Connect with us

Politics

What Is Going On In Saudi Arabia?

From the very beginning, there was something off about Sunday’s unprecedented countercoup purge unleashed by Mohammad bin Salman on alleged political enemies, including some of Saudi Arabia’s richest and most powerful royals and government officials

Published

on

From the very beginning, there was something off about Sunday’s unprecedented countercoup purge unleashed by Mohammad bin Salman on alleged political enemies, including some of Saudi Arabia’s richest and most powerful royals and government officials: it was just too brazen to be a simple “power consolidation” move; in fact most commentators were shocked by the sheer audacity, with one question outstanding: why take such a huge gamble? After all, there was little chatter of an imminent coup threat against either the senile Saudi King or the crown prince, MbS, and a crackdown of such proportions would only boost animosity against the current ruling royals further.

Things gradually started to make sense when it emerged that some $33 billion in oligarch net worth was “at risk” among just the 4 wealthiest arrested Saudis, which included the media-friendly prince Alwaleed.

One day later, a Reuters source reported that in a just as dramatic expansion of the original crackdown, bank accounts of over 1,200 individuals had been frozen, a number which was growing by the minute. Commenting on this land cashgrab, we rhetorically asked “So when could the confiscatory process end? As we jokingly suggested yesterday, the ruling Saudi royal family has realized that not only can it crush any potential dissent by arresting dozens of potential coup-plotters, it can also replenish the country’s foreign reserves, which in the past 3 years have declined by over $250 billion, by confiscating some or all of their generous wealth, which is in the tens if not hundreds of billions. If MbS continues going down the list, he just may recoup a substantial enough amount to what it makes a difference on the sovereign account.”

Then an article overnight from the WSJ confirmed that fundamentally, the purge may be nothing more than a forced extortion scheme, as the Saudi government – already suffering from soaring budget deficits, sliding oil revenues and plunging reserves – was “aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite.

As we reported yesterday, the WSJ writes that the country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.” But what is more notable, is that while we first suggested – jokingly – on Monday that the ulterior Saudi motive would be to simply “nationalize” the net worth of some of Saudi Arabia’s wealthiest individuals, now the WSJ confirms that this is precisely the case, and what’s more notably is that the amount in question is absolutely staggering: nearly 2x Saudi Arabia’s total foreign reserves!

As the WSJ alleges, “the crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property, and people familiar with the matter say the government estimates the value of assets it can reclaim at up to 3 trillion Saudi riyal, or $800 billion.”

While much of that money remains abroad – and invested in various assets from bonds to stocks to precious metals and real estate – which will complicate efforts to reclaim it, even a portion of that amount would help shore up Saudi Arabia’s finances.

A prolonged period of low oil prices forced the government to borrow money on the international bond market and to draw extensively from the country’s foreign reserves, which dropped from $730 billion at their peak in 2014 to $487.6 billion in August, the latest available government data.

Confirming our speculation was advisory firm Eurasia Group, which in a note said that the crown prince “needs cash to fund the government’s investment plans” adding that “It was becoming increasingly clear that additional revenue is needed to improve the economy’s performance. The government will also strike deals with businessmen and royals to avoid arrest, but only as part of a greater commitment to the local economy.”

Of course, there is a major danger that such a draconian cash grab would result in a violent blowback by everyone who has funds parked in the Kingdom. To assuage fears, Saudi Arabia’s minister of commerce, Majid al Qasabi, on Tuesday sought to reassure the private sector that the corruption investigation wouldn’t interfere with normal business operations. The procedures and investigations undertaken by the anticorruption agency won’t affect ongoing business or projects, he said. Furthermore, the Saudi central bank said that individual accounts had been frozen, not corporate accounts. “It is business as usual for both banks and corporates,” the central bank said.

