PPCC: Pisitófilos Creditófagos. Verano 2024

[Derby]

https://www.bloomberg.com/opinion/articles/2024-06-24/housing-affordability-and-the-rise-of-the-far-right

Don't Ignore Housing's Role in the Far Right's Rise

Few other issues have greater potential to damage the social fabric and undermine democracy.

Gains by far-right parties in this month’s European Union elections should serve as a reminder of the dangers of failing to address the region’s chronic problems of inadequate housing supply and worsening affordability. Few other issues have greater potential to damage the social fabric and undermine democracy.

Housing wasn’t at the forefront of this month’s campaigning, but we can be sure it was part of the background music. The cost and availability of shelter cause part of the economic anxiety that has been exploited by populist politicians, who have scapegoated immigrants for a squeeze that owes more to decades of underbuilding and restrictive planning policies. This in turn has been exacerbated by a near-perfect storm of higher interest rates and surging construction costs in the wake of the Covid pandemic and Russia’s invasion of Ukraine.

The warning signs have been hard to miss. Across a region with a diversity of housing models and structural challenges, the same themes recur. Lisbon, Amsterdam, Milan and Prague are among cities that have seen housing-related protests since the start of last year . Dublin’s housing crisis was a driver of anti-immigrant riots in the Irish capital in November. In the Netherlands, the far-right party led by Geert Wilders won the 2023 election with a campaign that blamed migrants for shortages of accommodation and soaring rents.



Recognition of the scale of the challenge is shared across investors, policy makers, civil-society organizations and supranational bodies. The housebuilding shortfall in Germany, France and Britain will get worse before it gets better, Jones Lang LaSalle Inc. said in a commentary last year that pointed to an estimated shortfall of 2.7 million construction workers needed by 2030. Failure to solve the housing crisis would be a “real threat” to Germany’s democracy, the co-head of Chancellor Olaf Scholz’s Social Democratic Party has warned. The United Nations’ special rapporteur on the right to adequate housing said last month that social gaps created by underinvestment and inadequate government planning are enabling far-right parties to prosper.

In Germany, where the far-right Alternative for Germany or AfD beat the Social Democrats for second place in the EU vote, apartment completions were 294,400 last year — well below a government target of 400,000. The Munich-based Ifo Institute forecasts they will plunge to 175,000 in 2025. Construction costs jumped more than a third in the past three years and mortgage rates tripled. That has priced out many would-be homeowners, fueling demand and driving up prices in the rental market.

What is particularly alarming is how affordability challenges are expanding to ensnare middle-income earners. CBRE Investment Management estimates that 57% of European households (excluding low-income groups that are in social or subsidized housing) would be unable to afford current monthly market rents without paying more than 30% of their disposable income. Many such renters are at risk of being priced out of the cities where they work by a “skewed housing market structure,” the US real estate investor says. The rent on a one-bedroom apartment in Lisbon more than doubled to €1,350 ($1,450) last year from €600 in 2014, according to Eurostat data. In Dublin, it rose to €2,050 from €1,150.



It isn’t difficult to see how such a predicament can sow resentment and erode trust in mainstream political parties. Closed off from the chance of becoming homeowners, young employees on average salaries instead find themselves forced to hand over a large chunk of their income just to keep running in place. It is the erosion of hope that is so corrosive. Such people may justifiably question whether the system is working for them, and look for politicians who promise radical solutions.

Populist policies, of course, would do the exact opposite of what they promise and make things worse rather than better. Berlin enacted rent controls in 2020 that, while popular with existing tenants, predictably choked off supply before being overturned in court. Undeterred, activists have since pursued efforts to force the city to take over thousands of dwellings owned by big property investment firms. The Dutch parliament this week began debating expanded rent controls that are likely to have a similar impact. More logically, countries including Portugal, Spain and Ireland have announced an end to so-called golden visa programs that offer residency in exchange for real estate purchases. Portugal has also clamped down on short-term rentals — a problem in many cities where renting out on Airbnb Inc. may be more lucrative than leasing to long-term tenants.

A lasting fix can only come from increased supply. It’s hard to see that happening at sufficient scale without a more interventionist role from government, after decades when the state generally retreated from housing provision. But private capital also has a big role to play, if allowed. Affordable housing for middle-income earners is a “compelling opportunity” as well as a social imperative, says CBRE Investment Management, which last year bought about 2,500 apartments in Berlin, Munich and Frankfurt from debt-laden German landlord Vonovia SE for just over €900 million.

Building more looks like a solid bet for real estate investors. Provided they can find the workers. And they can get the planning permissions. And they don't get expropriated.

[sudden and sharp]

[...] T odos los asistentes a «la cena del Casino de Madrid», ¡que se vayan a vivir a Argentina!, donde por fin «han triunfado las ideas de la libertad» y es de esperar, por tanto, la mayor lluvia de riqueza de la historia. Queremos la lista.

P. S.: La justicia subjetiva y de inspiración consuetudinaria es la base del Derecho nazi.]

Listas no. Eso sí que es nazi.

Ni en broma, por favor.

[Derby]

https://www.bloomberg.com/news/articles/2024-06-24/us-approves-freddie-mac-pilot-program-to-buy-second-mortgages

US Approves Freddie Mac Pilot Program to Buy Second Mortgages

Proposal could help households pull equity from their homes
US households have $32 trillion in real estate equity

US regulators have authorized a pilot program for housing giant Freddie Mac to buy second mortgages, a shift that could ultimately make it cheaper for households to borrow against the equity in their homes.

