| Topic: De-dollarisation is no myth |
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| 1. Author: OzPar Date: Fri 14th Jun 2024. 06:24 Any thoughts that de-dollarisation is a myth should be put to bed by the announcement that Saudi Arabia will not renew the 50-year petrodollar agreement with the United States. Instead, it will sell oil in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan. The BRICS alliance`s strategy, which focuses on reducing dollar dependency and promoting multiple currencies for trade, is more than just a shift. It`s a potential game-changer in the global energy market. Saudi Arabia`s decision to align with BRICS` goals by ending oil transactions in dollars could enhance its influence and contribute to dollar devaluation. The association`s ten members include Brazil, Russia, India, China, and South Africa. New members Egypt, Iran, UAE, Saudi Arabia, and Ethiopia joined the grouping in 2023. A dozen more countries, including Turkey and Venezuela, which holds the world`s largest oil reserves, have applied for membership this year. Russia took over the chairmanship of BRICS on January 1. In 1994, the Western economic grouping G7 (US, Canada, UK, France, Germany, Italy and Japan) represented 45% of world output. BRICS, as it is currently constituted, represented 18%. Now, it has flipped. The BRICS countries are about 36% of world output - double what they were 30 years ago, while the G7 countries are now about 29%. It is no coincidence that Russia, China, Iran, and Venezuela have all been subject to US trade and economic sanctions in recent years. Therefore, it is with good reason they want to end the dollar`s dominance in trade negotiations. The US economic outlook has never looked grimmer. With a debt of 34 trillion dollars rising by a trillion dollars every quarter, political leadership on both sides offers no alternative to rising debt. If the key commodity traders across the globe choose to abandon the dollar in favour of their own or other currencies, America`s goose will be cooked. Those leaders in Russia, China, Iran, and Venezuela may be reflecting on the old saying, "Don`t get mad, get even!" Reply |
| 2. Author: hurricane_jimmy Date: Sat 15th Jun 2024. 02:02 Hate to tell you Oz, but it is. How many countries keep reserves of Yuan or Roubles? How many countries store a chunk of their sovereign assets in Russia and China? The answers to these questions are key because consumer trust is an integral part of growth economics. With regard to the Petrodollar, there are a few points to make: - First and Foremost, Saudi Arabia are enacting Vision 2030, which is a concerted attempt to move their economy away from Oil. Whether they meet this in time or not, who knows but that is the direction. - Demand for Oil will not be what it was and the US, EU and other large economies are moving toward EVs, hence why the Saudis are pushing vision 2030. China and India are both pushing in this direction too and their use of oil for development will be limited as green technology takes over. Lithium and Gallium are likely to be more prominent commodities going forward. - The Saudis are attempting to take a stance to (rightly I would add) force the US to rethink its support for Israel over Gaza. It is quite likely that a new deal will be agreed. If not, then, as was the case with natural gas in Europe, the required oil will be sourced elsewhere such as from Canada, Australia or the North Sea. - It is actually possible to buy oil in currencies other than the dollar as things stand - you can look into the mechanisms for this. - This announcement was made several days ago and there has been virtually no reaction by the markets. As for BRICS: - India will be the next superpower and are playing their cards well by getting what they need from the West and natural resources from Russia and the Middle East. They are far more likely to put their eggs in the US/EU/Western basket when push comes to shove. - China is in a REALLY bad state economically and much of their economic data is fabricated, which undermines a chunk of the figures you quote. They have largely failed to urbanise and about 30% of their economy (property) is being kept afloat by the Central Government. Their National Railway company is the most indebted company in history and the Government are already struggling to service that debt. Moreover, they have been quite successful in p*ssing off most of their neighbours and the West. It is predicted (by the same organisations that forecast the same in Japan and Korea) that China will lose almost half its population by 2100. These ingredients are not gonna create a recipe for growth. - As far as I`m aware, Saudi Arabia are actually yet to join formally. Of the other countries, Ethiopia and Brazil are the ones that have big potential. South Africa have big problems with corruption, governmental organisation and crime which really holds them back. Egypt have massive problems with Governmental stability and really haven`t grown that much in decades as far as I`m aware. The UAE`s growth depends on how well they can transition away from oil. India and China however... Post Edited (Sat 15 Jun 02:02) Reply |
