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Saudi Arabia Declares Spending Moratorium As Oil Rout Bankrupts Kingdom
As we’ve documented extensively for the better part of a year, the Saudis’ move to “Plaxico” themselves by artificially suppressing crude prices in an attempt to preserve market share by bankrupting the largely uneconomic US shale space has far-reaching implications for global liquidity.
When the supply of exported petrodollar capital turned negative for the first time in decades last year, it effectively ushered in a new era wherein the “great accumulation” (to quote Deutsche Bank) of USD-denominated assets by the world’s reserve managers came to an abrupt end removing a decades-old, perpetual bid for DM debt.
But that’s the bigger picture. At a more granular level, the Saudis bankrupted themselves, as slumping crude killed the current account and simultaneously created a budget deficit that amounts to 20% of GDP.
This has led directly to Riyadh’s return to the debt market and the entire debacle will only be exacerbated by the escalation of the proxy wars in Yemen and Syria (as it turns out, bombing Yemeni weddings is expensive).
Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if perhaps cutting back on spending was in order and indeed, in the wake of the country's move to tap debt markets, rumors have been circulating for months that the Saudis have enlisted the help of "advisers" to help rein in the ballooning deficit.
Now, as Bloomberg reports, Riyadh has effectively declared a spending moratorium in the wake of self-inflicted crude carnage:
Saudi Arabia is ordering a series of cost-cutting measures as the slide in oil prices weighs on the kingdom’s budget, according to two people familiar with the matter.
The finance ministry told government departments not to contract any new projects and to freeze appointments and promotions in the fourth quarter, the people said, asking not to be identified because the information isn’t public. It also banned buying vehicles or furniture, or agreeing any new property rentals and told officials to speed up the collection of revenue, they said.
With income from oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude prices in the past 12 months has put pressure on the nation’s finances. While Saudi Arabia’s public debt is one of the lowest in the world, with a gross debt-to-GDP ratio of less than 2 percent in 2014, the kingdom’s net foreign assets fell for a seventh month to the lowest level in more than two years in August.
And so, as the kingdom continues to draw down its petrodollar stash in a desperate attempt to shore up its finances while defending both the riyal peg from a skeptical market and the Mid-East from the spread of Iranian, Shiite influence, the budget cuts are coming, and that leads directly to the following question: if the lifestyles of everyday Saudis ends up being threatened by the government's inability to sustain the status quo, what happens to social stability and what are the implications for the future of the ruling family?
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The Fed will now buy oil
The Saudi's, they go from driving Mercedes to driving Audi's.
Poor babies...
Civil war bitchez
Just like in Venezuela, they will run outta toilet paper very soon! ;-)
Looney
.....and go back to wiping their asses with their left hands.
Spending money like MC Hammer.
> The Fed will now buy oil
Just to be clear, we mean the Fed will now buy paper oil. Saudi can sell 5 year oil futures just fine.
No worries for them.
That's what the left hand is all about.
World wide, the elites, will abandon their people. They just don't want to be bothered by them any longer, to expensive. They are moving on, ignoring that hungary and desparate people can swarm like flocks of locust devouring everything in sight.
Sure they will abandon the women and seek refuge jihad in the rest of the world.
Saud has a mere 1 trillion in oil reserves and the shale boys are backed by infinite digital dollars courtesy of the federal reserve and reserve status....they will not win
But Saudi Arabia head chopping will continue with the Saudis still paying for the axe sharpening services and the wooden blocks needed for the execution of infidels.
Hey Saudis - how is that Yemeni war thing going for you and the UAE? Not so good huh?
And store it where? They could buy reserves in the ground and leave it there?
It's time for the Saudies to switch to Russian Lada
https://www.youtube.com/watch?v=TP5Br2WUBNs
All those decades of huge profits, what happened to all the money?
Check their bank accounts.
Solid gold poop seats.
When your own population won't fight, can't fight and war is knocking on your door. When you are virtually surrounded by your only regional rival (both religious and economic) it isn't the toilet seats, it the cost of merc's and proxies.
They threw in with the good 'ol US, but the good 'ol US ain't what it used to be. Soon they will realize that they have been hung out to dry. Then what do you do?
Pound sand?
