Pepe Escobar: Saud's unloading their bonds (The Secret Behind the Next Global Crash)

[ThePythonicCow]

.
Pepe Escobar, of Brazil, one of the best connected reporters on the world financial scene these days, has just posted an exclusive on Sputniknews: The Secret Behind the Next Global Crash (http://sputniknews.com/columnists/20160121/1033486596/secret-behind-next-global-crash.html).

He reports that the Saud's and other Arabian Gulf Oil Emirates have been ordered by the "Masters of the Universe" to dump their bonds, now, rapidly. Untold trillions of US Dollars of Treasury debt are being unloaded.

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The World Economic Forum in Davos is submerged by a tsunami of denials, and even non-denial denials, stating there won’t be a follow-up to the Crash of 2008.

Yet there will be. And the stage is already set for it.

Selected Persian Gulf traders, and that includes Westerners working in the Gulf confirm that Saudi Arabia is unloading at least $1 trillion in securities and crashing global markets under orders from the Masters of the Universe – those above the lame presidency of Barack Obama.

Those were the days when the House of Saud would as much as flirt with such an idea to have all their assets frozen. Yet now they are acting under orders. And more is to come; according to crack Persian Gulf traders Saudi Western security investments may amount to as much as $8 trillion, and Abu Dhabi’s as $4 trillion.

In Abu Dhabi everything was broken into compartments, so no one could figure it out, except brokers and traders who would know each supervisor of a compartment of investments. And for the House of Saud, predictably, denial is an iron rule.

This massive securities dump has been occasionally corporate media, but the figures are grossly underestimated. The full information simply won’t filter because the Masters of the Universe have vetoed it.

There has been a huge increase in the Saudi and Abu Dhabi dump since the start of 2016. A Persian Gulf source says the Saudi strategy “will demolish the markets.” Another referred to a case of “maggots eating the carcass in the dark”; one just had to look at the rout in Wall Street, across Europe and in Hong Kong and Tokyo on Wednesday.

So it’s already happening. And a crucial subplot may be, in the short to medium term, no less than the collapse of the eurozone.

The Crash of 2016?

So a case could be made of a panicked House of Saud being instrumentalized to crash a great deal of the global economy. Cui bono?

Moscow and Tehran are very much on it. The logic behind crashing markets, creating a recession and a depression – from the point of view of the Masters of the Universe above the lame duck President of the United States — is to engineer a major slow down, cripple buying patterns, decrease oil and natural gas consumption, and point Russia on a road to ruin. Besides, the ultra low oil price also translates into a sort of ersatz sanction on Iran.
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In short, the "Masters of the Universe" (Escobar's term for what I call the Bastards in Power) are deliberately blowing up the world's financial, monetary, debt and energy markets. We are watching that happen, in real time, here and now.

One of my favorite analysts, Jim Willie, has been expecting Saudi Arabia to start selling oil in other currencies besides the US Dollar. Perhaps Jim got the timing, and the basic thrust of the action, Saudi abandonment of the Petro-Dollar, right, but missed on the details ... rather than further devastating the petro-dollar markets by embracing other currencies, it seems that the Saud's are instead devastating the petro-dollar-debt markets by abandoning US Treasuries.

Meanwhile, expect continued dumping of Saudi and other oil on the saturated world oil market, including the newly unleashed billions of barrels from Iran, driving the price of oil further down below $20 a barrel, as reported here: Russia's Ex-Finance Minister Claims Oil Price May Drop to $16-18 a Barrel (http://sputniknews.com/business/20160121/1033481385/oil-prices-kudrin.html).

[ThePythonicCow]

Note that far less US Dollars are being spent, already, on raw materials, due to the global economic slowdown (as evidenced by the all time historic lows in the Baltic Dry Index), and due to the very low prices paid for what little is purchased.

Now with China already, and Saudi Arabia and the other Gulf Oil Emirates a new, exchanging their stock of bonds for Dollars, more US Dollars are being pushed into the financial markets.

In other words, Saudi Arabia will no longer be (1) exchanging other nations Dollars for Saudi oil, but rather, for the most part, (2) exchanging their paper reserves for Dollars. Process (1) was a zero-sum game for Dollars - the Dollars moved from hither to yon, from one pocket to another. Process (2) is not a zero-sum game for Dollars - new Dollars must be conjured into existence to extinguish (monetize) the cashed in bonds.

