(And that makes me happy.)
I want to talk about the Saudis farther below, but first, here’s something from the Sputnik News blog, which is run by the Russian government.
In January, President Maduro declared an economic emergency in Venezuela. The announcement came two days after Venezuela’s oil price dropped to $24 a barrel, the lowest mark in 12 years. Up to 96 percent of Venezuela’s budget depends on oil revenues.
No, no, no! I see this error all the time. Let me correct it…
 The nation of Venezuela has a GDP, but not a budget.
 If we are talking about the Venezuelan government’s budget, then domestically it does not rely on oil revenues at all, since the Venezuelan government can create all the bolivares it likes for domestic purposes.
 Where the Venezuelan government relies on oil revenues is in getting foreign currencies. Venezuela sells oil to foreigners to get foreign revenues, which are used to buy imports.
The blogs and the corporate web sites almost never clarify this.
On 17 Feb 2016, Obama renewed the U.S. sanctions against President Maduro and key figures around him. Obama says Venezuela is a “threat” to the USA.
Maduro is a fan of Bernie Sanders, and has nothing positive to say about Hillary.
Speaking of foreign currencies, this is amusing…
Normally the money masters condemn any nation that refuses to keep paying them, but not so with Venezuela. On the contrary, the money masters are whining that Venezuela keeps paying its foreign debts.
On 24 Feb 2015 the Wall Street Journal had a story titled, “In Decaying Venezuela, Debts Get Repaid: The country, struggling with an economy in crisis, appears set to hand over $1.5 billion for its debt payment to foreign bondholders.”
A February 29 headline for CNBC.com said “Venezuela is making ‘surreal, suicidal’ debt payments.”
Here’s why the money masters are wailing…
The money masters want to destroy Venezuela’s President Maduro, so that Venezuela’s rich elitists can once more crush the masses under their heel. To destroy Maduro, the money masters have imposed sanctions on Venezuela, and they coordinate their efforts with Venezuela’s elitists to create shortages of consumer goods, which causes inflation, which makes the peasants scream in pain.
Meanwhile the plunge in oil prices has crippled Venezuela’s ability to get foreign currencies, which are needed to buy imports. This forces Venezuela to borrow foreign currencies. If Venezuela defaults, or is late on debt payments (as the money masters hope) then the interest rate will shoot up when Venezuela applies for more loans in foreign currencies. If the interest rate climbs high enough, and if oil prices do not rise, then Venezuela will not be able to get any foreign currencies at all. This would instantly finish President Maduro, and would restore the rich elitists to supremacy.
Therefore the money masters want Maduro to default. And when he doesn’t, they whine.
Incidentally there is evidence that oil prices are beginning to recover, so enjoy your cheap gasoline while you can. The mass shut-down in oil production in North Dakota, plus production outages in Nigeria, Iraq and the United Arab Emirates, have reduced the supply of oil, which has caused the price of oil to start rising again. This is called “market balancing.”
THE SAUDIS ARE IN TROUBLE
Back in 2014 the Saudis decided to increase their production in order to depress oil prices. The Saudi intention was to expel Russia from the European and Asian oil markets, while dealing a heavy blow to the US shale oil industry, and also to hurt Venezuela as a favor to the USA.
Everyone (including me) thought this was stupid, and would backfire on the Saudis. Everyone (including me) was correct.
We all knew that Venezuela would be devastated by low oil prices, but not Russia, since Russia’s economy is diversified, and it does not depend exclusively on oil exports to get foreign currency revenues.
However the Saudis produce nothing but hydrocarbons, and they fully depend on cheap slave labor from Asia.
(The Saudis can’t even blow their noses without the help of slaves. That’s why Saudi troops can’t fight on the ground. It’s why Saudi aircraft have been unable to break Yemen, despite a full year of non-stop bombing. It’s why the Saudis are so obese that they have an epidemic of diabetes.)
And now, because the Saudis depressed oil prices, they have burned through a lot of their foreign currency reserves. This means they can’t buy imports, can’t pay their Asian slaves, and they can’t begin new construction projects that use imported materials.
In fact, check this out…
The red zone indicates a trade deficit. From late 2014 until today the Saudis have lost nearly USD $34 billion in foreign currency reserves.
The Saudis were once flush with foreign currency. Now they are seeking to borrow up to $8 billion from foreign banks for the first time in over a decade. They may also try to borrow foreign currency by selling sovereign bonds. They may also be forced to sell off some of the state-owned oil company Saudi Arabian Oil Co. (Aramco).
Why? Because the Saudis need foreign currency to buy imports with. The Saudis make nothing themselves. When oil prices were high, the Saudis lived well. Now they are in the red zone. The danger zone.
Furthermore there is evidence to suggest (but not prove) that the Saudis are running out of crude oil. The Ghawar Field, the world’s largest oil field, is running out after 65 years of continuous production, and the Saudi Aramco is due to start the CO2-EOR process to extract the last of the field’s oil. Back in 2012, an analytical report by Citigroup Inc. stated that Saudi Arabia risks becoming an oil importer by 2030. If that happens, then Saudi Arabia will return to an almost medieval third world status.
The USA knew all along that the Saudis’ days were numbered. This is one reason (among many) why the USA made overtures to Iran. With Iran back on the stage, it will be more difficult for Riyadh to manipulate oil prices.
If Iranian oil floods the market, and oil prices become depressed again, the Saudis will be in worse trouble than ever. If Saudi oil runs out, or if they are not able to get foreign currencies, then the Western Empire will regard them as expendable.
The Saudis know this. They know that they might have to switch allegiances in the near future. That’s why they are beginning to back off a little in Syria, and take steps toward cooperating with Russia.
Depressed oil prices do not hurt the USA, since the USA does not rely on exports to get foreign currency. The USA does not need any foreign currency in the first place. The U.S. government and U.S. banks can create dollars out of thin air, and the dollars are accepted worldwide.
When the U.S. Empire collapses (which is just a matter of time) it will be because the parasitic 1% have sucked out everything, leaving the USA like an orange that has dried in the sun, with a national structure more fragile than that of an egg.
When will this be? No one knows, but I predict that that collapse will be as sudden as was the USSR’s collapse. There’s just too much private debt, too few jobs, too much poverty, too much inequality, and too much corruption. The physical nation will still exist, but the society and government will change form. Into what? We don’t know.
The way things are right now, with the Wall Street and the 1% a deadly cancer, the USA could not fight a world war and win. Seventy five years ago, yes, but not today.