Better a solid gold poop seat in your own castle that you can touch/feel every now and then than a paper receipt for the same amount of gold in "registered bar" form in a New York or London repository vault. Not as insane is it first sounds if you don't have a level of trust for the people running the repository...
If they had declared a moratorium on wars, then this spending moratarium would not be needed.
Hope the Saudis go bankrupt from all their illegal wars.
Being America's bitch does not help your finances:
John Kerry, the US secretary of state, allegedly struck a deal with King Abdullah in September under which the Saudis would sell crude at below the prevailing market price. That would help explain why the price has been falling at a time when, given the turmoil in Iraq and Syria caused by Islamic State, it would normally have been rising.
http://www.theguardian.com/business/economics-blog/2014/nov/09/us-iran-r...
''This, at any rate, is the way we looked at the matter before fifteen Saudis and four other terrorists launched their suicide attacks on September 11; before Osama bin Laden suddenly became for the Arab world the most popular Saudi in history; before USA Today reported last summer that nearly four out of five hits on a clandestine al Qaeda Web site came from inside Saudi Arabia; and before a recent report commissioned by the UN Security Council indicated that Saudi Arabia has transferred $500 million to al Qaeda over the past decade.''
http://www.theatlantic.com/magazine/archive/2003/05/the-fall-of-the-hous...
How many wars have the Saudis pushed? Too many. They are f**ked. I hope Russia, Iran and China liberate Saudi Arabia. The House of Saud is shit and bankrupt. The next place they should liberate is Qatar. Let the Syrian Army go in and take over Qatar for what they did to the Syrians.
Michael Reagan, the eldest son of Ronald Reagan, in March 2014:
http://townhall.com/columnists/michaelreagan/2014/03/06/putin-petroleum-...
“I suggest that President Obama might want to study how Ronald Reagan defeated the Soviet Union. He did it without firing a shot, as we know, but he had a super weapon - oil. Oil was the only thing the Soviets had in the 1980s that anyone in the rest of the world wanted to buy, besides ICBMs and H-bombs, and they weren't for sale. Since selling oil was the source of the Kremlin's wealth, my father got the Saudis to flood the market with cheap oil. Lower oil prices devalued the ruble, causing the USSR to go bankrupt, which led to perestroika and Mikhail Gorbachev and the collapse of the Soviet Empire.”
The US won mainly because they could borrow more from the world than the Soviets could. That gave the western world another 30 years, but look where borrowing from the future has brought us today. As an additional punch, this time, thirty years later, the Saudi oilfields are in decline and the most visible casualties of low prices will be US shale producers.
fuck those bitch made "royal" Fraudi fucks...
tic, toc assholes............
FraudiArabia...LOL!
WB - suggesting for a piece of art -
Would Goldman Sachs be these "advisors" to House of Saud?
wonder if GS will perform "services" similar to what they did to Greece?
NoVa
better yet what GS did for Qadaffi and Libya - they "managed" billions and it ....disappeared
Sordid Arabia.
Heads are going to roll !!
LOL!!
Yes, let me guess, just not yours.
Disco!
Would be funny and ironic indeed if all the Saudi princes ended up being publicly beheaded.
...by a cruise missile!
The bell tolls for the Bel-Arabs.
I hope the peasants that these bastards try to placate finally wake up, drag them out of their palace's and chop their worthless heads off.
That should also be the hope right here in the USA.
so like Saudi Arabia is bankrupt
.
-zero hedge
Let the good times roll...
fed is already monetizing commodities globally and directly and actively engaging and manipulating every financial market on the planet, which is why we'll never see an audit and they will never raise rates.
What a lovely thought. Those corrupt decadent hypocrites going down the tubes.
Maybe they can auction their seat on the UN Human Rights Council to China. Or North Korea.
Maybe they can auction their seat on the UN Human Rights Council to China. Or North Korea.
North Korea is more humane than Saudi Arabia.
The former execute the condemned with anti-aircraft rounds rather than cutting off heads...
The butchers that behead women and men and finance terrorism on behalf of the United States are going broke.All those Al Qaeda and ISIL fighters are paid along with the so-called moderate henchmen.I only hope that Goldman's prediction of soft prices and possibly another leg down turns out to be right and breaks the back of this human rights abuser.Next in line are the crooks running Turkey that are making money from Syrian oil which finances terrorism from the north on behalf of NATO.
Beta Test for Kissinger and Zbrinski?
