And the head of Russian military intelligence is dead with no explanation.
Of course the GRU makes the NSA look like a bunch of gossipy old ladies so I shouldn't be too surprised.
Saudi Default, Devaluation Odds Spike As Mid-East Careens Into Chaos
Saudi Arabia just doesn’t know when to quit.The kingdom’s plan to deliberately suppress crude prices in an effort to bankrupt the US shale space and preserve market share has cost Riyadh dearly over the past 12 months. The country’s budget deficit for 2015 ballooned to some 15% of GDP as oil revenue collapsed. For 2016, the deficit is expected to come in at a still elevated 13% of economic output.
The red ink has forced the Saudis to tap the SAMA reserve war chest as well the debt market. In a testament to how dire the situation has become, Riyadh also moved to cut subsidies on everything from fuel to electricity to water in order to buy some budget breathing room. The welfare state overhaul was necessary because the Saudis aren’t keen on i) dropping the riyal peg, or ii) rolling back the defense spending.As if the situation needed to get still more precarious, Riyadh went out and sparked a sectarian showdown over the weekend by executing a prominent Shiite cleric. The Sheikh’s death triggered protests in Iran (among other countries) and before you knew it, the Saudi embassy in Tehran was on fire. That prompted Riyadh to cut diplomatic ties with the Iranians and comments by Saudi Foreign Minister Adel Al-Ahmad Al-Jubeir seem to suggest that the kingdom may be on the verge of taking more steps to intervene militarily in the region in an effort to rollback Iran’s growing influence and stop the Shiite crescent from waxing.Of course war is costly and is generally accompanied by quite a bit of uncertainty. And if there’s anything the Saudis absolutely do not need right now, it’s more expenses and more geopolitical ambiguity. In a testament to just how unwelcome the events that unfolded over the weekend truly are, Saudi CDS is blowing out to six year wides...
...while the implied odds of the vaunted riyal peg finally breaking are at record highs...
One has to believe that something is about to snap here. The only question is whether it will be the peg or the patience of the Saudi populace with a government that seems hell bent on dragging the country into the financial and geopolitical abyss....MORE