The Federal Housing Finance Agency said in a statement Friday that Freddie Mac could buy as much as $2.5 billion of the mortgages over the 18-month trial period. The regulator will then evaluate the program to see if it has benefited borrowers in rural and underserved communities, among other criteria.

Freddie Mac in April proposed backing second mortgages after the steep jump in home-loan rates over the past two years. When rates were lower, a homeowner who wanted to borrow for renovations might have used a cash-out refinancing that allowed them to take out a new loan that was bigger than their prior mortgage.

But now that rates have climbed, cash-out refinancings don’t make sense for many borrowers because they would be shifting into a bigger, higher-rate loan. So getting a smaller second mortgage might make sense in many cases.

At the same time, US households have more than $32 trillion of equity following the steep rise in housing prices, about a 60% increase from 2020. Bank of America strategists had estimated that some $18 trillion of that amount was potentially available for equity extraction, mostly through private channels.

The scale of the initial program means the impact of Freddie Mac’s involvement will be more limited than anticipated.

“We did expect the program to be rolled out with numerous restrictive parameters, as was mentioned frequently in the comments received by the FHFA,” said Bank of America’s Jeana Curro. “But limiting the overall size to just $2.5bn was surprisingly small.”

Freddie Mac’s proposal to back second mortgages faced opposition from some industry groups as well as politicians including Senators JD Vance and Mike Crapo, who argued it could boost inflation and crowd out private lending. But other comments from the public on the proposal said it would help boost the scale of the market for home-equity lending.

Sandra Thompson, the FHFA director, said in a statement that capping the program at $2.5 billion will mitigate the risk of its boosting inflation. And requiring that Freddie Mac buy loans of $78,277 or less would ensure that the government-backed enterprise stays focused on borrowers who may be underserved, such as rural and low-income homeowners, rather than higher-income borrowers that may be better served by private lenders, Thompson said.

[sargento.algodon]

Tengo la sensación que tiene poco de proyecto legislativo en concreto y mucho de globo sonda, porque si tuviera verdadera intención legislativa la propuesta no sería tan radical. Pasar del viva la pepa absoluta a la extinción total del alquiler turístico no parece realista y probablemente tampoco una propuesta racional; de modo que doy por casi cierto que se trata de una bomba de estruendo (arrojada precisamente en las vísperas de San Juan) para ver cuál es la reacción social y como catalizador de las tendencias que flotan en el ambiente.

(El costo político de tal decisión ya lo habrán meditado un rato, supongo que tendrán asumida una estrategia en varias etapas).

En Barcelona pasa que el sector hotelero es muy potente, tradicionalmente lo ha sido. Lógicamente están detrás de sacarse de encima una competencia que les hace daño.

Por otro lado, ayer en el Telediario de La1, explicaban que las comunidades de propietarios pueden acordar una modificación de los estatutos y prohibir el uso de vivienda turística para los pisos que conforman dicha comunidad. Hay muchas comunidades de propietarios que lo han hecho. De la misma manera que se prohíben otros usos lícitos o ilícitos. Y no hace falta ninguna legislación adicional o específica. Con que se pongan de acuerdo los vecinos de un edificio, es suficiente.

Desde 2019 y por acuerdo de 3/5 de propietarios y cuotas...
https://www.mundojuridico.info/prohibicion-del-alquiler-turistico-por-la-comunidad-de-propietarios/

[asustadísimos]

[Va saliendo quién estuvo y quién no.
https://www.eldebate.com/internacional/20240622/arriba-abajo-nombre-apellidos-invitados-noche-casino-javier-milei_207467.html
https://www.eldiario.es/politica/ultima-hora-sobe-actualidad-politica-directo_6_11466425_1108625.html
https://www.lanacion.com.ar/el-mundo/quien-es-willyrex-el-youtuber-espanol-que-cenara-con-javier-milei-nid18062024/
https://www.eldiario.es/politica/cuadro-milei-abrazos-abascal-defensa-motosierra-cena-juan-mariana_1_11469832.html
https://www.libremercado.com/2024-06-22/milei-recibe-premio-juan-mariana-7139891/#juan-bravo-federico-jimenez-losantos-mariana220624
https://www.libremercado.com/2024-06-22/milei-recibe-premio-juan-mariana-7139891/#milei-17
Etcétera.]

[Derby]

https://www.thenationalnews.com/business/energy/2024/06/17/us-saudi-arabia-security-deal-could-seal-future-of-petrodollar/

US-Saudi Arabia security deal could seal future of petrodollar

The kingdom is finalising a defence treaty with the US, which is part of a broader package, reports say


Saudi Crown Prince Mohammed bin Salman with US President Joe Biden. A US-Saudi deal could 'put the brakes on' the Saudi-China partnership, experts say. AP

A comprehensive US-Saudi Arabia deal may place the world’s largest crude exporter firmly in the dollar camp, experts say, amid speculation that the kingdom could end oil sales in the currency.

US President Joe Biden's administration is close to signing a security deal with the kingdom, according to a Wall Street Journal report that quoted official sources.

“The signing of a security treaty would further align Washington and Riyadh’s interests in the region and reverse the long-standing tough position US President Joe Biden had with the Saudi regime,” said Francesco Sassi, research fellow at Ricerche Industriali Energetiche in Bologna.

