Exploring this week’s Sunday Smack about Saudi Arabia’s blockbuster threat to sell approximately three-quarters of a trillion dollars worth of treasury holdings and other US assets should Congress pass a bill that would make the The Saudis responsible for the September 11th attacks requires a background understanding of at least four areas:
- How the petrodollar system of trade works
- The missing 28 pages of the 9/11 Commission’s report which may detail Saudi Arabia’s role in the attacks
- How US Treasury securities fund America’s deficits
- The US Dollar’s role as the world’s reserve currency
President Obama — a friend and protector of the kingdom, like his White House predecessors, and who is currently urging Congress to abandon the proposed legislation — plans to visit Riyadh this Wednesday.
The kingdom’s reasoning behind the US asset sale is to reduce its exposure to litigious families of 9/11 victims who may seek to freeze the Saudis’ US assets after the 28 pages are released.
Aside from the near certain diplomatic conflict between the two countries, any immediate move by the kingdom to aggressively sell-off US Treasury holdings will cause the financial markets to crash.
While I would love to hear your opinions about this new development, I also want to draw your attention to an interesting quote from the NYTimes, which attempts to explain a portion of Team Obama’s objections to the bill [emphasis mine]:
Obama administration officials counter that weakening the sovereign immunity provisions [of the bill] would put the American government, along with its citizens and corporations, in legal risk abroad because other nations might retaliate with their own legislation.
I’m giving you a menu of choices for this Sunday Smack.
First, what do the Saudis have to hide?
Second, given the “legal fear” Team Obama has, what is the US hiding?
Third, how would a crash between now and November affect the US elections?
song currently stuck in my head: “night feel” – patrick perkins