World War 3 Could Very Easily Turn Into The Very First Nuclear War In The Middle East

Nuclear War - Public DomainSaudi Arabia already has nukes, Iran probably does, and the Russians are one of the two great nuclear powers on the entire planet.  So if Saudi Arabia, Turkey and their Sunni allies do decide to conduct a full-blown ground invasion of Syria, could someone ultimately decide to use nuclear weapons when their backs get pushed up against a wall?  As you read this article, there are thousands of military vehicles and hundreds of thousands of troops massed along the southern border of Turkey and the northern border of Saudi Arabia.  If the command is given and those forces start streaming toward Damascus, it is inevitable that the Syrians, the Iranians, Hezbollah and the Russians would fight back.  It would literally be the start of World War 3, and the Saudis and the Turks are trying very hard to convince the United States to be involved.  But the truth is that we don’t want any part of this conflict, because it could very easily become the very first nuclear war in the history of the Middle East.

Perhaps you didn’t know that the Saudis already have nukes.  Of course the official position is that they don’t, but it is a fact that they were the ones that funded the development of Pakistan’s nuclear program.  It is an open secret that the Saudis have the bomb, but nobody is really supposed to talk about it.

That is why it was so alarming what Saudi political analyst Dahham Al-‘Anzi told RT just recently

Earlier this week a Saudi political analyst told RT’s Arab network the kingdom has a nuclear weapon.

Dahham Al-‘Anzi made the claim while saying Saudi Arabia is engaged in an effort to “minimize the Iranian threat in the Levant and Syria.”

Although Saudi Arabia has officially denied it has a nuclear weapons program and has publicly stated it opposes nuclear weapons in the Middle East, it has funded a military nuclear program and received scientific assistance from the United States and Pakistan.

You can watch video of this exchange right here

If you don’t want to believe him, perhaps you will believe the former director of the CIA counter-terrorism operations center.  He told Fox Business that everyone in the intelligence world knows the Saudis have nukes

If the fur started flying in Syria and Russia and Iran decided to start bombing Saudi airbases, would Saudi Arabia resort to using their nukes?

Let’s hope not.

In the event of a massive ground invasion by Saudi Arabia, Turkey and their allies, it is actually more likely that Russia may decide to be the first one to use nukes.  An invasion force of hundreds of thousands of troops would vastly outnumber the relatively small Russian force that is already inside Syria, and so the Russians may feel that the only way that they can keep the Sunni powers out of Damascus is to use tactical nukes.

Russia has more tactical nukes that anyone else in the world by far, and there are some reports that indicate that Russia may be prepared to use them in Syria.  For example, former Associated Press reporter Robert Parry, the author of America’s Stolen Narrative, says that a source has told him that the Russians have already warned Turkey that this could potentially happen

If Turkey (with hundreds of thousands of troops massed near the Syrian border) and Saudi Arabia (with its sophisticated air force) follow through on threats and intervene militarily to save their rebel clients, who include Al Qaeda’s Nusra Front, from a powerful Russian-backed Syrian government offensive, then Russia will have to decide what to do to protect its 20,000 or so military personnel inside Syria.

A source close to Russian President Vladimir Putin told me that the Russians have warned Turkish President Recep Tayyip Erdogan that Moscow is prepared to use tactical nuclear weapons if necessary to save their troops in the face of a Turkish-Saudi onslaught. Since Turkey is a member of NATO, any such conflict could quickly escalate into a full-scale nuclear confrontation.

Given Erdogan’s megalomania or mental instability and the aggressiveness and inexperience of Saudi Prince Mohammad bin Salman (defense minister and son of King Salman), the only person who probably can stop a Turkish-Saudi invasion is President Obama. But I’m told that he has been unwilling to flatly prohibit such an intervention, though he has sought to calm Erdogan down and made clear that the U.S. military would not join the invasion.

Are you starting to understand how serious this is?

With all of the talk of a potential invasion in recent days, the Russians are on high alert and are rapidly preparing for a direct conflict with both Saudi Arabia and Turkey.  The following comes from Infowars

Still, the Russians are taking no chances and they have put all their forces into high alert. They have very publicly dispatched a Tu-214r – her most advanced ISR (Intelligence Surveillance Reconnaissance) aircraft. You can think of the Tu-214R as an “AWACS for the ground”, the kind of aircraft you use to monitor a major ground battle (the regular Russian A-50Ms are already monitoring the Syrian airspace). In southern Russia, the Aerospace forces have organized large-scale exercises involving a large number of aircraft which would be used in a war against Turkey: SU-34s. The Airborne Forces are ready. The naval task forces off the Syrian coast is being augmented. The delivery of weapons has accelerated. The bottom line is simple and obvious: the Russians are not making any threats – they are preparing for war. In fact, by now they are ready.

In addition, it is important to remember that it is quite likely that the Iranians have nuclear weapons as well.

Of course the U.S. government and the Iranian government both insist that Iran does not have nukes, but many of those in the know insist otherwise.

For instance, you may want to consider what retired U.S. Army Major General Paul Vallely and U.S. Air Force Lt. Col. Dennis B. Haney are saying.  The following comes from an article that was authored by Jerome Corsi of WND

In a joint statement, Vallely and Haney say an accumulation of available evidence shows a coalition of Russia, China and North Korea have assisted Iran since 1979 in achieving a nuclear weapon, despite sanctions, under the guise of a domestic nuclear energy program.

Vallely explained to WND that he and Haney have taken a systematic approach to evaluating each component needed to deliver a nuclear weapon, from the development and testing of a ballistic missile system, to the design of a nuclear weapons warhead, to the development of the weapons-grade uranium needed to produce a bomb.

“To come to our conclusion that Iran is a nuclear weapons power right now, we supplemented publicly available research, plus information from intelligence sources, including Iranian resistance groups such as the National Council of Resistance of IRAN, NCRI,” Vallely explained.

I happen to agree with Vallely and Haney.  I cannot prove it, but all of the intel that I have received indicates that Iran already has nukes.

Hopefully I will not be proven accurate any time soon.

It had been hoped that a cease-fire could be negotiated that would at least temporarily defuse tensions in Syria.  Unfortunately, it does not look like the shooting is going to stop, and this is going to put immense pressure on both Saudi Arabia and Turkey to do something to rescue the radical Sunni militants that are on the verge of defeat.  The Saudis, the Turks and their allies have poured enormous amounts of money and resources into this war over the past five years, and now they are faced with the choice of either accepting defeat or directly intervening in this conflict themselves.

But in order to conduct a full-fledged ground invasion, they are going to need justification for doing so.  There are some that are suggesting that we could soon see a false flag attack that would provide that justification, so that is something to watch out for.

I can’t remember a time when our planet has been so close to World War 3 potentially beginning.

And if it does break out, I believe that it is quite likely that nuclear weapons will be used.

So what do you think?

Do you agree with me?

Please feel free to share your thoughts by posting a comment below…

World War III Approaches: Saudi Arabia And Turkey Drop Hints That An Invasion Of Syria Is Imminent

World War III - Public DomainAs you read this article, Turkish forces are massing along the border with Syria, and the largest “military exercises” in the history of the Middle East are being held in northern Saudi Arabia.  The Saudis are publicly warning that Syrian President Bashar al-Assad “will be removed by force” if a political solution cannot be found, and Turkey is claiming that it may have to establish a “safe zone” in northern Syria “for humanitarian purposes”.  Saudi Arabia, Turkey and their Sunni allies have poured massive amounts of money and arms into the conflict in Syria, and now that their Sunni insurgents are on the verge of total defeat, they are trying to come up with a way to justify going in there and doing the job themselves.