The potential agreement is part of a broader package that would encompass a civil nuclear agreement between the US and Saudi Arabia, as well as progress towards the creation of a Palestinian state and efforts to resolve the conflict in Gaza.

“The security deal would put the brakes on the Saudi-China partnership in terms of security and diplomatic outreach, further delaying any possible speculation of Saudi Arabia ending its use of the dollar,” Mr Sassi told The National.

The US is also pushing for closer ties with the UAE, the Arab world's largest economy after Saudi Arabia, particularly in the field of artificial intelligence, to gain an edge over China in the global AI race.

In April, Abu Dhabi-based AI and cloud company G42 received a $1.5 billion investment from Microsoft, further bolstering the Emirates' position as a regional technology hub.

Petrodollar deal speculation

Last week, reports emerged that the US-Saudi petrodollar agreement "expired", suggesting the kingdom would move to sell oil in various currencies, not just dollars. Some reports even claimed the Chinese yuan would replace the dollar.

There was a significant increase in Google searches for the term "petrodollars" in the past two weeks, reaching an all-time high, Google Trends said.

This sharp increase was linked to viral stories that, on June 9, Saudi Arabia did not renew a secret 50-year agreement with the US to price oil in dollars. The reports, widely shared by crypto enthusiasts on social media, have since been dismissed by financial analysts and economists.

"Many crypto speculators desperately want to believe in the dollar’s demise. Confirmation bias encourages people to ignore what is realistic if their prejudices are seemingly confirmed. This is a poor investment strategy," said Paul Donovan, chief economist of UBS Global Wealth Management.

"Oil has always traded in non-dollar currencies ... Saudi Arabia’s riyal remains pegged to the dollar, and its stock of financial assets are dollar-focused. The dollar’s reserve status depends on how money is stored, not how transactions are denominated," Mr Donovan said in a note on Friday.

About 80 per cent of global oil sales are conducted in dollars, and Saudi Arabia has traded oil exclusively in the currency as part of an informal agreement with the US.

In June 1974, the US and Saudi Arabia set up a joint commission for economic co-operation to help the kingdom spend its excess dollars on US products. A month later, Riyadh agreed to invest its oil revenue in US Treasuries, a fact kept confidential by the US government until 2016.

The deal came a year after the 1973 oil crisis, when several Arab oil-producing nations, including Saudi Arabia, imposed an embargo on oil exports to countries perceived as supporting Israel in the Arab-Israeli War.

“The US has been pressuring Saudi Arabia to sell crude oil in dollars to protect the dollar's status since the 1970s and demanding Saudi Arabia purchase US bonds and arms,” said Shigeto Kondo, a senior researcher at the JIME Centre of the Institute of Energy Economics, Japan.

The kingdom increased its holdings in US Treasuries in March this year for the eighth straight month, reaching $135.9 billion, which was 3.66 per cent higher than the previous month, US government data shows.

But in the past two years, Saudi Arabia has considered trading in yuan, with Beijing emerging as the Arab country's top trading partner and the biggest buyer of its crude.

Riyadh has been focused on maintaining a balance between its relationship with its primary security ally, the US, and its relationships with China and Russia, its key energy partner within Opec+.

Last year, China and Saudi Arabia signed a local currency swap agreement worth $7 billion as part of efforts to boost trade using their currencies and reduce reliance on the dollar.

More recently, Saudi Arabia became a participant in the mBridge project, a collaborative effort between several central banks to develop a new system for cross-border payments using central bank digital currencies.

It was launched in 2021 between the central banks of China, Hong Kong, Thailand and the UAE.

“It is true that China is asking Saudi Arabia to use the renminbi to settle its crude oil payments, but the Saudis would not want to take China's offer seriously,” Mr Kondo said.

“The Saudi riyal is pegged to the dollar, making budget planning easier by receiving oil revenue in dollars. The dollar's position as the world's major reserved asset remains still dominant, which give little incentive for the Saudis to switch to other currencies."

Dollar peg

Abu Dhabi Commercial Bank, the third-largest lender in the UAE, expects the Saudi riyal's peg to the dollar to continue for the "near and medium term".

“It anchors currency and macroeconomic stability, alongside inflation expectation,” said Monica Malik, the bank’s chief economist.

“The dollar peg is also vital for foreign direct investment inflows at a time when Saudi Arabia needs to increase overseas investment to support the transformation plan."

Saudi Arabia requires hundreds of billions of dollars to transform its economy and move away from oil exports as part of its Vision 2030 programme.

The plan relies on attracting foreign investment, but some large-scale projects have not yet secured as much private funding as hoped.

At an event in April, Saudi Finance Minister Mohammed Al Jadaan said the kingdom would adapt to current economic and geopolitical challenges and “downscale” or “accelerate” some projects.

The role of the dollar in the global economy has been in focus recently due to the strong US economy, tighter monetary policy and increased geopolitical risks, all of which have boosted the currency’s value.

But economic fragmentation and the potential shift of global economic and financial activities into separate blocs have led some countries to use and hold other international and reserve currencies. Concerned with America's frequent use of sanctions as a foreign policy tool, some states have explored using alternative currencies or payment systems.

