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Qatar Will Pull Out Of OPEC, As Rift With Saudi Arabia Deepens
Qatar plans to leave OPEC in January, shaking up the alliance of oil-producing nations and furthering its dispute with Saudi Arabia. Qatar made the announcement on Monday — the same day it informed OPEC.
Qatar's Energy Minister Saad al-Kaabi said the small Persian Gulf country will leave OPEC because it wants to focus on natural gas — a sector in which Qatar is a world leader. But the move also draws another line of division with Saudi Arabia, the only country with which Qatar shares a land border.
Saudi Arabia cut diplomatic ties with Qatar in June of 2017, in a dramatic move that was matched by Egypt, the United Arab Emirates and others. Since then, Saudi Arabia has maintained a boycott against Qatar, a country that has sometimes pursued its own foreign policy goals against the will of its fellow Sunni states.
[...] Qatar's exit from the Organization of Petroleum Exporting Countries will become official on Jan. 1, 2019, Kaabi said at a news conference in Doha Monday. The country will still attend the group's winter meeting in Vienna, which is scheduled to begin on Thursday.
See also: Qatar to quit OPEC after more than 57 years, denies decision related to Saudi-led boycott
(Score: 0) by Anonymous Coward on Tuesday December 04 2018, @02:04AM (6 children)
By devaluation do you mean inflation? That has always been the game, borrow like mad because inflation erases it eventually. Still, I don't see how trading oil in a different currency will "crash the dollar "
(Score: 2) by legont on Tuesday December 04 2018, @02:26AM (5 children)
It probably will not crash dollar by itself, but will be a step toward. Let me explain it in simple terms.
Since folks everywhere use dollars for trade and reserve, the US has to provide enough dollars for them. The only way to do it is to run trade deficit with the world as a whole.
If/when dollar loses this status, all the folks will come to the US for their money back. At this point there are only two options: default or hyperinflation.
Note that Russia already dumped pretty much all dollar denominated assets, presses her clients to pay for oil in other currencies, and actively promotes "dedollarisation" of the local economy.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 2, Informative) by khallow on Tuesday December 04 2018, @09:17AM (4 children)
What is that supposed to mean? Debt in the form of bonds or treasuries, for example, is a contract. No party can hurry that contract along. So, for example, the US can tell bond holders "You're going to get this on the schedule we all agreed to over the next twenty years [or whatever] and you're going to like it."
And dumping such bonds at fire sale prices will just firm up the dollar a bit. Bottom line is that the dollar isn't going anywhere with most of the parties that have an interest in the dollar, because they've already lent way too much.
Not true. The US government can also merely provide dollars in exchange for other currencies.
(Score: 2) by legont on Wednesday December 05 2018, @02:33AM (3 children)
Yes, they are not likely to dump the US debt. They still could, but what will likely happen is that they will stop buying new debt. The US will have difficulties with rolling over the debt, which will push the rates up, which will increase the need for the US to roll over more debt, which will make it even less attractive for buyers and so on. Chain reaction.
First, the US government would have to earn those dollars somehow, but it's a mute point anyway because what exactly the US government can do with foreign currency? Buy foreign goods which it more trade deficit again. Granted, a responsible government might keep them in reserve by buying foreign, say Chinese bonds. Realistically, do you see it happen? A program to say cut social security payments and use the proceeds to buy china debt?
Finally, the exact nature of the crisis is always not what was predicted. Otherwise, it would be easy to prevent.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 1) by khallow on Wednesday December 05 2018, @03:17AM (2 children)
Controlling inflation, control US/state governments spending, and having a strong economy would cover most such crises. Of course, I think the implied axiom to all this speculation is that the US doesn't do that, which unfortunately is not a bad assumption to make.
(Score: 2) by legont on Thursday December 06 2018, @01:25AM (1 child)
I personally think that from this list we are beyond repair on all but one - what you called strong economy. Simply stating we need grows. It is the only way out of this debt hole. This grows has to be very fast - way faster than even the most optimistic economists predict. Controlling inflation and spending is almost always anti-growth.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 1) by khallow on Thursday December 06 2018, @02:30AM
What grows with inflation and government spending? Interest rates do. Inflation does nothing for an economy nor for a government that is borrowing heavily just to keep up. At best, it's just a shuffling of wealth from savings to borrowers.
And government spending only does something for the economy, if it creates something of value. For example, the US federal government has about 50% dumped in entitlements which do little to grow the economy and another 20% dumped into an extremely inefficient defense apparatus. The remaining 30% isn't spent well either. So not seeing the growth from that.
Let's keep in mind that not spending means more wealth for private growers of the economy.