Zero Hedge: “On Monday, we brought you “Saudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos,” in which we outlined the jump in riyal forwards and widening of CDS spreads that Riyadh witnessed in the aftermath of the kingdom’s move to cut diplomatic ties with Iran.
In short: the market is getting worried that Riyadh is about to careen into crisis. In the face of slumping crude, the Saudis are staring down double digit budget deficits and the prospect of having to once again tap debt markets in order to offset the SAMA burn and keep the kingdom from having to implement further subsidy cuts.
The open hostilities with Iran all but guarantee the war in Yemen will escalate (just today for instance, Tehran accused the Saudis of bombing the Iranian embassy in Sana’a) and that entails a further drain on the kingdom’s finances as the monarchy will be forced to fund a prolonged and intractable struggle with the Houthis.”
Opinion: “Follow the money” – a phrase that’s now part of our national lexicon (courtesy of the Watergate scandal of the 1970s) is once again a good rule of thumb.
The Saudis are broke and angry that the US would negotiate a $150 billion windfall for their long-time enemy, Iran.
Recalling a John McCain rendition of a song from the Beach Boys …
… the perfect distraction, start a war.
(See Headline “ISIS in America” @ BPTnews.org)