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It's Just Not Saudi Arabia's Year: First Oil Prices, Now This...

Tyler Durden's picture




 

Last week, in the latest sign of Saudi Arabia’s deteriorating financial condition, S&P downgraded the kingdom to AA- negative citing “lower for longer” crude and the attendant ballooning fiscal deficit. 

To be sure, we’ve covered the story extensively and it was almost exactly one year ago that we flagged the quiet death of the petrodollar and explained the significance to a market that hadn’t yet woken up to just what it means when, thanks to plunging crude prices, producing nations cease to be net exporters of capital. 

With more than $650 billion in SAMA reserves, Riyadh does have a sizeable cushion. However, there are a number of factors (in addition to low oil prices) that are weighing heavily including, i) financing the war in Yemen,  ii) maintaining the lifestyle of everyday Saudis, and iii) preserving the riyal peg. Here's a look at the breakdown of government expenditures:

When you mix heavy outlays with declining revenue, it means dipping into the warchest…

Here's a bit of color from Deutsche Bank which helps to explain what we mean by "the cost of preserving the societal status quo":

The largest energy subsidy beneficiary is the end-consumer in the form of fuel (petrol) subsidies. Bringing up the price of petrol to levels in the UAE, which earlier this year eliminated the petrol subsidy, could provide the government with USD27bn incremental revenues, or 20% of the budget deficit. However, this is a highly unlikely scenario given the demographic differential between KSA and UAE and the socio-economic impact that such an outcome (blended prices rising from USD0.11/l to USD0.5/l) could have within the country.

 


 

The Saudi government could look to increase electricity tariffs. This would be a challenge for residential consumption (51% of aggregate consumption) given the political/social impact, though it would present the highest incremental revenue benefit. Bringing up the electricity rates for industrial/commercial consumers to UAE levels could raise incremental revenues of USD3bn, which, while higher than those from the chemical sector feedstock impact, is still only 2.3% of the budget deficit. 

 

Water is another area where the government could raise more revenues. Currently consumers pay only SAR0.1/cu meter for consumption of 50 cu.m per month, which is one of the lowest in the world.

You get the idea. The Saudis are paying a heavy price to pacify the masses and ensure that some type of Arab Spring event doesn't come to Riyadh. This puts enormous pressure on the budget which leads directly to pressure on SAMA reserves when oil prices collapse.

In a sign of the times, the Saudis have also tapped the debt market, setting up a scenario where Riyadh’s debt-to-GDP ratio (which might as well have been zero) is now set to rise at least sevenfold by the end of next year and fifteenfold by 2020.


All of this suggets that S&P may be painting far too rosy a picture. That is, it’s not entirely clear that a 16% fiscal deficit is attainable this year, and we’re not sure it’s looking good for 10% in 2016. Here are Deutsche Bank's estimates:

As for the economy, well, it's set to decelerate meaningfully going forward. 

Finally, note that for the first time in decades, the Saudis are actually staring down a current account deficit and speaking of trade, Bloomberg is out today with a particularly interesting assessment of the kingdom's aquifers which have run dry, meaning the country will no longer be able to grow wheat in the harsh desert environment. Here's more:

For decades, only a few features punctuated the vastness of the Saudi desert: oil wells, oases -- and wheat fields.

 

Despite torrid weather and virtually no rain, the world’s largest oil producer once grew so much of the grain that its exports could feed Kuwait, United Arab Emirates, Qatar, Bahrain, Oman and Yemen. The circular wheat farms, half a mile across with a central sprinkler system, spread across the desert in the 1980s and 1990s, visible in spring to anyone overflying the Arabian peninsula as green spots amid a dun sea of sand.

 


 

The oilfields remain, but the last wheat farms have just disappeared to save the aquifers supplying them. For the first time, Saudi Arabia will rely almost completely on wheat imports in 2016, a reversal from its policy of self-sufficiency. It will become a full member of the club of Middle Eastern nations that, according to the commodity-trade adage, "sell hydrocarbons to buy carbohydrates."

 


 

"The Saudis are the largest new wheat buyer to emerge," said Swithun Still, director of grain trader Solaris Commodities SA in Morges, Switzerland.