For the Saudis, their focus is on trying to convince everyone that Syrian President Bashar al-Assad is an extremely dangerous dictator that must be removed at all costs.  The following comes from the London Independent

Syrian President Bashar al-Assad will be removed by force if the peace process fails, Saudi Arabia’s Foreign Minister has said.

Bashar al-Assad will leave – have no doubt about it,” Saudi Arabia’s Foreign Minister Adel al-Jubeir told CNN. “He will either leave by a political process or he will be removed by force.”

Saudi Arabia has sent troops and fighter jets to a Turkish military base ahead of a possible ground invasion of Syria.

So precisely who will be doing the “removing” if force is necessary?

Are the Saudis ready to send in ground troops?

Apparently they are.  Just consider what Saudi Arabia’s Foreign Minister Adel al-Jubeir told CNN

Saudi Foreign Minister Jubeir made clear that his country’s troops would not go it alone.

I can tell you that there is some serious discussion going on with regards to looking at a ground component in Syria, because there has to be a possibility of taking and holding ground, that one cannot do from the air.

“We are saying we will participate within the U.S.-led coalition, should this coalition decide to send ground troops into Syria, that we are prepared to send special forces with those troops.”

But if the Saudis try to take Damascus and remove Assad by force, the Syrians and their allies will certainly fight back.  That means that the Saudis will be fighting Hezbollah, the Iranians and the Russians.

Needless to say, Saudi Arabia is going to need a lot of help to do that.

So that may explain why Saudi Arabia has organized the largest “military exercise” in the history of the Middle East.  CNN finally reported on this gigantic gathering of military forces in northern Saudi Arabia earlier today

Saudi Arabia launched a massive military exercise that will include troops from 20 nations, state media reported Monday.

The drill, dubbed North Thunder, involves Arab and Muslim countries, according to the Saudi Press Agency. It’s taking place in King Khalid Military City in northeastern Saudi Arabia.

The news agency did not provide much information on what the exercise entails but called it “the largest in the region’s history.” The agency said it will involve air, sea and land forces.

This is the list of nations that are reportedly participating in these “exercises” so far…

-Saudi Arabia

-Jordan

-Bahrain

-Senegal

-Oman

-Qatar

-United Arab Emirates

-Sudan

-Kuwait

-the Maldives

-Morocco

-Pakistan

-Chad

-Tunisia

-Comoro Islands

-Djibouti

-Malaysia

-Egypt

-Mauritania

-Mauritius

As I discussed yesterday, 350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are reportedly gathering for these “military exercises”.

To me, that seems to be a great deal of overkill if the goal is just “training”.

Here is more about these “exercises” from RT

The Saudi state agency made the announcement on Sunday, adding that participating troops will begin arriving in “the next few hours.”

The oil-rich nation described the exercises as “the largest and most important” military drills in the region’s history.

The so-called “Northern Thunder” exercise will take place in the north of the country and will include air, sea and land forces. SPA said that it will show that Riyadh and its allies “stand united in confronting all challenges and preserving peace and stability in the region.”

So are these forces massing for a ground invasion of Syria?

We shall see.

In the end, we probably won’t have to wait too long before we find out the answer.

Meanwhile, Turkish officials continue to assert that they may have to establish a “safe zone” for refugees in northern Syria.  Since thousands of refugees are continually pouring their direction, they claim that they have no other choice but to go in and take control of the situation.

In fact, Turkey has already established several very large refugee camps on the Syrian side of the border

Some 100,000 Syrian refugees are being looked after in camps inside Syria close to the Turkish border, including 35,000 who this month fled a Russian-backed regime offensive in northern Aleppo province, a top Turkish official said Friday.

Turkish Deputy Prime Minister Yalcin Akdogan, whose country has come under increasing pressure to open its border to people fleeing the violence, said the refugees were being accommodated in nine camps just across the border with Syria.

But make no mistake – this is not just about helping refugees.

The truth is that ISIS has been using Turkey as a home base for years, and hundreds of millions of dollars of ISIS oil has been shipped into Turkey where it has then been sold to the rest of the world.  Barack Obama knows about all of this, and yet he has refused to do anything to stop it.

At this point the cooperation between ISIS and Turkey has become so obvious that even CNN is admitting that ISIS militants are being resupplied from Turkey…

To the east of Aleppo, Kurdish forces are, with American support, eyeing the remaining ISIS strongholds along the Turkish border — Jarablus and Manbij. The U.S. wants ISIS out, to remove its access to resupply of materiel and fighters from Turkey.

Meanwhile, Turkey, America’s NATO ally that is engaged in a brutal but often unseen war with the Kurds’ allies in Turkey’s southeast, doesn’t want the Kurds to advance, and may stop at nothing to prevent that.

Fortunately, the Russian bombing campaign has pretty much put an end to the endless parade of ISIS oil trucks that were entering Turkey, and now the primary supply line to Sunni militants in the strategically important city of Aleppo is about to be cut off.

The corridor that runs through the city of Azaz is vitally important, and the Prime Minister of Turkey recently insisted that the Turkish government “will not allow Azaz to fall”

Turkey shelled YPG positions for a third straight day on Monday to try to stop its fighters seizing Azaz, just 8 km from the border. Ankara fears the Kurdish militia, backed by Russia, is trying to secure the last stretch of around 100 km along the Syrian border not already under its control.

We will not allow Azaz to fall,” Davutoglu told reporters on his plane on the way to Ukraine. “If they approach again they will see the harshest reaction,” he said.

Unfortunately for the Turkish government, it appears that Azaz is already slipping away from the militants.  The following was reported by an Iranian news source

Ankara is likely to take action to counter the Syrian military and allied groups on choking up a supply link on which militants relied to get weapons and logistics.

Syrian troops and Lebanon’s Hezbollah fighters have retaken the town of Azaz, located to the northwest of Aleppo, prompting Saudi Arabia and Turkey to hint at deployment of ground forces to the region.

Asked if Ankara might act to reverse the gains, Turkish Prime Minister Ahmet Davutoglu (seen below) said on Friday, “Wait for the next few days and you will have the answer,” Turkish paper Hurriyet reported.

Wait for the next few days and you will have the answer?

That sounds rather ominous.

Like I said yesterday, I don’t think that I have ever seen a scenario which was more likely to lead to World War III than the one that we are watching play out right now.

Do Saudi Arabia and Turkey actually expect to waltz into Syria and start taking territory without a response from the Syrians, Hezbollah, the Iranians and the Russians?

And if fighting does break out, how is the United States possibly going to stay out of it?

The truth is that Saudi Arabia and Turkey would never invade Syria in the first place without the express approval of the Obama administration.

The next couple of weeks are key.  If we can get into early March without an invasion, by that time Saudi Arabia and Turkey may have missed their window.  The troops gathered for the massive military exercise in northern Saudi Arabia will start to go home, and by then the Sunni militants remaining in Aleppo will probably be pretty much completely defeated.

