Middle East

To summarize: in order to get the Saudis to "agree" to the Iran deal, all the US had to do is remind King Salman, that as long as oil is where it is to a big extent as a result of Saudi's own record oil production, crushing countless US oil corporations and leading to the biggest layoffs in Texas since the financial crisis, the country will urgently need access to yield-starved US debt investors. If in the process, US corporations can invest in Saudi Arabia (and use the resulting assets as further collateral against which to take out even more debt), while US military corporations sell billions in weapons and ammo to the Saudi army, so much the better.

Amid reports that Russia is building a substantial military presence in Syria, a worried John Kerry called Sergei Lavrov on Saturday. Here, according to the State Department, is what was said: "The secretary made clear that if such reports were accurate, these actions could further escalate the conflict, lead to greater loss of innocent life, increase refugee flows and risk confrontation with the anti-ISIL coalition operating in Syria."

The characteristic feeling of the post-2008 world has been one of anxiety. Occasionally, that anxiety breaks out into fear as it did in the last two weeks when stock markets around the world swooned and middle class and wealthy investors had a sudden visitation from Pan, the god from whose name we get the word "panic." Pan's appearance is yet another reminder that the relative stability of the globe from the end of World War II right up until 2008 is over. We are in uncharted waters. The relentless, if zigzag, rise in financial markets for the past 150 years has been sustained by cheap fossil fuels and a benign climate. We cannot count on either from here on out...

America’s descent into totalitarian violence is accelerating. It is a land in which facts have been redefined as enemy propaganda, a land in which legally protected whistleblowers are redefined as “fifth columns” or foreign agents subject to extermination, a land in which America is immune from criticism and all crimes are blamed on those whom Washington intends to rule.

The current refugee crisis is not an EU problem, but rather "a German problem," according to Hungary's Prime Minister Viktor Orban as his nation's borders are swamped with foreigners seeking to travel on to Germany. "People in Europe are full of fear because they see that the European leaders are not able to control the situation," he exclaimed after a meeting with EU President Schultz. He is right, of course, as we detailed here and here, but the sheer scale of the tragedy is worst than many could imagine. Orban defended his decision to erect a fence along its southern border with Serbia, saying: "we don’t do this for fun, but because it is necessary," adding rather pointedly that his country was being "overrun" with refugees, most of whom, according to the prime minister, were not Christians.

While the market nervously eyes the petrodollar reserves of Saudi Arabia and the UAE as the countries juggle domestic expenditures, dollar pegs, and the cost of war, Yemen itself is coming apart at the seams - literally. As WSJ reports, it now looks as though the country may in fact split, as Aden residents have eschewed the red, white and black for the flag of South Yemen, which existed as an independent republic for more than two decades.

An assistant professor from the U.S. Military Academy at West Point recently declared that professionals critical of the “War on Terror” constitute a “treasonous” opposition that should be subject to military force.

Markets have "reached some kind of a tipping point," warns Marc Faber in this brief Bloomberg TV interview. Simply put, he explains, "because of modern central banking and repeated interventions with monetary policy, in other words, with QE, all around the world by central banks - there is no safe asset anymore." The purchasing power of money is going down, and Faber "would rather focus on precious metals because they do not depend on the industrial demand as much as base metals or industrial commodities," as it's now "obvious that the Chinese economy is growing at nowhere near what the Ministry of Truth is publishing."

Europe's refugee crisis just took a dramatic turn for the worse, and strikes at the very hear of Europe's Shengen customs union which has allowed borderless travel within Europe for decades. As Bloomberg reports, the Italian Province of Bolzano in Northern Italy said in a statement that it agreed with the Italian government on request by German Federal State of Bavaria by "communicating a willingness to restore border controls at Brenner and temporarily suspend the Schengen agreement."

As Deutsche Bank put it on Tuesday, we've officially reached the end of the "Great Accumulation" as slumping Chinese growth, plunging crude, and an imminent Fed hike have put enormous pressure on emerging economies’ accumulated stash of FX reserves and that means that buyers of USD assets are becoming sellers at the expense of global liquidity and the perpetual bid for some core paper. Now, Goldman has weighed in, noting that the rise in foreign FX reserves held by non-G-7 countries that started around 2003-04 (at around US$1trn) appears to have ended for good.

Wax on Wax off,risk on today risk off tomorrow.....things could spiral out of control rather quickly

Saudi Arabia is staring down a current account-fiscal account outcome that makes Brazil look favorable by comparison. With the fiscal budget deficit projected at some 20% of GDP and two proxy wars combined with the necessity of maintaining the status quo for ordinary Saudis serving to make fiscal retrenchment next to impossible, you might be wondering how high oil prices need to climb in order for the Saudis to plug the gap. Deutsche Bank has the answer.

The latest set of Clinton e-mails released by the State Department reveals another 125 exchanges that contain classified information, establishing further (for anyone who still had doubts) that sensistive information was indeed transferred over Clinton's home e-mail server and leading to two rather obvious questions: 1) will Clinton be held accountable?, and 2) will her campaign be able to hold the 2016 Presidential bid together amid a rising tide of public mistrust?

According to Western diplomats, a Russian expeditionary force has already arrived in Syria and set up camp in an Assad-controlled airbase. The base is said to be in area surrounding Damascus, and will serve, for all intents and purposes, as a Russian forward operating base. In the coming weeks thousands of Russian military personnel are set to touch down in Syria, including advisors, instructors, logistics personnel, technical personnel, members of the aerial protection division, and the pilots who will operate the aircraft.