Friday, August 21, 2015

Austerity Brigade now making dagger eyes at Saudi Arabia


Random said...

Right it all comes down to this "buffers" mindset. "Balancing the budget over a cycle." But it makes no sense to save up your own IOUs.
Let's imagine due to a technical error the "buffers" disappeared. The govt then creates new "buffers."

Matt Franko said...

They stole your term!

Random said...

It's not mine its Tom Hickey's term.
What you want is "buffers" of REAL RESOURCES.
Buffers of oil, food etc.

Ignacio said...

Iraq is suffering due to oil prices already, issuing bonds to finance. Is such a feeble state that could collapse any moment. Now, a lot of the SA stability depends on the welfare state they have created (financed by oil sales).

We are talking about countries which don't produce anything useful to sell to the rest of the world except oil, and which have a large young population that cannot be sustained through national production, at least at the modern standards they want to. Is the same problem in Egypt and other countries of the ME.

So in this case is a 'real resources' problem which cannot be solved through increasing demand (injecting net financial assets into the private sector). Even if they do have rich environment, they lack the organization, capital goods and knowledge to exploit them (aka Venezuela).

There may be anew 'Arab Spring' in the making (as there was in Egypt) as the situation worsens if oil prices keep low. But this is the future of all those petro-states, adapt, remove corrupt leadership and educate or perish and collapse in eternal civil wars and conflicts. The West and the East must continue their plans to decouple from carbon, is a matter of survival now, we cannot have all those petro-states in permanent "dictatorship welfare", they will have to sort their crap sooner or later.

p.d: An unintended consequence ofc will be continued emigration towards Europe and Asia.