Eventually, the shrinking supply of US Dollars being lent into existence to a shrinking world economy will be overwhelmed by the expanding supply of US Dollars being monetized into existence to extinguish existing debt, and the US Dollar will reverse, from being the most scarce currency (aka the "strongest") to being one of the more abundant currencies (aka the collapse of the US Dollar in high inflation and global rejection.)

The Masters of the Universe (bastards in power) are piling up so many imbalances in the world financial/monetary/economic/political structure that its "controlled demolition" seemingly risks spiraling out of even their control.

[Lifebringer]

Saudi's don't realize that they've had 2 strikes in the game already, that has the hackles up on Americans. These people and intel never warned of the Saudi's on 911 Also bombing allies under the guise of getting rid of ISIS. I thinnk Megedo will be over whether they allow like Kadaffi, and Syria to convert to the BRICS abandoning a lifetime partner of bushes. They are turning the swords on them selves.

[Redstar Kachina]

..........

[Flash]

OK, then expect Israel to become a problem child in the Middle East, directly OVERTLY engaging Syria et al.

Expect U.S. military Stop Loss (those expecting to retire/separate) to have their greener grass can-kicked into sometime in 2017, by which time there probably won't be any green grass left.

Joy...

the world is being brought to a halt, by the bastards in power, in order to have complete hold on the planet. However, I hope white hats etc are on it too, so that it will have the snake bite its tail and swallow it to its death - in other words, that the situation will be reversed at the last minute hopefully by finding some cracks in the bastards strategies and using it to its maximum.

One thing for sure, Israel (I means the bastards using it) will be use to provoke and third world war, once the rats think they are winning, and this should be worked on to be avoided.

My little nobody's opinion.

[Redstar Kachina]

..........

[ghostrider]

It is interesting how this will play out , a civilization these days last only around 200 years , we are anxiously past that ... the same patterns the have used so many times wont work , with so many minds awake, so many eyes looking, so many surfing the electronic world, and sharp swords like our own Paul it wont be easy for them to give the world the same slide of hand tricks ... ya know what I'm getting at ...

[mgray]

i wrote this in my 2016 market preview column at the end of 2015.

"End of June- early July: With gasoline at $1.55 a gallon for peak driving season, Saudi Arabia cuts the riyal's historic peg to the dollar. Like the Chinese devaluation in Aug of this year, Equity markets plunge 40% on the news."

"September - December: Saudi government falls as fighting with Yemen (with Russian aid) escalates into a full-blown war over $25 a barrel oil. Janet Yellen attempts to stabilize US banks, which are cratering over currency fallout. Markets bounce back at years' end to close out 2016 down 45%."

[Redstar Kachina]

..........

[Carmody]

the slower things go.. the bigger the size of the mass of fish in the net.

Immediacy of danger can never be shown or illustrated, lest the net come back with less of a catch.

The psychology of humans in both group and individual components, must be core to the given methodology and act which is in play, otherwise it won't work.

Multi-tiered gaming through the most weak, blind, and layered sides, avenues, and conditions... is key to oligarchical manipulations.

This is obvious, in hindsight.... and one has to tell this to themselves constantly when looking at the games at play that involve the given future (prediction, etc). Otherwise the analysis will fail to capture the essence of their moves, nor uncover the manipulations in the given necessary time frames (where response could be effective).

Eventually, one realizes they've become hypnotized by complex motions behind the scenes, with all the game playing and muti-tiered writhing about......and finally come to understand that the best course of action....is to take a chainsaw and shovels unto to their purposely built Gordian knot of complexity. That there is little to no use for dexterity and deftness in a system where that sort of response is destined, no purpose built (by the presented situation) ----to fail.

[ThePythonicCow]

... to take a chainsaw and shovels unto to their purposely built Gordian knot of complexity ...


http://ecx.images-amazon.com/images/I/41piO1puNUL.jpg


Go, go, Power Rangers Chainsaws!

[ThePythonicCow]

Bill Holter, over at Jim Sinclair's JSMineSet.com (http://www.jsmineset.com/2016/01/22/the-government-will-never-let-it-happen/), has a couple of relevant thoughts.