1. Set up Crisis
2. Publish
3. Cut government spending
4. Cut Welfare programs
5. Engage populous in many programs to control their behavior
6. Export to Europe & USA
- Just heard the Saudi Arabia was the most vicious kingdom in the Middle East
Looney
Just like in Venezuela, they will run outta toilet paper very soon! ;-)
Looney
*************************
Luckily for them, they don't use toilet paper. The have the 'left hand rule'.
It's about time they experienced a bit of austerity and learned how to live in tents, ride camels and cope without air-conditioning.
and PUTIN has all the names and details of which US officials are illegally involved with house of SAUD.
everything supporting CIA/SAUD/ISIS/ISRAEL is about to get washed away. these clowns are going to be backed in a corner with no where in the world to run and hide. maybe 5000 of them are in control today. but 5 million are going to be coming at them soon with axes
and PUTIN has all the names and details of which US officials are illegally involved with house of SAUD
of course he has, I still remember his famous statement: "I can stay silent on many things.....But one-sided actions, in the continuous search for an "alliance" and coalitions, which are actually PREDETERMINED, this is not a method to seek to discuss and agree on mutual grounds of understanding. They lead to crises. Obama also mentioned ISIS. And who created ISIS? Do you really not understand as to who is fighting in Syria? They are mercenaries. They are paid a certain amount. I even know, what these amounts are!"
https://www.youtube.com/watch?v=VbZDyr2LkdI
Lets see now...
Finite resource after 60 years + permanent peg to the USD + forced reduction in the price to 60% of what said finite resource is actually worth = unrest and mayhem back home!
To the Saudi Leadership... How does it feel having a "permanent gun" to the side of your head all these years by the real terrorists in London, Washington D.C. and Tel Aviv that own you?
I guess that trying to pump as much oil as possible even though the price is in the shitter and trying to knock out U.S. competition is not working out to well. LOL
With income from oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude price
I'm confused... Instead of 36% shift in GDP, they are signalling only 20%... Where are another 16% (i.e. appr. 100+ bln.$)?..
WE WERE ALWAYS THERE...
Boo Hoo. Hoist on their own stinking petard. Exquisite.
A bankrupt Saudi Animal Kingdom breaks my heart. Especially given that the only thing between relative domestic stability and internal revolution is the money the vulgar, venal and repressive despots spend on keeping people quiet. Take that away and the revolution begins before long.
I hope it's televised. Let's see some pseudo-Princes and Kings hanging from the gold lamp posts.
Saudi "men" can not even make their own tea. Revolt? I doubt it. Only another prince looking to move up.
The revolt would be when the Saudis lose their housekeepers. Take out the foreign labor and....bam! No work done.
mil coup in play now..
http://right.is/politics/2015/10/greatest-military-coup-ever-could-now-b...
candlestick this
mil coup in play now. . .
This is the same bullshit that David Wilcock and Benjamin Fulford have been spouting for the last 8 years or so and is the same kind of two year old crap that has recently been posted on "Before Its News" as "breaking information".
It hasn't happened yet and it's not going to happen any time in the next, say, 100 years or so. These same "elite" that are supposed to be the target of this "coup" are in control of the vast majority of all of the "western" military forces - what is supposed to happen? Their own guys are going to arrest themselves? Give me a break . . .
4 Saudi students at Johnson & Wales University in Providence charged w/ sexual assault on two women.
The assaults took place in the men's apt. in Pawtucket RI. The university has suspended them.
only suspended? why weren't they arrested?
only suspended? why weren't they arrested?
Maybe the "women" ended up being transvestites . . . .
"Austerity will continue until spending improves."
Whether one books oil-funded social welfare spending as an oil production expense or not...it is one.
This is true for Saudi Arabia.
This is true for Russia.
In the US we don't fund social welfare from energy, but steal from everything else to fund social welfare and energy.
The meme that the Saudi's want to crush shale is simply wrong. The US is not an exporter. And only a tiny amout of US energy imports are Saudi, the majority being Canadian and Mexican.
Furthermore, it is ILLEGAL to export Oil from the US.
ILLEAGAL.
The US is not competing for Saudi or Russian markets.
PERIOD.
No. By producing more the US cut imports.
