Back in January, when the market was watching in shocked silence as oil prices were crashing to decade lows and as concerns emerged that Saudi Arabia may need to commence selling its vast, if unquantified, USD reserves, we wrote a post titled "Attention Finally Turns To Saudi Arabia's "Secret" US Treasury Holdings" where we noted something very surprising: whereas we do know that Saudi Arabia is the owner of the world's third largest USD reserves... their actual composition remains as a secret, because while the US discloses the explicit Treasury holdings of all other nations, "It’s a secret of the vast U. Treasury market, a holdover from an age of oil shortages and mighty petrodollars," Bloomberg wrote of Saudi Arabia’s US Treasury holdings."As a matter of policy, the Treasury has never disclosed the holdings of Saudi Arabia, long a key ally in the volatile Middle East, and instead groups it with 14 other mostly OPEC nations including Kuwait, the United Arab Emirates and Nigeria,” Bloomberg goes on to note, adding that the rules are different for almost everyone else.Although Saudi Arabia's "secret" is protected by "an unusual blackout by the U. Treasury Department," for more than a hundred other countries, from China to the Vatican, the Treasury provides a detailed breakdown of how much U. debt each holds." So who does know how much US paper the Saudis are sitting on?
We closed with a simple, if suddenly very prophetic question: "who would be the new patron saint of the US Treasury Department in the event the Saudis drawdown all of their reserves and decide to diversify away from USD assets...Put differently, who will monetize the US deficit if relations between Washington and Riyadh hit the skids over Iran?" It is this question that has suddenly reemerged with a bang, and could rock the US administration to its core as what until recently was a "fringe conspiracy theory" is suddenly exposed as an all too unpleasant fact, and becomes the biggest political scandal to rock the U. in years, in the process maybe even crushing the friendly diplomatic relations the U. has held for years with its biggest Mid-East ally, Saudi Arabia.* * * First, a quick tangent: we have been greatly surprised by the reemergence of the topic of September 11 in recent weeks, and specifically the taboo - in official circles - issue whether there was a "Saudi connection" in the biggest terrorist attack on US soil.Just last weekend, out of the blue, 60 Minutes held segment on the "28 pages" that were classified in the Congressional investigative report into 9/11 - pages that allegedly confirm the Saudi connection.
To be sure, Saudi officials have long denied that the kingdom had any role in the Sept.
11 plot, and the 9/11 Commission found “no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.” But critics have noted that the commission’s narrow wording left open the possibility that less senior officials or parts of the Saudi government could have played a role.
Suspicions have lingered, partly because of the conclusions of a 2002 congressional inquiry into the attacks that cited some evidence that Saudi officials living in the United States at the time had a hand in the plot.
Those conclusions, contained in 28 pages of the report, still have not been released publicly.
It was the surprising rekindled focus on these 28 pages in recent days that suggested that something may have been afoot. * * * In a stunning report by the NYT, Saudi Arabia has told the Obama administration and members of Congress if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. Or mostly Congress, because Obama has remained steadfast in his support of his Wahhabi petrodollar overlords, and has been busy lobbying Congress to block the bill’s passage, according to administration officials and congressional aides from both parties, and the Saudi threats have been the subject of intense discussions in recent weeks between lawmakers and officials from the State Department and the Pentagon.
The officials have warned senators of diplomatic and economic fallout from the legislation.