Although the dollar remains the most dominant currency in the foreign exchange reserves of the world's central banks, its share in these reserves has decreased from more than 70 per cent in 2000 to about 55 per cent in the last quarter of 2023, after accounting for exchange-rate and interest-rate adjustments, International Monetary Fund data shows.

The reduced role of the dollar over the past two decades has not been offset by the euro, yen or British pound, the fund said in a report last week.

Instead, non-traditional reserve currencies including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar and Nordic currencies have increased their share, it added.

Last week, Russia's central bank and the Moscow Exchange halted trading in dollar and euros in response to the latest round of US Treasury sanctions against the country's financial infrastructure. The central bank told Russia's RBC News that the yuan had become the predominant currency on the Moscow bourse, representing 54 per cent of currency trades in May.

In December 2023, Iran and Russia concluded an agreement to trade using their local currencies instead of the dollar. The agreement was finalised during a meeting between the governors of the countries' central banks in Russia, Iran's state media reported at the time.

Meanwhile, the Brics economic group, which includes China, India and Russia, has discussed the prospect of a Brics currency aimed at challenging the dominance of the dollar.



Yuan’s ascension

The yuan's rise represents a shift in the global financial landscape towards a more multipolar system, challenging the historical dominance of western currencies and financial markets.

The yuan’s share as a global trade settlement currency has continued to grow, despite the shrinking overall trade pie amid China’s weakening exports to western countries.

It is now the fourth most-transacted currency, having overtaken the Japanese yen last year, according to data from Swift.

China, the world’s second-largest economy, has been opening its financial markets gradually, but it still maintains some controls on the movement of money in and out of the country.

“While countries like India and China are looking to pay for oil in their own currencies, namely to reduce balance of payments pressures, a critical factor is the still limited size of investment option in these currencies and the lack of full yuan convertibility,” Ms Malik said.

China currently operates under a system of partial convertibility, especially for the capital account. This means the yuan can be used freely for current account transactions including trade in goods and services, but there are still restrictions on capital account transactions such as investments and loans.

Despite significant efforts by China to internationalise the yuan, it remains unable to challenge the dollar's dominance as the world's leading reserve currency and preferred safe haven asset.

The greenback makes up about 60 per cent of the world's foreign exchange reserves, way ahead of the second-placed euro at only 20 per cent. About 88 per cent of all foreign currency transactions have the dollar on one side, while half of all international trade is conducted in dollars.

The US Dollar Index – a measure of its value against a weighted basket of major currencies – has gained more than 3 per cent this year amid growing geopolitical instability and a slowdown in some major economies.

[Cadavre Exquis]

https://www.lavanguardia.com/opinion/20240624/9754256/construccion-alza.html

https://www.lavanguardia.com/economia/20240624/9754163/construccion-repunta-40-ejecucion-fondos-europeos.html

Saludos.

[asustadísimos]

[Nunca se olvide que una de las aportaciones de este blog procapitalista a la causa antiinmobiliaria es que el alquiler solo es premio de consolación. El tan cacareado supuesto nivel absurdo que están alcanzando los 'precios', ¡ja!, de alquiler se debe a que se quiere que el primo compre. ¡Y ay de ti, gancho, si no difundes que el alquiler está carísimo! En realidad el alquiler de toda la vida está más barato que hace 20 años. Al alquiler le pasa como a la inflación. Es mentira. Es para que compres. Pero nadie compra porque nadie se cree nada. Cuanto más anarcocap, menos compras. Cuanta más Ucrania, menos compras. Cuanto más Sánchez, Sáánchez, Sááánchez, menos compras. Cuanto más novio de la frugívora, menos compras. Cuanto más se anuncia el próximo 'boom', menos compras. Están desesperados. Ya no saben qué hacer. Ni presidencias políticas frikis ni leches. ¡Quiero la lista! No es para vengarme. Es para desternillarme. Conozco a una persona que estuvo en la cena cenando y otra, trabajando. No se me quita de la cabeza ni el cuadro gigante ni la pajarita amarilla —que es de gomas, porque cuando sabes hacerte el lazo no te sale esa hélice de 'Bücker Jungmeister'—.]

[asustadísimos]

[El cuadro gigante de Milei, pintado por un cubano, parece hecho de cachondeo. Fíjense en los pies. Los dos están reposando en el suelo, pero nos quieren hacer creer que el Bigfoot de Halloween está caminando. Y la banda, Dios mío, qué me dicen de la banda, sobre el abrigo de cuero de la Schutzstaffel. Y la mirada. ¡Está bizco! Parece un 'serial killer' disfrazado de Miss Argentina con el pelo cardado. El cuadro está hecho con mala uva, sí, sí muy mala. Es como si quisiera dar miedo. Pero es un miedo de risa, tipo túnel de la bruja. Parece que va a salir de detrás una cayetana dando escobazos. Por cierto, no encuentro ninguna buena imagen del cuadro. Intentarán que se olvide. Pero aquí estamos nosotros.]