 

Ahmed bin Abdulaziz Al-Fares, managing director of the Grain Silos and Flour Mills Organization, the state agency in charge of cereal imports, told an industry conference in Riyadh last month that Saudi Arabia will import 3.5 million metric tons in 2016. That’s a 10-fold increase from about 300,000 tons in 2008, the first year local crops were curtailed.  An agency presentation says the kingdom will rely on imports for "100 percent" of its wheat in 2016 for the first time.

 

By 2025, demand is forecast to rise to 4.5 million tons as population growth drives demand for flour, positioning Saudi Arabia as one of the 10 biggest wheat buyers worldwide.

 

It may not be the last country to turn away from growing its own crops. Aquifers in other key agricultural regions, including northern India and northern China, are also under pressure. The stress is compounded by erratic rains, which some blame on climate change.

 

Saudi Arabia became a net exporter of wheat in 1984 from producing almost none in the 1970s. The self-sufficiency program became a victim of its own success, however, as it quickly depleted aquifers that haven’t been filled since the last Ice Age. In an unexpected U-turn, the government said in 2008 it was phasing out the policy, reducing purchases of domestic wheat each year by 12.5 percent and bridging the gap progressively with imports.

In short, the Saudis are running out of money, water, and food and although the global deflationary supply glut (thank you ZIRP) means that importing things like wheat will be cheap for the time being ...

...moving away from self sufficiency as you deliberately suppress the price of your most important export while attempting to simultaneously fight two proxy wars and preserve costly subsidies for the oppressed masses is a dangerous cocktail, and with Tehran set to transition from pariah state to regional power broker we ask once again: is the House of Saud about to enter a terminal decline?

 

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Wed, 11/04/2015 - 13:52 | 6749309 JustObserving
JustObserving's picture

Any bad news for the cruel, corrupt, criminal cabal that rules Saudi Arabia is great news for the rest of the world.  Can we not downgrade SA to junk to match its ethics?

The Western media is ignoring Saudi Arabia's war in Yemen.

Here is a partial list of Saudi Arabia's crimes in Yemen:

At least 3,500 have been killed as a result of the Saudi-led war, launched on March 26 of this year. Some 1,700 of these have been confirmed as civilians, according to the UN, with some 3,800 more civilians confirmed wounded.

Nearly 80 percent of the Yemeni population faces conditions of starvation, near starvation, and/or lack of reliable access to drinking water.

More than 1.2 million Yemenis have been forced to flee their homes by the war. At least 50,000 of the displaced have fled the country entirely, seeking refuge in neighboring countries of Oman, Djibouti, Somalia and Sudan.

Responsibility for the bloodshed and humanitarian disaster in Yemen lies squarely with Saudi Arabia, the other Gulf monarchies and their backers in Washington. While technically headed by the Saudi monarchy, the military onslaught against Yemen is a direct outgrowth of US imperial policy in the Middle East.

https://www.wsws.org/en/articles/2015/07/20/yeme-j20.html

Wed, 11/04/2015 - 14:03 | 6749374 froze25
froze25's picture

If the dictatorship known as the "Royal" House of Saud ceases to exist I for one will not be upset.

Wed, 11/04/2015 - 14:23 | 6749453 Bunghole
Bunghole's picture

They can all go choke on a bag of pork dicks as far as I'm concerned.

Wed, 11/04/2015 - 15:39 | 6749799 John Wilmot
John Wilmot's picture

Yea, but keep in mind that whatever replaces the Saudi royal government may be even worse.

Wed, 11/04/2015 - 14:00 | 6749355 Nostradumbass
Nostradumbass's picture

 

 

You must be mistaken. How could SA be elected as the Chair of the UN Human Rights Council if it is as devoid of morality as you allege? You must be a ray-cyst!

 

http://blog.unwatch.org/index.php/2015/09/20/saudi-arabia-wins-bid-to-be...

Wed, 11/04/2015 - 14:03 | 6749372 RaceToTheBottom
RaceToTheBottom's picture

Send them our GMOs

Wed, 11/04/2015 - 14:22 | 6749444 cynicalskeptic
cynicalskeptic's picture

 GMO or not, the US is exporting grain and other foodstuffs  all over the world WITHOUT taking into account the total cost to the US.  

We're squandering water,  draining aquifers AND consuming oil in the form of diesel to run equipment and fertilizer and pesticides to provide food to the rest of the world (one of the few exports the US still has).  Perhaps the US should charge MORE for all the food we provide to the rest of the world. 