But will Saudi Arabia and Turkey really be willing to walk away after pouring so much time, effort and money into the conflict in Syria?  They had dreamed of turning Syria into a full-blown Sunni nation, and if they give up now Syria will end up being dominated by Iran and Hezbollah.  It will be a result that is far worse than if they never tried to overthrow Assad in the first place.

So my gut feeling is telling me that Saudi Arabia, Turkey and their Sunni allies are not done in Syria.  But their obsession with that country threatens to plunge us into World War III, and if that happens the consequences will be felt by every man, woman and child on the entire planet.

World War 3 Could Start This Month: 350,000 Soldiers In Saudi Arabia Stand Ready To Invade Syria

War Soldiers - Public Domain350,000 soldiers, 20,000 tanks, 2,450 warplanes and 460 military helicopters are massing in northern Saudi Arabia for a military exercise that is being called “Northern Thunder”.  According to the official announcement, forces are being contributed by Saudi Arabia, the United Arab Emirates, Egypt, Jordan, Bahrain, Sudan, Kuwait, Morocco, Pakistan, Tunisia, Oman, Qatar, Malaysia and several other nations.  This exercise will reportedly last for 18 days, and during that time the airspace over northern Saudi Arabia will be closed to air traffic.  This will be the largest military exercise in the history of the region, and it comes amid rumors that Saudi Arabia and Turkey are preparing for a massive ground invasion of Syria.

If you were going to gather forces for an invasion, this is precisely how you would do it.  Governments never come out and publicly admit that forces are moving into position for an invasion ahead of time, so “military exercises” are a common excuse that gets used for this sort of thing.

If these exercises are actually being used as an excuse to mass forces near the northern Saudi border, then we should expect an invasion to begin within the next couple of weeks.  If it happens, we should expect to see the Saudi coalition storm through western Iraq and into Syria from the south, and it is likely that Turkey will come in from the north.

The goal would be to take out the Assad regime before Russia, Iran and Hezbollah could react.  For the past couple of years, Saudi Arabia, Turkey and their allies have been funding the Sunni insurgency in Syria, and they were counting on those insurgents to be able to take down the Assad regime by themselves.

You see, the truth is that ISIS was never supposed to lose in Syria.  Saudi Arabia and her allies have been funneling massive amounts of money to ISIS, and hundreds of millions of dollars of ISIS oil has been shipped into Turkey where it is sold to the rest of the world.

The major Sunni nations wanted ISIS and the other Sunni insurgent groups to take down Assad.  In the aftermath, Saudi Arabia and her allies intended to transform Syria into a full-blown Sunni nation.

But then Russia, Iran and Hezbollah stepped forward to assist the Assad regime.  Russian air support completely turned the tide of the war, and now the Sunni insurgents are on the brink of losing.

Aleppo was once the largest city in Syria, and Sunni insurgents have controlled it since 2012.  But now relentless Russian airstrikes have made it possible for Syrian, Iranian and Hezbollah ground forces to surround the city, and it is about to fall back into the hands of the Syrian government.

If this happens, the war will essentially be over.

Saudi Arabia, Turkey and their allies have invested massive amounts of time, money and effort into overthrowing Assad, and they aren’t about to walk away now.

If the war was to end right at this moment, a weakened Assad regime would remain in power, and Iran and Hezbollah would be the dominant powers in the country for years to come.  And once Assad died, it would be inevitable that Iran and Hezbollah would attempt to transform Syria into a full-blown Shiite nation.  This is something that Saudi Arabia and Turkey want to avoid at all costs.

So they are actually considering what was once absolutely unthinkable – a massive ground invasion of Syria.

But if Saudi Arabia, Turkey and their allies go in, they run the risk of a full-blown war with Russia, Iran and Hezbollah.  Just consider some of the comments that we have seen in recent days

Reacting to a potential troop deployment, Syrian Foreign Minister Walid al-Muallem said Saturday, “Let no one think they can attack Syria or violate its sovereignty because I assure you any aggressor will return to their country in a wooden coffin.”

Pavel Krasheninnikov, a deputy of Russia’s State Duma, has warned Saudi Arabia that any military ground operation in Syria without Damascus’ consent would amount to a declaration of war, Press TV reported.

We could literally be looking at the spark that sets off World War 3.  I can’t believe that Saudi Arabia and Turkey are actually considering this.

And if it does happen, you can rest assured that Barack Obama gave them the green light to go in.

Unfortunately, it sounds like the decision may have already been made.  Just consider what Turkish Foreign Minister Mevlut Cavusoglu is saying

“If we have such a strategy, then Turkey and Saudi Arabia may launch a ground operation,” he added, fueling concerns that a foreign troop invasion may soon further complicate the already turbulent situation in the war-torn country.

Earlier, Saudi Arabia, Bahrain and the UAE voiced their readiness to contribute troops for a ground operation in Syria on the condition that the US would lead the intervention. Damascus and its key regional ally, Iran, warned that such a foreign force would face strong resistance.

And in addition to all of the forces massing in northern Saudi Arabia, the London Independent is reporting that the Saudis have sent troops and aircraft to a military base in Turkey…

Saudi Arabia is sending troops and fighter jets to Turkey’s Incirlik military base ahead of a possible ground invasion of Syria.

The Turkish foreign minister, Mevlut Cavusoglu, confirmed the deployment in a statement to the Yeni Şafak newspaper on Saturday, days before a temporary ceasefire is due to come into force.

There are reports that Saudi officials are saying that the decision to send in ground troops is “irreversible”, and Reuters is reporting that the Syrian government claims that some Turkish troops have already entered the country…

The Syrian government says Turkish forces were believed to be among 100 gunmen it said entered Syria on Saturday accompanied by 12 pick-up trucks mounted with heavy machine guns, in an ongoing supply operation to insurgents fighting Damascus.

“The operation of supplying ammunition and weapons is continuing via the Bab al-Salama crossing to the Syrian area of Azaz,” the Syrian foreign ministry said in a letter to the U.N. Security Council published by state news agency SANA.

Of course the Turkish government is not going to confirm that report, but what we do know is that Turkey is shelling Kurdish forces on the Syrian side of the border.  The funny thing is that these Kurdish forces are actually being supported and supplied by the U.S. government.

So the Turks are not supposed to be doing this, but according to Reuters they have been doing it for two days in a row anyway…

The Turkish army shelled positions held by Kurdish-backed militia in northern Syria for a second day on Sunday, killing two fighters, the Syrian Observatory for Human Rights monitoring group said.

Turkey on Saturday demanded the powerful Syrian Kurdish YPG militia withdraw from areas that it had captured in the northern Aleppo region in recent days from insurgents in Syria, including the Menagh air base. The shelling has targeted those areas.

The hostility between Turkey and the Kurds goes back a long, long way.  The Syrian Kurds are not threatening Turkey in any way right now, but Turkey is using the instability in the region as an excuse to lob artillery shells at a hated enemy.  It is an act of naked aggression that the Obama administration should be loudly denouncing.

In addition, it is being reported that Syrian government forces have also been getting shelled by the Turkish military

Anatolia news agency reported that the Turkish military hit Syrian government forces on Saturday, adding that the shelling had been in response to fire inflicted on a Turkish military guard post in Turkey’s southern Hatay region.

Turkish artillery targeted Syrian forces again late on Saturday, according to a military source quoted by RIA Novosti. The attack targeted the town of Deir Jamal in the Aleppo Governorate.