[tomasjos]

[Nunca se olvide que una de las aportaciones de este blog procapitalista a la causa antiinmobiliaria es que el alquiler solo es premio de consolación. El tan cacareado supuesto nivel absurdo que están alcanzando los 'precios', ¡ja!, de alquiler se debe a que se quiere que el primo compre. ¡Y ay de ti, gancho, si no difundes que el alquiler está carísimo! En realidad el alquiler de toda la vida está más barato que hace 20 años. Al alquiler le pasa como a la inflación. Es mentira. Es para que compres. Pero nadie compra porque nadie se cree nada. Cuanto más anarcocap, menos compras. Cuanta más Ucrania, menos compras. Cuanto más Sánchez, Sáánchez, Sááánchez, menos compras. Cuanto más novio de la frugívora, menos compras. Cuanto más se anuncia el próximo 'boom', menos compras. Están desesperados. Ya no saben qué hacer. Ni presidencias políticas frikis ni leches. ¡Quiero la lista! No es para vengarme. Es para desternillarme. Conozco a una persona que estuvo en la cena cenando y otra, trabajando. No se me quita de la cabeza ni el cuadro gigante ni la pajarita amarilla —que es de gomas, porque cuando sabes hacerte el lazo no te sale esa hélice de 'Bücker Jungmeister'—.]

Lo siento, Asustadísimos, pero el alquiler de toda la vida ha subido tanto como el de temporada, no podemos decir lo que no es - que yo conozco caseros " de toda la vida" y han subido los precios como los demás- .

[Derby]

[El cuadro gigante de Milei, pintado por un cubano, parece hecho de cachondeo. Fíjense en los pies. Los dos están reposando en el suelo, pero nos quieren hacer creer que el Bigfoot de Halloween está caminando. Y la banda, Dios mío, qué me dicen de la banda, sobre el abrigo de cuero de la Schutzstaffel. Y la mirada. ¡Está bizco! Parece un 'serial killer' disfrazado de Miss Argentina con el pelo cardado. El cuadro está hecho con mala uva, sí, sí muy mala. Es como si quisiera dar miedo. Pero es un miedo de risa, tipo túnel de la bruja. Parece que va a salir de detrás una cayetana dando escobazos. Por cierto, no encuentro ninguna buena imagen del cuadro. Intentarán que se olvide. Pero aquí estamos nosotros.]

Hay que ir a la página web del pintor cubano autor del cuadro.

https://www.richardsomonte.com/product-page/retrato-de-javier-milei



https://diariodecuba.com/cultura/1719071060_55585.html

[Vipamo]

https://www.thenationalnews.com/business/energy/2024/06/17/us-saudi-arabia-security-deal-could-seal-future-of-petrodollar/

US-Saudi Arabia security deal could seal future of petrodollar

The kingdom is finalising a defence treaty with the US, which is part of a broader package, reports say


Saudi Crown Prince Mohammed bin Salman with US President Joe Biden. A US-Saudi deal could 'put the brakes on' the Saudi-China partnership, experts say. AP

A comprehensive US-Saudi Arabia deal may place the world’s largest crude exporter firmly in the dollar camp, experts say, amid speculation that the kingdom could end oil sales in the currency.

US President Joe Biden's administration is close to signing a security deal with the kingdom, according to a Wall Street Journal report that quoted official sources.

“The signing of a security treaty would further align Washington and Riyadh’s interests in the region and reverse the long-standing tough position US President Joe Biden had with the Saudi regime,” said Francesco Sassi, research fellow at Ricerche Industriali Energetiche in Bologna.

The potential agreement is part of a broader package that would encompass a civil nuclear agreement between the US and Saudi Arabia, as well as progress towards the creation of a Palestinian state and efforts to resolve the conflict in Gaza.

“The security deal would put the brakes on the Saudi-China partnership in terms of security and diplomatic outreach, further delaying any possible speculation of Saudi Arabia ending its use of the dollar,” Mr Sassi told The National.

The US is also pushing for closer ties with the UAE, the Arab world's largest economy after Saudi Arabia, particularly in the field of artificial intelligence, to gain an edge over China in the global AI race.

In April, Abu Dhabi-based AI and cloud company G42 received a $1.5 billion investment from Microsoft, further bolstering the Emirates' position as a regional technology hub.

Petrodollar deal speculation

Last week, reports emerged that the US-Saudi petrodollar agreement "expired", suggesting the kingdom would move to sell oil in various currencies, not just dollars. Some reports even claimed the Chinese yuan would replace the dollar.

There was a significant increase in Google searches for the term "petrodollars" in the past two weeks, reaching an all-time high, Google Trends said.

This sharp increase was linked to viral stories that, on June 9, Saudi Arabia did not renew a secret 50-year agreement with the US to price oil in dollars. The reports, widely shared by crypto enthusiasts on social media, have since been dismissed by financial analysts and economists.

"Many crypto speculators desperately want to believe in the dollar’s demise. Confirmation bias encourages people to ignore what is realistic if their prejudices are seemingly confirmed. This is a poor investment strategy," said Paul Donovan, chief economist of UBS Global Wealth Management.

"Oil has always traded in non-dollar currencies ... Saudi Arabia’s riyal remains pegged to the dollar, and its stock of financial assets are dollar-focused. The dollar’s reserve status depends on how money is stored, not how transactions are denominated," Mr Donovan said in a note on Friday.

About 80 per cent of global oil sales are conducted in dollars, and Saudi Arabia has traded oil exclusively in the currency as part of an informal agreement with the US.

In June 1974, the US and Saudi Arabia set up a joint commission for economic co-operation to help the kingdom spend its excess dollars on US products. A month later, Riyadh agreed to invest its oil revenue in US Treasuries, a fact kept confidential by the US government until 2016.