Wed, 11/04/2015 - 15:12 | 6749648 mkkby
mkkby's picture

Gave up eating wheat and other fast carbs 2 weeks ago.  Lost 6 pounds so far and haven't felt better in years.

For the past 2 years I've had runny nose, head congestion, unable to sleep well.  All symptoms nearly gone 3 days into cutting out wheat and fast carbs.  Resting heart rate down from mid 80s to high 60s just as fast.

Let the fucking saudis have it.  It's slow poison.

Wed, 11/04/2015 - 16:27 | 6750004 TRM
TRM's picture

Too true. I've been on the Zone Diet promoted by Dr Sears for 12+ years and blood tests are excellent, along with health and weight. Grains are for people who can't understand a fridge is to keep their low glycemic load veggies fresh.

 

Wed, 11/04/2015 - 22:45 | 6752008 RaceToTheBottom
RaceToTheBottom's picture

Capitalism is not a efficient asset allocator when all costs are not included.

Thu, 11/05/2015 - 19:34 | 6755632 TheRedScourge
TheRedScourge's picture

Nor is any other possible system.

Wed, 11/04/2015 - 14:02 | 6749365 JRobby
JRobby's picture

Sam Kinison: Hunger - Living in a Desert!

https://www.youtube.com/watch?v=P0q4o58pKwA

Wed, 11/04/2015 - 14:14 | 6749423 Jack Burton
Jack Burton's picture

As much as I hate Saudi Arabia, I can take comfort over on YouTube. Just search Yemeni troops versus Saudi Tanks! Watch with pleasure the Yemeni resistance fighters cook off Saudi tanks with old Russian ATGM missiles. Look at this one!

https://www.youtube.com/watch?v=gYerF_51wOw

Wed, 11/04/2015 - 13:50 | 6749314 DogeCoin
DogeCoin's picture

It was a shitty desert before, and it'll go back to being a shitty desert.

Wed, 11/04/2015 - 13:58 | 6749353 Groundhog Day
Groundhog Day's picture

oil vs the printer...the printer always wins.  Saudi is so screwed

Wed, 11/04/2015 - 14:11 | 6749404 El Vaquero
El Vaquero's picture

The printer wins until it doesn't.  When it finally loses, you'll have to ask yourself, what is the price of something that nobody is willing to sell?

Wed, 11/04/2015 - 14:25 | 6749463 Groundhog Day
Groundhog Day's picture

Yes your right but before that happens the printer can buy up everything and set the price once the paper is viewed as worthless 

Wed, 11/04/2015 - 14:32 | 6749485 Grumbleduke
Grumbleduke's picture

depends on which caliber you intend to use...

Wed, 11/04/2015 - 14:31 | 6749483 cynicalskeptic
cynicalskeptic's picture

The Saudis are converting their paper into tangible assets.  When their oil is gone they'll still be sitting on a pile of gold and real estate all over the world.  Some of the Saudi princes - the ones with any financial sense - wil be be fine.

What's the US 'Plan B'?    How is the US going to deal with all the dollars that come flooding back to the US to buy up anything and everything  when the rest of the world won't take them anymore?   You can bet all those dollars will be spent on ANYTHING - at ever increasing prices - when the dollar begins to fail.  $US will still be legal tender HERE so overseas holders will buy whatever they can at any price to preserve some of their buyingpower.  Better to pay 'millions' for Manhattan real estate or 100 times the bid for Exxon stock if the alternative is holding paper that will be worthless in a short time.  We're in for a world of hurt when all those dollars held overseas come rushing back to the US.   

It COULD work out if the US simply defaults and refuses to allow overseas holders of dollars to use them but htat would make the US a pariah - alone and unable to trade with anyone else in the world.   Might not be a bad scenario - let the US rebuild and preserve our wealth but that won't happen.  We'll be looted and sold to the highest bidders.

Wed, 11/04/2015 - 13:52 | 6749322 semperfi
semperfi's picture

fuck that shithole - who gives a flying fuck

Wed, 11/04/2015 - 13:53 | 6749327 Nostradumbass
Nostradumbass's picture

 

 

No food or water - no problem. Lots of room for you over in Europe! Come one - come all!

Wed, 11/04/2015 - 13:53 | 6749330 hedgeless_horseman
hedgeless_horseman's picture

 

 

This is an excellent article.  Thank you!

Wed, 11/04/2015 - 13:54 | 6749332 economessed
economessed's picture

Cue the exodus to Germany in 3..... 2...... 1.......

