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Guest Post: The Growing Rift With Saudi Arabia Threatens To Severely Damage The Petrodollar

Tyler Durden's picture




 

Submitted by Michael Snyder of The Economic Collapse blog,

The number one American export is U.S. dollars.  It is paper currency that is backed up by absolutely nothing, but the rest of the world has been using it to trade with one another and so there is tremendous global demand for our dollars.  The linchpin of this system is the petrodollar.  For decades, if you have wanted to buy oil virtually anywhere in the world you have had to do so with U.S. dollars.  But if one of the biggest oil exporters on the planet, such as Saudi Arabia, decided to start accepting other currencies as payment for oil, the petrodollar monopoly would disintegrate very rapidly.  For years, everyone assumed that nothing like that would happen any time soon, but now Saudi officials are warning of a "major shift" in relations with the United States.  In fact, the Saudis are so upset at the Obama administration that "all options" are reportedly "on the table".  If it gets to the point where the Saudis decide to make a major move away from the petrodollar monopoly, it will be absolutely catastrophic for the U.S. economy.

The biggest reason why having good relations with Saudi Arabia is so important to the United States is because the petrodollar monopoly will not work without them.  For decades, Washington D.C. has gone to extraordinary lengths to keep the Saudis happy.  But now the Saudis are becoming increasingly frustrated that the U.S. military is not being used to fight their wars for them.  The following is from a recent Daily Mail report...

Upset at President Barack Obama's policies on Iran and Syria, members of Saudi Arabia's ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years.

 

Saudi Arabia's intelligence chief is vowing that the kingdom will make a 'major shift' in relations with the United States to protest perceived American inaction over Syria's civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.

 

Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said.

Saudi Arabia desperately wants the U.S. military to intervene in the Syrian civil war on the side of the "rebels".  This has not happened yet, and the Saudis are very upset about that.

Of course the Saudis could always go and fight their own war, but that is not the way that the Saudis do things.

So since the Saudis are not getting their way, they are threatening to punish the U.S. for their inaction.  According to Reuters, the Saudis are saying that "all options are on the table now"...

Saudi Arabia, the world's biggest oil exporter, ploughs much of its earnings back into U.S. assets. Most of the Saudi central bank's net foreign assets of $690 billion are thought to be denominated in dollars, much of them in U.S. Treasury bonds.

 

"All options are on the table now, and for sure there will be some impact," the Saudi source said.

Sadly, most Americans have absolutely no idea how important all of this is.  If the Saudis break the petrodollar monopoly, it would severely damage the U.S. economy.  For those that do not fully understand the importance of the petrodollar, the following is a good summary of how the petrodollar works from an article by Christopher Doran...

In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.

 

This means that every country in the world that imports oil—which is the vast majority of the world's nations—has to have immense quantities of dollars in reserve.

 

These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.

This arrangement works out very well for the United States because we can wildly print money and run up gigantic amounts of debt and the rest of the world gobbles it all up.

In 2012, the United States ran a trade deficit of about $540,000,000,000 with the rest of the planet.  In other words, about half a trillion more dollars left the country than came into the country.  These dollars represent the number one "product" that the U.S. exports.  We make dollars and exchange them for the things that we need.  Major exporting countries (such as Saudi Arabia) take many of those dollars and "invest" them in our debt at ultra-low interest rates.  It is this system that makes our massively inflated standard of living possible.

When this system ends, the era of cheap imports and super low interest rates will be over and the "adjustment" to our standard of living will be excruciatingly painful.

And without a doubt, the day is rapidly approaching when the petrodollar monopoly will end.

Today, Russia is the number one exporter of oil in the world.

China is now the number one importer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.

So why should Russia, China and virtually everyone else continue to be forced to use U.S. dollars to trade oil?

That is a very good question.

In fact, China has been making a whole lot of noise recently about the fact that it is time to start becoming less dependent on the U.S. dollar.  The following comes from a recent CNBC article authored by Michael Pento...

Our addictions to debt and cheap money have finally caused our major international creditors to call for an end to dollar hegemony and to push for a "de-Americanized" world.

 

China, the largest U.S. creditor with $1.28 trillion in Treasury bonds, recently put out a commentary through the state-run Xinhua news agency stating that, "Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated."

For much more on all of this, please see my previous article entitled "9 Signs That China Is Making A Move Against The U.S. Dollar".

But you very rarely hear anything about this on the evening news, and most Americans do not understand these things at all.  The fact that the U.S. produces the de facto reserve currency of the planet is an absolutely massive advantage for us.  According to John Mauldin, this advantage allows us to consume far more wealth than we actually produce...

What that means in practical terms is that the United States can purchase more with its currency than it produces and sells. In theory those accounts should balance.

 

But the world's reserve currency, for all intent and purposes, becomes a product. The world needs dollars in order to conduct its trade. Today, if someone in Peru wants to buy something from Thailand, they first convert their local currency into US dollars and then purchase the product with those dollars. Those dollars eventually wind up at the Central Bank of Thailand, which includes them in its reserve balance. When someone in Thailand wants to purchase an imported product, their bank accesses those dollars, which may go anywhere in the world that will take the US dollar, which is to say pretty much anywhere.

And as Mauldin went on to explain in that same article, a significant amount of the money that we ship out to the rest of the globe ends up getting reinvested in U.S. government debt...

That privilege allows US citizens to purchase goods and services at prices somewhat lower than those people in the rest of the world must pay. We can produce electronic fiat dollars, and the rest of the world accepts them because they need them to in order to trade with each other. And they do so because they trust the dollar more than they do any other currency that is readily available. You can take those dollars and come to the United States and purchase all manner of goods, including real estate and stocks. Just this week a Chinese company spent $600 million to buy a building in New York City. Such transactions happen all the time.

 

And there is one other item those dollars are used to pay for: US Treasury bonds. We buy oil and all manner of goods with our electronic dollars, and those dollars typically end up on the reserve balance sheets of other central banks, which buy our government bonds. It's hard to quantify the exact amount, but these transactions significantly lower the cost of borrowing for the US government. On a $16 trillion debt, every basis point (1/10 of 1%) means a saving of $16 billion annually. So 5 basis points would be $80 billion a year. There are credible estimates that the savings are well in excess of $100 billion a year. Thus, as the debt grows, the savings also grow! That also means the total debt compounds at a lower rate.

Unfortunately, this system only works if the rest of the planet has faith in it, and right now the United States is systematically destroying the faith that the rest of the world has in our financial system.

One way that this is being done is by our reckless accumulation of debt.  The U.S. national debt is now 37 times larger than it was 40 years ago, and we are on pace to accumulate more new debt under the 8 years of the Obama administration than we did under all of the other presidents in U.S. history combined.  The rest of the world is watching this and they are beginning to wonder if we are going to be able to pay them back the money that we owe them.

Quantitative easing is another factor that is severely damaging worldwide faith in the U.S. financial system.  The rest of the globe is watching as the Federal Reserve wildly prints up money and monetizes our debt.  They are beginning to wonder why they should continue to loan us gobs of money at super low interest rates when we are beginning to resemble the Weimar Republic.

The long-term damage that we are doing to the "U.S. brand" far, far outweighs any short-term benefits of quantitative easing.

And as Richard Koo has brilliantly demonstrated, quantitative easing is going to cause long-term interest rates to eventually rise much higher than they normally should have.

What all of this means is that the U.S. government and the Federal Reserve are systematically destroying the financial system that has enabled us to enjoy such a high standard of living for the past several decades.

Yes, the U.S. economy is not doing well at the moment, but we haven't seen anything yet.  When the monopoly of the petrodollar is broken, it is going to be absolutely devastating.

And as I wrote about the other day, when the next great economic crisis strikes it is going to pull back the curtain and reveal the rot and decay that have been eating away at the social fabric of America for a very long time.

Just check out what happened in Detroit recently.  The new police chief was almost carjacked while he was sitting in a clearly marked police vehicle...

Just four months on the job, Detroit’s new police chief got an early taste of the city’s hardscrabble streets.

 

While in his patrol car at an intersection on Jefferson two weeks ago, Police Chief James Craig was nearly carjacked, police spokeswoman Kelly Miner confirmed today.

Craig said he was in a marked police car with mounted lights when a man quickly tried to approach the side of his car. Craig, who became police chief in June, retold the story Monday during a program designed to crack down on carjackings.

Isn't that crazy?