| 3. Author: hurricane_jimmy Date: Sat 15th Jun 2024. 02:02 India and China however DESPISE each other and you will have a massive power struggle in this organisation going forward particularly between these two and the Russians also suffer from never having had to reflect on their own Imperialism and will not take kindly to being relegated to junior partners. We are likely to see a more multipolar world going forward with the EU, US leading the way and India and ASEAN becoming more and more prominent over the rest of the century. MERCOSUR will also be interesting to watch. Asia is the continent to watch going forward and India, Indonesia, Vietnam and potentially the Philippines are the places to watch. And these countries are all potentially united by their dislike of the CCP. Reply |
| 4. Author: OzPar Date: Fri 21st Jun 2024. 06:38 I don`t know where to start with this stuff, HJ. It is way too challenging to take something so devoid of reality seriously. I can only assume that you have been overdosing on the deranged rantings of that "geopolitical analyst" Peter Zeihan. He has spent the last couple of decades painting China as being on the edge of economic collapse, facing a demographic nightmare, and being universally hated; in other words, everyone`s bogeyman. This is disaster porn. He is wrong on almost every measure. China faces economic challenges, but it has the wherewithal to respond. How come 35% of the world`s economic growth last year came from China (source: IMF)? Like most other countries, there are demographic issues, but the retirement age in China currently is 60 for men and 50 to 55 for women, based on their jobs. The retirement age can be raised, so there is leeway, and AI will likely pick up any slack. Is China hated? Then why are over a hundred countries cooperating with China on its Belt and Road initiative? Some countries have signed multi-decade agreements with China in this respect. Ask the Africans if they prefer roads and railways and schools and hospitals to tanks, guns and patrol boats! Zeihan forecasted Russia`s economic collapse after the Ukraine conflict. He praised the sanctions and was uncomfortably jubilant when the Nord Stream gas pipeline was blown up. Still, he couldn`t foresee China and India stepping up and buying more oil and gas from Russia, all paid for in their currencies. Not a US dollar to be seen. You say the yuan and the rouble have no value. Really? Of course, they have value! For example, the yuan is one of the five elite currencies that make up the IMF`s Special Drawing Rights (SDR) basket. In international trade, SDRs represent a claim to currency held by IMF countries for which they may be exchanged. Even the Australian iron ore giants accept yuan as payment for their products. You discuss countries like China, India, and Russia as mere pawns on a chessboard dependent on the guiding hands of US and European grandmasters. And you have the gall to suggest that we will likely see a more multipolar world going forward, with the EU and the US "leading the way" and India and ASEAN becoming increasingly prominent over the rest of the century. In a jolly old colonialist fashion, you add, "MERCOSUR will also be interesting to watch." Sadly, HJ, you just don`t get it. The earth has already tilted, and the centre of gravity has moved east. Did you not note the true significance of Putin`s visit to Pyongyang this week? This was Putin demonstrating to the West that his country spans much of the globe. It does not just face Europe. It faces the Middle East, South Asia and East Asia, where most of the world`s population lives. (Continued...) Post Edited (Fri 21 Jun 06:39) Reply |
| 5. Author: OzPar Date: Fri 21st Jun 2024. 06:40 BRICS is a practical demonstration of the new alliances forming across the global south. Before long, that familiar term, global south, will disappear and be replaced by a far more appropriate term: global majority. Putin’s visit was also a timely reminder to Washington that Russia faces both coasts of America. Reply |
