PETRODOLLARS AND BANK LIQUIDITY-TBC

Shale Booms- (very long article, but a great read into the technicalities of how energy profits in bank money markets are fueling real estate ponzi schemes in meth infested boom towns.) http://fisher.osu.edu/supplements/10/12706/Exporting_Liquidity_Aug016-2013.pdf

Apparently nobody is allowed to prosper in the U.S.   It's just the political cronies who have a monopoly of power in the US through foreign governments purchase of US Treasuries and no financing in the US business backed privatize sector.  Then the uglie boomer trash racist losers who won't apply themselves and the stockhold sychophants in the tech sector who don't know any better can't compete to uphold that monopoly of power at my expense.   Hence one manager at a major tech firm is a parasite.  She was allowed to attain her grades.  I was the meal ticket to the visa sponsor and the fall guy in the family.  I'm not racially pure, I'm the reason why her side of the family could afford brand label names - while I was beaten for not respecting her backstabbing parasitic Korean culture while the backstabbing baby beating bitches were allowed to get American names to avoid discrimination.  I was beaten for stealing as a child- I was physically abused.  My parents chopped my hair off, sent me to another school.  Then when the boomers and the "haves" steal from me, my idiot parents help them!  Yes this family relative who benefitted from my existance, military dependants enable glorfied welfare sluts aka. military wives to have more money, which went to Asia.  No I didn't have anything saved up for college tuition.  I was forced to go without trendy clothes while the "poor" ching chongs were allowed to have expensive brands at my expense.  Funny how my dad was ranked with the others and we had so much less.  The ching chongs now lay off workers at HP to buyback shares, they gamble away spouses inheritances ($1 million) on a slot machine, they steal by flipping houses- my only way out was through my own efforts and the racist trashy junkie boomer utopia of Cloward Piven took that away from me.  Before their great society of scum used the FDA to poison me and their government to impose racist discrimination to make fending for myself literally impossible.  That's BEFORE family that I'm forced to depend on....but anyways.  I was sickened when I consumed Kraft dairy foods with rbST- doubled over in cramps when my idiot narcissistic ideologue daddy tried to throw me away in the garbage baby boomers' war.

My dad uses the almighty force and bully.thug technique to tell me that I'm wrong without backing his stance up.  His garbage country and politics is more important than family.  Family should be the reason why he does this.  Everything went WAY too far.  And nobody is better because of it.

A means is never justified by the ends, and me getting robbed by CIA/Nuland for tweaker nazi trash only after the garbage dixie racist landlady in santa barbara robbed me of $400, physically attacked me and racially harassed me- the santa barbara deputies aided and abetted her.  Struggling with unemployment and vandals in an unaffordable, stagflated sanctuary state of California (my home state)wasn't bad enough----  all I know is that ecstacy/heroine overdose is an available way out.   IT wasn't worth it.  The trouble, the hell- there's nothing in the world beautiful enough to justify it.

I'm sickened that our government would stoop to this level to antagonize Russia, just so the failed criminal bankers can have their stupid petrodollars.