The deal came a year after the 1973 oil crisis, when several Arab oil-producing nations, including Saudi Arabia, imposed an embargo on oil exports to countries perceived as supporting Israel in the Arab-Israeli War.

“The US has been pressuring Saudi Arabia to sell crude oil in dollars to protect the dollar's status since the 1970s and demanding Saudi Arabia purchase US bonds and arms,” said Shigeto Kondo, a senior researcher at the JIME Centre of the Institute of Energy Economics, Japan.

The kingdom increased its holdings in US Treasuries in March this year for the eighth straight month, reaching $135.9 billion, which was 3.66 per cent higher than the previous month, US government data shows.

But in the past two years, Saudi Arabia has considered trading in yuan, with Beijing emerging as the Arab country's top trading partner and the biggest buyer of its crude.

Riyadh has been focused on maintaining a balance between its relationship with its primary security ally, the US, and its relationships with China and Russia, its key energy partner within Opec+.

Last year, China and Saudi Arabia signed a local currency swap agreement worth $7 billion as part of efforts to boost trade using their currencies and reduce reliance on the dollar.

More recently, Saudi Arabia became a participant in the mBridge project, a collaborative effort between several central banks to develop a new system for cross-border payments using central bank digital currencies.

It was launched in 2021 between the central banks of China, Hong Kong, Thailand and the UAE.

“It is true that China is asking Saudi Arabia to use the renminbi to settle its crude oil payments, but the Saudis would not want to take China's offer seriously,” Mr Kondo said.

“The Saudi riyal is pegged to the dollar, making budget planning easier by receiving oil revenue in dollars. The dollar's position as the world's major reserved asset remains still dominant, which give little incentive for the Saudis to switch to other currencies."

Dollar peg

Abu Dhabi Commercial Bank, the third-largest lender in the UAE, expects the Saudi riyal's peg to the dollar to continue for the "near and medium term".

“It anchors currency and macroeconomic stability, alongside inflation expectation,” said Monica Malik, the bank’s chief economist.

“The dollar peg is also vital for foreign direct investment inflows at a time when Saudi Arabia needs to increase overseas investment to support the transformation plan."

Saudi Arabia requires hundreds of billions of dollars to transform its economy and move away from oil exports as part of its Vision 2030 programme.

The plan relies on attracting foreign investment, but some large-scale projects have not yet secured as much private funding as hoped.

At an event in April, Saudi Finance Minister Mohammed Al Jadaan said the kingdom would adapt to current economic and geopolitical challenges and “downscale” or “accelerate” some projects.

The role of the dollar in the global economy has been in focus recently due to the strong US economy, tighter monetary policy and increased geopolitical risks, all of which have boosted the currency’s value.

But economic fragmentation and the potential shift of global economic and financial activities into separate blocs have led some countries to use and hold other international and reserve currencies. Concerned with America's frequent use of sanctions as a foreign policy tool, some states have explored using alternative currencies or payment systems.

Although the dollar remains the most dominant currency in the foreign exchange reserves of the world's central banks, its share in these reserves has decreased from more than 70 per cent in 2000 to about 55 per cent in the last quarter of 2023, after accounting for exchange-rate and interest-rate adjustments, International Monetary Fund data shows.

The reduced role of the dollar over the past two decades has not been offset by the euro, yen or British pound, the fund said in a report last week.

Instead, non-traditional reserve currencies including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar and Nordic currencies have increased their share, it added.

Last week, Russia's central bank and the Moscow Exchange halted trading in dollar and euros in response to the latest round of US Treasury sanctions against the country's financial infrastructure. The central bank told Russia's RBC News that the yuan had become the predominant currency on the Moscow bourse, representing 54 per cent of currency trades in May.

In December 2023, Iran and Russia concluded an agreement to trade using their local currencies instead of the dollar. The agreement was finalised during a meeting between the governors of the countries' central banks in Russia, Iran's state media reported at the time.

Meanwhile, the Brics economic group, which includes China, India and Russia, has discussed the prospect of a Brics currency aimed at challenging the dominance of the dollar.



Yuan’s ascension

The yuan's rise represents a shift in the global financial landscape towards a more multipolar system, challenging the historical dominance of western currencies and financial markets.

The yuan’s share as a global trade settlement currency has continued to grow, despite the shrinking overall trade pie amid China’s weakening exports to western countries.

It is now the fourth most-transacted currency, having overtaken the Japanese yen last year, according to data from Swift.

China, the world’s second-largest economy, has been opening its financial markets gradually, but it still maintains some controls on the movement of money in and out of the country.

“While countries like India and China are looking to pay for oil in their own currencies, namely to reduce balance of payments pressures, a critical factor is the still limited size of investment option in these currencies and the lack of full yuan convertibility,” Ms Malik said.

China currently operates under a system of partial convertibility, especially for the capital account. This means the yuan can be used freely for current account transactions including trade in goods and services, but there are still restrictions on capital account transactions such as investments and loans.

Despite significant efforts by China to internationalise the yuan, it remains unable to challenge the dollar's dominance as the world's leading reserve currency and preferred safe haven asset.

The greenback makes up about 60 per cent of the world's foreign exchange reserves, way ahead of the second-placed euro at only 20 per cent. About 88 per cent of all foreign currency transactions have the dollar on one side, while half of all international trade is conducted in dollars.

