Surviving Capitalism (Not) : Saudi riyal in danger as oil war escalates

We’ve lived so long under the spell of hierarchy—from god-kings to feudal lords to party bosses—that only recently have we awakened to see not only that “regular” citizens have the capacity for self-governance, but that without their engagement our huge global crises cannot be addressed. The changes needed for human society simply to survive, let alone thrive, are so profound that the only way we will move toward them is if we ourselves, regular citizens, feel meaningful ownership of solutions through direct engagement. Our problems are too big, interrelated, and pervasive to yield to directives from on high.
—Frances Moore Lappé, excerpt from Time for Progressives to Grow Up

Tuesday, December 29, 2015

Saudi riyal in danger as oil war escalates

Click here to access article by Ambrose Evans-Pritchard from The Telegraph (Britain).

This highly respected international business analyst writes about the deteriorating economic conditions in Saudi Arabia.

Saudi Arabia is burning through foreign reserves at an unsustainable rate and may be forced to give up its prized dollar exchange peg as the oil slump drags on, the country’s former reserve chief has warned.

“If anything happens to the riyal exchange peg, the consequences will be dramatic. There will be a serious loss of confidence,” said Khalid Alsweilem, the former head of asset management at the Saudi central bank.

The latter is a key Empire ally that has furnished all kinds of contributions to US-Israeli false-flag terrorist operations in many parts of the world from Afghanistan to the New York trade center.

Saudi Arabia also provides key backing for the US dollar ever since the US went off the gold standard in 1971 following the run-up of huge debts incurred during the Vietnam War. This dramatic event was followed in 1974 by an agreement secured by Henry Kissinger with Saudi authorities who agreed to sell oil only in US dollars and to recycle those dollars into US Treasury bonds and US stocks. In return the Saudis were guaranteed security by the US. As Michael Hudson stated:

Saudi Arabia realizes that it exists only with U.S. support. Doing what U.S. diplomats tell them to do lets them keep their oil resources rather than being treated like Iraq and Iran.

This crucial agreement effectively backed US dollars with oil ("petrodollars") because other nations since then have been forced to buy and hold US dollars in order to purchase oil.