However, this is problematic: first, not only is the list of names of detained and “frozen” accounts growing by the day…

The government earlier this week vowed that it would arrest more people as part of the corruption investigation, which began around three years ago. As a precautionary measure, authorities have banned a large number of people from traveling outside the country, among them hundreds of royals and people connected to those arrested, according to people familiar with the matter. The government hasn’t officially named the people who were detained.

… but the mere shock of a move that would be more appropriate for the 1950s USSR has prompted crushed any faith and confidence the international community may have had in Saudi governance and business practices.

The biggest irony would be if from this flagrant attmept to shore up the Kingdom’s deteriorating finances, a domestic and international bank run emerged, with locals and foreign individuals and companies quietly, or not so quietly, pulling their assets and capital from confiscation ground zero, in the process precipitating the very economic collapse that the move was meant to avoid.

Judging by the market reaction, which has sent Riyal forward tumbling on rising bets of either a recession, or devaluation, or both, this unorthodox attempt to inject up to $800 billion in assets into the struggling local economy, could soon backfire spectacularly.

Meanwhile, for those still confused about the current political scene in Saudi Arabia, here is an infographic courtesy of the WSJ which explains “Who Has Been Promoted, Who Has Been Detained in Saudi Arabia

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Politics

Is America Really ‘Up’ For A Second Cold War?

America will have been pushed out of Asia and the western Pacific back beyond the second chain of islands.

Published

on

After the 19th national congress of the Chinese Communist Party in October, one may discern Premier Xi Jinping’s vision of the emerging New World Order.

By 2049, the centennial of the triumph of Communist Revolution, China shall have become the first power on earth.

Her occupation and humiliation by the West and Japan in the 19th and 20th centuries will have become hated but ancient history.

America will have been pushed out of Asia and the western Pacific back beyond the second chain of islands.

Taiwan will have been returned to the motherland, South Korea and the Philippines neutralized, Japan contained. China’s claim to all the rocks, reefs and islets in the South China Sea will have been recognized by all current claimants.

Xi’s “One Belt, One Road” strategy will have brought South and Central Asia into Beijing’s orbit, and he will be in the Pantheon beside the Founding Father of Communist China, Mao Zedong.

Democracy has been rejected by China in favor of one-party rule of all political, economic, cultural and social life.

And as one views Europe, depopulating, riven by secessionism, fearful of a Third World migrant invasion, and America tearing herself apart over politics and ideology, China must appear to ambitious and rising powers as the model to emulate.

Indeed, has not China shown the world that authoritarianism can be compatible with national growth that outstrips a democratic West?

Over the last quarter century, China, thanks to economic nationalism and $4 trillion in trade surpluses with the United States, has exhibited growth unseen since 19th-century America.

Whatever we may think of Xi’s methods, this vision must attract vast numbers of China’s young — they see their country displace America as first power, becoming the dominant people on earth.

What is America’s vision? What is America’s cause in the 21st century? What is the mission and goal that unites, inspires and drives us on?

After World War II, America’s foreign policy was imposed upon her by the terrible realities the war produced: brutalitarian Stalinist domination of Eastern and Central Europe and much of Asia.

Under nine presidents, containment of the Soviet empire, while avoiding a war that would destroy civilization, was our policy. In Korea and Vietnam, Americans died in the thousands to sustain that policy.

But with the collapse of the Soviet Empire and the breakup of the USSR, it seemed that by 1992 our great work was done. Now democracy would flourish and be embraced by all advanced peoples and nations.

But it did not happen. The “end of history” never came. The New World Order of Bush I did not last. Bush II’s democracy crusade to end tyranny in our world produced disasters from Libya to Afghanistan.

Authoritarianism is now ascendant and democracy is in retreat.

Is the United States prepared to accept a world in which China, growing at twice our rate, more united and purposeful, emerges as the dominant power? Are we willing to acquiesce in a Chinese Century?

Or will we adopt a policy to ensure that America remains the world’s preeminent power?