Needless to say, the Russians are quite alarmed by all of this.

In fact, Russian Prime Minister Dmitry Medvedev is warning about what could happen if things spiral out of control

In the wake of Saudi Arabia’s proposal to send in ground troops on Thursday, the Russian Prime Minister claimed the move could spark a new world war.

“A ground operation draws everyone taking part in it into a war,” he told the Handelsblatt newspaper.

“The Americans and our Arab partners must consider whether or not they want a permanent war.”

If Saudi Arabia, Turkey and their allies launch an invasion and make a mad dash to take out the Assad regime in Damascus, the Russians will inevitably respond.

And if tactical nuclear weapons are necessary to keep the invading forces out of Damascus, the Russians will not be shy about using them.

I don’t know if I have ever seen a scenario which was more likely to initiate World War 3 than the one that we are watching unfold right now.

So what has the mainstream media been saying about all of this?

Incredibly, they have been almost entirely silent.  When he went looking for news about these events, James Bailey could find almost nothing on either Fox News or CNN…

I just visited the home page for Foxnews.com and found not one single mention of the insane events now unfolding in the Middle East. I could not believe it, so I used my Find tool to search for Syria and Saudi Arabia. Not one mention!

Of course that could change at any moment, but nothing there when I checked. Their stories were all about the meaningless Presidential election, which has already been decided regardless of what we think about it, and other stories about entertainment, sports, Congressional political theater, etc.

So I went to CNN and found just about the same thing with one news story about the Syrian cease fire, but when I read it there was no mention of any of the big events that have developed this week. This is truly an amazing media blackout!

But Fox News does have space to run headlines like these…

Spanish man skipped work for 6 years, still got paid

48 people rescued from stuck tram cars at New Hampshire ski resort

Lovelorn elephant takes out his rage on more than a dozen cars

And CNN apparently thinks that these news stories are more important than the potential beginning of World War 3…

Kanye West drops album, says he’s $53 million in debt

Dutch cops train eagles to hunt drones

Teen hands out 900 flowers to girls at school

If Saudi Arabia, Turkey and their allies are going to conduct an invasion of Syria, the most likely time for this to happen will be by the end of this month during these military exercises.

If we can get to March 1st and no invasion has happened yet, perhaps we can breathe a little sigh of relief.

But if it does happen, and the Russians and the Iranians decide to shoot back, it really could be the start of World War 3.

If you have not been paying attention up until now, you need to start, because this could literally change everything.

The Financial Apocalypse Accelerates As Middle East Stocks Crash To Begin The Week

Apocalyptic - Public DomainIt looks like it is going to be another chaotic week for global financial markets.  On Sunday, news that Iran plans to dramatically ramp up oil production sent stocks plunging all across the Middle East.  Stocks in Kuwait were down 3.1 percent, stocks in Saudi Arabia plummeted 5.4 percent, and stocks in Qatar experienced a mammoth 7 percent decline.  And of course all of this comes in the context of a much larger long-term decline for Middle Eastern stocks.  At this point, Saudi Arabian stocks are down more than 50 percent from their 2014 highs.  Needless to say, a lot of very wealthy people in Saudi Arabia are getting very nervous.  Could you imagine waking up someday and realizing that more than half of your fortune had been wiped out?  Things aren’t that bad in the U.S. quite yet, but it looks like another rough week could be ahead.  The Dow, the S&P 500 and the Nasdaq are all down at least 12 percent from their 52-week highs, and the Russell 2000 is already in bear market territory.  Hopefully this week will not be as bad as last week, but events are starting to move very rapidly now.

Much of the chaos around the globe is being driven by the price of oil.  At the end of last week the price of oil dipped below 30 dollars a barrel, and now Iran has announced plans “to add 1 million barrels to its daily crude production”

Iran could get more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry.

The Persian Gulf nation will be able to access all of its revenue from crude sales after the U.S. and five other global powers removed sanctions on Saturday in return for Iran’s curbing its nuclear program. The fifth-biggest producer in the Organization of Petroleum Exporting Countries had been receiving only $700 million of each month’s oil earnings under an interim agreement, with the rest blocked in foreign bank accounts. Iran is striving to add 1 million barrels to its daily crude production and exports this year amid a global supply glut that has pushed prices 22 percent lower this month.

It doesn’t take a genius to figure out what this is going to do to the price of oil.

The price of oil has already fallen more than 20 percent so far in 2016, and overall it has declined by more than 70 percent since late 2014.

When the price of oil first started to fall, a lot of people out there were proclaiming that it would be really good for the U.S. economy.  But I said just the opposite.  And of course since that time we have seen an endless parade of debt downgrades, bankruptcies and job losses.  130,000 good paying energy jobs were lost in the United States in 2015 alone because of this collapse, and things just continue to get even worse.  At this point, some are even calling for the federal government to intervene.  For example, the following is an excerpt from a CNN article that was just posted entitled “Is it time to bail out the U.S. oil industry?“…

America’s once-booming oil industry is suddenly in deep financial trouble.

The epic crash in oil prices has wiped out tens of thousands of jobs, caused dozens of bankruptcies and spooked global financial markets.

The fallout is already being felt in oil-rich states like Texas, Oklahoma and North Dakota, where home foreclosure rates are spiking and economic growth is slowing.

Now there are calls in at least some corners for the federal government to come to the rescue.

Is it just me, or is all of this really starting to sound a lot like 2008?

And of course it isn’t just the U.S. that is facing troubles.  The global financial crisis that began during the second half of 2015 is rapidly accelerating, and chaos is erupting all over the planet.  The following summary of what we have been seeing in recent days comes from Doug Noland

The world has changed significantly – perhaps profoundly – over recent weeks. The Shanghai Composite has dropped 17.4% over the past month (Shenzhen down 21%). Hong Kong’s Hang Seng Index was down 8.2% over the past month, with Hang Seng Financials sinking 11.9%. WTI crude is down 26% since December 15th. Over this period, the GSCI Commodities Index sank 12.2%. The Mexican peso has declined almost 7% in a month, the Russian ruble 10% and the South African rand 12%. A Friday headline from the Financial Times: “Emerging market stocks retreat to lowest since 09.”

Trouble at the “Periphery” has definitely taken a troubling turn for the worse. Hope that things were on an uptrend has confronted the reality that things are rapidly getting much worse. This week saw the Shanghai Composite sink 9.0%. Major equities indexes were hit 8.0% in Russia and 5.0% in Brazil (Petrobras down 9%). Financial stocks and levered corporations have been under pressure round the globe. The Russian ruble sank 4.0% this week, increasing y-t-d losses versus the dollar to 7.1%. The Mexican peso declined another 1.8% this week. The Polish zloty slid 2.8% on an S&P downgrade (“Tumbles Most Since 2011”). The South African rand declined 3.0% (down 7.9% y-t-d). The yen added 0.2% this week, increasing 2016 gains to 3.0%. With the yen up almost 4% versus the dollar over the past month, so-called yen “carry trades” are turning increasingly problematic.