Petrodollars may be defined as the U.S. dollar earned front the sale of oil, or they may be simply defined as oil revenues denominated in U.S. dollars. Petrodollars accrued to oil-exporting nations depend on the sale price of oil as well as the volume being sold abroad, which is in turn dependent on oil production. The overall world supply of oil, on the one hand, and the world demand, on the other hand, determine sooner or later an actual market price for oil regardless of any administered pricing system. A price determined by OPEC can be maintained only so long as there is sufficient demand to absorb the amount being supplied in world markets. If demand exceeds supply, oil will be sold at an even higher price than that determined by OPEC. The opposite holds true when an oil glut occurs. This is reflected in a drop in the price after a certain time lag regardless of the price dictated by OPEC. The experience of the seventies and the eighties is no more than art application of microeconomic tools to the pricing of oil in world markets.
Petrodollar surpluses may also be defined as the net U.S. dollars earned from the sale of oil that are in excess of internal development needs. Petrodollar surpluses, accrued in the process of converting subsoil wealth into an internal INCOME-generating capital stock, refers to oil production that exceeds such needs but is transformed into monetary units.
Since petrodollars and petrodollar surpluses are by definition denominated in U.S. dollars, then purchasing power is dependent on the U.S. rate of inflation and the rate at which the U.S. dollar is exchanged (whenever there is need for convertibility) by other currencies in international MONEY MARKETS. It follows that whenever economic or other factors affect the U.S. dollar, petrodollars will be affected to the same magnitude. The link, therefore, between the U.S. dollar and petrodollar surpluses, in particular, has significant economic, political, and other implications.
First, the placement of petrodollar surpluses of the Arab oil exporting nations in the United States may be regarded politically as hostage capital. In the event of a major political conflict between the United States and an Arab oil-exporting nation, the former with all its military power can confiscate or freeze these assets or otherwise limit their use. It can impose special regulations or at least use regulations for a time, in order to attain certain political, economic, or other goals. It may be argued that such actions are un-American, since they are a direct violation of the sacred principles of capitalism and economic freedom. Nevertheless, the U.S. government resorted to such weapons twice in the l980s against Iranian and Libyan assets. It follows, therefore, that governments placing their petrodollar surpluses in the United States may lose part of their economic and political independence. Consequently, the more petrodollar surpluses are placed in the United States by a certain oil-exporting nation, the less independent such a nation becomes.
Second, an oil-exporting country can have petrodollar surpluses only if its absorptive capacity is less than its earnings from the sale of' oil for any particular period of time. It follows, therefore, that petrodollar surpluses depend on oil prices, quantities exported, and the nation's absorptive capacity.
Third, petrodollar surpluses do not represent real wealth but rather are a vehicle by which the latter can be acquired. If kept in liquid form such as paper dollars, their purchasing power will gradually be eroded by inflation and adverse foreign exchange rates. Both are affected in the United States by a host of variables, for example, money supply, interest rates, marginal productivity, stage of a business cycle, and balance-of-payments deficit. Also a factor is U.S. monetary and fiscal policy which in turn affects some of' these variables. Furthermore, changes in the U.S. laws and regulations have an impact on the economic variables, which may affect inflation rates and foreign exchange rates. Thus, the purchasing power of liquid petrodollar surpluses belonging, for example, to Arab oil-exporting nations is determined by a complicated set of variables whose trends and quantities are a function of' factors that are not in the control of these countries.
Fourth, efficient allocation of petrodollars for internal investments could increase the productive capacity of an oil-exporting nation and may work to its relative advantage. However, dependency on imported consumer goods, including luxury and rare collector's items, promotes the export of limited resources that could have been otherwise used for internal capital development.
Fifth, the economic development of an oil-exporting nation is based on the conversion of its subsoil resources into other assets such as industrial plants, equipment, education, technology, infrastructure, and other forms of real wealth, that is, real capital stock. Obviously the conversion process can be carried on at different rates. An optimum rate is achieved when oil is pumped at a level that can maximize the present discounted value of the income created in the conversation process. By pumping oil in excess of an optimum production rate, countries such as Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, and others accumulated petrodollar surpluses until 1981. It is worth noting that the difference between the volume of oil actually supplied and the volume that should have been supplied in observance of standard microeconomic theory is in fact a subsidy granted, in real terms, to oil-importing nations such as the United States, Germany, France, and Japan.¹ http://faculty.georgetown.edu/imo3/petrod/define.htm

Emerging markets oil exporters leave $70 billion liquidity hole
Many oil firms are being left with little excess money because of rock bottom oil prices. In the days of higher oil prices, oil firms would save or invest excess cash in financial instruments, providing liquidity to the market.
But with the WTI crude oil price sitting at $80.84 a barrel on Monday, and Brent crude trading for $85.88, there will be a net yearly inflow of capital to EM energy producers for the first time in 18 years, according to BNP Paribas. This will likely be repeated in 2015 if oil prices stay at around $80 a barrel.
In an almost $70bn swing, EM energy producers will see $8bn of net inflows into the global markets by the end of this year from the $60bn of outflows in 2013.
The drop from 2012 is even more pronounced, after EM energy firms put $248bn into the global financial markets that year by recycling petrodollars through tools such as BANK DEPOSITS and capital markets instruments, according to BNP Paribas figures.
LARGE RAMIFICATIONSA net shift from outflows to inflows could have large ramifications for a diverse range of financial market instruments.
These include loans, as energy firms cut lender liquidity by putting less cash into bank DEPOSITS, direct equity investments and even US Treasuries.
"Strong recycled petrodollars has often been used as an argument why US rates are low and why there is excess demand/liquidity in financial markets," David Spegel, global head of emerging markets sovereign andCREDIT strategy research at BNP Paribas, told IFR. "So there are many implications for markets if this deteriorates any further."
The shift to companies spending funds, rather than saving or investing them in the capital markets, is directly correlated to the low price of oil, the French bank said.
At their height in 2006, EM energy firms provided US$511bn of liquidity to financial markets. While WTI crude, at $76.28/barrel, was trading not much lower in September 2006 than it is today, the sector back then was at a different stage of the cycle after prices had risen by 47% in a year, according to the US energy and information administration. In contrast, crude prices shed 23.87% this July alone.
"Previously, EM exporters were saving more of the net capital and current ACCOUNT inflows they received and were investing the money into deposits and capital markets," said Spegel. "Where once oil EMs provided the world with liquidity and contributing to imbalances, they are not doing so and instead are starting to suck it up."
This means that the incremental liquidity provided by EM oil firms recycling their petrodollars is now negative on a net basis.
Spegel added: "This is the first a drain on global liquidity has been provided by oil-credits in the time I have been looking at that petrodollar capital."
Major EM energy exporters include Saudi Arabia, the United Arab Emirates and Venezuela.
BELOW BREAK EVENOil prices are already well below the budgetary break even price for many oil exporting countries. Russia needs oil at around US$100/barrel, according to Deutsche BANK. The UAE has a break even oil price of $90/barrel, Saudi Arabia $92, Libya $111, Venezuela $117, Iraq $116 and Nigeria $124, according to Thomson Reuters data.
While low oil prices can benefit EM countries, particularly by increasing household disposable INCOME, cheap oil puts pressure on outstanding bonds, said BNP Paribas.
"With the heavy reliance on debt capital markets for funding, typical of many energy net exporters, the picture for marketable hard currency bonds is somewhat less positive," said the report.
There were $213bn of outstanding SECURITIES from oil exporting sovereigns and $239bn from energy producing corporates at the end of September, 2014. This equates to 8% and 13% of outstanding external bond debt respectively.
"This means that 21% of the external bond universe faces negative oil-price-related CREDIT pressure," said the report.   http://articles.economictimes.indiatimes.com/2014-11-03/news/55720486_1_capital-markets-global-markets-crude

