from Bill Still
You may have heard the dire war drums coming from the direction of the New York Times, last Friday.
They were warning of impending doom should the Saudis sell off their 4% stake of the U.S. bonds in a hissy-fit fire sale. Not to fear, the end is not near.
During last month’s visit to Washington, the Saudi Foreign Minister, Adel-al-Jubeir, delivered a threatening message from the Saudi King.
Congress had better reconsider passing a new law under consideration in the Senate which would allow the kingdom to be held responsible for their role in the 9/11 terror attacks.
The Saudis are fearful that nearly a trillion dollars of their U.S. assets could be frozen by U.S. courts involved in lawsuits by 9/11 family groups and other interested parties. So, they would sell off all U.S. assets, including some 750 billion dollars in U.S. national debt.
The threat is that Saudi Arabia is the third-largest holder of U.S. debt instruments and if they decided to flood the market it could sharply increase interest rates the U.S. would have to pay on its perpetual new bond selling activities – new debt.
President Obama and the rest of his administration has lobbied against the bill furiously – some say desperately — in Congress.
The bill makes clear that the immunity from civil suits granted to foreign nations will not apply if that nation is found responsible for terrorist attacks that kill Americans an United States soil.
Should the bill pass Congress and then be signed into law by President Obama, that would clear a path for further investigations into the Saudi’s role by the Sept. 11 lawsuits.
Incredibly, Secretary of State John Kerry told a Senate committee in February that the bill could expose the United States of America to lawsuits from nations interested in the U.S. role in attacks in other countries – like Libya.
Although there is much hand-wringing among the Obama Administration and its coddling press corps – like the New York Times – other experts yawned at the threat.
Edwin M. Truman, a fellow at the Peterson Institute for International Economics noted that the Saudi currency, the riyal is pegged to the dollar. In other words:
“The only way they could punish us is by punishing themselves,” said Mr. Truman.
Karl Denninger, who runs the website “The Market Ticker” was unfazed. He said if the Saudis wanted to try to punish the U.S.:
“Go ahead, Mr. King; we’re far bigger than you are and you’ll be the one that gets blown up economically, not us.”
“Never mind that you seem to enjoy our fighter aircraft, parts and other military hardware. It would be a damn shame if you couldn’t buy any more parts for those things nor would we provide any more assistance with their maintenance and upkeep, wouldn’t it?”
He also said that the U.S. is nearly energy independent right now and the complete cut-off of Saudi oil no longer is a significant threat.
In other words, “yawn”.
I’m Still reporting from Washington. Good day.