These days, the criminals are not even afraid to go after the police while they are sitting in their own vehicles.

And this is just the beginning.  Things are going to get much, much worse than this.

So let us hope that this period of relative stability that we are enjoying right now will last for as long as possible.

The times ahead are going to be extremely challenging, and I hope that you are getting ready for them.

 

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Thu, 10/24/2013 - 20:29 | 4088581 localsavage
localsavage's picture

At $4 gas, sentiment is against the Saudis.

Thu, 10/24/2013 - 20:33 | 4088585 resurger
resurger's picture

As long as Al-Saud are there, the Petro-D will continue. They are the right hand of Satan.

Thu, 10/24/2013 - 20:35 | 4088598 King_of_simpletons
King_of_simpletons's picture

Rift with Saudi Arabia is always a good thing. The root cause of all evil in this world is that country's existence.

Thu, 10/24/2013 - 20:41 | 4088602 ZerOhead
ZerOhead's picture

"If it gets to the point where the Saudis decide to make a major move away from the petrodollar monopoly, it will be absolutely catastrophic for the U.S. economy."

Let's see...

Saddam Hussein tried this > dead

Moammar Gadhafi tried this > dead

Personally I'm a little curious to see what happens to Bandar bin Bush and his extended family...

Thu, 10/24/2013 - 20:41 | 4088617 resurger
resurger's picture

Dont worry, they are pussies.

Thu, 10/24/2013 - 20:48 | 4088636 mickeyman
mickeyman's picture

He has raised the wrong finger.

Thu, 10/24/2013 - 20:53 | 4088651 ZerOhead
ZerOhead's picture

Despite how persistently he may beg you... never.   ever.   pull that finger...

Thu, 10/24/2013 - 21:57 | 4088817 Almost Solvent
Almost Solvent's picture

Any article like this that does not address the fact that Saudi Arabia would become the next ward of the U.S. military is not facing reality.

 

WW3 will break out before the petro$ ends. Our military can't exist without it.

Thu, 10/24/2013 - 23:09 | 4089025 One World Mafia
One World Mafia's picture

Not if they cut the purse strings.

Thu, 10/24/2013 - 23:42 | 4089119 James_Cole
James_Cole's picture

One way that this is being done is by our reckless accumulation of debt.  The U.S. national debt is now 37 times larger than it was 40 years ago

Nobody gives a shit about the debt, for the love of gawd. King dollar comes at the barrel of a gun - nothing else. 

Been that way since before North America was on the map, only difference was the weapons.  

Thu, 10/24/2013 - 23:50 | 4089137 One World Mafia
One World Mafia's picture

The Saudis have too much control over the value of the dollar by way of the petro purse strings.

Fri, 10/25/2013 - 06:50 | 4089436 mjcOH1
mjcOH1's picture

"Any article like this that does not address the fact that Saudi Arabia would become the next ward of the U.S. military is not facing reality."

Yep. Haven't you heard that the Saudis have gone rogue? They're supporting the Islamist rebels in Syria. And they're threatening us....they clearly said in the article that all options are on the table. I do believe the Kenyan could bring home another Nobel Peace prize if decides to save the world from this threat and goes for regime change.

Fri, 10/25/2013 - 07:34 | 4089487 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

The Saudis are close to running out of their black gold. Does it matter over say 5-10 years?

Fri, 10/25/2013 - 08:30 | 4089588 balanced
balanced's picture

"Dont worry, they are pussies."

Hah. I was thinking the same thing. They are just like Boehner - spineless.

Thu, 10/24/2013 - 21:08 | 4088702 Urban Redneck
Urban Redneck's picture

Bandar is a half-breed, and the other half serves a purpose. What Turki said should be far more troubling.

Who cares what KSA does "independently" when both the GCC common currency is still on the table (and on a typically Arab schedule- inshallah, inshallah, inshallah) and the ongoing discussions of redenomination of the OPEC Basket to a currency basket are continuing (on a less Arab schedule)?

Thu, 10/24/2013 - 21:29 | 4088737 Deo vindice
Deo vindice's picture

This is really an 'Obama issue' more than a Bandar one.

While everyone is moaning about how inept Obama is, I disagree. I think he has played this brilliantly. (evil, but brilliant).

If his goal is to bring the USA down to and to make it a disparaged country in the world, he has done a superb job at accomplishing that.

And how better to accomplish this goal than to have the US dollar cease being the reserve currency of the world?

Thu, 10/24/2013 - 23:13 | 4089037 lolmao500
lolmao500's picture

Don't you worry, they'll find a way to plant this on tea partiers.

Thu, 10/24/2013 - 23:33 | 4089100 walküre
walküre's picture

If Obama is muslim and works hand in hand with the Saudis to end the US zionist grip on the world, then all that Obama has done and is doing makes 100% perfect sense.

Fri, 10/25/2013 - 07:08 | 4089462 I need Another Beer
I need Another Beer's picture

Don't forget blaming the Jews too. I blame stupid people which are the Democrats and the people who voted them in.

Fri, 10/25/2013 - 07:56 | 4089528 GMadScientist
GMadScientist's picture

Pretty much everyone except yourself. Coincidence?

Fri, 10/25/2013 - 01:31 | 4089275 NidStyles
NidStyles's picture

Except the US was on that path long before Doctor Choom-Wagon was in charge of more than his own breathing.

Fri, 10/25/2013 - 03:15 | 4089342 zhandax
zhandax's picture

It doesn't look to me like odumbass is working hand in hand with anyone. Maybe mouth around cock with the stockholders of the frb.

Fri, 10/25/2013 - 06:24 | 4089424 Obese-Redneck
Obese-Redneck's picture

Dats right crackerz, you all been suckin the saud balls for bout 50 years, and now you get angry cause you cant gassup the bassboat anymore?  What it costs 150 bennys to fill up your penis wagon? and now you get the picture, youve been twerking the kings phallus 4EVA, get it? How do you like dem apples?

Thu, 10/24/2013 - 22:30 | 4088914 UKdk
UKdk's picture

Would save 'Uncle Vlad' a job! Guarantee he's marked Bandar Bush's card after bandar's threat's to unleash the Chechen's at Sochi. But then again maybe Vlad, the Chinese and House of Saud will come to an 'understanding', who know's in the new upside down world!

Sat, 10/26/2013 - 14:00 | 4093519 mkkby
mkkby's picture

You are correct.  The saudis know that if the US withdraws the troops protecting them, they will be overthrown quickly by their many enemies.  So they will whine and threaten, but will do nothing.

These bastards stir up trouble around the world and keep their people down, only because the US military protects them.

Fri, 10/25/2013 - 05:16 | 4089387 Ar-Pharazôn
Ar-Pharazôn's picture

+1 but honestly do you think that the american people is ready to accept this?

look what happened with iraq and afghanistan, saudi arabia would be worse than the 2 combined.

Fri, 10/25/2013 - 21:48 | 4092103 lotsoffun
lotsoffun's picture

saudi was never sold weapons. they have no army.  they were sold 'awacs' radar only 'defense' aircraft.  they would be rolled over in a day.  the tiny isrealis could roll them over.  i wonder whose troll you are.  if you are a 'proud' saudi - i feel sorry for you.  as others pointed out here, iran was an empire for centuries as was iraq.  saudi is was a sand pile forever and has huge false population based on the fact that oil was discovered and that huge amount of money that was created was able to create huge imports of food and water that supports a population many times greater than what that land can support.  saudi is toast.  sorry pal.  enjoy the good times while you can. 

Fri, 10/25/2013 - 10:18 | 4089902 auntiesocial
auntiesocial's picture

who's running this joint, anyway? 

 

-insert answer here-

Fri, 10/25/2013 - 21:42 | 4092083 lotsoffun
lotsoffun's picture

exxon, bp, royal dutch shell, conoco, a few more.  massive profits.   used to be the auto companys were their partners, but they blew up by going into financing.  now the partners are defence, because they are really good at burning petrol for not reason and didn't go into financed, because we finance their profits for free.  is there really anybody that doesn't know this?

Thu, 10/24/2013 - 20:40 | 4088611 resurger
resurger's picture

How about Israel existance?

Thu, 10/24/2013 - 20:45 | 4088626 Eahudimac
Eahudimac's picture

Nope. Try again. I'll give you a hint. It's where Wall St. is. 

