Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 12, 2013
World’s Top Oil Exporter Keeps Faith in U.S. Debt
Saudi Arabia, the world’s biggest oil exporter, isn’t changing its “positive” view on the U.S. Treasuries market even as Democrats and Republicans quarrel over the debt ceiling, central bank chief Fahad Almubarak said.
“The U.S. current crisis will go away and we think its effect won’t be lasting on our investments,” Almubarak said after a speech in Washington yesterday, where he is attending the annual meetings of the International Monetary Fund and the World Bank. “Our long-term view is positive.”
Oil exports have helped Saudi Arabia accumulate $700 billion in foreign asset reserves, the world’s third-largest after China and Japan, according to central bank figures and data compiled by Bloomberg. More than $500 billion are invested in foreign securities, including Treasuries. Failure by U.S. politicians to raise the debt ceiling limit risks a default.
“We are long-term investors,” said Almubarak, a former Morgan Stanley banker who was named head of the Saudi Arabian Monetary Agency in 2011.
Almubarak also joined central bank and finance chiefs from other emerging markets in urging a gradual, measured withdrawal of stimulus policies introduced by advanced nations.
Monetary Policy
“Quantitative easing is an emerging monetary policy,” he said in his speech, referring to the U.S. Federal Reserve’s program of bond-buying to spur growth. “It has resulted in unintended consequences for emerging-market economies and hopefully it will be withdrawn in a measured way to avoid disruption to the financial markets.”
Saudi Arabia, a member of the Group of 20 large economies, pegs its currency to the dollar and its monetary policy tracks the U.S. Federal Reserve. The country has maintained its benchmark reverse repo rate at 0.25 percent since 2009.
Almubarak said the central bank can use tools such as “cash management and capital adequacy control” to offset unwanted side-effects of low interest rates.
The governor questioned the effectiveness of a call for more coordination among G-20 members, saying policy makers will struggle to reconcile domestic mandates with efforts to limit spillover effects of their actions on other economies.
“Central banks are mandated with domestic objectives toward price stability, employment and financial stability,” he said. “It may be challenging for local authorities to also be responsible for spillovers to other countries that may suffer from unintended consequences of unconventional monetary policy.”
Saudi Arabia’s benchmark Tadawul All Share Index (SASEIDX) has gained 17 percent this year amid speculation that regulators will allow more access to foreign investors. The market’s capitalization of about $427 billion makes it the largest in the Arab world.
6 Comments on "World’s Top Oil Exporter Keeps Faith in U.S. Debt"
BillT on Sat, 12th Oct 2013 12:42 pm
Financial porn. SA cannot move away from the dollar or it would lose the support of the Empire in it’s (Saudi Arabia’s) goal to take down Iran. Not to mention destroying the economy of one of it’s biggest markets and supplier of arms, the US. However, China is now buying as much oil as the US from SA. Things will change. Wait and see. The Saudi’s are not stupid and they, like the rest of the world see the dollar turning into wastepaper.
J-Gav on Sat, 12th Oct 2013 1:06 pm
“Central banks are mandated with domestic objectives toward price stability,employment and financial stability.”
They may be mandated with those objectives, but that’s not at all what they’re doing. The 60 central bank members of the BIS (Bank for International Settlements in Switzerland), plus their acolytes amongst the TBTF monster banks, are in fact experts in one thing: looting the earnings/savings/assets and pensions of working people all over the world. This is made possible by our debt-based monetary system which allows them to create money out of thin air and then lend it AT INTEREST!
BillT on Sat, 12th Oct 2013 1:21 pm
Capitalism is the destroyer of Democracy. They cannot co-exist for very long without greed over-riding equality. Central Banking is the means of that destruction and the B.I.S. is the Leader.
Newfie on Sat, 12th Oct 2013 1:52 pm
The USA is running the worlds biggest Ponzi scheme. The US Treasury prints pieces of paper called T-bills which are purchased by the US Federal Reserve with pieces of paper printed out of thin air called dollars. If the Saudis try to sell their T-bills, the Ponzi scheme will collapse.
J-Gav on Sat, 12th Oct 2013 5:44 pm
Newfie – Up to now, anybody who might have the idea of massively dumping their T-bills has thought twice about it, fearing the ‘shock and awe’ that could rain down upon them for being so uppity. Behind the scenes, though,a number of countries (notably the BRICS but some others too) are quietly putting together trade agreements which don’t involve the dollar. As these spread, the U.S. will face a choice: either agree to integrate a ‘smoother’ transition away from dollar hegemony and financial-capitalism corruption or stupidly cling to ‘American exdeptionalism’ and other such horseshit ‘values’, whining about how everybody envies their freedoms (which will mostly be gone by then) and going out in an inglorious blaze ….
Yes, I know the choices are not quite as stark as I make them out to be here but I figured a point needed to be made.
BillT on Sun, 13th Oct 2013 4:13 am
J-Gav, they ARE as stark as you portrayed them. Maybe worse. I doubt that 1 in 1 million see all of the ‘Swords of Damocles’ hanging over the US today. All they see and hear is that the US is strong and eternal and getting stronger. The reality is just the opposite.
I’m glad I am in the Philippines and the country is pretty much ignored by world events. It is too poor for all the electronic controls and the police state toys to be possible. It is not militarily threatening and will likely not be a target in the event of an East-West war, although it will become a Chinese colony or satellite eventually. We live in exciting times!