Perhaps those two boats, with ten sailors, wandered into Iranian waters and were captured, not on account of ordinary mechanical or navigational problems, but on account of their navigational gear being hacked by the Iranians, the same way that the Donald Cook was hacked in the Black Sea in late 2014. That would surely give the US forces food for thought. Moreover (and Holter didn't say this ... I am) perhaps rescue and interdiction operations from the USS Harry S. Truman strike group in the area were thwarted the same way. That too would surely give US forces more food for thought.

Holter also notices that President Xi of China has been publicly visiting Iran and Saudi Arabia in the last few days. It seems likely that Xi discussed the sale of oil in Yuan, rather than Dollars, by Saudi Arabia, to China, and that he discussed oil sales and other economic activity with Iran. Holter does have the order of Xi's trip reversed, I believe. As has been widely reported in Iran's PressTV.com, India's IndiaTimes.com (http://timesofindia.indiatimes.com/world/china/Chinese-President-Xi-Jinping-set-to-visit-Saudi-Arabia-Iran-and-Egypt/articleshow/50593512.cms), and China's Xinhuanet.com, Xi visited Saudi Arabia, Egypt and Iran, in that order. This was Xi's first trip to the Middle East since he became President of China in 2013 ... so I presume he wasn't just traveling to improve his golf game.

[ThePythonicCow]

Perhaps those two boats, with ten sailors, wandered into Iranian waters and were captured, not on account of ordinary mechanical or navigational problems, but on account of their navigational gear being hacked by the Iranians, the same way that the Donald Cook was hacked in the Black Sea in late 2014.
One of the other commentators worth reading, The Saker, makes a similar observation -- that perhaps some advanced Russian (and now Iranian) technology disabled the two boats that Iran captured in the Persian gulf.

Avalon member Sophocles posted this article by The Saker here: Ukraine, Crimea, Syria, Israel, Iran, Putin, and World War III -- Post #1008 (http://projectavalon.net/forum4/showthread.php?69621-Ukraine-Crimea-Syria-Israel-Iran-Putin-and-World-War-III&p=1040170&viewfull=1#post1040170).

[ThePythonicCow]

Process (2) is not a zero-sum game for Dollars - new Dollars must be conjured into existence to extinguish (monetize) the cashed in bonds.

Bzzzt .. that ain't necessarily so!

(Once again, I have let the popular meme of the gold bugs and doom and gloomers, that the US is hyper-inflating the US Dollar supply, printing Dollars backed by nothing, confuse my thinking. I might be a doomy, gloomy advocate of holding gold and silver, but that's not why.)

There are perhaps four places that the US Dollars could come from to buy back the trillions of US Treasury debt that China and now Saudi Arabia are liquidating:

Perhaps other legitimate purchasers of US Treasury debt could purchase that debt paper on the open market.
Perhaps existing cash reserves of the Federal Reserve (the Fed), US Treasury, Exchange Stablization Fund (ESF), and/or the big Western banks could be drawn down to purchase that debt paper back.
Perhaps other assets held by those same parties, such as corporate stocks held by the ESF, could be sold to raise the cash required to buy back the debt.
Perhaps new cash could be "printed", out of thin air, in what I termed above "monetizing" the debt.


(The "normal" way to generate cash, lend it into existence, doesn't apply in the case that one is trying to reduce, not expand, the existing supply of debt paper. So other ways, such as the above 4, must be considered.)

Possibility (4) leads to rapid inflation, weakening the US Dollar. We are not seeing that (at least not yet)!

Possibility (1) presumes that there is (still) a massive market in which to sell US Treasury debt paper at its current high prices, or otherwise we'd be seeing a collapse in the value of Treasuries (spike in their imputed interest rate (http://financial-dictionary.thefreedictionary.com/Imputed+Interest)), as more Treasuries were offered for market than there were eager buyers to purchase them. We are not seeing that either (at least not yet)!. US Treasuries continue to be priced at a premium value (very low interest rates), even though there are no apparent genuine buyers at such prices, in Trillion Dollar volumes.

Possibility (2) would require moving trillions of US Dollars into the Fed/ESF/Treasury complex, to pay for soaking up the bonds dumped by China and Saudi Arabia. We are seeing what may be that, with the recent extensions in the Fed's Reverse Repo activities.

