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The Black Swan Is a Drone

Predictably, the mainstream media is serving up heaping portions of reassurances that the drone attacks on Saudi oil facilities are no big deal and full production will resume shortly. The obvious goal is to placate global markets fearful of an energy disruption that could tip a precarious global economy into recession.

The real impact isn’t on short-term oil prices, it’s on asymmetric warfare: the coordinated drone attack on Saudi oil facilities is a Black Swan event that is reverberating around the world, awakening copycats and exposing the impossibility of defending against low-cost drones of the sort anyone can buy.

(Some published estimates place the total cost of the 10 drones deployed in the strike at $15,000. Highly capable commercially available drones cost around $1,200 each.)

The attack’s success should be a wake-up call to everyone tasked with defending highly flammable critical infrastructure: there really isn’t any reliable defense against a coordinated drone attack, nor is there any reliable way to distinguish between an Amazon drone delivering a package and a drone delivering a bomb.

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Mideast Turmoil: Follow the Oil, Follow the Money

While there are numerous dynamics at work in the turmoil roiling Saudi Arabia and by extension, the Mideast, one way to cut to the chase is to follow the oil, follow the money. Correspondent B.D. recently posited a factor that has been largely overlooked in the geopolitical / fate-of-the-petrodollar discussions:

Perhaps the core dynamic is a technical one of diminished oil production. Here is B.D.’s commentary:

“I think the Saudis may be quickly running out of profitable oil to produce/export.

I think they tried to over-produce for a while to damage the competition… and they now have production issues resulting from that. (As has happened in the past)

I think they may have recently slipped over the event horizon for being the world’s swing producer of ‘cheap-ish and abundant’ oil. That has huge ramifications for the global markets ability to quickly respond to supply/demand fluctuations.

I suspect they’re no longer cutting production voluntarily … they are now in the grip of a technically driven decline in output. (Why else begin selling off ARAMCO now?)

I doubt that many national economies can handle $70+ oil for very long… price will be limited by the ability of the consumers to pay. What I assume should happen is relentless severe volatility in the absence of a big swing producer that can open up or shut in production with comparative ease.”

Thank you, B.D. Let’s start with what’s well-established about Saudi oil production:

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‘Shame on Saudis’

‘Saudi adventurism’ had invariably been clandestine until Yemen was shelled and razed to the ground over the course of a fortnight. The Arab world had never witnessed such a ruinous calamity, and the so-called human rights organizations just like any other time in history shamefully turned a blind eye to it.

It stands out a mile that such blatant ferocity could have certainly been averted had Arab stooges done their American masters less bidding. With the benefit of hindsight and by looking back on history, what we may construe is that those nations that kindle the starting flames of war are well aware of its repercussions and yet unbeknownst to the fact that, as the saying goes, “what goes around comes around.” The disastrous consequences of such a political karma will definitely have its toll on this fledgling warmongering tyro in the Middle East.
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Risk of ‘World War’ between NATO and Russia on Ukraine as Yemen Bombed

Risk of ‘World War’ between NATO and Russia on Ukraine as Yemen Bombed

MARKET UPDATE

– Gold looks set for second consecutive week of gains
– Japan’s QE fails – Returns to zero inflation
– ‘Master of the universe’ central bank speeches today
– ETF and COMEX holdings fall as gold flows East
– JP Morgan to be part of new gold ‘fix’
– Greeks pull €8 billion from banks
– “No one knows how to solve the situation in Greece”
– Bundesbank warns debt in euro zone has entered “danger zone”
– UK and Irish house prices are falling … again

Today’s AM fix was USD 1,198.00, EUR 1,106.70 and GBP 805.32 per ounce.
Yesterday’s AM fix was USD 1,209.40, EUR 1,097.26 and GBP 809.23per ounce.

Gold climbed 0.65 percent or $7.80 and closed at $1,203.40 an ounce yesterday, while silver rose 0.47 percent or $0.08 at $17.05 an ounce.

Gold in U.S. Dollars - 1 Week

In the end of day trading in Singapore, gold prices climbed 0.3 percent to $1,199.95 an ounce after reaching a high on Thursday of  $1,219.40. Gold surged  after news of the bombing in Yemen but prices were capped at the $1,220 level prior to a retracement of much of the initial gains.

Oil prices jumped over 6 percent at one stage and stock markets worldwide slumped yesterday after Saudi Arabia and allies carried out air strikes, which fueled worries internationally that global energy shipments may be put at risk. (more…)

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Oil Surges, Gold and Silver Spike as Saudi Arabia Bombs Yemen

Oil Surges, Gold and Silver Spike as Saudi Arabia Bombs Yemen

– Geopolitical tensions in Middle East escalate dramatically as Saudi Arabia bombs Yemen
– Yemen’s government seized power in coup – Regarded as hostile to Saudi and ally of Iran
– Saudi attack is an escalation of Middle Eastern proxy war between Gulf States and Iran
– Action has broader geopolitical implications in deepening cold war between the West and East
– Oil surged 6% and gold 2% on the the news
– Should oil prices return to new record highs will impact struggling global economy

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Geopolitical tensions escalated dramatically over night as Saudi Arabia launched military operations including air strikes in Yemen. The Saudis claim the action is to counter Iran-allied forces besieging the southern city of Aden where the U.S. backed Yemeni president had taken refuge.