Closer to home, the crisis in Puerto Rico continues to spiral out of control.  The following is an excerpt from a letter that Treasury Secretary Jack Lew sent to Congress on Friday

Although there are many ways this crisis could escalate further, it is clear that Puerto Rico is already in the midst of an economic collapse

Puerto Rico is already in default. It is shifting funds from one creditor to pay another and has stopped payment altogether on several of its debts. As predicted, creditors are filing lawsuits. The Government Development Bank, which provides critical banking and fiscal services to the central government, only avoided depleting its liquidity by halting lending activity and sweeping in additional deposits from other Puerto Rico governmental entities. A large debt payment of $400 million is due on May 1, and a broader set of payments are due at the end of June.

It isn’t Michael Snyder from The Economic Collapse Blog that is saying that Puerto Rico is “in the midst of an economic collapse”.

That is the Secretary of the U.S. Treasury that is saying it.

Those that have been eagerly anticipating a financial apocalypse are going to get what they have been waiting for.

Right now we are about halfway through January, and this is the worst start to a year for stocks ever.  The Dow is down a total of 1,437 points since the beginning of 2016, and more than 15 trillion dollars of stock market wealth has been wiped out globally since last June.

Unfortunately, there are still a lot of people out there that are in denial.

There are a lot of people that still believe that this is just a temporary bump in the road and that things will return to “normal” very soon.

They don’t understand that this is just the beginning.  What we have seen so far is just the warm up act, and much, much worse is yet to come.

In Yemen, It’s The Bad Guys Vs. The Bad Guys

Yemen - Photo by Addicted04Saudi Arabia and Egypt stand poised to conduct a massive ground invasion of Yemen, and the western media will be full of tales about how “Operation Decisive Storm” is liberating that country from the evil Iranian-backed Houthi rebels.  And without a doubt, the Houthis are bad guys and so are their Iranian benefactors.  But don’t be fooled into thinking that the war in Yemen is a battle of good vs. evil.  The truth is that the conflict in Yemen is actually a proxy war between two sets of bad guys that both ultimately plan for Islam to take over the entire planet.  On one side, the Iranians are very honest about the fact that they view us as an enemy, and they plan to impose their version of radical Shia Islam worldwide as soon as they can.  On the other side, the Saudis pretend to be our friends, but they don’t hide the fact that they believe that their version of Sunni Islam will eventually rule the world.  And their version of Sunni Islam includes constant beheadings, the destruction of all churches and the death penalty for anyone caught smuggling a Bible into Saudi territory.  At the end of the day, there is very little difference between the Saudis and ISIS.  In fact, ISIS gets a lot of funding from Saudi sources, and there is more support for ISIS on Twitter from Saudi Arabia than from anywhere else.  Saudi Arabia is a horribly repressive regime where women are treated like dirt, where the secret police conduct a never ending reign of terror and where even a minor deviation from sharia law can mean the loss of a limb.  But because our politicians and the mainstream media constantly tell us that they are “our friends”, we cheer them on.

It is being reported that the Saudis have mobilized 150,000 troops for a ground invasion of Yemen, and Egypt says that it is ready to contribute a very large force as well.  The Saudis simply were not going to just sit back and watch as pro-Iranian forces took total control of their neighbor.  The following is how the Telegraph recently described what the Iranians have been up to in Yemen for the past several years…

For the past four years the Quds force of Iran’s Revolutionary Guards have been smuggling weapons to the Houthis, as well as providing expert military training, with the result that the Shia Houthi militia finally succeeded in seizing control of the capital Sana’a last year, forcing the Western-backed president, Abed Rabbo Mansour Hadi, to seek refuge in Aden.

Last week it was claimed that Tehran was increasing its support for the Houthis with the delivery of a 185 ton shipment of weapons and other military equipment.

This is how Iran likes to fight wars.  They like to fund and arm proxy organizations that will do their fighting for them.  That way they don’t have to get their hands messy or risk direct retaliation.  Hezbollah is a prime example of this.

And the Iranians were winning in Yemen.  In fact, they were on the verge of complete and total victory.

So the Saudis felt forced to step in.  The Saudis don’t like to fight their own wars either, but in this instance they felt there was no other choice.

But let there be no misunderstanding.  This is not a conflict between Saudi Arabia and some rebel group in Yemen.  This is part of an ongoing war between Saudi Arabia and Iran, and at this point relations between the two nations are at an all-time low

“The Saudis were caught off guard by how quick and aggressive the Houthi offensive was and felt they needed a sharp and immediate response,” geopolitical expert Ian Bremmer, president of Eurasia group, told Business Insider over email. “They didn’t want Iran to think they needed Egypt or anyone else to come rescue the Kingdom. This is the worst tension we’ve seen between Iran and Saudi Arabia, period.”

And of course Yemen is far from the only front in this war.

For instance, Saudi-backed fighters “are poised for a massive battle” with Iranian-backed Hezbollah fighters on the Syria-Lebanon border…

Islamist forces armed and aided by Saudi Arabia are poised for a massive battle in the coming days targeting the Syrian regime and the Iranian-backed Hezbollah organization, according to Egyptian security officials speaking to WND.

The officials said the Saudis have directed the Islamist forces, including the Al Nusra Front, to lead an imminent counterinsurgency focusing on the Syria-Lebanon border, with particular emphasis on the Qalamoun region.

Qalamoun is a strategic site that serves as a supply line to Damascus from Lebanon. Control of the area would give the rebels a base of operations to target Damascus.

In the western media, this ongoing conflict is being characterized as a conflict between “good” Saudi Arabia and “evil” Iran.

But should we really be cheering on Saudi Arabia?

As I mentioned above, more funding for ISIS comes out of Saudi Arabia than anywhere else.

And ISIS also gets more support on social networks such as Twitter from Saudi Arabia than anywhere else

Part of ISIS’s success is its adoption of social media as a way to spread the group’s messages and find new members. A study by The Independent analyzed the origin of posts supporting ISIS on Twitter, and found that Saudi Arabia provides by far the most.

If you believe that ISIS is wrong for beheading people, you should keep in mind that there is a beheading in Saudi Arabia every four days.

The truth is that ISIS is simply just copying what the Saudis have been doing for centuries.

And for writing what I just did, I could be sentenced to 1,000 lashes if I was living in Saudi Arabia.  In fact, that is exactly what happened to one Saudi blogger.  Another Saudi man was recently sentenced to death for renouncing Islam.

The Saudis don’t believe that it will happen tomorrow, but they are fully convinced that their version of Islam will eventually dominate every inch of our planet.

Are you ready to live like the Saudis do?  In Saudi Arabia, women are not allowed to drive, religious police can drag you away at any time for any reason, and the penalty for smuggling a Bible is death.

If you are tempted to think that the Saudis do not plan to impose their rules on the rest of the world, you should consider what the top religious leader in the entire country recently had to say.  Earlier this month, he declared that every single church on the entire Arabian Peninsula (not just Saudi Arabia) must be destroyed

Saudi Arabia’s top Muslim cleric called on Tuesday for the destruction of all churches in the Arabian Peninsula after legislators in the Gulf state of Kuwait moved to pass laws banning the construction of religious sites associated with Christianity.

Speaking to a delegation in Kuwait, Sheikh Abdul Aziz bin Abdullah, who serves as the grand mufti of Saudi Arabia, said the destruction of churches was absolutely necessary and is required by Islamic law, Arabic media reported.

These are the “good guys”?

The truth is that the Saudis are not our friends.  They like our money and they like our military might, and we make a convenient ally for them right now.

But what the Saudis stand for is the antithesis of everything that the United States is supposed to stand for.  It is a brutally oppressive regime that is promoting tyranny all over the planet.  Barack Obama may be comfortable with such “friends”, but the American people should not be.