Thu, 10/24/2013 - 20:59 | 4088668 rtalcott
Fri, 10/25/2013 - 03:35 | 4089349 Gief Gold Plox
Gief Gold Plox's picture

"Rift with Saudi Arabia is always a good thing. The root cause of all evil in this world is that country's existence."

Spoken like someone who hasn't read a single history book.

Thu, 10/24/2013 - 21:07 | 4088698 Stoploss
Stoploss's picture

Oh, so now it's blackmail huh?? 

Fight our wars, or we kill the petro dollar....

 

Hey, give it a shot an see what happens.

Meanwhile, maybe we should ask some of our unemployed youth, (yutes), how they would feel about working in the oil patch here at home???

That is actually a great idea. Fuck the petro dollar, zero taxes await the the home oil companies that create the most jobs in the safest way possible?

What?? You say? Maybe back off the regs enough to allow real R&D on safety?

LOL!!  I think we better stick to being mercenaries, blowing ourselves up regularly seems to suit us.

Thu, 10/24/2013 - 22:00 | 4088825 Keyser
Keyser's picture

Independence from SA for crude oil is coming, but it will have to wait a few more years as Obama despises the oil industry and would shut it down entirely in the US if he could. 

 

Fri, 10/25/2013 - 08:50 | 4089633 Keyser
Keyser's picture

Funny, I guess at least 5 people can't handle the truth. 

 

Fri, 10/25/2013 - 01:59 | 4089294 Element
Element's picture

OT:

Just in, is this a coincidence?

Saudi Arabia is reporting dozens of anomalous glitches in Siemens industrial programmable logic controllers associated with their potable-water desalination plant network's operations. A concerned anonymous senior supervising engineer has told newsagencies off the record, that things were fine, " ... then suddenly around 7:04 AM this morning they were not fine, all those black boxes started acting like miscreants ..."

 

Engineers have been unable to identify any faults in the code or the hardware. "It's quite strange, we've not been able to reset any of the controllers, at this point despite numerous attempts, and we don't have spares sufficient to replace these, to get even one of the nation's desalination plants producing potable water. There is no emergency as such as we have approximately 80 hours of water storage capacity overhead, and water restrictions were implemented. We call it going on "camel mode", which is a part of our national emergency preparedness and planning."

 

Engineers have also been frustrated by a lack of after sales support. "We have attempted to contact the Siemens help-line for advice, many times, but they aren't answering, or else some infuriating Indian guy answers and puts us on hold, and then the line eventually drops out, and we lose the connection."

 

The engineer further added, "And their 'on-hold' piped muzak is quite atrocious, it keeps playing this silly old song by a band called 'America', "I've been through the desert on a horse with no name, it felt good to be out of the rain". Really! What is with that sort of thing?"

https://www.youtube.com/watch?v=l_NPSFEzsPc

 

Fri, 10/25/2013 - 02:57 | 4089332 Joe A
Joe A's picture

Sort of a 'water for oil' programme similar to the 'food for oil programme' in Iraq?

Fri, 10/25/2013 - 08:56 | 4089656 CR Bill
CR Bill's picture

source ?

Fri, 10/25/2013 - 09:07 | 4089673 Random
Random's picture

HEHEHEHE, the old Stuxnet strategy? This would be true only if we ignore the fact that KSA and US proxy (via Israel) are playing for the same team.

Fri, 10/25/2013 - 05:06 | 4089381 snowlywhite
snowlywhite's picture

it's blackmail in the head of this end of the world guy... Don't get me wrong, a big crash probably will come, but the chances it'll come from SA are as big as it comming from Liechtenstein... Saud&family would be toast without US in less than 5 years(and that's generous); thing of which I guess they're fully aware.

 

plus, there's always the option of switching SA with Iran; sure, there's the drawback that the iranians are nowhere as dumb or as easy to manipulate. OTOH, iranians had an empire for millenias, they are good at negociating stuff, so a decent deal can always come out of it.

 

everyone fears the sunnis; the second US drops them...

Fri, 10/25/2013 - 05:42 | 4089402 Seer
Seer's picture

Good take.

People need to keep in mind that "Saudia Arabia" = "Saudi Royal Family."  The "deal" was ALWAYS "oil for protection."  In order for the Royals to make the break from the US they'd have to have another "protector" lined up.  I'm not thinking it's Russia, which then only leaves China... does China really have the means? and, do they really want to start getting into the internal affairs of others?  And back to Russia...

Russia IS and ALWAYS will be the key.  Russia wants more of China's market.  I'd therefore figure that Russia wouldn't be aiding China in any way in any move of China's to latch on to the Saudis.

For those that haven't been paying attention, all the US activity in the ME is the result of the KNOWN problem of succession in the Saudi Royal Family.  Iran is much more stable (in comparison).

It's going to be a tough call on oil costs.  Although China's consumption is rising (and will do so for a bit longer) the rest of the world's consumption is dropping.  The major oil exporters are facing depleting oil reserves and increased internal consumption.  It's going to be one BIG tug-of-war, with all eventually being pulled to the ground: margins will evaporate.

Fri, 10/25/2013 - 09:20 | 4089705 GoldenTool
GoldenTool's picture

I'd give you +1k on this if I could get the arrow to do it.

 

"Sapiens qui prospicit"

Fri, 10/25/2013 - 05:43 | 4089392 Tall Tom
Tall Tom's picture

It is NOT BLACKMAIL. That is the deal that we made back in 1973 when we PERMANENTLY suspended Gold Dollar convertibility. The August 15, 1971 event was supposed to be temporary.

 

Henry Kissinger went over to the Saudis and struck the deal. The Saudis were REQUIRED, by TREATY, to accept ONLY US DOLLARS for Oil. Furthermore they were REQUIRED to INVEST in US TREASURIES.

 

We, in return, promised our Military to protect them from Foreign invasion and protect them from internal uprising.

 

Syria is a threat to the Internal Stability of the House of Saud. By refusing to overthrow Assad's Syrian Regime and by making overtures for peace with Iran the UNITED STATES is BREAKING the TERMS and CONDITIONS of our Treaty.

 

This is not Saudi Arabia acting. This is the United States FAILING to live up to OUR AGREEMENT.

 

We have lived quite well because of the House of Saud keeping their end of their bargain.

 

Perhaps we need to keep ours if we want to maintain the World's Reserve Currency status?

 

I am tired of the United States playing itself as if it were a victim when it is the INSTIGATOR.

 

Personally I find it abhorrent that we made the deal in the first place.

 

Personally I find it abhorrent that we left the Gold Standard.

 

But we need to own up to our own actions and not place the blame on others when it squarely belongs on us.

 

Victim Mentality sucks.

Fri, 10/25/2013 - 05:53 | 4089404 Seer
Seer's picture

It's like two-way-blackmail... and, it's really blackmail against the non-royals in SA.

But, yes, I'm not so sure "blackmail" is really the appropriate term to apply.  When dependencies are so large and when things get a bit unstable BOTH side are reminded of how fragile things can be.

Bandar bin Bush is the Henry Kissinger of Saudi Arabia.  It's all a big chess match.  Bandar is looking to renegotiate for a better deal.  As I note above, I don't think that the Chinese are going to play the role of protector.

This is just part of the great unwinding, which will ultimately find the Saudis back to relying more on camels for transport (and the US on bicycles/horses?).

Sat, 10/26/2013 - 14:08 | 4093543 mkkby
mkkby's picture

If we neuter Syria and Iran, Saudi won't have any meaningful enemies any more.  Then they won't be so depandant on US protection, and can disengage from the petro dollar.

Obama is just weak.  But he may be accidentally be winning the chess game.  Keep them scared so they need us is the game.

Thu, 10/24/2013 - 20:33 | 4088588 outamyeffinway
outamyeffinway's picture

Kabuki theatre. They know what's coming. Publicly moving away over Syria because they're "mad". Syrian war might have been cover for forthcoming dollar collapse??? The world is a stage....

Thu, 10/24/2013 - 21:23 | 4088734 AlaricBalth
AlaricBalth's picture

How formidable would a gold backed Petro-Yuan be?

Thu, 10/24/2013 - 21:38 | 4088771 willwork4food
willwork4food's picture

Should I tell my wife that it might not be a good idea to get that $3000 pit group at this time?

Fri, 10/25/2013 - 07:43 | 4089501 kralizec
kralizec's picture

This is much closer to reality...the Saudis cannot do squat about ending the special relationship with the US without finding a new dance partner!