The US Dollar Index – a measure of its value against a weighted basket of major currencies – has gained more than 3 per cent this year amid growing geopolitical instability and a slowdown in some major economies.

https://www.thenationalnews.com/business/energy/2024/06/17/us-saudi-arabia-security-deal-could-seal-future-of-petrodollar/

US-Saudi Arabia security deal could seal future of petrodollar

The kingdom is finalising a defence treaty with the US, which is part of a broader package, reports say


Saudi Crown Prince Mohammed bin Salman with US President Joe Biden. A US-Saudi deal could 'put the brakes on' the Saudi-China partnership, experts say. AP

A comprehensive US-Saudi Arabia deal may place the world’s largest crude exporter firmly in the dollar camp, experts say, amid speculation that the kingdom could end oil sales in the currency.

US President Joe Biden's administration is close to signing a security deal with the kingdom, according to a Wall Street Journal report that quoted official sources.

“The signing of a security treaty would further align Washington and Riyadh’s interests in the region and reverse the long-standing tough position US President Joe Biden had with the Saudi regime,” said Francesco Sassi, research fellow at Ricerche Industriali Energetiche in Bologna.

The potential agreement is part of a broader package that would encompass a civil nuclear agreement between the US and Saudi Arabia, as well as progress towards the creation of a Palestinian state and efforts to resolve the conflict in Gaza.

“The security deal would put the brakes on the Saudi-China partnership in terms of security and diplomatic outreach, further delaying any possible speculation of Saudi Arabia ending its use of the dollar,” Mr Sassi told The National.

The US is also pushing for closer ties with the UAE, the Arab world's largest economy after Saudi Arabia, particularly in the field of artificial intelligence, to gain an edge over China in the global AI race.

In April, Abu Dhabi-based AI and cloud company G42 received a $1.5 billion investment from Microsoft, further bolstering the Emirates' position as a regional technology hub.

Petrodollar deal speculation

Last week, reports emerged that the US-Saudi petrodollar agreement "expired", suggesting the kingdom would move to sell oil in various currencies, not just dollars. Some reports even claimed the Chinese yuan would replace the dollar.

There was a significant increase in Google searches for the term "petrodollars" in the past two weeks, reaching an all-time high, Google Trends said.

This sharp increase was linked to viral stories that, on June 9, Saudi Arabia did not renew a secret 50-year agreement with the US to price oil in dollars. The reports, widely shared by crypto enthusiasts on social media, have since been dismissed by financial analysts and economists.

"Many crypto speculators desperately want to believe in the dollar’s demise. Confirmation bias encourages people to ignore what is realistic if their prejudices are seemingly confirmed. This is a poor investment strategy," said Paul Donovan, chief economist of UBS Global Wealth Management.

"Oil has always traded in non-dollar currencies ... Saudi Arabia’s riyal remains pegged to the dollar, and its stock of financial assets are dollar-focused. The dollar’s reserve status depends on how money is stored, not how transactions are denominated," Mr Donovan said in a note on Friday.

About 80 per cent of global oil sales are conducted in dollars, and Saudi Arabia has traded oil exclusively in the currency as part of an informal agreement with the US.

In June 1974, the US and Saudi Arabia set up a joint commission for economic co-operation to help the kingdom spend its excess dollars on US products. A month later, Riyadh agreed to invest its oil revenue in US Treasuries, a fact kept confidential by the US government until 2016.

The deal came a year after the 1973 oil crisis, when several Arab oil-producing nations, including Saudi Arabia, imposed an embargo on oil exports to countries perceived as supporting Israel in the Arab-Israeli War.

“The US has been pressuring Saudi Arabia to sell crude oil in dollars to protect the dollar's status since the 1970s and demanding Saudi Arabia purchase US bonds and arms,” said Shigeto Kondo, a senior researcher at the JIME Centre of the Institute of Energy Economics, Japan.

The kingdom increased its holdings in US Treasuries in March this year for the eighth straight month, reaching $135.9 billion, which was 3.66 per cent higher than the previous month, US government data shows.

But in the past two years, Saudi Arabia has considered trading in yuan, with Beijing emerging as the Arab country's top trading partner and the biggest buyer of its crude.

Riyadh has been focused on maintaining a balance between its relationship with its primary security ally, the US, and its relationships with China and Russia, its key energy partner within Opec+.

Last year, China and Saudi Arabia signed a local currency swap agreement worth $7 billion as part of efforts to boost trade using their currencies and reduce reliance on the dollar.

More recently, Saudi Arabia became a participant in the mBridge project, a collaborative effort between several central banks to develop a new system for cross-border payments using central bank digital currencies.

It was launched in 2021 between the central banks of China, Hong Kong, Thailand and the UAE.

“It is true that China is asking Saudi Arabia to use the renminbi to settle its crude oil payments, but the Saudis would not want to take China's offer seriously,” Mr Kondo said.

“The Saudi riyal is pegged to the dollar, making budget planning easier by receiving oil revenue in dollars. The dollar's position as the world's major reserved asset remains still dominant, which give little incentive for the Saudis to switch to other currencies."

Dollar peg

Abu Dhabi Commercial Bank, the third-largest lender in the UAE, expects the Saudi riyal's peg to the dollar to continue for the "near and medium term".

“It anchors currency and macroeconomic stability, alongside inflation expectation,” said Monica Malik, the bank’s chief economist.

“The dollar peg is also vital for foreign direct investment inflows at a time when Saudi Arabia needs to increase overseas investment to support the transformation plan."