Oil surged and gold rose nearly 2% following a sharp drop in stocks on Wall Street globally in response to the bombing in Yemen.

Gulf broadcaster al-Arabiya TV reported that the kingdom was contributing as many as 150,000 troops and 100 war planes to the operations. Egypt, Jordan, Sudan and Pakistan were ready to take part in a ground offensive in Yemen, the broadcaster said. (more…)

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For Sale to the Highest Bidder – How Middle Eastern Governments Are Buying Off the U.S. Political Process

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While having super rich and powerful American oligarchs running the show is one thing, the reality of the situation is actually far worse. Thanks to a recent article in Vice, we now know that foreign governments are aggressively employing their extraordinary wealth to advance their interests here on American soil. In many cases, these are autocratic regimes, which not only do not care about the best interests of the nation, they are often caught actively funding ISIS and even perpetuating 9/11 itself…

Read the rest here.

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I Call BS on Projections of a Decade of $20/Barrel Oil

The ability of oil exporters to trigger a short-term collapse in price does not automatically translate into an ability to control the financial conflagration such a crash ignites.

My BS detector went off when two stories with similar headlines touting $20/barrel oil were published on the same day. Color me skeptical, but it’s almost as if mere $40/barrel oil is no longer enough to get the blood flowing, so both stories blared the more extreme $20/barrel price point.

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The American Public: A Tough Soldier or a Chicken Hawk Cowering in a Cubicle? Some Thoughts on ISIS Intervention

You gotta love the American public sometimes. For a mass of people so easily terrified by guys in caves funded and armed by our intelligence services and “allies” in the Persian Gulf, the same public talks with such armchair bravado when it comes to launching bombs from drones and sending other people’s children to die.

Makes you wonder though, which one is it? Is the American public actually the tough guy soldier it pretends to be when cheering overseas military interventions, or is it really a scared, propagandized, coward hiding in one of our nation’s endless cubicle rows? Unfortunately, based on recent opinion polls demonstrating approval for military action against ISIS, it appears to be the latter. The former is merely a front put on by that terrified, economically insecure, silently suffering automaton. I really wish this weren’t the case…

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Must Watch Video – Congressman Thomas Massie Calls for Release of Secret 9/11 Documents Upon Reading Them

Late last year, I published a post titled: Two Congressmen Push for Release of 28-Page Document Showing Saudi Involvement in 9/11. Here’s an excerpt from the piece:

Since terrorists attacked the United States on Sept. 11, 2001, victims’ loved ones, injured survivors, and members of the media have all tried without much success to discover the true nature of the relationship between the 19 hijackers – 15 of them Saudi nationals – and the Saudi Arabian government. Many news organizations reported that some of the terrorists were linked to the Saudi royals and that they even may have received financial support from them as well as from several mysterious, moneyed Saudi men living in San Diego.

Saudi Arabia has repeatedly denied any connection, and neither President George W. Bush nor President Obama has been forthcoming on this issue.

Read more and watch the video here.

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Blockbuster Report from WND – Jordanian Official Claims Americans Trained ISIS

Just yesterday, I wrote what I think was one of my most important articles of 2014, titled: America’s Disastrous Foreign Policy – My Thoughts on Iraq

Apparently, I didn’t go far enough down the rabbit hole in my observations. According to this blockbuster article from WNDa Jordanian official who is terrified that ISIS will be coming for the Kingdom next, has insisted that the U.S. itself was instrumental in training some ISIS fighters. Wait, it gets even crazier. We learn that:

Read more here.

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America’s Disastrous Foreign Policy – My Thoughts on Iraq

But in the years they were getting started, a key component of ISIS’s support came from wealthy individuals in the Arab Gulf States of Kuwait, Qatar and Saudi Arabia. Sometimes the support came with the tacit nod of approval from those regimes; often, it took advantage of poor money laundering protections in those states, according to officials, experts, and leaders of the Syrian opposition, which is fighting ISIS as well as the regime.

“Everybody knows the money is going through Kuwait and that it’s coming from the Arab Gulf,” said Andrew Tabler, senior fellow at the Washington Institute for Near East Studies. “Kuwait’s banking system and its money changers have long been a huge problem because they are a major conduit for money to extremist groups in Syria and now Iraq.”

Iraqi Prime Minister Nouri al-Maliki has been publicly accusing Saudi Arabia and Qatar of funding ISIS for months. Several reports have detailed how private Gulf funding to various Syrian rebel groups has splintered the Syrian opposition and paved the way for the rise of groups like ISIS and others.

Read the rest here.

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