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By Michael Snyder – End Of The American Dream

If Saudi Arabia won’t take in Syrian refugees, why should the United States?  In recent weeks, we have heard a whole lot from Barack Obama about our “moral obligation” to take in refugees from Syria.  Well, if there is a “moral obligation” to help these refugees, then why aren’t more wealthy Islamic nations stepping up to the plate?  According to Amnesty International, since the beginning of the Syrian civil war Saudi Arabia has not accepted a single Syrian refugee.  Neither has Kuwait.  Neither has Qatar.  Neither has the United Arab Emirates.  These nations are absolutely swimming in money, and yet they have slammed the door on these desperately needy Islamic refugees.  So what precisely does that tell us?

When I first learned about this, I was quite upset.  So much pressure is being put on the U.S, Europe and other wealthy nations to take in vast numbers of Syrian refugees, and yet the wealthiest Islamic nations in the Middle East are completely shunning them.  The following comes from TruNews

While the United States and Europe argue over how many Syrian refugees to allow in, the richest Persian Gulf states have accepted exactly zero.

The Muslim countries of the Gulf Cooperation Council that include Kuwait, Oman, Qatar, Saudi Arabia, Bahrain and United Arab Emirates steadfastly refuse to accept any Syrian refugees. Amnesty International, USA (AIUSA) tells The Daily Caller News Foundation they have not accepted a single refugee since the armed Syrian conflict erupted years ago.

“The Gulf States have accepted zero refugees registered with the United Nations and administered through the U.N. resettlement program. They have accepted zero,” Geoffrey Mock, the Syrian country coordinator for AIUSA, tells TheDCNF.

To be honest, if people are leaving Syria because they want to get away from ISIS, then they probably wouldn’t want to go to Saudi Arabia.

Yes, things are certainly more peaceful in Saudi Arabia than in Syria at the moment, but the truth is that the Saudis and ISIS have much in common.  Both embrace a radical version of Sunni Islam that is more than a little bit frightening, and both are run by religious fanatics that are absolutely ruthless.  Just consider the following chart on crime and punishment under both systems that was put out by Middle East Eye

Saudi Arabia And The Islamic State

Do you see what I am talking about?

Continue reading at End Of The American Dream: Saudi Arabia Refuses To Take Even A Single Syrian Refugee

 

About the author:

Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.

Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

Read his new book The Beginning of the End

By Michael Snyder – The Economic Collapse Blog

Who 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.

This article first appeared at The Economic Collapse Blog: Who Is Behind The Oil War, And How Low Will The Price Of Crude Go In 2015?

About the author:

Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.

Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

Read his new book The Beginning of the End

Price Of Oil Causes A Junk Bond Crash – Public Domain

 

By Michael Snyder  – The Economic Collapse

There has only been one other time in history when the price of oil has crashed by more than 40 dollars in less than 6 months.  The last time this happened was during the second half of 2008, and the beginning of that oil price crash preceded the great financial collapse that happened later that year by several months.  Well, now it is happening again, but this time the stakes are even higher.  When the price of oil falls dramatically, that is a sign that economic activity is slowing down.  It can also have a tremendously destabilizing affect on financial markets.  As you will read about below, energy companies now account for approximately 20 percent of the junk bond market.  And a junk bond implosion is usually a signal that a major stock market crash is on the way.  So if you are looking for a “canary in the coal mine”, keep your eye on the performance of energy junk bonds.  If they begin to collapse, that is a sign that all hell is about to break loose on Wall Street.

It would be difficult to overstate the importance of the shale oil boom to the U.S. economy.  Thanks to this boom, the United States has become the largest oil producer on the entire planet.

Yes, the U.S. now actually produces more oil than either Saudi Arabia or Russia.  This “revolution” has resulted in the creation of  millions of jobs since the last recession, and it has been one of the key factors that has kept the percentage of Americans that are employed fairly stable.