| 6. Author: hurricane_jimmy Date: Fri 21st Jun 2024. 23:18 Deary me Oz, it definitely seems like you`re lapping up the CGTN and TASS narratives and not actually looking beyond the surface. The vast majority of the stuff I`m saying about China comes from actually working in Hong Kong where we`re dealing with global companies and Mainland Chinese companies on a daily basis. Can you say that you have such experience? One of the really interesting things is that you`ll find several of the high level officials in China have granted their family members Hong Kong or Macau passports because the SARs allow dual nationality and also access to Mainland China, whereas the Mainland itself doesn`t allow dual nationality. Xi Jinping`s daughter actually holds American citizenship. Now, if China`s economic prospects were so great, why would the elites be keeping their assets abroad? I think you need to properly grasp the idea that China is not what it seems on the surface. If you go across the border to Guangzhou or to Shenzhen, you`ll see all these fancy skyscrapers that are used to project the narrative that "China is advanced", "China is the future" etc but you`ll find that big chunks of these buildings are actually empty and they`ve turned out to be what they call "White Elephant" developments and there are even several of these "Ghost Cities" across China. I`ve seen this first hand. Mainlanders are not allowed to move more than 50,000 RMB abroad in a given year (ca- 5400GBP at today`s rate) and so property was one of the few ways to invest that they had access to. Many couples were going as far as getting paper divorces so that they could own more than two apartments and this was or is the grassroots of the problems the property sector now faces. Funny thing is that the folk never even own the property properly as its only on a 70 year lease from the Government. Why do you think that Mainlanders are so focussed on investing in property? The answer is because they can`t invest in anything else because they`re not allowed to. I could put you in touch with several Mainlanders who would tell you this. I`m seeing the mass Youth Unemployment in the Mainland first hand, the scrambling of Mainlanders to try and land a job in Hong Kong as a route out of the Mainland, the withdrawal of companies from Hong Kong to Singapore as they shift their focus to Indonesia, Vietnam and India. Post Edited (Fri 21 Jun 23:43) Reply |
| 7. Author: jake89 Date: Fri 21st Jun 2024. 23:38 I have a friend in Beijing. He`s very careful what he says but anyone suggesting China is in a good way is way off the mark. Reply |
| 8. Author: hurricane_jimmy Date: Fri 21st Jun 2024. 23:40 Your 35% figure relating to Chinese growth from the IMF actually refers to the last DECADE and not the last year. In any case, again, you need to take this figure with a pinch of salt because of the data fabrication that comes out of the Mainland - this is something I deal with in work on a daily basis. China`s gotta "keep face" y`ken? You talk about retirement ages in the Mainland being lower than in the West. This was actually aspect I hadn`t considered but it reminds me of a phenomenon you see in Japan, where the Liberal Democratic Party have had a rude awakening because they have been shaping policy for decades to favour the OAPs who compose the largest part of the electorate, but recently reality has hit home that folk ain`t having kids. My son is schooled in Osaka and over his 5 years thus far, we`ve basically had to pay less out of our own pockets for his education as the government ramps up subsidies to encourage folk to have children. Similar things are happening in South Korea and Taiwan. To switch back to China though: Are you aware that China doesn`t provide universal healthcare for its citizens? nor free education? Are you aware that there is a huge problem with homelessness? Or of the true figures of people that are still in poverty? Many are not aware of these things. The lifting of the One Child policy really hasn`t had an effect because people simply can`t afford to meet the costs that child rearing brings in China. It`s quite interesting as Families in the mainland pour almost everything into their child`s education and this is a mentality that has existed since Deng Xiaoping as its seen as an investment toward retirement, i.e. "my children will take care of me when I`m old because the state won`t". That`s not a system that will hold in the longer term and it will leading to the continuance of stuttering economic growth. I studied quite a few courses in Economics and Asian Economic history, so I do have a fairly good grounding in many of the issues seen over here. The reality is that China is at a crossroads where, in order to properly move to the next tier of development, they`ll have to open up and become a properly global free market economy. The choice is to seal off to the rest of the world and focus on their internal market (which is developing the capital required to generate said growth hence the focus on BRI) or to open up properly (which would likely result in the demise of the CCP). There isn`t even a debate over what direction they will take and they will do everything to protect the system as it stands. Reply |