Do we have what is required in wealth, power, stamina and will to pursue a Second Cold War to contain China, which, strategic weapons aside, is more powerful and has greater potential than the Soviet Union ever did?

On his Asia tour, President Trump spoke of the “Indo-Pacific,” shorthand for the proposition that the U.S., Japan, Australia and India form the core of a coalition to maintain the balance of power in Asia and contain the expansion of China.

Yet, before we create some Asia-Pacific NATO to corral and contain China in this century, as we did the USSR in the 20th century, we need to ask ourselves why.

Does China, even if she rises to surpass the U.S. in manufacturing, technology and economic output, and is a comparable military power, truly threaten us as the USSR did, to where we should consider war to prevent its expansion in places like the South China Sea that are not vital to America?

While China is a great power, she has great problems.

She is feared and disliked by her neighbors. She has territorial quarrels with Russia, India, Vietnam, the Philippines, Japan. She has separatists in Tibet and Xinjiang. Christianity is growing while Communism, the state religion, is a dead faith. Moreover, the monopoly of power now enjoyed by the Communist Party and Xi Jinping mean that if things go wrong, there is no one else to blame.

Finally, why is the containment of China in Asia the responsibility of a United States 12 time zones away?

For while China seeks to dominate Eurasia, she appears to have no desire to threaten the vital interests of the United States. China’s Communism appears to be an ideology disbelieved by her own people, that she does not intend to impose it on Asia or the world.

Again, are we Americans up for a Second Cold War, and, if so, why?

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Economy

The Stock Market Is Up 5 Trillion Dollars Since Donald Trump Was Elected

One year ago we witnessed the greatest miracle in political history, and since that time we have also witnessed one of the greatest miracles in financial history.

Published

on

One year ago we witnessed the greatest miracle in political history, and since that time we have also witnessed one of the greatest miracles in financial history. On November 8th, 2016 the Dow closed at 18,332.74. On Wednesday, it closed at 23,563.36. U.S. stocks have increased in value by about 5.4 trillion dollars since Donald Trump was elected, and I don’t think that we have seen anything quite like this ever before. So does Donald Trump deserve the credit for this unprecedented stock market run? Many experts are at least giving him part of the credit…

Greg Valliere, chief global strategist at Horizon Investments, says outgoing Federal Reserve chair Janet Yellen deserves “much of the credit” because the Fed’s policy of low interest rates has helped maintain a good economy and “favors stocks over other investments.”

But Trump, he adds, “gets some credit for establishing a pro-business climate in Washington.” Trump also gets kudos for rolling back business regulations and pushing for a big tax cut for U.S. corporations, which investors say will boost corporate profitability.

Without a doubt, a Trump victory was a good thing for the financial markets, but politicians need to be careful not to take too much credit for soaring stock prices.

Because if they take credit when stocks go up, then they also have to be willing to take the blame when they go down.

The primary reason why stock prices have gone up so much over the past several years is due to unprecedented intervention by global central banks. They have literally pumped trillions of dollars that they have created out of thin air into the financial markets, and of course that was going to drive up asset prices.

But now global central banks are reversing course in unison, and we will see if financial markets around the world can maintain these dizzying levels without artificial support.

Because the truth is that whenever price/earnings ratios have ever gotten this high throughout history, a horrifying stock market crash has always followed. There is no way that stock prices can stay at these levels without central bank support, and the trillions of dollars in paper gains that we have seen up to now can potentially be wiped out very rapidly.

Just look at a company like Snapchat. This is a company that is supposedly worth 15.4 billion dollars at the moment, and yet it is bleeding hundreds of millions of dollars a quarter. The following numbers come from Wolf Richter…

Snap Inc., the parent company of Snapchat, reported late Tuesday that its revenues in the third quarter rose 62% from a year ago, to $208 million, while its net loss more than tripled to $443 million. How? It wasn’t easy, but here’s how they did it:

  • Cost of revenues, $211 million, exceeds revenues, a troublesome indicator. Most of it is what Snap pays Alphabet for hosting its content in the Google Cloud.
  • Research and development expenses, $239 million, also exceed revenues.
  • Sales and marketing expenses, $102 million, to push those Snapchat Spectacles? More on those in a moment.
  • General and administrative expenses: $118 million

Total expenses of $670 million, against revenues of $208 million. That’s what I call a business model.