Wed, 11/04/2015 - 14:11 | 6749401 taketheredpill
taketheredpill's picture

Germany or SoCal?

 

 

Wed, 11/04/2015 - 13:59 | 6749352 Bill of Rights
Bill of Rights's picture
19 year old girl in German city becomes victim of refugee rape gang, 4th attack this month alone

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

 

This is the Obama vision for America folks, I suggest you arm up ladies and quick....

 

Think I'm kidding?

http://www.westernjournalism.com/these-100-us-cities-are-begging-obama-for-more-muslim-refugees-yours-could-be-one-of-them/

 

Obama has said that 10,000 Syrian refugees will be welcome in the United States, but if 100 U.S. mayors get their way, that figure could be much more.

Recently, 18 mayors sent a letter to Obama, representing 100 mayors with Cities United for Immigration Action.

The mayor of Baltimore, Stephanie Rawlings-Blake, stresses what she perceives as the economic importance for her city of immigrants and refugees, a concern which is echoed by other mayors in the letter.

Wed, 11/04/2015 - 14:05 | 6749380 Bastiat
Bastiat's picture

I wonder if the "undocumented guests"  are immune from prosecution in Germany as they are in the US?

Wed, 11/04/2015 - 14:25 | 6749461 El Vaquero
El Vaquero's picture

Yeah, one of the mayors in my state signed that letter requesting more "immigrants."  On one hand, I don't want them here, but on the other hand, I kind of hope that Santa Fe gets a few thousand of them to teach the idiot politicians who run that town and the people who vote for them a lesson.  It's far enough from me plus the people just outside of Santa Fe won't put up with the kind of shit that they'll bring. 

Wed, 11/04/2015 - 15:09 | 6749642 daveO
daveO's picture

Are they even teachable? We've had 50 yrs of indoctrination about whitey discwiminatin' against, and keeping down, the black man. The sorry fact is the welfare gov. needs more tax slaves to feed the all the takers.

Wed, 11/04/2015 - 14:10 | 6749360 GoinFawr
GoinFawr's picture

Ah, so prince Abdel Mohsen Bin Walid Bin Abdulaziz was caught merely doing his level best to diversify the national portfolio into, uh, 'pharmaceuticals'?

If so, I certainly hope he doesn't meet the same fate as the other,  less royal, convicted drug smugglers nabbed by the Lebanese,

I wouldn't even wish that on my worst enemy (jk. Anyway, 'sif).


Wed, 11/04/2015 - 14:04 | 6749376 10mm
10mm's picture

Where's the body count of the rapists? Germans suffering WW2 guilt to this day.  Lost their fight.

Wed, 11/04/2015 - 14:33 | 6749489 Pure Evil
Pure Evil's picture

Been neutered by feminism.

No balls, no glory.

In the old days the German warriors would have slaughtered them in the forests.

There's a reason Rome was unable to conquer all the German tribes except those closest to Gaul.

Wed, 11/04/2015 - 14:56 | 6749574 Lucky Leprachaun
Lucky Leprachaun's picture

No. The so-called DeNazification program, the most effective brainwashing project in history, has destroyed German morale and sense of self-worth.

Wed, 11/04/2015 - 15:48 | 6749844 John Wilmot
John Wilmot's picture

"There's a reason Rome was unable to conquer all the German tribes except those closest to Gaul."

Yes, but not the reason you think. The Romans always defeated the Germans in open combat (no surprise with the Romans being better equipped and trained). So the Germans resorted to guerrilla war. That, coupled with the difficult terrain, coupled with the poverty of Germania (hardly worth conquering) is why the Romans gave up.

Not unlike the British in Afghanistan, for instance,

Wed, 11/04/2015 - 16:20 | 6749973 Caleb Abell
Caleb Abell's picture

That and Rome also lost 3 entire legions because Augustus put one of his young ineperienced friends in command who knew nothing about the military.  He marched them into a German trap and all 3 legions were annihilated.  Rome never made another serious attempt to conquer Germany and the 17th, 18th, and 19th legions were never reconstituted.

Fortunately, the US learned from history and would never make the mistake of placing incompetent schmucks in positions of power merely because they had political connections.

Wed, 11/04/2015 - 14:05 | 6749384 LawsofPhysics
LawsofPhysics's picture

Mis-pricing assets of real utility can have dire consequences indeed.

moral hazard motherfuckers!