Those formerly US imports then went to the global market to compete against Russia and Saudi Arabia, both of whom have entrenched and un-booked social welfare expenses attached to their energy production.
Here's a hint about who has the most efficient operation:
The guy with the lowest production costs doesn't have to pull out a gun to control the market.
I don't know who is winning this oil-exporter price-war.
But it isn't the ones who are using military power. Because the lowest cost producer doesn't need tanks to capture market share.
You are incorrect. Numerous oil companies funded social programs, including hospitals throughout the Caribbean... Jes sayin'
Now if i could only get myself hired as a Frugal Advisory, for a few Billion i would tell them how to save some money
but i won't work where there aren't hot women.. and under black table cloths doesn't count
No more high-class hookers - it's back to goats again...
"Last month, when King Salman arrived in Washington to a fleet of Mercedes S-Classes, we asked if perhaps cutting back on spending was in order..."
I think he also rented out the entire Four Seasons hotel in Washington. I wonder if King Salman ever took a French History class.
The only people that will suffer will be the 'serfs', bankrupt - Ha, not fuckin' likely, those Arab Kings, Princes, Sheiks will always live the life of luxury (Super luxury) Do I feel sorry for them, do I fuck, do I feel sorry for the 'serfs', Nope. Get up off your arses, get your dicks out of that goat and go and bring down the bunch of kiddy fuckin', wedding bombing, trouble making, bunch of self appointed Gods that you call your rulers, you fucking, stinking lazy Arabs.
Once that's done you can start selling all that black gold for Yuan.
Until then, Fuck Off with your moratorium.
Yeah, worked out all right for that boy who's going to be crucified, doesn't it. It takes a bit more than just some street protests to do something about it. It's easy to you to rant sitting comfortably in the US the country that is making this entire ponzi scheme possible in the end.
Butt, Butt ZH told me the Saud's were breaking Russia for the US. Such loyalty I never imagined.
It is time to bring in the "big guns"...Benny Bernankme...where are you went they need you?.. just think...if you are not sucessful..well you know in Saudia Arabia...heads do roll...
Couldn't happen to a nicer bunch of head choppers.
Want to bet this "spending moratorium" will have NO effect whatsoever on SA's ability to continue to bomb the crap out of the civilians in Yemen??
As always the LAST thing to get cut is the cost to kill people in other countries on an industrial scale . . . . this not only goes for SA but for all of the "western" countries as well - particularly the USA, UK and France.
...the "western" countries as well - particularly the USA, UK and France...
Ever wonder the point of reference when France is considered "west" and Iran is considered "east"? Or how about the "northern" country of Turkey and the "southern" Sudan? (I know, it's a bit of an oxy-moron, but still.)
Does China think of the place we consider "middle east" as their "middle west"?
That little country that shares half citizenship with elected officials thoughout the USA government and tbtf financial structures certainly know how to frame an argument.
jmo.
We're really going to be in deep shit if the magnetic poles reverse . . .
So how will the Saudis afford their foreign wars, funding of terrorist groups, and their western weapons?
Saudi Arabia/SA means. "Spreading Atrocities".
All Jihadis movements were originated from SA. The sooner the rulers are gone the less terrorism around the world.
911 was 90% Saudis. Pakistan, Afghanistan, Syria, Iraq are all infected by Saudi money terrrorism.
Well, where are those times, when Saudi thugs, who thought themselves invulnerable, used to come to Putin to "threaten him".
FSB memo from 2013 says how, Saudi Prince Bandar, again!, came to the Kremlin and in a secret meeting with Putin reiterated his threat to cause terror in Russia, unless Putin stops supporting Assad, to which Putin suggested to the Saudis that they abandon “sectarian instigations and supporting terrorism, because it is a double edged sword that will rebound inside Saudi Arabia and gather momentum in a manner that you will not be able to control”.
And just perhaps Saudi is actually running low on oil and has to become evermore involved in the wars for profit to obfuscate the fact. Whatever the outcome you'll soon be re-thinking that big SUV to haul the kiddies to soccer practice. The internal growth in Saudi Arabia should finish off whatever oil they have left. Then spoiled underemployed Saudis may have to actually get their hands calloused and dirty taking care of the family sheep, goats and camels. If they're lucky.
Saudis love camels
camels will all you have
Camels & desert sand in your eyes , ears & nose
You deserve it
----
All this for their love of America