Possibility (3) would require either massive fraud (one can never entirely rule out that possibility in this market) or a decline in some other asset, such as major stock markets. We are seeing that too, with major stock market declines since the beginning of 2016.

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The Fed's Reverse Repo activities deserve a bit of explanation. They have confused most analysts (just as the Fed doubtlessly intended.) They are actually quite simple in my view.

In an ordinary Repo (short for repossession), the Fed offers cash to a major bank, on a short term basis, and the major bank puts up some asset, such as some Treasuries or other debt paper it holds, as collateral, for that short term loan. This is exactly like you or I taking our big screen TV or Glock pistol to the pawn shop, as collateral for a short term loan until next payday, so we can pay our rent and avoid eviction. In the case of Fed Repo's, the Fed gets the collateral debt paper, and the bank gets some sorely needed cash on a short term basis.

In a Reverse Repo, it goes the other way. The Fed coughs up some of the debt paper it holds on its balance sheet (it has plenty ... we need not worry it will run out soon) to a major bank, and gets a short term loan of cash from the bank in return. This reduces the amount of liquid cash held by that bank, which the bank might not mind so much, if they had decided to quit lending so much money to businesses and the public. Essentially, the banks are lending to the Fed instead.

The famous announcement of a Fed rate increase in early December was not a Fed rate increase. They were lying, as usual. The Fed's short term inter-bank offering rate has hardly moved upward at all since then, and besides, banks really don't want to lend to each other so much anymore these days anyway ... too risky. The important thing that happened in that early December Fed meeting, buried in the back pages of their announcement, was further ramping up of their Reverse Repo activity. The Fed's real goal in December was not to make inter-bank lending cheaper, but to increase the volume of lending of cash, by banks, to the Fed.

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That (Reverse Repos) may be one of the two ways that the Fed (and its partners in crime, the US Treasury and ESF) are vacuuming up existing cash, in order to keep the US Dollar strong while using that sucked up cash to buy back the US Treasury debt now being marked "Return To Sender, Worth Unknown" by China and, starting this month, Saudi Arabia.

The other way, sales of stocks, may be behind some of the crashing stock markets, world wide.

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The combination of those two ways, selling corporate stocks, and sucking up bank reserve cash, are highly stressful on any corporation, nation, pension plan, or individual overly in debt. Crashing stock markets, declining revenues and collapsing profits all cause corporate layoffs. Banks cutting back on lending and calling in shaky debts are hard on any nation, business, person, or other entity overly in debt. Declining economic activity (less being produced, shipped and sold, for lower prices ... double whammy) lowers the cash flow and tax revenue flows required by those in debt to make payments on that debt. Banks retracting lending forces marginal debt to be "marked to market", recognized as defaulting, rather than covered up with more loan extensions.

The march toward deflation, bankruptcy, economic and financial collapse continues, using these essentially deflationary tactics.

... for now.

Once our economic carcass is brain dead, then they might open up a fire hose of money that is printed out of thin air, not lent in exchange for debt contracts, and create high inflation. This would make the US Dollar increasingly worthless, and easier to pry from our hands in exchange for a new currency, reconstituted on a new basis, after a new "Bretton Woods", marking the end of the US Dollar as the world's reserve currency.

When that high inflation happens, precious metals might spike at 5 or 10 times their current price in US Dollars, but more because the Dollar collapsed than because gold and silver were being restored as the common man's real means of wealth preservation. Gold, silver, farmland, and other physical assets of long term worth are some of the means available to preserve wealth across the coming monetary reset, not a likely means to "get rich quick".

If there is, and likely there will be, some gold and silver aspect to this new currency, it would be between nations, as was the case from 1945 to 1971, when the US backed its Dollar with gold, but only to other nations. This new currency will almost surely be another debt-based currency, lent into existence in exchange for a contract - a note, bill, bond, mortgage or other claim on the borrower's assets and income.

So, no, for now at least, the sale of trillions of Dollars of Treasuries by Saudi Arabia and the other Gulf Oil Emirates is not the mark of a beginning inflation. The US Dollar remains "strong" (in short supply) ... deliberately ... as part of choking to death the economic, financial and monetary activity of every person, business or political entity that is in debt or that depends on income or assets from some other such in debt. In other words, all but a few Aborigines in the Australian outback, more or less, and a few Rothschilds and relatives, in their mansions.