Wed, 11/04/2015 - 14:11 | 6749408 Jack Burton
Jack Burton's picture

Saudi Arabia is one of America's top allies, second only to Israel and the UK. Saudi could not have crashed oil prices without the "deep state" rulers in Washington's full approval. We can assume that the oil price wars were aimed at the "deep states" pet project, the bring down of the Russian Federation. Sanctions, financial cut offs and oil price crash were supposed to stress the Russian population via a deep recession to force them onto the streets in a Moscow Maidan, led by Russian NGO funded Liberals.

The USA appeared ready to lose Fracking's Miracle to get back at Russia, OR, as I believe, the "deep state" knew all along fracking was NOT what the media hype made it out to be, and that fracking was a sacrifice worth taking down RU. The problem with the Saudi American plan was that Russia has a real economy, not just energy. That economy has what Saudi does not have, "almost unlimited potential for growth using domestic resources and new build plant and equipment to service domestic demand in place of EU imports". While oil did crash the currency and cause recession, it was not a knock out blow, because Russia had nice fat reserves, lots of gold, and limited dent exposure. A bumpy ride for RU, but not something that could not be dealth with. While Saudi has not a fucking thing but those oil fields. Add 2 plus 2 and the answer is "Saudi needs oil money more than RU does".  So Saudi is in trouble, while the recession in Russia is easing back into more normal growth, with expansion due to import replacement projects. Both agricultural and consumer. Is Russia still beat up by super low oil prices? Yes, but America itself is nearing a full blown financial crisis and recession. So it didn't really work.

Wed, 11/04/2015 - 14:32 | 6749487 Gambit
Gambit's picture

Exactly Jack, I grew up during the Soviet collapse... I remember we used to dig up roots of trees (there were no more trees left in my town) to warm our house and melt snow to have drinking water.  This is fresh in the minds of most Russians, they lived through total economic collapse and depression, and they know how to handle it very well.  So a little recession here or there won’t bug them too much, but if you have been living in a privileged life style for 3 generations you will not be able to deal with depression to well not to mention Wahhabism does not allow for technology and other forms of alternate ways of inducing economic growth to flourish. Wahhabism realize on ignorance to rule the masses. 


Wed, 11/04/2015 - 14:53 | 6749561 Lucky Leprachaun
Lucky Leprachaun's picture

True. In addition Russians know how to survive under terrible conditions. Which is more than can be said for Saudi's bloated parasites.

Wed, 11/04/2015 - 15:43 | 6749830 weburke
weburke's picture

I bet they have the water, but are told they dont so they will be vulnerable to starvation, and soon. Like the california growing area.

Wed, 11/04/2015 - 14:14 | 6749420 DelusionalGrandeur
DelusionalGrandeur's picture

I hope they all starve to death and become so thirsty they resort to drinking from their oil wells.

Wed, 11/04/2015 - 14:15 | 6749425 Muppet
Muppet's picture

What happened to ZH that is causing a pop-up of "blue sky with clouds" from some "liverail.com"

?

?

?

?

?

 

Wed, 11/04/2015 - 14:57 | 6749581 Muppet
Muppet's picture

I found the problem.   FireFox upgraded yeterdat to level 42.0.     I downgraded back to 41.0.2 and all is resolved.   Whew!    ZH with ad's is unbearable.

Wed, 11/04/2015 - 15:50 | 6749861 ebear
ebear's picture

Turn off Java, java script and plugins.

It's like going back to 1997 - the way the web used to be.

Thu, 11/05/2015 - 03:33 | 6752636 IronForge
IronForge's picture

Install Ad blocking, Tracker blocking and/or Cooking Crushing Addons.

Wed, 11/04/2015 - 14:16 | 6749427 Caveman93
Caveman93's picture

Karma

Wed, 11/04/2015 - 14:23 | 6749450 taketheredpill
taketheredpill's picture

If this is all true is there a limit to how far they will go to kill off competition?  If they cut supply by 10% wouldn't they make it up if the price goes up by more than 10%?

 

I assume they see demand data that we do not confirming a global slowdown, if they didn't cut supply the high(er) prices would aggrevate the problem.

 

So fucked, basically.  Maybe good analogy with Shale producers, gotta keep pumping no matter what (for different reasons). Trapped.