| 9. Author: hurricane_jimmy Date: Sat 22nd Jun 2024. 00:14 The Belt and Road Initiative is an interesting one. You`ve accused me of having a colonialist mentality but if you actually go and look at the BRI in operation in Africa, you`ll find some interesting things - many of them very neo-colonial in nature. Firstly, despite the promises to help train local workers in places like Ghana, Kenya, Angola etc this virtually never happens and they simply import workers from Mainland Chine. This is leading to much more public anger toward the Chinese and BRI. Of course, you have to consider that in Africa politics simply doesn`t work in the same way and so there is no guarantee that public dissatisfaction will result in an effective change in policy. There was a trend somewhere (I forget which social media platform it was - mabe tiktok ironically) I believe in Kenya where locals were furious that the Chinese workers had built their own shopping mall but the locals were being denied access to shopping there and this thing went viral across the continent with others in other countries showing the same. So public support of the BRI in developing countries is quite questionable. Again, the BRI is something that you really need to scratch below the surface with and a number of countries are now turning instead to the EU and US initiatives as an alternative, although these have been slow to get off the mark thus far. I`d certainly be very curious to see how many schools China has built in Africa that locals actually have access to. I`d have an educated guess and be willing to bet that that figure is very close to zero. Most of the roads are from the likes of mines and oil refineries to ports rather than benefitting locals. And then they crumble within a few years. Much of the money from the exploitation of these natural resources also never reaches the locals either, as was the case in the European colonial times. As for BRICS, a word I have seen used often is "Transactional" which is probably about right. You ignored quite a few specific points that were made earlier about it for whatever reason The Indians will overtake the Chinese if the latter doesn`t make some quite drastic changes, which I can`t see happening willingly. You`ll have the same thing with China as was seen with the USSR: Everything will seem fine until suddenly when its not. At that point, things will move very quickly. As for Putin, the North Korean thing is quite funny in all honesty because it shows how alienated he has become. Of course, you`re buying into the whole "The West started the Ukrainian war" narrative but the reality is that Putin is simply determined to create some sort of legacy for his name and he can`t stop what he started because he will lose power and likely his life. Can you imagine what Russia might have achieved had it developed at the same rate as, say, Poland, instead of being riddled with systematic corruption. Now there is some food for thought... Reply |
| 10. Author: OzPar Date: Wed 23rd Oct 2024. 02:09 BRICS is meeting in Kazan, Russia, now. De-dollarisation is no myth. It is happening. The global majority is speaking, and the financial world is about to change forever. Reply |
| 11. Author: hurricane_jimmy Date: Wed 23rd Oct 2024. 09:01 Oh dear, more fake news from our resident Info Wars Bureau Chief. Over 90% of trade still takes place in USD. You really need to delve deeper into what`s going on with the Chinese economy and you`ll see that it is far from the rosy picture they`re trying to paint. I`m dealing with that at work every day with companies heading to Singapore and others. A wee wander around Shenzhen last weekend showed many abandoned construction sites and empty shiny new LED-laden office blocks. The bubble has burst and now they`re facing a demographic crisis that Dwarfs Japan`s. Getting India and China to agree to anything is a hiding to nothing, but India will overtake China as the leader of global growth by the end of the decade. They`ve played their cards very well by taking their oil from Russia at a reduced price but they run the risk of falling into the same middle income trap as China if they don`t grow fast enough, quickly enough. And to do that you need Western Technology. India could really do something special with their expertise in IT over the next few decades. India and China hate each other and that simple fact will hinder BRICS from being able to properly challenge the current world order. Put on top of that that the CCP has largely peeved off all the other Asian countries and there is talk of an Asian NATO and yeah... Once again, you are buying into the Kremlin and CCP narrative, whereas if you actually understood economics and policy making you`d be able to contribute something other than propaganda. Reply |
| 12. Author: The One Who Knocks Date: Wed 23rd Oct 2024. 09:09 Not in our lifetime Oz. And although my eyes were open They just might as well be closed Reply |