Saudi Arabia requires hundreds of billions of dollars to transform its economy and move away from oil exports as part of its Vision 2030 programme.

The plan relies on attracting foreign investment, but some large-scale projects have not yet secured as much private funding as hoped.

At an event in April, Saudi Finance Minister Mohammed Al Jadaan said the kingdom would adapt to current economic and geopolitical challenges and “downscale” or “accelerate” some projects.

The role of the dollar in the global economy has been in focus recently due to the strong US economy, tighter monetary policy and increased geopolitical risks, all of which have boosted the currency’s value.

But economic fragmentation and the potential shift of global economic and financial activities into separate blocs have led some countries to use and hold other international and reserve currencies. Concerned with America's frequent use of sanctions as a foreign policy tool, some states have explored using alternative currencies or payment systems.

Although the dollar remains the most dominant currency in the foreign exchange reserves of the world's central banks, its share in these reserves has decreased from more than 70 per cent in 2000 to about 55 per cent in the last quarter of 2023, after accounting for exchange-rate and interest-rate adjustments, International Monetary Fund data shows.

The reduced role of the dollar over the past two decades has not been offset by the euro, yen or British pound, the fund said in a report last week.

Instead, non-traditional reserve currencies including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar and Nordic currencies have increased their share, it added.

Last week, Russia's central bank and the Moscow Exchange halted trading in dollar and euros in response to the latest round of US Treasury sanctions against the country's financial infrastructure. The central bank told Russia's RBC News that the yuan had become the predominant currency on the Moscow bourse, representing 54 per cent of currency trades in May.

In December 2023, Iran and Russia concluded an agreement to trade using their local currencies instead of the dollar. The agreement was finalised during a meeting between the governors of the countries' central banks in Russia, Iran's state media reported at the time.

Meanwhile, the Brics economic group, which includes China, India and Russia, has discussed the prospect of a Brics currency aimed at challenging the dominance of the dollar.



Yuan’s ascension

The yuan's rise represents a shift in the global financial landscape towards a more multipolar system, challenging the historical dominance of western currencies and financial markets.

The yuan’s share as a global trade settlement currency has continued to grow, despite the shrinking overall trade pie amid China’s weakening exports to western countries.

It is now the fourth most-transacted currency, having overtaken the Japanese yen last year, according to data from Swift.

China, the world’s second-largest economy, has been opening its financial markets gradually, but it still maintains some controls on the movement of money in and out of the country.

“While countries like India and China are looking to pay for oil in their own currencies, namely to reduce balance of payments pressures, a critical factor is the still limited size of investment option in these currencies and the lack of full yuan convertibility,” Ms Malik said.

China currently operates under a system of partial convertibility, especially for the capital account. This means the yuan can be used freely for current account transactions including trade in goods and services, but there are still restrictions on capital account transactions such as investments and loans.

Despite significant efforts by China to internationalise the yuan, it remains unable to challenge the dollar's dominance as the world's leading reserve currency and preferred safe haven asset.

The greenback makes up about 60 per cent of the world's foreign exchange reserves, way ahead of the second-placed euro at only 20 per cent. About 88 per cent of all foreign currency transactions have the dollar on one side, while half of all international trade is conducted in dollars.

The US Dollar Index – a measure of its value against a weighted basket of major currencies – has gained more than 3 per cent this year amid growing geopolitical instability and a slowdown in some major economies.

Estos también son occidente. Parece ser que va a ser Mahoma para los vasallos europeos.

[tomasjos]

[...] T odos los asistentes a «la cena del Casino de Madrid», ¡que se vayan a vivir a Argentina!, donde por fin «han triunfado las ideas de la libertad» y es de esperar, por tanto, la mayor lluvia de riqueza de la historia. Queremos la lista.

P. S.: La justicia subjetiva y de inspiración consuetudinaria es la base del Derecho nazi.]

Listas no. Eso sí que es nazi.

Ni en broma, por favor.

Sudden, no ha mucho que usted nos ponia en una lista a los que apoyamos que Rusia derrote a Ucrania y se quede con la parte al este del Dniéper, y decía usted que nos iban a fichar. Parece que cuando las listas son de proanglos, liberales y anarcocaps, entonces no están bien, pero si si son de antianglos y anti liberalismo económico y antianarcaps. Eso a mí me suena a doble vara de medir

[sudden and sharp]

[...] T odos los asistentes a «la cena del Casino de Madrid», ¡que se vayan a vivir a Argentina!, donde por fin «han triunfado las ideas de la libertad» y es de esperar, por tanto, la mayor lluvia de riqueza de la historia. Queremos la lista.

P. S.: La justicia subjetiva y de inspiración consuetudinaria es la base del Derecho nazi.]

Listas no. Eso sí que es nazi.

Ni en broma, por favor.

Sudden, no ha mucho que usted nos ponia en una lista a los que apoyamos que Rusia derrote a Ucrania y se quede con la parte al este del Dniéper, y decía usted que nos iban a fichar. Parece que cuando las listas son de proanglos, liberales y anarcocaps, entonces no están bien, pero si si son de antianglos y anti liberalismo económico y antianarcaps. Eso a mí me suena a doble vara de medir

¿Y lo tengo que buscar yo --el post, digo? ¿O tu palabra ya vale?

[R.G.C.I.M.]