From the Federal Reserve"
http://www.newyorkfed.org/research/current_issues/ci12-9.pdf

http://www.newyorkfed.org/research/current_issues/ci12-9/ci12-9.html

The Central Bank's Liquidity Policy in an Oil Economy (Norwegian Bank)
http://www.norges-bank.no/Upload/English/Publications/Economic%20Bulletin/2007-04/Liquidity%20policy.pdf

From the Financial Times:

Emerging markets oil exporters leave $70 billion liquidity hole

Nov 3, 2014, 10.54PM IST (Emerging market energy…)LONDON: Emerging market energy producers could put pressure on a range of capital market instruments including Treasuries this year by draining capital from global markets for the first time in almost two decades, according to BNP Paribas strategists.A shift from outflows to inflows could see emerging market energy firms take $8bn net out of the financial markets in 2014, the French bank said in a research notMany oil firms are being left with little excess money because of rock bottom oil prices. In the days of higher oil prices, oil firms would save or invest excess cash in financial instruments, providing liquidity to the market.But with the WTI crude oil price sitting at $80.84 a barrel on Monday, and Brent crude trading for $85.88, there will be a net yearly inflow of capital to EM energy producers for the first time in 18 years, according to BNP Paribas. This will likely be repeated in 2015 if oil prices stay at around $80 a barrel.In an almost $70bn swing, EM energy producers will see $8bn of net inflows into the global markets by the end of this year from the $60bn of outflows in 2013.The drop from 2012 is even more pronounced, after EM energy firms put $248bn into the global financial markets that year by recycling petrodollars through tools such as bank deposits and capital markets instruments, according to BNP Paribas figures.LARGE RAMIFICATIONSA net shift from outflows to inflows could have large ramifications for a diverse range of financial market instruments.These include loans, as energy firms cut lender liquidity by putting less cash into bank deposits, direct equity investments and even US Treasuries."STRONG RECYCLED PETRODOLLARS HAS OFTEN BEEN USED AS AN ARGUMENT WHY US RATES ARE LOW AND WHY THERE IS EXCESS DEMAND/LIQUIDITY IN FINANCIAL MARKETS," DAVID SPEGEL, GLOBAL HEAD OF EMERGING MARKETS SOVEREIGN AND CREDIT STRATEGY RESEARCH AT BNP PARIBAS, TOLD IFR. "SO THERE ARE MANY IMPLICATIONS FOR MARKETS IF THIS DETERIORATES ANY FURTHER."The shift to companies spending funds, rather than saving or investing them in the capital markets, is directly correlated to the low price of oil, the French bank said.At their height in 2006, EM energy firms provided US$511bn of liquidity to financial markets. While WTI crude, at $76.28/barrel, was trading not much lower in September 2006 than it is today, the sector back then was at a different stage of the cycle after prices had risen by 47% in a year, according to the US energy and information administration. In contrast, crude prices shed 23.87% this July alone."Previously, EM exporters were saving more of the net capital and current account inflows they received and were investing the money into deposits and capital markets," said Spegel. "Where once oil EMs provided the world with liquidity and contributing to imbalances, they are not doing so and instead are starting to suck it up."This means that the incremental liquidity provided by EM oil firms recycling their petrodollars is now negative on a net basis.Spegel added: "This is the first a drain on global liquidity has been provided by oil-credits in the time I have been looking at that petrodollar capital."Major EM energy exporters include Saudi Arabia, the United Arab Emirates and Venezuela.BELOW BREAK EVENOil prices are already well below the budgetary break even price for many oil exporting countries. Russia needs oil at around US$100/barrel, according to Deutsche Bank. The UAE has a break even oil price of $90/barrel, Saudi Arabia $92, Libya $111, Venezuela $117, Iraq $116 and Nigeria $124, according to Thomson Reuters data.While low oil prices can benefit EM countries, particularly by increasing household disposable income, cheap oil puts pressure on outstanding bonds, said BNP Paribas."With the heavy reliance on debt capital markets for funding, typical of many energy net exporters, the picture for marketable hard currency bonds is somewhat less positive," said the report.There were $213bn of outstanding securities from oil exporting sovereigns and $239bn from energy producing corporates at the end of September, 2014. This equates to 8% and 13% of outstanding external bond debt respectively."This means that 21% of the external bond universe faces negative oil-price-related credit pressure," said the report.http://articles.economictimes.indiatimes.com/2014-11-03/news/55720486_1_capital-markets-global-markets-crude