So what do you think?  Please feel free to share your thoughts by posting a comment below…

 

Who Is Behind The Oil War, And How Low Will The Price Of Crude Go In 2015?

War Peace Sign - Public DomainWho is to blame for the staggering collapse of the price of oil?  Is it the Saudis?  Is it the United States?  Are Saudi Arabia and the U.S. government working together to hurt Russia?  And if this oil war continues, how far will the price of oil end up falling in 2015?  As you will see below, some analysts believe that it could ultimately go below 20 dollars a barrel.  If we see anything even close to that, the U.S. economy could lose millions of good paying jobs, billions of dollars of energy bonds could default and we could see trillions of dollars of derivatives related to the energy industry implode.  The global financial system is already extremely vulnerable, and purposely causing the price of oil to crash is one of the most deflationary things that you could possibly do.  Whoever is behind this oil war is playing with fire, and by the end of this coming year the entire planet could be dealing with the consequences.

Ever since the price of oil started falling, people have been pointing fingers at the Saudis.  And without a doubt, the Saudis have manipulated the price of oil before in order to achieve geopolitical goals.  The following is an excerpt from a recent article by Andrew Topf

We don’t have to look too far back in history to see Saudi Arabia, the world’s largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.

It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.

The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.

Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC’s refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.

If the Saudis wanted to stabilize the price of oil, they could do that immediately by announcing a production cutback.

The fact that they have chosen not to do this says volumes.

In addition to wanting to harm U.S. shale producers, some believe that the Saudis are determined to crush Iran.  This next excerpt comes from a recent Daily Mail article

Above all, Saudi Arabia and its Gulf allies see Iran — a bitter religious and political opponent — as their main regional adversary.

They know that Iran, dominated by the Shia Muslim sect, supports a resentful underclass of more than a million under-privileged and angry Shia people living in the gulf peninsula — a potential uprising waiting to happen against the Saudi regime.

The Saudis, who are overwhelmingly Sunni Muslims, also loathe the way Iran supports President Assad’s regime in Syria — with which the Iranians have a religious affiliation. They also know that Iran, its economy plagued by corruption and crippled by Western sanctions, desperately needs the oil price to rise. And they have no intention of helping out.

The fact is that the Saudis remain in a strong position because oil is cheap to produce there, and the country has such vast reserves. It can withstand a year — or three — of low oil prices.

There are others out there that are fully convinced that the Saudis and the U.S. are actually colluding to drive down the price of oil, and that their real goal is to destroy Russia.

In fact, Venezuela’s President Nicolas Maduro openly promoted this theory during a recent speech on Venezuelan national television

“Did you know there’s an oil war? And the war has an objective: to destroy Russia,” he said in a speech to state businessmen carried live on state TV.

“It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse,” he added, accusing the United States of trying to flood the market with shale oil.

Venezuela and Russia, which both have fractious ties with Washington, are widely considered the nations hardest hit by the global oil price fall.

And as I discussed just the other day, Russian President Vladimir Putin seems to agree with this theory…

“We all see the lowering of oil prices. There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.”

Without a doubt, Obama wants to “punish” Russia for what has been going on in Ukraine.  Going after oil is one of the best ways to do that.  And if the U.S. shale industry gets hurt in the process, that is a bonus for the radical environmentalists in Obama’s administration.

There are yet others that see this oil war as being even more complicated.

Marin Katusa believes that this is actually a three-way war between OPEC, Russia and the United States…

“It’s a three-way oil war between OPEC, Russia and North American shale,” says Marin Katusa, author of “The Colder War,” and chief energy investment strategist at Casey Research.

Katusa doesn’t see production slowing in 2015: “We know that OPEC will not be cutting back production. They’re going to increase it. Russia has increased production to all-time highs.” With Russia and OPEC refusing to give up market share how will the shale industry compete?

Katusa thinks the longevity and staying power of the shale industry will keep it viable and profitable. “The versatility and the survivability of a lot of these shale producers will surprise people. I don’t see that the shale sector is going to collapse over night,” he says. Shale sweet spots like North Dakota’s Bakken region and Texas’ Eagle Ford area will help keep production levels up and output steady.

Whatever the true motivation for this oil war is, it does not appear that it is going to end any time soon.

And so that means that the price of oil is going to go lower.

How much lower?

One analyst recently told CNN that we could see the price of oil dip into the $30s next year…

Few saw the energy meltdown coming. Now that it’s here, industry analysts warn another move lower is possible as the momentum remains firmly to the downside.

“If this doesn’t hold, we could go back to price levels in late 2008 and early 2009 — down in the $30s. There’s no reason why it couldn’t happen,” said Darin Newsom, senior analyst at Telvent DTN.

Others are even more pessimistic.  For instance, Jeremy Warner of the Sydney Morning Herald, who correctly predicted that the price of oil would fall below $80 this year, is now forecasting that the price of oil could fall all the way down to $20 next year…

Revisiting the past year’s predictions is, for most columnists a frequently humbling experience. The howlers tend to far outweigh the successes. Yet, for a change, I can genuinely claim to have got my main call for markets – that oil would sink to $US80 a barrel or less – spot on, and for the right reasons, too.

Just in case you think I’m making it up, this is what I said 12 months ago: “My big prediction is for $US80 oil, from which much of the rest of my outlook for the coming year flows. It’s hard to overstate the significance of a much lower oil price – Brent at, say, $US80 a barrel, or perhaps lower still – yet this is a surprisingly likely prospect, the implications of which have been largely missed by mainstream economic forecasters.”

If on to a good thing, you might as well stick with it; so for the coming year, I’m doubling up on this forecast. Far from bouncing back to the post crisis “normal” of something over $US100 a barrel, as many oil traders seem to expect, my view is that the oil price will remain low for a long time, sinking to perhaps as little as $US20 a barrel over the coming year before recovering a little.

But even Warner’s chilling prediction is not the most bearish.

A technical analyst named Abigail Doolittle recently told CNBC that under a worst case scenario the price of oil could fall as low as $14 a barrel…

No one really saw 2014’s dramatic plunge in oil price coming, so it’s probably fair to say that any predictions about where it’s going from here fall somewhere between educated guesses and picking a number out of a hat.

In that light, it’s less than shocking to see one analyst making a case—albeit in a pure outlier sense—for a drop all the way below $14 a barrel.

Abigail Doolittle, who does business under the name Peak Theories Research, posits that current chart trends point to the possibility that crude has three downside target areas where it could find support—$44, $35 and the nightmare scenario of, yes, $13.65.

But the truth is that none of those scenarios need to happen in order for this oil war to absolutely devastate the U.S. economy and the U.S. financial system.

There is a very strong correlation between the price of oil and the performance of energy stocks and energy bonds.  But over the past couple of weeks this correlation has been broken.  The following chart comes from Zero Hedge

Energy Stocks - Zero Hedge

It is inevitable that at some point we will see energy stocks and energy bonds come back into line with the price of crude oil.

And it isn’t just energy stocks and bonds that we need to be concerned about.  There is only one other time in all of history when the price of oil has crashed by more than 50 dollars in less than a year.  That was in 2008 – just before the great financial crisis that erupted in the fall of that year.  For much, much more on this, please see my previous article entitled “Guess What Happened The Last Time The Price Of Oil Crashed Like This?…

Whether the price of oil crashed or not, we were already on the verge of massive financial troubles.