 

Wed, 11/04/2015 - 14:29 | 6749475 SgtShaftoe
SgtShaftoe's picture

Send the royal family the hyper-GMO wheat dripping with extra Glysophate. mmm mmm eat up motherfuckers!

Wed, 11/04/2015 - 14:33 | 6749490 SmittyinLA
SmittyinLA's picture

They should have invested in an Iraqi water aqueduct project rather than ISIS, Islam can't afford ISIS or its population growth.

Islam needs birth control.

US and western Europe are good for about 10 years overflow till they collapse from invasion, then what?

US is a net food importer with imports growing.

Wed, 11/04/2015 - 14:46 | 6749536 DosZap
DosZap's picture

US and western Europe are good for about (10 years) overflow till they collapse from invasion, then what?.

 

Man you're an Optomist!.

Wed, 11/04/2015 - 14:49 | 6749545 Lucky Leprachaun
Lucky Leprachaun's picture

'US is a net food importer'  

Is that true???

Wed, 11/04/2015 - 15:42 | 6749816 scubapro
scubapro's picture

 

 

no.  the US has a vast food trade surplus

Wed, 11/04/2015 - 16:04 | 6749909 samsara
samsara's picture

The answer is yes. Net importer the last couple years I believe.

Major exports are corn and wheat. Import many other things

Wed, 11/04/2015 - 14:35 | 6749493 E.F. Mutton
E.F. Mutton's picture

"..and now this.."

I was expecting Camel Syphilis, but I guess this sucks for them too

Wed, 11/04/2015 - 14:44 | 6749528 DosZap
DosZap's picture

The calm before the PERFECT TERRORIST STORM.

Economy goes to hades,treasury is empty(like ours) and the people are starving, and fill the streets,the Royal fams leave quickly, and Shazaaaaaaaaaaaaam!!!,lookie what IRAN/Al Queda/ISIL/ISIS or whoever wants it takes over!.

No doubt it will be caused by Global Warming(er' Climate Change.)

Wed, 11/04/2015 - 14:45 | 6749532 csmith
csmith's picture

"...moved to Plaxico themselves..."

 

Good one there...making it a verb and all.

Wed, 11/04/2015 - 14:48 | 6749542 Lucky Leprachaun
Lucky Leprachaun's picture

I feel a warm glow all over when I read such news about that hideous country and its even more hideous "Royal" Family.

Wed, 11/04/2015 - 14:48 | 6749543 theallseeinggod
theallseeinggod's picture

I guess allah is punishing the Saudis for being Washington's bitch. How about we rename the country to just Arabia?

Wed, 11/04/2015 - 14:55 | 6749569 Savyindallas
Savyindallas's picture

They have no choice-even though they only played a minor role in 911-funding the operation and providing a few patsies, Washington will blame them after releasing the missing 28 pages and crush them if they try to turn on us  -all we have to do is send in our ISIS boys. In retliation, Saudi could release their files implicating Mossad, CIA and Neocons. As you can see, they all have an interest in hanging together- the kind of hanging together I want to see is from the gallows  -although beheading would be more appropriate and consistent with Saudi culture and law. 

Wed, 11/04/2015 - 14:58 | 6749584 cookies anyone
cookies anyone's picture

FTRITP

Wed, 11/04/2015 - 15:06 | 6749623 Sudden Debt
Sudden Debt's picture

If you're in the dessert and you have a glass of water and 500 tons of gold on a pile.

And it's torching hot.

Guess for what they'll be fighting.

Wed, 11/04/2015 - 15:08 | 6749633 bubbbles
bubbbles's picture

What this article doesn't point out is that The Saudis have purchased land in Arizona and are using the U.S' depleting aquifers to grow their wheat and ship it back to themselves. I hear Arizona has plenty of water...

Wed, 11/04/2015 - 15:19 | 6749693 Joebloinvestor
Wed, 11/04/2015 - 15:32 | 6749767 foxenburg
foxenburg's picture

Apropos the Yemen conflict and Saudi /Israeli/USA involvement I haven't seen much written about Socotra. I assume the Houthis,if they get the upper hand, would want to turf the Americans off this huge, little reported base in the horn of Africa.

Wed, 11/04/2015 - 15:36 | 6749786 Jstanley011
Jstanley011's picture

Commodity-based economies always go tits up. See the settlements in the western U.S. whose economies were based on mining gold and silver -- which in their heyday boasted world class hotels and opera houses and visits from royals -- that are now ghost towns.