Thu, 10/24/2013 - 21:31 | 4088756 Kirk2NCC1701
Kirk2NCC1701's picture

+10 for "Kabuki Theater".  Happily, not everyone falls for the plays at the MSM Theater.

Thu, 10/24/2013 - 20:54 | 4088654 rubiconsolutions
rubiconsolutions's picture

So let's see if I understand this - America has a choice between preserving it's status as the world reserve currency by attacking a couple of sovereign nations or losing that by taking a moral position and telling the Saudi's to bugger off. If history is any indicator I give Syria and Iran about six months before the fireworks begin.

Thu, 10/24/2013 - 22:02 | 4088835 Keyser
Keyser's picture

You really think the commnity organizer has the juevos to actually go in through the front door? Barry strikes me more of a back door kind of guy. 

 

Fri, 10/25/2013 - 10:41 | 4089987 RaceToTheBottom
RaceToTheBottom's picture

Do you really think a country is run by its president?

Fri, 10/25/2013 - 03:00 | 4089335 starfcker
starfcker's picture

oh come on. i like mike snyders posts but every now and then it seems like even good writers take one for the team. so am i supposed to come to the conclusion that we should have started another war with syria lest bandar bush get her panties in a bunch? have john kerry set him down and show him the noose around saddams neck and quadaffi getting a flashlight up his ass. peacenik kerry was the designated house negro (fuck you colin powell) trying to rally support for this adventure. i'm not a fan of our president, but i have enormous respect for him making the decision to not start another war. there are a lot of VERY unhappy neocons and MIC interests, the war drums won't be quieted. 

Fri, 10/25/2013 - 06:08 | 4089415 Seer
Seer's picture

Regardless of the intentions, the outcome of NOT stepping on the landmine that is Syria WAS a good thing.  The US never did want to engage Russia, and nor should it.

I really find it all quite interesting.  People will focus on China.  I, however, believe China only as a wanna-be, Russia IS and always will be the key.

If "China" was smart it would focus on Iran.  If it doesn't then it's quite possible that the US, favoring oil over Israel, would negotiate improved relations with Iran.  Seems that this would be best for Russia as well in that the Saudis would collapse w/o support from the US (China is NOT going to provide protection to the royals there), which would then have the Chinese more dependent on Russian energy.

Thu, 10/24/2013 - 20:30 | 4088582 resurger
resurger's picture

Go East my son...

Thu, 10/24/2013 - 21:28 | 4088745 Kirk2NCC1701
Kirk2NCC1701's picture

Go West, my son.  The fly way West.

Thu, 10/24/2013 - 21:40 | 4088774 willwork4food
willwork4food's picture

Right, east to me is in the Euro zone empire. Are you saying Africa is the next empire? I'm confused.

Thu, 10/24/2013 - 20:37 | 4088586 Constitutional ...
Constitutional Republic's picture

ALL options on the table? Good.

Then let's subject the Saudis and their Rothschild/Israeli backers to forensic audits as soon as possible. They can hand their U.S. visas or passports in immediately.

They shout a countdown 5...4...

I say, let's go straight to 1. Still want to play hardball? Smog ridden Bejing or Singapore will choke you to death, even if China has become the biggest importer of black gold, oil.

I prefer yellow gold, and silver. Game on, boys...over your dead bodies this time.

 

Fri, 10/25/2013 - 02:00 | 4089300 UKdk
UKdk's picture

Tone it down buddy USA hasn't got the balls' for a showdown with either the Red Dragon or the Bear. USA has only ever taken on weaker countries and can't even beat them! Russia and China will 'outplay' US before anything get's miltary (read 'art of war'). You seem to be ready for full on US civil war and that is most likey as when the next play comes it's likely religious,ethnic,social tensions will tear US apart.

Fri, 10/25/2013 - 06:31 | 4089428 Seer
Seer's picture

US doesn't have to have a show-down with China.  What's the point?  If the petro-dolar collapses then there goes China's UST holdings.  I just don't see China assuming the protector role of the Saudi royals.  As world-wide contraction continues China's trade balance reverses (as it imports more and more energy).

Sun Tzu was never exposed to the Russians.  And while "China" has "existed" for a long time, their current formation is NOT the same as it was back in Sun Tzu's time.

Russia has the hand.  It has more strategic options than anyone else (esp in that region).

As I note above, China would be foolish to take over the role of protector of the House of Saud.  It's not their style.  If they did attempt it they'd lose favor with a closer supplier- Iran.  This would all be in Russia's best interest; and, also as I note above, it would, if the US played it correctly, also work out best for the US.  The House of Saud IS going to fall: this is the PRIMARY reason the US invaded Iraq- it didn't go as well as desired, of course, but as oil interests go it's better than otherwise would have played out.

Dick Cheney stated that the American way of life isn't negotiable.  Dick has major oil connections.  It's folks like him who ultimately cause the chess pieces to move.  "Losing" isn't an option for them, and when you've got the weaponry that the US has I wouldn't taunt...  Ultimately it's what is been about for most of the "modern" era- US vs Russia.  MADD ain't going to happen, in which case China will be the odd man out: Saudis will be left flapping in the wind; Bandar has to understand this- it really is desperation time for them.

Thu, 10/24/2013 - 20:33 | 4088589 edotabin
edotabin's picture

While it is very clear the dollar situation is precarious at best, the Saudis should also realize their position is not so solid either. 

I say they will partner up with the EU and accept Euro.

Thu, 10/24/2013 - 20:41 | 4088612 Constitutional ...
Constitutional Republic's picture

The Saudis are more likely to do deals in yuan for their USD, as China and the Rothschilds/central banks have combined their joint interests, and intend to shift the money power to the Far East which is accumulating gold as fast as it can in anticipation of a new reserve currency. These facts are easily verifiable for those curious enough to see facts, not provincial wishful thinking.

Thu, 10/24/2013 - 21:42 | 4088783 willwork4food
willwork4food's picture

I wonder how much cash is transacted via Yuan and the House of Saud under the table.

Thu, 10/24/2013 - 23:02 | 4089001 booboo
booboo's picture

There is no "under the table" anymore, Barry has them big ears ya know and the N$A is more about tracking money then it is about listening to two teen age boys talking on the phone about stink finger or for tracking "terrist". China needs to build a Navy that can compete before is begins thinking about the reserve currency, that they are doing but it takes some time.

Fri, 10/25/2013 - 00:59 | 4089238 Waffen
Waffen's picture

All data is sent unfiltered to Israel, the NSA is essentially isreal.

Fri, 10/25/2013 - 02:28 | 4089312 Kirk2NCC1701
Kirk2NCC1701's picture

More like Mossad's IT dept.

Fri, 10/25/2013 - 02:33 | 4089309 Element
Element's picture

That is a good and valid point however, it's going to be much more dynamic than that.

First, China must work in close strategic partnership with Russia, to defeat the US dollar system (and deter Japanese and US fleet), after that they may take other more self-serving paths but still cooperate closely. So china must also serve Russia's strategic interests, in parallel.

Secondly, the primary concern of the Chinese is to engineer a dramatic shrinkage of the size of the US Navy, and the US's several air forces in various branches (naval air power, air force proper, marines air power and air national guard, etc), and the clear way for China and Russia to do that is to take the $USD down hard, and thus making it much harder and much more proportionately expensive for the US military to intervene effectively in most parts of the world, and politically much less likely.

Thus it's not just about China's and Russia's navies and air power getting bigger, but the Western naval and air power must also become smaller, and do so faster, thus collapsing the US dollar system, early, and replacing it (due need and desperation, with something else) is not a far-off fancy, but is much closer and coming at us, faster all the time.

This spat and split with the camel jockeys would have been unthinkable 5-years ago but here it is, and is a necessary break for it to occur, and it did not take a war to get it, it took a no-war event!

As of last week both the leaderships of Russia and China have individually and openly said they're going to destroy the US dollar system completely, and take the global reins of power of the United States - it's on now.

Fri, 10/25/2013 - 03:53 | 4089355 UKdk
UKdk's picture

Exactly - art of war - defeat the enemy before you fight them! Or in this case let their own arrogance and hubris do the job for you. As US$$$ goes south the miltary will implode(not unlike the soviet union) - wanna buy couple hundred thousand humvee's stationed in the ME anyone?? Gotta deal with shippin yerself tho!