But the fact that the price of oil has collapsed makes all of our potential problems much, much worse.

As we enter 2015, keep an eye on energy stocks, energy bonds and listen for any mention of problems with derivatives.  The next great financial crisis is right around the corner, but most people will never see it coming until they are blindsided by it.

CDC Getting Dozens Of Calls ‘About People Who Are Ill After Traveling In Africa’

Telephone - Public DomainShould we be alarmed that the CDC has received “several dozen calls” from hospitals around the country “about people who are ill after traveling in Africa”?  As you will read about below, a lot more Ebola testing has been going on around the nation than we have been hearing about in the mainstream media.  I can understand the need to keep people calm, but don’t we have a right to know what is really going on?  And the media has also been very quiet about the fact that Ebola is now potentially spreading to even more countries.  As you will read about below, a Liberian man just died from Ebola in Morocco, and a man that traveled to Saudi Arabia from Sierra Leone on Sunday night is being tested for Ebola after exhibiting “symptoms of the viral hemorrhagic fever”.  Top officials in the U.S. keep assuring us that everything is going to be just fine, but the truth is that this is a crisis that is beginning to spiral out of control. On Tuesday, the CDC told Time Magazine that it had received dozens of calls from all over the United States about people that had gotten sick after traveling to Africa…

The Centers for Disease Control and Prevention told TIME on Tuesday that it’s received several dozen calls from states and hospitals about people who are ill after traveling in Africa. “We’ve triaged those calls and about half-dozen or so resulted in specimen coming to CDC for testing and all have been negative for Ebola,” CDC spokesman Tom Skinner said, adding that the agency is expecting still more calls to come in.

Let’s certainly hope that there is nothing to be concerned about in any of those calls.  As I pointed out yesterday, the consequences of having a major Ebola outbreak in the United States could potentially be absolutely catastrophic. Meanwhile, there is a case in Saudi Arabia that has health officials over there extremely concerned.  A man that traveled to the country on Sunday night is being tested for the virus after showing symptoms of “viral hemorrhagic fever”

Saudi Arabia said Tuesday it is testing a man for the Ebola virus after he showed symptoms of the viral hemorrhagic fever following a recent trip to Sierra Leone. The Health Ministry said the symptoms appeared in the 40-year-old Saudi man at a hospital in the western city of Jiddah. He is in critical condition and being treated in a unit with advanced isolation and infection-control capabilities. Different types of viral hemorrhagic fevers have been found in the kingdom, but no case of Ebola has ever been detected there, according to the ministry.

In addition, it is being reported by international media sources that a Liberian has died of the Ebola virus in Morocco. If that is true, that is extremely troubling.  That would mean that we now have confirmed Ebola cases in five different countries. And remember, the Ebola virus can have an incubation period of up to three weeks, and Ebola victims can “look quite fit and healthy and can be walking around until shortly before their deaths“. Because of this, hospitals across America are being extremely cautions right now.  The following is from a recent NPR report

If you show up at a hospital emergency department with a high fever and you just happen to have been traveling in Africa, don’t be surprised if you get a lot of attention. Hospitals are on the lookout for people with symptoms such as a high fever, vomiting and diarrhea who had been traveling in parts of West Africa affected by Ebola, following instructions from the federal Centers for Disease Control and Prevention.

And there have been some high profile cases that have gotten a lot of attention in recent days. The woman that was being tested for Ebola in Ohio got a lot of media attention, but it turns out that she does not have the disease. We are still waiting to hear about the man that was admitted to Mount Sinai Medical Center in New York.  Officials say that he “probably does not have Ebola“, but the test results have not been released yet. In addition, Paul Joseph Watson has pointed out that CNN’s Sanjay Gupta has publicly revealed that there have actually been “about half a dozen patients” that have been tested for the virus in recent days…

During a segment concerning the admission of a potential Ebola victim at Mount Sinai Hospital in New York City, CNN’s Dr. Sanjay Gupta revealed that there have been at least six cases at the hospital which prompted doctors to test for Ebola but that the details were not divulged publicly. “There have been about a half a dozen patients who have had their blood tested because of concern, those particular patients their stories were not made public,” said Gupta, adding, “I’m not sure if that’s because of heightened concern by the hospital or what that means exactly.”

What else is going on around the nation that we have not heard about? Like I keep saying, let us hope and pray that Ebola does not start spreading here, because it can rapidly become a nightmare.  Over in Africa, nearly 900 people have already died, but one doctor told CBS News that the true number is actually significantly higher because “many cases are going unreported”…

Already, the World Health Organization says 887 people have died, but a top doctor working at the heart of the outbreak in West Africa says many cases are going unreported. The senior doctor, who works for a leading medical organization in Liberia, explained to CBS News’ Debora Patta that what has helped set this outbreak apart from previous ones is the virus’ spread in urban areas. One of the epicenters of the disease is the Liberian capital of Monrovia, home to about a million people, or almost a quarter of the country’s population. The doctor, who spoke to CBS News on condition of confidentiality, said the disease is spinning out of control in Africa partly because it is extremely difficult to contain it in a sprawling, congested city center.

And it certainly does not help that infected bodies are being dumped into the streets over in Liberia.  If that continues to happen, this epidemic could very rapidly turn into a raging inferno over there. There have been health scares in the past, but this one is very different.  If you get Ebola, you are probably going to die.  And right now the number of Ebola cases is growing at an exponential rate.  If this outbreak is not brought under control soon, we could be facing the worst health crisis that we have seen in any of our lifetimes.

The Growing Rift With Saudi Arabia Threatens To Severely Damage The Petrodollar

Are You Ready For The Death Of The Petrodollar - Photo By RevisorwebThe number one American export is U.S. dollars.  It is paper currency that is backed up by absolutely nothing, but the rest of the world has been using it to trade with one another and so there is tremendous global demand for our dollars.  The linchpin of this system is the petrodollar.  For decades, if you have wanted to buy oil virtually anywhere in the world you have had to do so with U.S. dollars.  But if one of the biggest oil exporters on the planet, such as Saudi Arabia, decided to start accepting other currencies as payment for oil, the petrodollar monopoly would disintegrate very rapidly.  For years, everyone assumed that nothing like that would happen any time soon, but now Saudi officials are warning of a “major shift” in relations with the United States.  In fact, the Saudis are so upset at the Obama administration that “all options” are reportedly “on the table”.  If it gets to the point where the Saudis decide to make a major move away from the petrodollar monopoly, it will be absolutely catastrophic for the U.S. economy.

The biggest reason why having good relations with Saudi Arabia is so important to the United States is because the petrodollar monopoly will not work without them.  For decades, Washington D.C. has gone to extraordinary lengths to keep the Saudis happy.  But now the Saudis are becoming increasingly frustrated that the U.S. military is not being used to fight their wars for them.  The following is from a recent Daily Mail report

Upset at President Barack Obama’s policies on Iran and Syria, members of Saudi Arabia’s ruling family are threatening a rift with the United States that could take the alliance between Washington and the kingdom to its lowest point in years.

Saudi Arabia’s intelligence chief is vowing that the kingdom will make a ‘major shift’ in relations with the United States to protest perceived American inaction over Syria’s civil war as well as recent U.S. overtures to Iran, a source close to Saudi policy said on Tuesday.