Good the Sauds have goat herding to fall back on.

Wed, 11/04/2015 - 15:39 | 6749800 LoveTruth
LoveTruth's picture

Beinsa Duno/Peter Dunov teaches "Whatever you wish others will come on you".

That's why Jesus preached "Love one another" as the best way to live.

Saudi Arabia is nothing, but exporter of Wahabi Islam, Islam of barbarity and brutality. 

Wed, 11/04/2015 - 15:41 | 6749811 Grandad Grumps
Grandad Grumps's picture

A. Oil prices are not connected to supply and demand. They are controlled by the banks. Lower oil prices look to be primarily a planned attack on the Saud.
B. If the banks supported Saudi Arabia, then the Saud would never have received a downgrade. It was another planned attack.
C. The war distraction/cost with Yemen, another attack.

There is no room for monarchaies of any kind with "globalization"... unless it is the one monarch at the top of it all. I don't think that will be the Saud.

Wed, 11/04/2015 - 16:08 | 6749839 Youri Carma
Youri Carma's picture

SAUDI ARABIA Headlines

- Saudi Arabia Non-Oil Private Sector Growth Eases Further
- S&P Downgrades Saudi Arabia On Slumping Crude, Ballooning Fiscal Deficit
- Saudi Arabia Will Be Broke In 5 Years, IMF Predicts
- Saudi Arabia Delays Contractor Payments To Preserve Cash
- Saudi Arabia Declares Spending Moratorium As Oil Rout Bankrupts Kingdom
- Saudi Petrodollar Reserves Fall To 32 Month Low Amid Crude Carnage
- Saudi Arabia Responds With Oil Price Cuts To Protect Market Share

Wed, 11/04/2015 - 17:02 | 6750155 WhyWait
WhyWait's picture

Saudi people are watching closely and aer intensely political under a repressed surface.  Anger at the princely class has been ready to boil over for at least 25 years. Women, Shiites, the huge number of non-citizens, all are being severely repressed - and are watching and dreaming of when their time comes. And all are acutely aware of the enourmous waste of supporting thousands of princes and their entourages.

The disasters at this year's hajj, the larger one caused by the thoughtless actions of a prince and his entourage, and Iran's call for the Sauds to be stripped of their role as keepers of the holy sites have fueled this anger.  If Saudi troops or ISIS mercenaries return defeated from the wars, there will be no stopping the explosion.  And the power of a social explosion is proportional to the degree of repression that preceeds it.

Putin, faced with US actions which block Russian air power from delivering the coup de grace to ISIS, is no doubt fully aware of how unstable Saudi rule is, and as with Ukraine he will play the long game.  If the collapse of Assad's government can be averted, time is on his side.

Wed, 11/04/2015 - 16:11 | 6749928 83_vf_1100_c
83_vf_1100_c's picture

Always remember to be nice to folks you pass on the way up the ladder. The Sauds are farked.

Wed, 11/04/2015 - 16:35 | 6750043 SmittyinLA
SmittyinLA's picture

I remember during the last El Nino trend as long as El nino lasted.....there was a horrible drought in Africa, the same places that have dramatically expanded both in population and agribusiness will get hit again, this time worse. 

Food imports may  (will ) not be available, politically broke starving countries may not be able to export (legally they could ) 

Wed, 11/04/2015 - 17:00 | 6750107 WhyWait
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<moved>

Wed, 11/04/2015 - 16:55 | 6750118 WarPony
WarPony's picture

Maybe - "Arab News are reporting that 6 people have died as a result of flash floods."

Wed, 11/04/2015 - 17:04 | 6750159 LoveTruth
LoveTruth's picture

Washington should take only Christian refugees. If the muslims convert to another religion fine if not, we don't want to face down the rode "lone wolf" terrorism.

Wed, 11/04/2015 - 17:32 | 6750325 NEKO
NEKO's picture

And when the going gets tough the Saudis will find out how many friends they really have... a close your facebook account moment.

Wed, 11/04/2015 - 18:38 | 6750711 MaxThrust
MaxThrust's picture

Just Observing

Your posted comments were very resonable and yet you have 3 down arrows.

The Trolls are angry early today

Thu, 11/05/2015 - 00:17 | 6752314 onmail1
onmail1's picture

Saudi Arabia will become like overheated pressure cooker with no safety valve

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