Fri, 10/25/2013 - 08:55 | 4089648 Keyser
Keyser's picture

China has already stated emphatically that they do not want the yuan to be the next reserve currency. 

 

Fri, 10/25/2013 - 11:23 | 4090144 Overfed
Overfed's picture

They have also stated emphatically that they don't want the US dollar to continue as the present reserve currency.

Thu, 10/24/2013 - 22:29 | 4088879 edotabin
edotabin's picture

And it makes sense, doesn't it?  Between India and China you have 2.5+ billion people, many in absolute poverty. In the US you have fully tapped out consumers and in Europe (perhaps to a lesser extent of excess) you have pretty much the same thing. How many more cars, TVs, laptops, iphones etc can people buy? How many more reality shows and "Dancing with the Stars" can a person stomach? We are literally a few steps away from having TV shows like "Ow, my balls" and movies like "Ass"

So the system, such as it is, is moving to the next horizon. It is where all the consumption and growth will come from.  Ben is basically giving away money and people aren't borrowing so that's that.

Then, just as the g-7 became the g-183, so too will the issuance of money. It will go from dollar, to Euro, to Yuan, to....... and then to the Globo/Eartho/IMF-O/SDR etc.

 

Fri, 10/25/2013 - 01:45 | 4089290 Oliver Jones
Oliver Jones's picture

+100 for the Idiocracy reference. :)

Fri, 10/25/2013 - 03:58 | 4089356 UKdk
UKdk's picture

Next currencies are in place, PM's for the reset, coming out the other side with (PM backed) Yuan and the Euro? World won't accept SDR by the time all the shit's doen with hitting the fan, the next banking master's will be in the East. Curious to see if UK stays the course if that happen's then the true axis of financial power never left the UK. If not UK and US become third world s**tholes.

Fri, 10/25/2013 - 04:53 | 4089377 Element
Element's picture

The West will not end up at third world level, they are way too proud, aggressive and resource-rich for that, they'll fight back hard (and Russia knows it, and China should know it), but will be far less influential than before (and they should be) but very dangerous. The Soviets fell but everyone knew it'd be crazy to tangle with the Russian military in the Balkans. They were less influential and could be largely sidelined but they were much too dangerous to confront directly over issues they felt strongly about, like defending the Slavic people.

Fri, 10/25/2013 - 06:40 | 4089431 Seer
Seer's picture

I agree with your view that they'd be more willing to do Yuan than Euro.  BUT... the "deal" really centers around protecting the House of Saud, and I just ain't seeing this as something that the Chinese are going to want to venture in to.

China's current rise will prove to be nothing more than a flash: their current rate of growth can't hold up (not that ANY growth can on a finite planet), and there's no indication that they've got any major break-throughs in energy.  And if they have any smarts at all they'll realize that they're best off not getting involved in the internal affairs of the Saudis.  A block against the US, for the Chinese, would be to concentrate on Iran.  All plays, however, will be somewhat fenced by the Russians (who hold the best hand).

Thu, 10/24/2013 - 20:49 | 4088643 Zero Point
Zero Point's picture

I don't know a whole lot about oil production, but a milk shake is to all intents giving full production through the straw right down to the bottom of the cup, when suddenly you hear that sucking sounds and get jack shit.

I wonder if that sucking sound is pretty close and our beloved royal family of the desert sands are about to get tossed away like a used Kleenex.

Thu, 10/24/2013 - 21:07 | 4088694 samsara
samsara's picture

Horz. Drilling. Pumping water to force the very thin layer of petro to the surface. 90+% of the liquid they pump in is the water they pump in. It goes to big tanks and the oil rises to the surface they pump the rest back in.

It won't be long now. Reminds me of an article.

Google the article "Ghawar Is Dying" by C. Haynes. Short. It will give you an idea of where we are at.

Thu, 10/24/2013 - 21:30 | 4088747 Zero Point
Zero Point's picture

That's an excellent article. Thanks!

Thu, 10/24/2013 - 21:47 | 4088791 samsara
samsara's picture

Then you should also read this one. Especially with context of this ZH article.

Everybody on ZH should read this one. About bad times in the Kingdom (SA). and the repercussions in the US. A little diary of the experience, VERY funny.

Sixty Days, Next Year
http://www.newcolonist.com/dim_ages.html

-snip-
You'll have to excuse me, but I don't usually keep a diary. These events began before I understood what was happening, and where it was all headed. It was only later, after it was all going on, that I thought that maybe I should be keeping some sort of record--as if no one else was. We live in The Information Age, or did. Now it's just The Dim Ages. Welcome to my world.

June 14
It all started (for me) with just a small item on an Internet news page, "Trouble in the Kingdom". I thought they were talking about Disney World (the Magic Kingdom) so I clicked on it. Turns out they were talking about "the repercussions of curtailed social services in Saudi Arabia". (Insert a big yawning noise here.) So their kids don't get free day care? Big whoop. I scanned the article for any mention of M. Mouse and then went on with my life. My mistake. No biggie. Really.

June 15
Yesterday's headlines are still today's news? I guess those folks in the sand are really upset about something--it was in all the papers today. Sounds like the Saudi government is in for a tough time trying to rein in a runaway budget--and the locals don't like it one bit. Now their capital (Riyadh?) is a mess with people getting ugly in the streets. Yeah, yeah, yeah, no more subsidized housing. Deal with it, people. Get a job.

June 16
I saw the news today, oh boy. Three Saudi cities are up in flames, people with big guns are going nuts, and everyone that can find a plane is leaving that country in one big hurry. It's like Saigon in a sand box. (Not that I actually remember Saigon.) Local news guys are talking about what it means to us--and our oil. Maybe I'd better go fill up the car before everyone else does. I hate being stuck in long lines.

-snip-

Fri, 10/25/2013 - 00:09 | 4089174 lasvegaspersona
lasvegaspersona's picture

"Sixty Days" was pure fantasy

After the Saudis go down the dollar goes the next day. The guy would have had no job, the gas stations would have closed that week, the grocery store would be bare in5 days...max.

It was supposed to be a cautionary tale I know but it left out the brutal truth....it will be far more brutal and quick. There will be no rides to work (what work) or the movies. 

I am pessimistic by nature (at least for the last decade) but I'm even more pessimistic about what is coming. Americans can be good people but our 'leaders' are not leading or planning (unless FEMA camps is planning) and I just do mot see much hope until after a good long period of chaos....I hope I'm as wrong as I usually am.

Thu, 10/24/2013 - 21:59 | 4088823 samsara
samsara's picture

Oh, and I actually got one of the bumper stickers seen on the right side of the article for sale.

Thu, 10/24/2013 - 21:12 | 4088710 Errol
Errol's picture

Zero Point, you're on the right track.  Saudi Arabia has been producing a huge amount of a finite resource for 60 years, and is nearing the bottom of the barrel.  Ignore what they claim and watch what they do: desperately search for natural gas so they can free up for export the oil they currently burn in power plants.  Redevelop fields they mothballed years ago due to difficulties in production or low oil quality.  They are even actually talking about drilling for offshore, subsalt oil!  That will be VERY expensive oil IF it ever gets produced at all.

The Saudis are trying to compel the US to finish off regional rivals (Iran, Syria) before their declining production reduces their influence.

Thu, 10/24/2013 - 21:32 | 4088759 Zero Point
Zero Point's picture

Ya know what? When Iran claims they're trying to explore nuke power just for energy... I'm getting more and more apt to believe them.

Why would one of the largest producers of energy on the planet IMPORT uranium to produce energy?

 

Fri, 10/25/2013 - 00:25 | 4089195 pragmatic hobo
pragmatic hobo's picture

in case of iran, they lack refining capability so despite producing large amount of crude oil they actually have to import refined products ...

Thu, 10/24/2013 - 21:27 | 4088740 Yes_Questions
Yes_Questions's picture

 

 

This is likley an intended consequence.  In the race of the milkshakes, let THEM drink first..

 

Fri, 10/25/2013 - 06:45 | 4089434 Seer
Seer's picture

Yup.

The other component is the ever-expanding "Royal Family."  It's a huge welfare state that just keeps growing, requiring increased internal consumption (http://www.businessweek.com/news/2012-09-04/saudi-arabia-may-become-oil-...), which means less for exports.  The trajectory was always problematic...

