Europe Unveils “Special Purpose Vehicle” To Bypass SWIFT, Jeopardizing Dollar’s Reserve Status

But that agreement was not a treaty. You must have missed my earlier post.

 

Well, since your claim is that it was never passed by Congress, the fact that it was passed by congress would be important to you maintaining a grasp on reality

 

Your correct. Trump had the right to cancel it. It was just stupid to do so.
Do you think the US has the right to blackmail the other countries into following our sanctions on Iran? That's the question.

 

In the earlier case it was Russia and China that were looking for alternative financial architecture for settlement rather than be blackmailed by those systems controlled by the US. In this case, it is Europe looking to switch - one of the USA's strongest allies. This is big news and is down entirely to Trump. First his decision on climate change, then NATO, then breaching Obama's Iran deal that all the other involved nations continue to support has led to this tectonic shift.

 

It could tremendously hurt the USA. As the world reserve currency, many international transactions take place in US$. All oil transactions are supposed to be in US$. That means there is a huge demand for US currency, and a ready market for US treasury notes and printed US currency - and that's what supports the seemingly never ending quantitative easing, and allows the US govt to borrow to pay the interest on US debt. It also gives the US significant control in setting interest rates, which it keeps artificially low so that interest on the US debt does not destroy the US economy.

Once that changes, the house of cards is likely to crumble.

 

"Blackmail"??? We are not demanding money from anyone. We are not obligated to trade with anyone.
And can you state just one reason you think it was stupid to do so? Only thing stupid here was for Obama to imply to the world that the agreement was ANYTHING more than an agreement between Obama personally, and Iran.

 

Wrong. Use the internet and do some research.

The EU (particularly France and Germany) and Japan began looking at independence from the US$ since 1998. In 1998, the US forced Japan and Singapore to fund the East Asian economies during the East Asian financial crisis, the US did not put up any money but used its power as the world reserve currency to force others to do the US bidding. That has happened before - and nations dont like to be forced to be the slave of another nation.

Around 2000, the BRICS started working to replace the US$.

OPEC has been actively working to get away from the US$ since 2004, notably trying to partner with China and Russia to form a world reserve composed of a "basket of currencies". Note that OPEC includes African and South American nations.

Russia has been working to replace the US$ since the early 2000's.

Russia, China, EU, OPEC, the BRICS, have been working for 20 years to form some sort of world reserve currency.

This OP is just more biased Trump hating.

 

Stupid because we had a deal that restricted Iran's bomb development. Now we have none.
We are trying to force the signing countries into Iran sanctions by threatening sanctions on them. It's not trade. It is control of the money transfers.
Why do you think they want off the dollar?

 

Not the collapse of the US, but the collapse of the liberal tyranny controlling it.

 

Anyone who tried to get off the US dollar was killed, whether it was Saddam Hussein, Ghadaffi, or the Pres. of Total Oil - who after telling Vladimir Putin that he won't comply with the sanctions and would get off the petro dollar, ended up in a weird airplane accident in Moscow.

I know the Brics wanted to get off the dollar, but believed they needed at least 10 more years, that is until Putin took the lead and started the ball rolling with the third sanctions.

 

It takes time to reorient huge economies. Its an incremental process. Some nations now do trade deals in non-US$, some even do oil deals in non-US$.

And politics plays a big role. As the world reserve holder, the US gains a lot of political power. Other nations resent the US, other nations want that power for themselves. Its an ongoing battle.

 

Iran is a danger to the world. I would go further than sanctions.

 

Sure you would.

 

Why??Because we have such a great record in the wars we have entered since WW2?????NOT!!!

 

Where did I say it was not passed by congress?

 

I have been giving the EU a survival rate of 2 years, but I guess I was wrong, so I made it 2 and a half years. Creating their own SWIFT might just do the trick. One should never underestimate the destructive power of an empire when it's hegemony is at stake.

 

Global trade and financial transactions go through BIS -- the Bank of International Settlements. It was originally established as a clearing house for war reparations paid by Germany after WW I, but the US and UK commandeered it and started using it as clearing house for trade and financial transactions after the Bretton Woods Agreement came to be.

The US and UK barred East Bloc States from using their own currencies for trade, so Hungaria, Romania and the Soviet Union/Russia could not use their respecting currencies (Forints, Lei or Rubles) to purchase or pay for goods and services or use them in other financial transactions.

East Bloc States had to sell everything in US Dollars, Pound Sterling, French or Swiss Francs, or Deutschmarks and then use those currencies to buy goods and services or conduct other financial transactions, such as loans and what not.

Generally, if you weren't dealing with Britain, France, Switzerland or [West] Germany directly, you conducted all trade and financial transactions in US Dollars.

