Rebels captures Mosul, Iraq’s 2nd largest city

[tupac chopra]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?
Though maybe the threat of doing it gives them leverage. But even threatening that could have massive unintended consequences.
I think it will happen at some point, but China may prefer to choose another time to begin that sort of strategy with the Saudis

 

[Cheerful Charlie]

What I have to ask is, "Where is ISIL getting their weapons from? And who is supplying them with food, fuel, and transport?" Rebellions do not finance themselves. Someone is behind this. My guess would be Saudi Arabia since they are Sunni and the rebels are Sunni, and the Iraqi government is sympathetic to Iran. But what that would mean is that Saudi Arabia is working against US policy in the Mid-East.

On the other hand, I guess that's to be expected. US policy everywhere in the world is so incoherent that one shouldn't expect that our allies are necessarily going to defer to all of our schemes all of the time.

In Iraq, the Iraqi army has dropped their weapons, stripped off their uniforms and ran like rabbits. Lots of arms here for the Islamists. We sure trained those guys real good.

 

[Cheerful Charlie]

I still can't avoid asking the question, "What does this mean for US Saudi relations?" In Syria we have at least not been on the side of al Qaeda in a technical sense. We are presumably only supporting the actual Syrian rebels. But a bombing of Assad would have helped the Saudi-backed Al Nusra Front, the al Qaeda people, as well as the rebels, and it is well-known that the Saudis were furious at us for not launching that bombing attack.

Now we find the jihadists, almost certainly funded by Saudi Arabia, launching attacks against the government that we have installed in Iraq. This suggests to me that there is a significant split in US-Saudi relations which, if not mended pretty quickly, could have more far-reaching implications. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

Stupid rich Saudis have been pouring money into radical Islamicism for decades. This is a result. The stupid Saudi Royals may finally feel the need to decide to deal with the pro-Islamicist factions that are supporting these bastards.
US relarions may be simply pointing out the obvious to them. We can't help you until you help yourselves. But it may be too late.

 

[Togo]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?

Yes. Either they pay more for their oil because yaun is a less useful currency than dollars, or Saudi effectively gets less for their oil, through being forced to accept the same amount in yaun, and the yaun gets devalued as a result.

There's plenty of things the Chinese could do to disrupt the dollar, but this isn't particularly high on the list.

 

[boneyard bill]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?
Though maybe the threat of doing it gives them leverage. But even threatening that could have massive unintended consequences.
I think it will happen at some point, but China may prefer to choose another time to begin that sort of strategy with the Saudis

I doubt that it's on their near term agenda since they have beaucoup dollars that they want to get rid of. However, it is there as a geopolitical weapon as well as an economic weapon and geopolitics could lead them to advance their time table.

 

[boneyard bill]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?

Yes. Either they pay more for their oil because yaun is a less useful currency than dollars, or Saudi effectively gets less for their oil, through being forced to accept the same amount in yaun, and the yaun gets devalued as a result.

There's plenty of things the Chinese could do to disrupt the dollar, but this isn't particularly high on the list.

I agree. If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding. But the Saudi-China connection is just one more weapon in their arsenal. They probably wouldn't have to insist on yuan. They could just insist that Saudi Arabia abandon the petro-dollar and take any other major currency.

 

[J842P]

http://www.ibtimes.com/mosul-bank-robbery-isnt-only-thing-funding-isis-1601124

So I've posted a link to a good article on how ISIS makes it's money. It appears to be mostly through private funding from sympathetic individuals in other Arab countries. Also, they institute a "tax" in the areas they control.

I would hope this would stop the blatant equivocation of Saudi Arabian citizens with the Saudi Arabian government.

 

[tupac chopra]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?

Yes. Either they pay more for their oil because yaun is a less useful currency than dollars, or Saudi effectively gets less for their oil, through being forced to accept the same amount in yaun, and the yaun gets devalued as a result.

There's plenty of things the Chinese could do to disrupt the dollar, but this isn't particularly high on the list.

A collapsed dollar would not do too much for China's exports either. .

 

[tupac chopra]

http://www.ibtimes.com/mosul-bank-robbery-isnt-only-thing-funding-isis-1601124

So I've posted a link to a good article on how ISIS makes it's money. It appears to be mostly through private funding from sympathetic individuals in other Arab countries. Also, they institute a "tax" in the areas they control.

.

They also apparently produce "annual reports" for donors.
Selling terror: how Isis details its brutality

 

[jonatha]

If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding.

Why would the sale of already-issued Treasuries affect the dollar exchange rate?

(I could see the sale of China's dollar reserves having an effect....)

 

[Jason Harvestdancer]

If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding.

Why would the sale of already-issued Treasuries affect the dollar exchange rate?

(I could see the sale of China's dollar reserves having an effect....)