| 13. Author: DBP Date: Wed 23rd Oct 2024. 11:00 The think I understand, but don’t get is why we’re outsourcing our required technology skills and data to places like India? Yes they’re 1/8 off the price (although probably 4 times slower, not including the issue of distance to customers means more rework)… But what happens when we’re fully reliant on them and a) India cosy’s up to their Russian, Iranian etc pals and we fall even further out with them? Or even b) the climate issues get even worse - some Indian cities are already exceptionalism major problems. Yet to save some short sighted costs, companies like (uk centric, helping Britain prosper!) Lloyds banking group, which includes bank of Scotland, are binning they’re it engineers over here and opening technology centre offices in India?) Ps I’m a customer of BoS and don’t work for LBG, so this is a general observation Reply |
| 14. Author: jake89 Date: Wed 23rd Oct 2024. 14:58 My primary concern with any outsourcing is the checks around data access. Banks in particular have loads of sensitive data about people. This is pie in the sky, but imagine another political power finding out the PM has numerous OF subs and is a regular down the bookies? Reply |
| 15. Author: P Date: Wed 23rd Oct 2024. 21:11 DBP, Wed 23 Oct 11:00 I do work for LBG and have been to the Hyderabad campus and know this area in great detail and it’s not driven by costs. The technical skills are simply not available here and the availability and quality of technical capability there absolutely pi$$ es all over what is available here. The resource that is being replaced is contingent ie contract & non permanent resource. There are permanent job losses in the UK but they do not map directly to the technology centre. This is all information that is in the public domain but as always this sort of story is presented to in a certain way to miss key facts. If you have seen the technology campuses and the resources spent on developing skills you would be more properly questioning why we as a nation are not creating those opportunities for our youth or if we are why they are not taking them instead of being left behind as a country Reply |
| 16. Author: P Date: Wed 23rd Oct 2024. 21:15 jake89, Wed 23 Oct 14:58 It’s not outsourcing it’s a permanent operation (that will massively reduce the use of existing outsourced technology resource that is already being used in India) and amazingly access and use of data is considered as well as security and impacts to the customer along with decision making powers. Banks are highly regulated and what they can and cannot do in different geographic jurisdictions is poured over in great detail. It’s not a case of banging a cable in and hiring a load of unvetted desk jockeys and firing random work and systems access at them without any control. Post Edited (Wed 23 Oct 21:19) Reply |
| 17. Author: DBP Date: Wed 23rd Oct 2024. 22:16 I`ve edited my post from a basic question (did that while talking the dog round the block for her final pitstop) I`ve worked/supported multiple organisations and seen first hand lots and lots of Indian technology delivery teams and uk based technology teams over my almost 30 years career and my experience is the complete reverse. you state that Indian IT engineers urinate over their uk counterparts, whereas my experience is that they are slower, their output generally isn`t as good and often requires rework refactoring and the fact that they are distant from an organisations clients / customers can often mean that their output doesn`t quite hit the mark or requires a lot more upfront direction etc. But I`d argue that your opinion and mine or both opinions, and if we took of our paradigm goggles the reality would be some point between those to opposing views... however, what I believe are true statements are the following: - Lloyds Banking Group (or LBG to use common parlance) are investing in offshoring their IT Engineering capability to India - LBG are paying their offshore IT Engineers based in India less that they would have to pay a UK based equivalent IT Engineer - There will be individuals in India who have access (direct, inderect or the ability to access) to UK Customer information - India is a founding member of BRICS (hence the I in the name), their PM is currently in Moscow and forming deeper alliances with countries like Russia, China and Iran; these are countries that the UK deems a threat, and in some cases has imposed sanctions (post below lists a few of the general BRICs objectives, I`d add a way for sanctioned countries to bypass those sanctions) As an LBG customer for even longer my 30 year career, my view on the above is that I do not believe investing in India`s technology capability aligns with the mission statement of helping Britain prosper, and considering the location and who they are keeping friends with, I am concerned on several fronts, about my own financial data and technical dependency Post Edited (Thu 24 Oct 08:17) Reply |