Thu, 10/24/2013 - 21:18 | 4088718 Croesus
Croesus's picture

I posted about this in an earlier thread today (but it was OT). It seems incredibly odd that US Foreign policy seems to be shifting away from traditional Mid-East alliances...such as those we maintain with Israel, UAE, Saudi Arabia, etc. 

Why now? Why would the US do such a thing? Like most foreign-policy-anything, there's more to the story...

Why abandon old "friendships" and attempt to make new ones, unless you know your old friendships aren't going to work out anyway...

Iran and her "BFF's" China and Russia, have something that the US wants/needs, that our old friends just don't offer, is my point. So what do the "new friends" offer? 

"Maybe the US 'found out' about a big party that China and Russia are planning...it's going to be 'The Party of the Century'...and EVERYONE who's cool is going to be there...and the US wants to get on the invite list, but can't, as long as they keep hanging-out with their nerdy friends"...

 

Thu, 10/24/2013 - 23:06 | 4088990 outofideas
outofideas's picture

Wait, is your premise that the US foreign policy is in the hands of competent people? You think they understand what they are doing, or in fact that they actually have a plan they are following, instead of walking around a dark room avoinding the corners where they stub their toes?

 

Fascinating perspective, I never thought of it.

Fri, 10/25/2013 - 06:16 | 4089371 Disenchanted
Disenchanted's picture

I think a lot of useful idiots are about to find out what the Red Shield types really thought about Isreal, YHWH and the 'Promised Land' thing all along.

Boy aren't they(UIs) going to be surprised. [edit: btw Saud and the 'exceptional' USA will be along for that ride]

 

Suprise suprise suprise. ~ Gomer Pyle

 

If you like, you can just call me crazy...

Fri, 10/25/2013 - 06:58 | 4089444 Seer
Seer's picture

When the stakes are high it's wise to NOT give your hand away...

China is just a second-rate player in the game, with the primary contestants being the US and Russia.  Russia is playing for the block on Iran (in the same fashion as they'd done in Cyprus), which would force more business (Chinese) their way: Saudis are running on empty (http://www.businessweek.com/news/2012-09-04/saudi-arabia-may-become-oil-... The US, for now, has the upper-hand in negotiating Iran's play in the global arena, doing so via nuclear regulations.  Keep in mind that it was the US who was pushing Iran into nuclear power back in the 50s: anyone who doesn't understand why ought not try playing this game...  The Iranians are, in my opinion, FAR smarter than the Saudis (who have to cater to their royal family's oppulance, which substitutes for "country").  The tricky part will be in how the "marriage of convenience" can be made to work with Israel's hooks sunk so deeply into the US body: maybe the US provides backdoor security access to Israel so that it can monitor things in Iran, with the "promise*" (by the US) of eventual ousting of the Iranian powers.

* We all know how reliable political/diplomatic promises are!

Thu, 10/24/2013 - 20:34 | 4088590 cossack55
cossack55's picture

Thank goodness the US is selling them $ 600M worth of CBUs and another assorted $11B worth of toys.  OBTW, are not CBUs a violation of some treaties. Oh what the hell. Go tell it to the Sioux.

Thu, 10/24/2013 - 20:36 | 4088596 venturen
venturen's picture

Obama and the liberals are so stupid and small minded...that they mess it up every time! OBama Iraq...FAILURE! Obama Syria...FAILURE! Obama Afgha...About to be failure! Obama Libya.,...FAILURE. Obama Germany Failure. Obama Brazil Failure. Carter Iran FAilure. Obama ACA...FAILURE! Obama ibso facto FAILURE! 

Thu, 10/24/2013 - 21:32 | 4088752 Deo vindice
Deo vindice's picture

As stated above, I disagree. Obama is doing precisely what he wants to do and getting away with it!

If he was that big a failure, he would have been removed long ago by those who put him into power.

He is destroying the credibility and image of the US around the world as fast as he can in the best way he can.

Fri, 10/25/2013 - 07:04 | 4089453 Seer
Seer's picture

What "credibility" was there to start with?

Further, what logic is there in this hypothesis that this is all intentional, that it's desired?  TPTB, who are the actual controllers, want to subject themselves to major instabilities?  Do you not understand what "status quo" means?

No, this fucker's been falling apart for quite some time.  Empires rise and fall.  If you love empires then you'll cheer them rising, and hiss them when they fall...

Fri, 10/25/2013 - 08:06 | 4089543 Oldwood
Oldwood's picture

So are things getting better for America or worse? Does the current administration have anything to do with that? And are you for for against things getting worse? There are a lot posting here that evidently believe America deserves some sort of takedown as revenge or justice for our actions.

Thu, 10/24/2013 - 20:37 | 4088605 toady
toady's picture

I knew we shoulda nuked Damascus & Tehran.

DAMN YOU PUTIN!

is it too late to let a couple nuke-tipped cruise missiles fly?

Thu, 10/24/2013 - 20:59 | 4088669 DeadFred
DeadFred's picture

Probably not. I hope none come my way, just saying.

Thu, 10/24/2013 - 21:08 | 4088704 toady
toady's picture

Just stay out of Damascus &Tehran ;)

Actually, you better make that all major metropolitan areas ...

Fri, 10/25/2013 - 09:14 | 4089683 GMadScientist
GMadScientist's picture

New plan: we're sending YOU to Tehran, on the ground; keep that atropine handy now!

Thu, 10/24/2013 - 21:04 | 4088686 Winston Churchill
Winston Churchill's picture

Only if you want some very expensive 'reefs' created.

The balance of power has shifted again , and US carrier groups now are as useful as

 Dreadnoughts would have been at Midway.

Its common knowledge in MI that Iran aquired mirv nuke warheads during the Soviet collapse.

Which  is why Israel will never take  them on alone, and need Uncle Scam to do the work.

Not quite sure how Pakistan would react either.

Its one big pile os waiting for someone to tread in it.

Thu, 10/24/2013 - 20:38 | 4088607 Randoom Thought
Randoom Thought's picture

Ok, so try and convince me that this bit of bad theater was not planned. Sheesh these guys are bad actors.

Fri, 10/25/2013 - 07:13 | 4089465 Seer
Seer's picture

How do you expect them to act?  And when all IS but an act?

This is the highest of high-stakes-poker.  We all here can pretend that we know how things work and should work, but...

The transformation of US leaders is pretty clear.  George W Bush wasn't a fan of nation building, yet what did he end up doing?  And Obama was a "community organizer," a "Nobel Peace Prize" winner who has out-matched his predecessor (which was thought not possible) in warmongering.  The POTUS throne is an electric chair, and if one doesn't do what TPTB want the switch will be thrown (as has happened in the past).

Thu, 10/24/2013 - 20:40 | 4088610 q99x2
q99x2's picture

Bandar might have been able to pay Bush, Cheney and Rumsfeld to take down the World Trade Centers but we're on to that sucker. The marines will fuck him up this time if he trys anything.

Thu, 10/24/2013 - 21:33 | 4088760 Yes_Questions
Yes_Questions's picture

 

 

Followed by helicopter crash(es) of said Marines and an interim burial at sea.

 

Coming to a MSM theatre near you.

Fri, 10/25/2013 - 07:20 | 4089472 Seer
Seer's picture

Bandar has NOTHING.  The Russians would prefer if SA collapsed.  And while the Chinese would like to have SA oil I'm not thinking that they're willing to pay the price for it- they're not likely going to want to get sucked into the whole "family" thing.

I don't believe that Bandar was the push behind 9/11.  If anything he was a tool.  And then again, this might be the only thing that Bandar has: but seeing as how firmly entrenched the story is anything from Bandar that would go counter to the story would be readily squashed (figure that it would also be counter to Israeli interests).

The writing is on the wall:

http://www.businessweek.com/news/2012-09-04/saudi-arabia-may-become-oil-...

Thu, 10/24/2013 - 20:41 | 4088615 Eahudimac
Eahudimac's picture

Currently sitting in the toronto airport waiting to fly back to the US. 10 years ago, I probably would have been happy about that. Now, Canada is looking real good to me. The USA has become a real shithole. There are a few decent places left relatively speaking, but most of the place sucks balls. 

Thu, 10/24/2013 - 20:43 | 4088622 Constitutional ...
Constitutional Republic's picture

Toronto suits your temperament. Stay there, and take all the other fatties with you. Thanks.