Prince Bandar bin Sultan told European diplomats that the United States had failed to act effectively against Syrian President Bashar al-Assad and the Israeli-Palestinian conflict, was growing closer to Tehran, and had failed to back Saudi support for Bahrain when it crushed an anti-government revolt in 2011, the source said.

Saudi Arabia desperately wants the U.S. military to intervene in the Syrian civil war on the side of the “rebels”.  This has not happened yet, and the Saudis are very upset about that.

Of course the Saudis could always go and fight their own war, but that is not the way that the Saudis do things.

So since the Saudis are not getting their way, they are threatening to punish the U.S. for their inaction.  According to Reuters, the Saudis are saying that “all options are on the table now”…

Saudi Arabia, the world’s biggest oil exporter, ploughs much of its earnings back into U.S. assets. Most of the Saudi central bank’s net foreign assets of $690 billion are thought to be denominated in dollars, much of them in U.S. Treasury bonds.

“All options are on the table now, and for sure there will be some impact,” the Saudi source said.

Sadly, most Americans have absolutely no idea how important all of this is.  If the Saudis break the petrodollar monopoly, it would severely damage the U.S. economy.  For those that do not fully understand the importance of the petrodollar, the following is a good summary of how the petrodollar works from an article by Christopher Doran

In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.

This means that every country in the world that imports oil—which is the vast majority of the world’s nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.

This arrangement works out very well for the United States because we can wildly print money and run up gigantic amounts of debt and the rest of the world gobbles it all up.

In 2012, the United States ran a trade deficit of about $540,000,000,000 with the rest of the planet.  In other words, about half a trillion more dollars left the country than came into the country.  These dollars represent the number one “product” that the U.S. exports.  We make dollars and exchange them for the things that we need.  Major exporting countries (such as Saudi Arabia) take many of those dollars and “invest” them in our debt at ultra-low interest rates.  It is this system that makes our massively inflated standard of living possible.

When this system ends, the era of cheap imports and super low interest rates will be over and the “adjustment” to our standard of living will be excruciatingly painful.

And without a doubt, the day is rapidly approaching when the petrodollar monopoly will end.

Today, Russia is the number one exporter of oil in the world.

China is now the number one importer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.

So why should Russia, China and virtually everyone else continue to be forced to use U.S. dollars to trade oil?

That is a very good question.

In fact, China has been making a whole lot of noise recently about the fact that it is time to start becoming less dependent on the U.S. dollar.  The following comes from a recent CNBC article authored by Michael Pento

Our addictions to debt and cheap money have finally caused our major international creditors to call for an end to dollar hegemony and to push for a “de-Americanized” world.

China, the largest U.S. creditor with $1.28 trillion in Treasury bonds, recently put out a commentary through the state-run Xinhua news agency stating that, “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated.”

For much more on all of this, please see my previous article entitled “9 Signs That China Is Making A Move Against The U.S. Dollar“.

But you very rarely hear anything about this on the evening news, and most Americans do not understand these things at all.  The fact that the U.S. produces the de facto reserve currency of the planet is an absolutely massive advantage for us.  According to John Mauldin, this advantage allows us to consume far more wealth than we actually produce…

What that means in practical terms is that the United States can purchase more with its currency than it produces and sells. In theory those accounts should balance. But the world’s reserve currency, for all intent and purposes, becomes a product. The world needs dollars in order to conduct its trade. Today, if someone in Peru wants to buy something from Thailand, they first convert their local currency into US dollars and then purchase the product with those dollars. Those dollars eventually wind up at the Central Bank of Thailand, which includes them in its reserve balance. When someone in Thailand wants to purchase an imported product, their bank accesses those dollars, which may go anywhere in the world that will take the US dollar, which is to say pretty much anywhere.

And as Mauldin went on to explain in that same article, a significant amount of the money that we ship out to the rest of the globe ends up getting reinvested in U.S. government debt…

That privilege allows US citizens to purchase goods and services at prices somewhat lower than those people in the rest of the world must pay. We can produce electronic fiat dollars, and the rest of the world accepts them because they need them to in order to trade with each other. And they do so because they trust the dollar more than they do any other currency that is readily available. You can take those dollars and come to the United States and purchase all manner of goods, including real estate and stocks. Just this week a Chinese company spent $600 million to buy a building in New York City. Such transactions happen all the time.

And there is one other item those dollars are used to pay for: US Treasury bonds. We buy oil and all manner of goods with our electronic dollars, and those dollars typically end up on the reserve balance sheets of other central banks, which buy our government bonds. It’s hard to quantify the exact amount, but these transactions significantly lower the cost of borrowing for the US government. On a $16 trillion debt, every basis point (1/10 of 1%) means a saving of $16 billion annually. So 5 basis points would be $80 billion a year. There are credible estimates that the savings are well in excess of $100 billion a year. Thus, as the debt grows, the savings also grow! That also means the total debt compounds at a lower rate.

Unfortunately, this system only works if the rest of the planet has faith in it, and right now the United States is systematically destroying the faith that the rest of the world has in our financial system.

One way that this is being done is by our reckless accumulation of debt.  The U.S. national debt is now 37 times larger than it was 40 years ago, and we are on pace to accumulate more new debt under the 8 years of the Obama administration than we did under all of the other presidents in U.S. history combined.  The rest of the world is watching this and they are beginning to wonder if we are going to be able to pay them back the money that we owe them.

Quantitative easing is another factor that is severely damaging worldwide faith in the U.S. financial system.  The rest of the globe is watching as the Federal Reserve wildly prints up money and monetizes our debt.  They are beginning to wonder why they should continue to loan us gobs of money at super low interest rates when we are beginning to resemble the Weimar Republic.

The long-term damage that we are doing to the “U.S. brand” far, far outweighs any short-term benefits of quantitative easing.

And as Richard Koo has brilliantly demonstrated, quantitative easing is going to cause long-term interest rates to eventually rise much higher than they normally should have.

What all of this means is that the U.S. government and the Federal Reserve are systematically destroying the financial system that has enabled us to enjoy such a high standard of living for the past several decades.

Yes, the U.S. economy is not doing well at the moment, but we haven’t seen anything yet.  When the monopoly of the petrodollar is broken, it is going to be absolutely devastating.

And as I wrote about the other day, when the next great economic crisis strikes it is going to pull back the curtain and reveal the rot and decay that have been eating away at the social fabric of America for a very long time.

Just check out what happened in Detroit recently.  The new police chief was almost carjacked while he was sitting in a clearly marked police vehicle…

Just four months on the job, Detroit’s new police chief got an early taste of the city’s hardscrabble streets.

While in his patrol car at an intersection on Jefferson two weeks ago, Police Chief James Craig was nearly carjacked, police spokeswoman Kelly Miner confirmed today.

Craig said he was in a marked police car with mounted lights when a man quickly tried to approach the side of his car. Craig, who became police chief in June, retold the story Monday during a program designed to crack down on carjackings.

Isn’t that crazy?

These days, the criminals are not even afraid to go after the police while they are sitting in their own vehicles.

And this is just the beginning.  Things are going to get much, much worse than this.

So let us hope that this period of relative stability that we are enjoying right now will last for as long as possible.

The times ahead are going to be extremely challenging, and I hope that you are getting ready for them.