| 18. Author: OzPar Date: Thu 24th Oct 2024. 07:20 Here is a statement from the BRICS meeting... “There is an urgent need to reform the international financial architecture,” Xi Jinping said today. “BRICS must play a leading role in promoting a new system that better reflects the profound changes in the international economic balance of power,” he added. The blockchain-based BRICS pay system has always been viewed as a key de-dollarization development. For the bloc, it presents a chance to circumvent Western financial infrastructure like the SWIFT payment platform. Therefore, it presents an opportunity for nations within the group to promote the use of their currencies for trade. Reply |
| 19. Author: P Date: Thu 24th Oct 2024. 11:10 Fair points DBP and I could probably answer quite a lot in more detail but am not permitted to but I can address a couple; - Indian external sourced engineers are being replaced by internal permanent engineers so the cost comparison to UK engineers is not relevant (although I’m privy to some eye opening info in that regard) - Indian resource js used already because try as LBG might they simply cannot source the required resource in the UK in the volumes required for wholesale transformation or a legacy technology organisation - There is zero access to UK data in the present build, its is not customer servicing and it is not allowed to do anything impacting customers. LBG special auxiliary services exemption under Ring Fencing expressly forbids it (Edinburgh reforms could change that) and any activity that Indian authorities interpret as banking related would sever tax penalties so another reason to be careful. - I agree it conflicts with helping Britain prosper especially as it grows but see point 2 on if Britain isn’t providing the skills in the volumes required then commercial concerns should do the best for their shareholders - on Indian capabilities I agree there are limitations and can add some are driven culturally through a overly hierarchical culture and over willingness to ‘do’ when there may be a lack of capability or clarity As for being a member of BRICS as a reason not to partner with India I think that’s a major stretch and the amount of industry placed in India from the west especially US banks I doubt they would hobble their economy to cost up to Putin Reply |
| 20. Author: OzPar Date: Thu 24th Oct 2024. 11:32 HJ: Oh dear, more fake news from our resident Info Wars Bureau Chief. Over 90% of trade still takes place in USD. === There’s a boring predictability about these HJ posts—it`s like listening to a broken record. I appreciate your passion for this topic, HJ, but we are circling back to the same points. Do you think there is something new we could explore or maybe a different perspective to consider? If you cannot do that without resorting to childish insults, I will have nothing more to do with you. It’s true that most trade currently takes place in US dollars—88%, actually, but I will give you that point. However, only 56% of international trade invoices are in dollars, and both those percentages will reduce after the events this week in Kazan. For an allegedly unpopular leader who is said to be “on the nose” in world politics, Vladimir Putin seems to have done pretty well assembling 36 presidents and prime ministers of countries representing about half of the world’s population and a fair chunk of its wealth. Arguably, BRICS is now the most important economic bloc in the world, surpassing the G7 in economic output. BRICS is not a military alliance. It has nothing to do with outsourcing. It concerns finance, trade, economics, culture, education, and scientific advancement. BRICS is a group of countries determined to forge strong relations with all emerging and developing economies and resist the pressures of unilateral US sanctions, which have grown in recent years. By the time the meeting ends on Sunday, BRICS will demonstrate that it is no longer feasible for the United States and its allies to impose these unilateral coercive measures, which are against international law. Until now, individual countries have found it hard to resist these bullying measures. This is where it ends. I may be wrong, but I see BRICS as forming the basis for a genuinely multilateral/ multipolar world. It should not be interpreted as an anti-West response. Indeed, countries like Australia and New Zealand would have much to gain from being inside this community. Maybe even some European countries? Greece? France? Much has been made of Australia’s military ties with the US and UK through AUKUS. What is probably less known is the extent to which the Australian population is up in arms about the deal. We believe we have been sold a ruinously expensive pup. Why should we allow ourselves to be confronting our biggest trading customer, China, just to satisfy the ambitions of the US and UK? At what point do you find a balance between trade and security? The US is our fifth largest export market, and Britain is 14th. But combined, they represent less than 10% of the value of our exports to China. Outside of New Zealand, our top ten trading partners are in South and East Asia, many of whom are in or want to get into BRICS. The world is changing before our eyes. Reply |