If you remember, Nixon authorized the US government to loan money to Ceausescu of Romania. To pay back the loan, Romania had to use US Dollars instead of Romanian Lei, because BIS wouldn't accept Romanian Lei. As a result, for the next 25 years, Romanians only had electricity from 6:00 AM to 8:00 AM, when it was turned off, and then turned back on from 8:00 PM to 10:00 PM. Essential businesses and industries of course had electricity 24-hours a day.

The reason was Romania couldn't use oil or coal to fire electric power plants, because it had to export as much oil and coal as possible on the global market for US Dollars to repay the loan, or use coal in steel mills to export steel for US Dollars or to produce semi-finished or finished steel parts and goods for export to get US Dollars.

Romania also exported the bulk of its food crops, leaving people literally starving to death, because food shortages were prevalent throughout the country. It wasn't unusual for food to be transported in trucks in a convoy escorted by the army, or by Securitate units to prevent food riots in cities.

The Russian Ruble was first traded regionally around 1994, and then around 1996, BIS relented and started accepting the Ruble as payment, as well as accepting currencies from other East Bloc States.

A lot of former East Bloc States are now EU member-States, and some use the Euro, so that's not an issue any longer.

Establishing an alternative to BIS would be a major coup for the EU, and actually the world would benefit from that, but the US and UK wouldn't necessarily benefit from it.

 

John Wayne agrees

 

Do you even know what a nuclear arsenal is?

The US had a man-portable nuclear device weighing about 53 pounds with a maximum yield of 1 kt (although you could double the yield by using sleeve made of U-235). It used 4.3 kg of weapons grade Plutonium, which is a little less than 10 pounds of Plutonium.

The US also had a man-portable nuclear device weighing a little less than 85 pounds with a maximum yield of less than 1 kt, and it used about 30 pounds of U-235 as the fissile material.

If you don't understand why that is so, you should probably refrain from discussing anything nuclear, because being ignorant doesn't really impress anyone.

Suffice to say Iran is incapable of producing weapons grade Plutonium, so if you thought 400 kt nuclear warheads would be raining down on the US, you thought wrong.

The maximum theoretical limit for U-235 is about 60 kt, and neither Iran, nor the US, nor France, Britain, Russia, China, or Israel have a missile capable of delivering such a device. Only an aircraft could, and it would have to be a bomber, and, no, a Mirage fighter-bomber isn't a bomber. It would have to be a B-52G/H, or a Tu-16 Badger, or Tu-22 Blinder or something larger than that. Pakistan used to have B-57Gs which could carry such a device, but not any more.

 

An insightful and informative post. Thanks. Although I will add that there is increasing disquiet, and internecine antagonisms among the EU member states?

For example, the controversy here between Brexiteers and Remainers.

 

You and every other armchair general who never wore the uniform. And many who did wear the uniform.

 

I wore the uniform. spent no time in an armchair while I did. But I appreciate your expertise.

 

In 1964, Fidel Castro turned off the water with which Cuba had always supplied our base at Guantanamo, in retaliation for Cuban fishermen being fined for fishing in Florida waters. Senator Goldwater called for the Marines to be sent to turn it back on. Castro's response: "Let Goldwater be in the first wave."

(We wisely turned to technology and now get water for Guantanamo -- up to two million gallons a day -- by desalination.)

By the way, I happen to agree re. Iran but ... the 'armchair general' argument against someone advancing policy involving the use of military force is not a good one. Even when it turns out they are indeed not a veteran.

Having served in the military MAY give you some special insight into a relatively small aspect of military reality, and the higher up the chain of command you went, the broader this will be. So the inputs of such people in planning are critical. BUT ... whether or not to use military force is a decision that has to be based on a lot more than just knowing something about the realities of military life, or even about the realities of combat.

In fact, since actual experience of sustained combat against a capable enemy is so horrible, if we only consulted surviving front-line veterans on foreign policy, we'd probably have a policy of near-pacifism. That might suit some people, but would be a disaster in the world as it is now.

You could argue that the terrible experience of combat in WWI made the European democracies unwilling to stand up to Hitler until it was almost too late. The Oxford Union (a well-known debating society at the university of that name) famously approved the motion "This House will not fight for King andCountry" in 1933 -- and apparently this sentiment, among Britain's future ruling class, was noted with pleasure in Tokyo and Berlin. More about it here.

 

No problem. I have just a few old friends left who did the Vietnam thing, and a few of them are still muttering something to the effect "we could have won, if only...."

Fools reminisce about women and wars and all sorts of other fantasies.

 

The mistake is believing "Europe Matters".
It doesn't. Global Suburb sounds appropriate. Si?
Reminds me of France, Germany, England behaving as if "They Mattered"
in the last part of the 20th Century.
They discovered they don't matter so became one big European Family to make themselves matter.
But, it didn't.
So they take on more, poorer member States to the east (Big Mistake) and "they still don't matter".


Maybe an interesting discussion might be, Why doesn't Europe matter?

Europe needs a de Gaulle, not a Merkle to get out of their continental malaise.
Or a Trump



Moi

talking about malaise regions​