Thu, 10/24/2013 - 20:45 | 4088630 Eahudimac
Eahudimac's picture

I would love to. Fuck Washington DC and the pugs that live there. 

Fri, 10/25/2013 - 08:51 | 4089636 GMadScientist
GMadScientist's picture

Great...another litter of ignorant dipshits like you. Live a little; see if you can fit a Great Dane up in there with your head.

Fri, 10/25/2013 - 07:30 | 4089481 Seer
Seer's picture

Wait until Canada's economic house of mirrors starts to crack and I think things will look a bit different...

Chinese money flow in to Canada will start to tapper, which will be the start of tipping the dominoes.  Canada's house of cards is also based on real estate bubbles.  And of course, exports to its number one trading partner, the US, will taper as well (as the US continues to contract).

Things change.  In order to be successful one has to properly guess/forecast the changes.  Identifying what exists NOW is the OBVIOUS.

Fri, 10/25/2013 - 08:48 | 4089630 GMadScientist
GMadScientist's picture

Forecasting what will stay the same, like Chinese demand for petro products, of which many can be found in the land of syrup and hockey, will also prove fruitful.

You're correct on the macro picture for Canada though; definitely a large amount of "veneer".

Thu, 10/24/2013 - 20:42 | 4088618 Moe Hamhead
Moe Hamhead's picture

Let them fight their own battles.  Maybe we would be better off without the half-trillion "habit" anyway.

Thu, 10/24/2013 - 21:29 | 4088625 spinone
spinone's picture

11 of the 9/11 hijackers were Saudi, 2 Egyptian.

So we go attack Iraq and Afghanistan?

The Saudis have it coming.

Fri, 10/25/2013 - 07:36 | 4089489 Seer
Seer's picture

Most likely the Saudis were but tools.  The hands on the controls could ONLY have been BIG ones: to command the ENTIRE US DEFENSE system isn't something that TPTB would have allowed foreigners to do.

Keep in mind that TPTB never engaged in a campaign to disclaim the origins of the [supposed] hijackers on 9/11.  Those skeletons can be pulled out of the closet if/when needed.

Fri, 10/25/2013 - 09:39 | 4089763 Random
Random's picture

How can the hijackers commandeer a plane/planes when NO planes crashed on 9/11?

Thu, 10/24/2013 - 20:45 | 4088627 gatorengineer
gatorengineer's picture

Oil down 8-10% in euros in the last 4 weeks. I think the US bankin cartels/squid initiated a first strike.  They will sit down and shut up.  they have to have at least a $100 a barrell to suppress their people.

Fri, 10/25/2013 - 07:40 | 4089496 Seer
Seer's picture

It not only affects the Saudis.

I don't believe that this is some sort of orchestrated occurrance so much as it's because of general economic contractionary forces.  If TPTB really had some sort of control I'd have thought that they'd have been better off pushing down the price of oil BEFORE resorting to undermining the credibility of the very thing that their power hinges upon- confidence in currencies.

Thu, 10/24/2013 - 20:45 | 4088629 Coldfire
Coldfire's picture

Has anyone else noticed that Bandar Bush bears a striking resemblance to a Tarsier monkey?

Thu, 10/24/2013 - 20:57 | 4088664 lotsoffun
lotsoffun's picture

don't underestimate your enemies.

Fri, 10/25/2013 - 00:40 | 4089216 Freddie
Freddie's picture

I think Bandhar Bush underestimated Putin.   The Russians AA, anti-ship and land to land missiles are very good.  My guess is Putin told Bandhar Bush that Russia or Syria will take out all of the Saudis oil fields and Riyad if they keep ***ing with Syria.

Putin and China told Obama to behave and stay out of Syria or else.

Fri, 10/25/2013 - 05:24 | 4089386 Element
Element's picture

No.

Proxy-war uses proxies. No way Russia will get directly involved in combat to attack SA, but you can bet they have told Iran and Syria they have Russian support up to a point, if it is necessary.

And Iran and Syria are perfect. Both have a direct, intense beef with SA. Both are very heavily armed with advanced long-range strike weapons and strong defenses, and the West does not want to fight them and suffer the Strategic consequences.

And that's one way of saying that Russia is effectively a small-b 'boss' here. Iran and Syria will not go after Saudis without Russia saying they have support to do that. Moscow knows that a closed Persian Gulf means instant global escalation, and Russia can not get directly involved in that, it's too dangerous, and most probably the USN can't for that matter, either, for the very same reasons (so the USN will instead stand-off and watch any Persian Gulf missile battle even though they perhaps don't even realize that yet).

The thing is though, Russia does not have Iran on a leash, no one does, and Iran will not allow a Strategic partnership with Moscow to subdue or control Iran.

So this is very dangerous for the GCC, and SA would be out of their mind to get into it with Iran, or to keep attacking Syria.

Fri, 10/25/2013 - 07:52 | 4089519 Seer
Seer's picture

I still fail to see any logically sound reasons for Russia to even give a shit about SA.  SA can no longer act as price stabilizer for world oil production.  SA has ZERO ability to really go after Syria or Iran, and, as you note, they'd be out of their mind to do so.

BUT... we're talking powers within countries, and the powers within SA have been deteriorating and will only continue to do so.  If this report by CitiGroup (http://www.businessweek.com/news/2012-09-04/saudi-arabia-may-become-oil-...) is close to the mark, which I believe so, then SA is pretty much finished.  And this is the reason for all the US's military adventures in Iraq: Iraq was always seen as the buffer/hedge for when SA''s royal's grip on power faded.  Russia's hand only strengthens as SA oil output drops.

I think that Bandar knows the big picture and is trying to solicit bids from China, bids that I don't believe would be forthcoming: China would have to get hooked into SA's internal affairs, which, I figure, would be judged as too high of a premium over Russian and Iranian oil.  The game is shifting away from SA and toward Iran... if I'm right then expect to see more diplomatic negotations between the US and Iran popping up (I figure the sticking point is with Israel).

Fri, 10/25/2013 - 10:25 | 4089901 Element
Element's picture

I don't disagree with the gist of what you've said there.

China is a strategic partner of Russia, and a crucially important one, for now, and for some years to come, so I also can't see China stepping on Russia's toes, just to hold SA's 'hand' like Bush did.

What could happen though, is payback for GCC attacking Syria and a reset of the geopolitical situation in the Gulf.

 

SCENARIO

Tensions in the gulf rise, and these lead to a heavy missile strike on SA by Iran and Syria. But neither Russia or US dare to get directly involved in the combat, and Israel is told by both big powers to shut up, and say out of it.

Instead the US and Europe and Asia ask for immediate ceasfire talks with Iran, to limit the damage to GCC states so that they can get the Gulf re-opened ASAP. Thus SA and GCC are thoroughly beaten up for a few days, so that they know their place in the pecking order. Iran can ride out whatever SA throws back at them.

The US and NATO are thus also put in their place by being forced to negociate, and everyone can see the jig is clearly up, there will be no more domineering and threats, or business as usual.

The price paid for getting the gulf reopened is: no US battle fleets in the Gulf any more and no more US bases in Iran's neighbouring states, plus all US sanctions on Iran lifted and the US agrees to never attack another country with such sanctions again. Plus all Israeli forces must immediately withdraw from the West Bank, and all settlers removed, also, and Israel recognize a Palestinian State and their right of return, and they return the Golan to Damascus.

Else the gulf stays closed and the missiles and mines continue until those terms are agreed to.

END SCENARIO

 

You see, the US still has to clean up the mess it has made here. The situation as it is now, will not be permitted to go on longer, as the USD collapses.

That should be clear, if it isn't already.

The US and Europe can do this the easy way, or they can do it the hard way.

There is unfinished business that must be sorted out to defuse this region's key issues of festering conflict.

Thu, 10/24/2013 - 23:46 | 4089131 Coldfire
Coldfire's picture

No offense to the Tarsier.

Thu, 10/24/2013 - 20:46 | 4088632 Sizzurp
Sizzurp's picture

What's the high low on another oil embargo?  I don't see it happening, but they may get a little more cozy with China.

Fri, 10/25/2013 - 07:58 | 4089534 Seer
Seer's picture

It's a two-way street, and China would have to agree to provide protecton to the royals.  I just don't see that happening.  The internal affairs of SA are only going to get very ugly.  China's best option is to squeeze out the US from making any deals with Iran.  And, for the short-term (10 years?) China would be better off dealing with Russia: energy demand by Europe is only going to decrease, in which case Russia will be forced to make the best deal with China if it hopes to beat out Iran; nonetheless, Russia still is looking to be ahead in the longer-run.