[ThePythonicCow]

Debt-money systems are not long term stable systems. They always depend on promising greater returns tomorrow, for the money lent today. Eventually, the productive capacity of the nation, or in our case, planetary civilization, using such a system has too much of its real productive capacity siphoned off to meet the promised debt payments and ever increasing returns. This snowballs, as the real productive capacity begins to collapse, due to reduced investment in real capital. The opportunities for "good" lending (with a high chance of repayment, at terms profitable to the lender) dry up.

The debt-money system must then enter into a period of collapse.

Just as new spending capacity, in the form of easy money, was added to the system during the expansion phase, so must real spending capacity be removed during the collapse phase.

This is done one of three ways:

The "Debt Jubilee" of times long ago, when the real powers on the planet weren't holding much debt paper, so didn't mind marking it down to little or no worth.
The "Inflationary" replacement of "real" debt-money with "paper" money backed by nothing, thus removing (making worthless) the excess debt-money flooding the economy and rendering debt repayment easy, but of little real value.
The "deflationary" calling in of debts and tightening of loan policies, thereby collapsing the economy and leading to wide spread defaults, bankruptcies, foreclosures, layoffs, "privatization" (selling of public property cheap), defaults, and other mark downs, cancellations and retractions of "future promises" of income, savings, investment, social benefits, etc.

So far, what they have been telling us is happening is (2), and what they've been doing is a combination of (2) in secondary currencies, and (3) in the primary reserve currency, the US Dollar, and (3) in other investments, pension plans, insurance plans, social benefit promises, stocks, junk bonds, real estate prices, income potential of higher education degrees, ... etc ... etc.

One way or another, all that we thought we were promised in the future must be scaled back dramatically, because far more has been promised than can be delivered, at least by a civilization that continues to be based on petro-chemical energy, food and medicine, on fraudulent science, history and politics, and on debt-based money.

[sleepydumpling]

An article I read by David stockman explained the debt situation well. He wrote
there are to many empty skyscrapers in china, to many idle oil wells in the united states, to much stuff in general
far more than the world needs right now, or will need for a long while.
there has been so much over investment in energy, mining, materials processing, manufacturing and warehousing
that nothing new will be built for years to come.
the boom of the last two decades essentially stole output from many years into the future.
so there will be a severe curtailment in the production of many things.

the world financial system has borrowed so much from the future to pay for today

[ThePythonicCow]

An article I read by David stockman explained the debt situation well. He wrote
there are to many empty skyscrapers in china, to many idle oil wells in the united states, to much stuff in general
far more than the world needs right now, or will need for a long while.
there has been so much over investment in energy, mining, materials processing, manufacturing and warehousing
that nothing new will be built for years to come.
That's true about China ... but the rot is far wider than that ... far far wider.

[Redstar Kachina]

..........

[Czarek]

Perhaps now would be a good time to see this classic again😨
m1aQ-XGWors

[TargeT]

So, no, for now at least, the sale of trillions of Dollars of Treasuries by Saudi Arabia and the other Gulf Oil Emirates is not the mark of a beginning inflation. The US Dollar remains "strong" (in short supply) ... deliberately ... as part of choking to death the economic, financial and monetary activity of every person, business or political entity that is in debt or that depends on income or assets from some other such in debt. In other words, all but a few Aborigines in the Australian outback, more or less, and a few Rothschilds and relatives, in their mansions.

Looks like the final "pump" before a big dump... going to be a great consolidation of wealth (again) it's surprising how many times this economy has been milked, but never quite in this way... I guess "go out with a bang" right?

I don't own any gold or silver, but I'm a bit doomy and gloomy on this one.. I don't see the USDollar coming out of the current dead cat bounce. (https://en.wikipedia.org/wiki/Dead_cat_bounce)
QT1suJ9cYI8

Focus should be on becoming as self-sufficient as possible. Commodity holdings are a duct tape / bubble gum measure for the short term (e.g., next few years). After that, well, it gets interesting...

Time to review maslow's hierarchy (https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs) & make sure you have at least the bottom two covered!

[Redstar Kachina]

..........