The sale of existing treasuries would have a severe impact on the sale of new treasuries. That would in turn have a severe impact on the interest rate of treasuries. That would then impact the value of the dollar, which would then impact the dollar exchange rate.

 

[Jimmy Higgins]

If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding.

Why would the sale of already-issued Treasuries affect the dollar exchange rate?

(I could see the sale of China's dollar reserves having an effect....)

The sale of existing treasuries would have a severe impact on the sale of new treasuries. That would in turn have a severe impact on the interest rate of treasuries. That would then impact the value of the dollar, which would then impact the dollar exchange rate.

The US pays interest on their Treasuries? Isn't it ridiculously low as it is?

 

[Jason Harvestdancer]

Yes, quite low. In fact, I would say that if treasuries were at actual market values then the interest rate would be much higher.

But governments are only resistant, not immune, to market forces. If China dumps US treasuries, then purchasers can get them from the US of they can get them from China. That means in order to make the ones sold by the US more attractive, the US will have to raise the offered rate.

 

[Jimmy Higgins]

Yes, quite low. In fact, I would say that if treasuries were at actual market values then the interest rate would be much higher.

Good point. Wait.. what? The US is forcing others to buy at these low rates?

 

[Nexus]

One lieutenant-colonel who escaped the militants' sweep over the northern city of Mosul told The Associated Press.

"I am as broken and ashamed as a bride who is not a virgin on her wedding night."

 

[tupac chopra]

Yes, quite low. In fact, I would say that if treasuries were at actual market values then the interest rate would be much higher.

Good point. Wait.. what? The US is forcing others to buy at these low rates?

The only ones who have been buying at these low rates in any size are the FED and Belgium. Belgium is buying for someone else though no one knows who. Some one could be using Special Drawing Rights perhaps.

 

[jonatha]

If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding.

Why would the sale of already-issued Treasuries affect the dollar exchange rate?

(I could see the sale of China's dollar reserves having an effect....)

The sale of existing treasuries would have a severe impact on the sale of new treasuries. That would in turn have a severe impact on the interest rate of treasuries. That would then impact the value of the dollar, which would then impact the dollar exchange rate.

China holds $1216 billion in treasury bonds (http://usa.chinadaily.com.cn/2014-06/17/content_17595524.htm)

Daily volume in the treasury bond market this past May was $468 billion (
https://www.google.com/url?sa=t&sou...r47hcj7WDSxJ8_qbg&sig2=UiKp-HgMhE4yMihaCRaQzA)

So China could totally divest and a week later nobody would have noticed...

 

[boneyard bill]

. Saudi Arabia's biggest market for her oil is China, and if China says we will only pay you in yuan, the petro-dollar would probably be doomed.

that would be pretty negative for China (as well as everyone else), at this time though, wouldn't it?

Yes. Either they pay more for their oil because yaun is a less useful currency than dollars, or Saudi effectively gets less for their oil, through being forced to accept the same amount in yaun, and the yaun gets devalued as a result.

There's plenty of things the Chinese could do to disrupt the dollar, but this isn't particularly high on the list.

A collapsed dollar would not do too much for China's exports either. .

China would pay a price for collapsing the dollar, but it's a price they need to pay anyway. What's the point of exporting real stuff to the US in exchange for dollars that lose value and treasuries that pay less interest than the inflation rate? China needs to transition to selling less of their products to the US and selling more to their own citizens. If the dollar collapses, Chinese products would cost more in the US while US products would cost less in China. The Chinese people would gain. The American people would lose. However, insofar as the Chinese yuan rose against all the world's currencies, Chinese imported raw materials would cost less and this would reduce the price of Chinese manufactured products both at home and abroad. This is why a strong currency is better than a weak one.

 

[Jason Harvestdancer]

It is true that a collapsed dollar will hurt China, but the big question is who would get hurt more?

If one acts on the premise that no country would ever do something that would cause itself harm, then no country ever goes to war because even the victor is harmed by the war ... just not as much as the loser of the war is. Wars are expensive in both dollars and blood, so if no country would ever do something that hurts itself all countries would act to avoid war at all costs. Even massively powerful ones that are bullying some smaller country, because even actions like that have some small cost of blood and money.

Yep, a collapsed dollar would hurt China. So? The question is - do the leaders of China think it is worth it?

 

[boneyard bill]

If China wants to bring down the dollar all they have to do is start selling all those US Treasuries that they're holding.

Why would the sale of already-issued Treasuries affect the dollar exchange rate?

(I could see the sale of China's dollar reserves having an effect....)

Why would a glut of new stuff coming onto the market of any product reduce its price? China has been holding US Treasuries as a reserve for its own currency. Hence, those dollars have been out of the market. But it doesn't need dollars for reserves anymore. It has negotiated currency swap agreements with most of its trading partners so they settle their accounts in each others currencies and don't need dollars to do that. So if they sold those treasuries, the price would go down and other countries would be encouraged to sell their treasuries as well before the price went lower.