Unfortunately, the shale oil boom is coming to an abrupt end.  As a recent Vox article discussed, OPEC has essentially declared a price war on U.S. shale oil producers…

For all intents and purposes, OPEC is now engaged in a “price war” with the United States. What that means is that it’s very cheap to pump oil out of places like Saudi Arabia and Kuwait. But it’s more expensive to extract oil from shale formations in places like Texas and North Dakota. So as the price of oil keeps falling, some US producers may become unprofitable and go out of business. The result? Oil prices will stabilize and OPEC maintains its market share.

If the price of oil stays at this level or continues falling, we will see a significant number of U.S. shale oil companies go out of business and large numbers of jobs will be lost.  The Saudis know how to play hardball, and they are absolutely ruthless.  In fact, we have seen this kind of scenario happen before

Robert McNally, a White House adviser to former President George W. Bush and president of the Rapidan Group energy consultancy, told Reuters that Saudi Arabia “will accept a price decline necessary to sweat whatever supply cuts are needed to balance the market out of the US shale oil sector.” Even legendary oil man T. Boone Pickens believes Saudi Arabia is in a stand-off with US drillers and frackers to “see how the shale boys are going to stand up to a cheaper price.” This has happened once before. By the mid-1980’s, as oil output from Alaska’s North Slope and the North Sea came on line (combined production of around 5-6 million barrels a day), OPEC set off a price war to compete for market share. As a result, the price of oil sank from around $40 to just under $10 a barrel by 1986.

But the energy sector has been one of the only bright spots for the U.S. economy in recent years.  If this sector starts collapsing, it is going to have a dramatic negative impact on our economic outlook.  For example, just consider the following numbers from a recent Business Insider article

Specifically, if prices get too low, then energy companies won’t be able to cover the cost of production in the US. This spending by energy companies, also known as capital expenditures, is responsible for a lot of jobs.

“The Energy sector accounts for roughly one-third of S&P 500 capex and nearly 25% of combined capex and R&D spending,” Goldman Sachs’ Amanda Sneider writes.

Even more troubling is what this could mean for the financial markets.

As I mentioned above, energy companies now account for close to 20 percent of the entire junk bond market.  As those companies start to fail and those bonds start to go bad, that is going to hit our major banks really hard

Everyone could suffer if the collapse triggers a wave of defaults through the high-yield debt market, and in turn, hits stocks. The first to fall: the banks that were last hit by the housing crisis.

Why could that happen?

Well, energy companies make up anywhere from 15 to 20 percent of all U.S. junk debt, according to various sources.

It would be hard to overstate the seriousness of what the markets could potentially be facing.

One analyst summed it up to CNBC this way

This is the one thing I’ve seen over and over again,” said Larry McDonald, head of U.S strategy at Newedge USA’s macro group. “When high yield underperforms equity, a major credit event occurs. It’s the canary in the coal mine.

The last time junk bonds collapsed, a major stock market crash followed fairly rapidly.

And those that were hardest hit were the big Wall Street banks

During the last high-yield collapse, which centered around debt tied to the housing sector, Citigroup lost 63 percent of its value in the following 60 days, Kensho shows. Bank of America was cut in half.

I understand that some of this information is too technical for a lot of people, but the bottom line is this…

Watch junk bonds.  When they start crashing it is a sign that a major stock market collapse is right at the door.

At this point, even the mainstream media is warning about this.  Just consider the following excerpt from a recent CNN article

That swing away from junk bonds often happens shortly before stock market downturns.

“High yield does provide useful sell signals to equity investors,” Barclays analysts concluded in a recent report.

Barclays combed through the past dozen years of data. The warning signal they found is a 30% or greater increase in the spread between Treasuries and junk bonds before a dip.

If you have been waiting for the next major financial collapse, what you have just read in this article indicates that it is now closer than it has ever been.

Over the coming weeks, keep your eye on the price of oil, keep your eye on the junk bond market and keep your eye on the big banks.

Trouble is brewing, and nobody is quite sure exactly what comes next.

This article first appeared at The Economic Collapse: Guess What Happened The Last Time The Price Of Oil Crashed Like This?…

About the author:

Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.

Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream

Read his new book The Beginning of the End

By Michael Snyder

Should 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.

This article first appeared at The Economic Collapse: CDC Getting Dozens Of Calls ‘About People Who Are Ill After Traveling In Africa’