Thu, 10/24/2013 - 21:03 | 4088637 grunk
grunk's picture

So you saw Prince Bandar at the Sock Hop kissing Vladimir Putin?

So what? He still loves me. I've got his varsity jacket.

He said he'd never send another terrorist-filled plane into my buildings.

 

Thu, 10/24/2013 - 20:51 | 4088648 tony wilson
tony wilson's picture

bandar bush the texan lovin cock suckin fluffer.

bandar bush jewish zionist mi6 deep cover.

bandar bush is he alive if he is soon he will be dead.

saudi arabia and israel both danced on 911.

a curse on the human race if they are allowed to carry on we are all dead.

Thu, 10/24/2013 - 20:55 | 4088657 Constitutional ...
Constitutional Republic's picture

And if the Rothschild central bank cartel allied with its Chinese proteges are so determined to appease the Wahhabists of the House of Saud (a creation of the Rothschild-led Mi6 in the early 20th century; divide and rule the Middle East under an authoritarian central control), then the CIAs pet Bandar had better get ready to hand back his mansion in Colorado and every other financial property and gain in the USA.

The only no flight zone we need is a ban on travel between the West and any country that threatens us, except for essential travel by our diplomats and trade missions.

Let the rest of the world do as it pleases in their own lands, and us in ours, if this sham show of globalization is merely for the profit of the greedy sociopathic old money powers from the old world.

Thu, 10/24/2013 - 20:56 | 4088658 Freewheelin Franklin
Freewheelin Franklin's picture

If Obama had any balls, he'd nuke the fuckers.

Fri, 10/25/2013 - 00:20 | 4089189 lasvegaspersona
lasvegaspersona's picture

FF

Have you spent any time thinking about a modern nuclear war? Not pretty. By my calcs no where in Vegas is safe. If the Chinese are involved all they have are those huge old mega ton stuff that goes 'one per city'. At least the Ruskies can get pinpoint accuracy but even a small batch of MERVs fucks up even my neighborhood and we are 10 miles from Nellis. Then there is Indian Springs 20 miles North West (drones).

Nope I am against getting nuke.

Think it through  about your town before you phone in that request cowboy.

Thu, 10/24/2013 - 20:56 | 4088660 buzzsaw99
buzzsaw99's picture

That all may have been true once upon a time but the sun is setting on the KSA's influence worldwide.

Thu, 10/24/2013 - 20:57 | 4088662 lindaamick
lindaamick's picture

The US Empire is over, however the question remains HOW will the Empire being over be handled by the people in power here? 

If maturity ruled decision making, then end of Empire in the US might benefit most citizens due to labor and talents being focused on areas other than war and weaponry and building bases in foreign countries to maintain Empire.  I can think of many better things to spend time and treasure on besides war and terror.

If immaturity rules, then Empire going down will try and take down with it as many other countries as it can. It could be a complete conflagration where nobody gets out alive.

Let's hope for maturity.

Thu, 10/24/2013 - 21:01 | 4088673 Constitutional ...
Constitutional Republic's picture

Excellent summary, lindaamick. History tells us you are right. Therefore, it is imperative to invoke the 10th Amendment and the sovereignty of states as soon as possible, in my opinion.

DC is bought and paid for by foreign interests. Our only hope is to rely on our own resources, history, family and friends.

Thu, 10/24/2013 - 21:07 | 4088697 DeadFred
DeadFred's picture

LOL, and hope the Easter Bunny brings you extra candy while your at it. Get real, you just watched the debt ceiling thingy and you talk about maturity?

Thu, 10/24/2013 - 21:52 | 4088802 el Gallinazo
el Gallinazo's picture

The debt ceiling was just diversionary theater for the sheeple and the 24/7 news presstitutes.  C-Span's attempt at an engaging reality show.    Destroying the planet altogether has more serious consequences.  Not that these psychopathic idiots wouldn't do it, but the decision would not come from any elected offical.  The people's voice is just so yesterday.    Some claim that it has alreadying been done - we are all dead men walking.  Fukushima.  And the Master Sorcerer is no where to be found to utter magic words.

http://ukiahcommunityblog.wordpress.com/2013/10/22/fukushima-28-signs-th...

Better take a Prussian Blue chaser after your bagel and lox.

Thu, 10/24/2013 - 22:05 | 4088850 Yes_Questions
Yes_Questions's picture

 

 

Long live maturity!

 

wait...

Thu, 10/24/2013 - 20:59 | 4088670 rlouis
rlouis's picture

Petro-Yuan... Petro-Reminbi...

backed by gold.

Seeing how we have given the Chinese the industrial capacity to build the military needed to sustain their curency it seems the China-Saudi relationship has some shared interests.  To the Saudis, (I'm speculating here,) it doesn't matter who the enforcer is as long as the credit is good.

Thu, 10/24/2013 - 21:04 | 4088687 Constitutional ...
Constitutional Republic's picture

Equally important is the hidden hand of the Brit/European Rothschild dynasty whose banks allied with China's some years ago, and set the current wheel of fortune in motion. These people are robber barons, parasitic globalists shifting from one country to the next; tax and plunder...then move onto the next host.

Thu, 10/24/2013 - 22:51 | 4088973 acetinker
acetinker's picture

I don't have personal knowledge of that which you speak, but I'd venture that any entity with a central bank is a Rothschild/Red Shield/Bauer ally at the end of the day.  Or, as ol' Bill from Stratford said; All the world's a stage.

Fri, 10/25/2013 - 18:38 | 4091583 supermaxedout
supermaxedout's picture

Yes, Agricultural Bank of China is such an example. Within a few years it morphed from an organizational nightmare into a shining star among the worlds best managed bank. I think its the only bank covering all of China. They employ more than 450,000 people. Quatar owns more than 22% of this bank.

Thu, 10/24/2013 - 21:02 | 4088678 paint it red ca...
paint it red call it hell's picture

I need some technical help here.

If the entirety of the saud families landholdings were nuked into a glass smooth parking lot, could drill rigs still penetrate into the remaining oil fields?

Fri, 10/25/2013 - 03:59 | 4089357 CrashisOptimistic
CrashisOptimistic's picture

No, radiation would kill the drillers.

Thu, 10/24/2013 - 21:02 | 4088680 Yen Cross
Yen Cross's picture

     I think the Saudis are going to eventually move away from the $ oil exchange irregardless of what the U.S. does. Fine by me, let the chinks protect them. That will eat into all those excess FX reserves PBOC has.

Thu, 10/24/2013 - 21:10 | 4088705 buzzsaw99
buzzsaw99's picture

Times have changed. In the old days the Sauds could put everyone else out of business by raising production by one or two mb/d. However... They have been going great guns for many months lately and here we are still ~ $100/bbl. Reminds me of the old ditty sung by the shark:

 

Shine, Shine, you swim so fine

But miss one stroke and your ass is mine

 

The day the KSA starts missing shipments that shit is going sky high. That day may be sooner than many people think. These articles miss the point. Russia, everyone in fact, is producing all they can. Nobody wants to see what the world looks like when the oil price triples overnight.

Thu, 10/24/2013 - 21:19 | 4088722 Yen Cross
Yen Cross's picture

   Check this out Buzz Where Does America Get Oil? You May Be Surprised : NPR

    If the Saudis want to cut production, they're playing with big time fire. The U.S. is going to be a net exporter of oil in the next few years, so we'll have extra capacity if the Saudis fuck with us. China is their #1 customer so they can protect their manipulative asses. The Saudis screw the Chinese if they play with prices. The Chinese buy oil from Iran, so they can deal with the M/E tribal games.

Thu, 10/24/2013 - 21:32 | 4088754 Constitutional ...
Constitutional Republic's picture

True, Yen. The House of Saud has no true friends, not among Arabs, nor their Rothschild/Zionist backers, nor foreigners. The House of Saud's only grip on power is reliant on foreigners keeping it in power, and foreigners do that in order to divide and rule the Middle East.

If Bandar or any other princeling screws China over on price, then sudden death to him and them is assured. Meanwhile, China inherits the internecine warfare cost of the Middle East, and its new bestest pals: the zionist Rothschilds who have ransacked every country they inhabit. China next.

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