US Dollar Looks Increasingly Like An Orphan

I don't know how valid this report is, but if this true, then behold we could be witnessing the end of the US dollar as the world's currency reserve regime sooner than anyone expects.

This from Robert Fisk of The Independent

(all bold emphasis mine)

``In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

``Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.

``The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years."

What used to be an isolated move by Iran to price oil transactions in US dollar appears to be generating a different flavor of the same theme, but this time with a broader following.

More from Mr. Fisk ``The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China's former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. "Bilateral quarrels and clashes are unavoidable," he told the Asia and Africa Review. "We cannot lower vigilance against hostility in the Middle East over energy interests and security."

``This sounds like a dangerous prediction of a future economic war between the US and China over Middle East oil – yet again turning the region's conflicts into a battle for great power supremacy. China uses more oil incrementally than the US because its growth is less energy efficient. The transitional currency in the move away from dollars, according to Chinese banking sources, may well be gold. An indication of the huge amounts involved can be gained from the wealth of Abu Dhabi, Saudi Arabia, Kuwait and Qatar who together hold an estimated $2.1 trillion in dollar reserves."

Again if this report is anywhere true, it would suggest not only a momentous shift away from the US dollar regime but likewise, an abandonment of ertswhile allies of their patron, or importantly, a seeming realignment of geopolitical forces that depends less on the US.

I recall John F. Kennedy's remark, "Victory has a thousand fathers, but defeat is an orphan."

From the development cited above, the US dollar looks increasingly like an orphan.