I want to be very clear about what I am going to say next.

Snapchat’s business model is terribly broken, and this is a company that is going to zero.

Ultimately, those that hold Snapchat stock to the very end will lose everything. Instead of 15 billion dollars, this is a company that won’t be worth 15 cents.

Speaking of going to zero, Sears just announced that they are getting rid of up to 140 more stores. We have already set an all-time record for retail store closings in 2018, and the “retail apocalypse” that we are witnessing is only going to continue to accelerate.

But at least the stock market continues to set new record highs, right?

Don’t be fooled by the headlines. The artificial stock market bubble is living on borrowed time, and meanwhile the “real economy” continues to struggle.

When the stock market finally crashes, it will not be Donald Trump’s fault.

Let me say that again.

When the stock market finally crashes, it will not be Donald Trump’s fault.

The Federal Reserve and other global central banks created this artificial bubble, and they will be to blame for the carnage that is caused when it bursts.

And as the next great financial crisis unfolds, my hope is that people will finally be sick enough of these “boom and bust cycles” that we will be able to get rid of the Federal Reserve for good.

We need people to understand that the design of our financial system is fundamentally flawed, because if we never treat the root cause of our problems we will always be chasing symptoms.

There is a better way, and my hope is that in the aftermath of the next crisis we can start to get there.

Michael Snyder is a Republican candidate for Congress in Idaho’s First Congressional District, and you can learn how you can get involved in the campaign on his official website. His new book entitled “Living A Life That Really Matters” is available in paperback and for the Kindle on Amazon.com.

Free "dummies guide" to trading options

Did you know trading options can actually be safer and more profitable than buying and selling stocks? Video and plain English training guide reveals how to get started tonight. 100% free.

Download now.

Continue Reading

Politics

Here Is How Easy It Is For The President To Launch a Nuclear Weapon

The steps the president has to take to fire a nuke are involved and complicated, but they work to safeguard against accidental launches and miscommunications.

Published

on






The steps the president has to take to fire a nuke are involved and complicated, but they work to safeguard against accidental launches and miscommunications.

That said, the entire process could happen in just a few short minutes. The following is a transcription of the animation.

It can take the US government just minutes to launch a nuclear weapon. Here’s how it would work.

The president has the sole authority to call for a nuclear strike. Once the call is made, a series of critical steps follow.

The president first meets with top military advisers. The meeting would take place in the Situation Room. If the president is traveling, a call is made on a secure line.

If the president still wants to go through with the strike, the order is verified. To authenticate the order, a challenge code is read to the president. It’s usually two phonetic letters like “Delta-Echo.”

The president then receives the “biscuit”, a laminated card that’s always near the president. The biscuit has the matching response to the challenge code.

The Pentagon then broadcasts an encoded message to missile crews. The message is only about the length of a standard tweet.

It includes the war plan, “Sealed Authentication System” or (SAS) codes, and the actual missile launch codes. When the launch crews get the message they open lock safes to obtain the SAS codes. These codes are compared with the SAS codes included in the message.

If fired from a submarine the captain, executive officer, and two others authenticate the launch order. Fifteen minutes after receiving the order, the missiles could be ready to launch.

If fired from land, there are 50 missiles controlled by 5 launch crews in different locations. Each crew “votes” for the launch by turning their keys at the same time.

There are five different keys, but only two need to be turned to launch the missiles. In this scenario, the missiles could be ready to launch just minutes after the president’s order. Once the missiles are launched, there’s no turning back.


Continue Reading
Advertisement

Trending