally tapped out. The Saudis do
have several smaller fields in production, but they do not compensate for the
vacated elephants. Not at all. The Saudis are liars on oil reserves.
ENTER THE ARAMCO DEAL
The Saudis wish to conduct an IPO stock deal on 10% of
the ARAMCO assets and income. They laughingly estimate the total
petro-chemical corporation to be worth US$2 trillion. In response, the
Western energy analysts hopped on the wagon to provide financial analysis of
value. Well, surprise surprise! The analysts estimate the ARAMCO giant to be
worth $500 billion or less, at least four times less than the bloated
exaggerated value posted by the Saudi liar princes. The IPO deal is stalled,
possibly since underwriting brokerage houses might not wish to be the object
of lawsuits in the near future. Meanwhile, the Saudis are sweating badly,
very worried about not having their $200 billion payday. They will be lucky
to have $50 billion in the tainted IPO deal. Below is just one site of the
sprawling state owned complex.
 
CHINA ON WHITE HORSE
The Chinese are always opportunistic. They invest in
trade and structural placements, in the hope of winning commercial partners
and friends. They do not wage war to win their way. The Chinese are observing
the ARAMCO deal and its massive snag. They might hand to the Saudis an
over-valued offer on a gilded platter. China has stayed away from any direct
involvement in the Yemen War. However, they might be the supplier of some
missiles used in Yemen by the native defenders, delivered by the Iran
Military. China might over-pay for a stake in the ARAMCO company for two
reasons. First, they want a toe-hold in the kingdom, in order to win other
trade deals with a degree of exclusivity. They would become a favorite
foreign son in the process, especially if other Western financial houses
refuse to invest in the bloated over-valued petro-chemical firm. Second, the
Chinese would then be in a position to demand that oil sales to China be paid
in Yuan currency, in RMB terms. The ARAMCO investment, large or small, would
serve as leverage to fracture the Petro-Dollar at its home base, within Saudi
Arabia. The shock waves would be heard around the financial world.
COPY CAT DAMAGE AS WILFIRE
Once the Chinese win the privilege to buy Saudi oil in
RMB terms, the other Gulf Arab oil producers will match the offer of selling
oil to the Chinese in their own currency, and NOT in the USDollar. The
Petro-Dollar defacto standard is about to suffer multiple coffin nails. The
rival Gulf Arabs will not wish to lose market share to the Saudis. They will
permit the Chinese payment terms in RMB, a no-brainer. On the other side,
Southeast Asian oil customers will wish to buy crude oil from the Gulf region
generally in currency other than the USDollar. They are fast dumping their
USTreasury Bonds, a trend that has endured for almost two years. The Gulf
Arabs will grant the Asians the right to pay for crude oil in whatever
currency they wish, being very accommodative. The result will be deeply
damaging. The Gulf Region will sell crude oil in non-USD terms on a
widespread basis and significant scale. To be sure, the Saudis and
other Arab rivals will be pressured by the USGovt not to agree to the RMB oil
deal. But Washington has lost most of its prestige and most of its power. The
NeoCons in charge are diverted in their attention with the slightest
temptation toward useless nonsense. The USCongress is a chamber of corrupted
members and babbling fools, the majority of whom are bribed into puppet
status.
GEOPOLITICAL EFFECT
When the Chinese, and Asians in general, begin to buy
Saudi oil, and Gulf oil in general, the entire geopolitical balance of power
will suffer a massive tectonic shift. The Petro-Dollar will be recognized as
dead, no longer the standard. If not dead, it will be regarded as having left
the Intensive Care ward and heading to the Morgue, a white sheet over its
lifeless cadaver, with a cemetery plot being selected. With logic on the
argument�s side, no standard can have such large exceptions on the buyer side
or seller side. The advent of the Dual Universe will have its dawn, with the
USD sphere coexisting with the RMB sphere. The impact will then fall on the
global banking reserves for more avid bond dumping. Concerns will be raised
on how the USGovt and USFed can manage the heaping volumes of dumped USTreasury
Bonds. The derivative machinery will be put to screeching strains, even given
some adverse publicity.
The Asians will shed their USTBonds, in favor of both RMB
bonds and Gold bullion. The game will change in a way to make clear the end
of the King Dollar Era. The great transition from Western sovereign bonds to
Gold bullion will begin in earnest. Forty years of exported inflation will be
reversed, and wreak havoc upon the USEconomy. The United States will be
compelled to create and launch a new domestic only dollar, all in time,
complete with official denials. Let it be dubbed the New Scheiss Dollar,
complete with a long sequence of devaluations. The $500 billion annual trade
deficit will become a major talking point. It will open the door for the United
States to the Third World.
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