Sunday, 31 July 2011

Keiser Report: Ghettofication of Americe

There is no doubt about it - things are developing rapidly, week by week, day-by-day.

So, OK, I'll come clean.

One way I find material for this blog is, as well as looking at trusted sources such as the Guardian and RT, I rely on the daily news desk at Collapse Net

They’re doing sterling work there dredging the world’s media for stories that enable the rest of us to join the dots.

Of late the number of headlines has been growing at such a rate that it is almost impossible to keep up with more than several key areas.

Now our attention is on the United States and we have taken our eye for the moment off Greece, Italy and the sovereign debt crisis there.  Meanwhile things are not getting any better in Japan.  There is still massive unrest in the areas we identified earlier in the year while things are brewing up in Israel and Palestine.


It is getter harder and harder to keep up.

So, for me sometimes it is nice for me to be able to put my feet up and listen to someone just create an accurate an accurate picture of the collapse of the whole social and economic edifice.

Max Keiser and Stacy Herbert are two key examples.  

Twice a week they go through the headlines and help me to make sense of the whole madness that we are living right now.

This week is no exception as they discuss how the price of gold says heaps about the real state of affairs when it comes to the dollar and the US economy.

In the second half Max interviews Steve Molyneaux of Canada who demonstrates how by constantly devaluing the currency essentially the US has already defaulted.

Interesting for me is that within the North American theatre the most trenchant criticism of crony capitalism comes from libertarians (not people that, just a short period of time ago I would have expected to find anything in common with!!) .

Life is full of ironies


Bank jobs in peril as global debt crisis pinches profits


UK's big-name banks expected to put thousands of jobs at risk as profits are hit by the US and eurozone problems


Suynday, 31 July, 2011

Britain's leading banks will put thousands of jobs on the line this week when they announce first-half figures dented by the lack of trading activity caused by the parallel crises in the eurozone and the US.

Exposures to the sovereign debt crisis will be scrutinised, as will any indications of the cost of "ringfencing" high-street businesses as recommended by the independent banking commission. Provisions to compensate customers mis-sold payment protection insurance will also hurt results, particularly at Lloyds and RBS.

For article GO HERE


Germany Accuses China Of Causing 'Catastrophic' Starvation In Africa


This is what we have heard that the Chinese have been doing: buying land over the world to produce food for their own people.  No doubt climate change has something to do with this as well.

Vincent Trivett






Germany's Africa policy chief Guenter Nooke said that the destructive drought in the Horn of Africa is a man-made "catastrophe."

According to Agence France-Presse, he blames Chinese land buy-ups there for greatly exacerbating the already tremendous humanitarian crisis and causing social conflicts and conditions that rob small farmers of their livlihoods.

"In the case of Ethiopia there is a suspicion that the large-scale land purchases by foreign companies, or states such as China which want to carry out industrial agriculture there, are very attractive for a small (African) elite," Nooke told the Frankfurter Rundscahu. "It would be of more use to the broader population if the government focused its efforts on building up its own farming system."

The Chinese foreign ministry denied Nooke's claims that they are buying up land  They say that they have only set up 10 agricultural demonstration centers in Africa and sent almost 1,000 experts to educate local officials in food safety issues.  The Chinese accuse Nooke of having ulterior motives.

China announced today that they will send about $14 million in aid to the areas that have been affected by drought. 

Nooke acknowledges that Chinese investment in the area could have a positive effect of transferring Chinese agricultural expertise to the continent and providing an example of how exporting can be done well.

This could be a case of the kettle calling the pot black, however.  European Union agricultural subsidies form an impenetrable barrier between European markets and African agricultural products.  Nooke notes that the Germans support a phase out of these hefty subsidies that could give African farmers a chance to compete. At a time of famine, international competition is a moot point, however. 

The drought and food crisis is affecting Somalia, Ethiopia, Djibouti, Kenya, and Uganda.  At least 12 million people are in danger of starvation.

The Chinese aren't the only ones buying up land in Africa.  Meet The Millionaires And Billionaires Suddenly Buying Tons Of Land In Africa.

Anger Tsunami: Mass protest wave reaches Israel

Russia Today, 30 July, 2011


The biggest wave of protest rallies in years is due to start shortly in Israel. Demonstrators will take to the streets in seven cities across the country. And activists hope the rally in Tel Aviv alone will attract half-a-million people. Thousands have been camping out across the country for about a week now, calling for social justice and for Prime Minister Netanyahu to go. RT's Paula Slier is in Tel Aviv:




Meanwhile....


Palestinians Prepare for Massive Uprising
By Mel Frykberg

BEIT UMMAR, Occupied West Bank, Jul 29, 2011 (IPS) - Leading members of the Palestinian Popular Committees in the West Bank plan massive civil unrest and disobedience against the Israeli occupation authorities come September when the Palestinians take their case for statehood to the UN.
For article GO HERE

Washington Is Annoyed at Wall Street's Failure to Panic

It is more than a little strange - this lack of a reaction from the markets.  Here in New Zealand the whole thing has been portrayed as nothing more than a political crisis in Washington - otherwise business is 'normal' it would appear.



John Carney,


I just got off the phone with a source on Capitol Hill who has spent the past few days trying to convince Republicans to vote for a debt ceiling hike.

He told me that the biggest obstacle he faces has been "market complacency."

"Frankly, a bit of panic would be very helpful right now," he said.

As he explained it, lots of people in Washington, D.C. expected that this would be a week marked by panic in the markets. Stocks would tank. Bonds would get clobbered. The dollar would do something dramatic. And all of this would help convince reluctant lawmakers that they had to reach a compromise on the debt ceiling.

"We were following the script from 2008. When the market collapsed after TARP failed, that spooked everyone enough to get them to fall in line. We thought the same thing would happen this week," he said.

Instead, the market has just been on a quiet, non-panicked slide.

Stocks have sold off by a couple of percentage points, but nothing that indicates a real fear trade in the works.

Everyone in D.C. has a theory about this. Some believe the market is sending a message that a deal will get done. Others think the market doesn't understand politics.

Think about this. We just got stunningly bad news about economic growth. The first-quarter number was revised into a nullity. But the markets are basically flat today.

"Every day we wake up and think that stocks will send a shock up to Capitol Hill. And every day nothing happens," the source said.

He's still holding out hope for a panic sell-off at the end of the day.

"It's the only thing that's going to bring everyone together on this," he said.

China loses patience with US leaders who 'kidnapped' world finance


Saturday, 30 July 2011



China, the world's biggest owner of US Treasuries, turned up the pressure on the US to sort out its sovereign debt woes yesterday as its official news agency labelled American politicians "dangerously irresponsible" for failing to resolve the crisis.

As nervous investors dumped short-term Treasury bills, China's state-controlled Xinhua news agency said US politicians had "kidnapped" the rest of the world in a "game of chicken" by wrangling over a deal to raise America's $14.3 trillion (£8.7trn) debt ceiling.

For article GO HERE

Ron Paul's Urgent Warning On The Inevitable Collapse Of The Dollar

Highly recommended that  you watch this stark warning by Ron Paul on the debt crisis in the United States


Michael Ruppert:  "Everyone in the United States and the world needs to watch this video now. I endorse every word spoken by Ron Paul in this Emergency Alert he has just issued. A huge line has been crossed. Ron Paul has virtually declared open constitutional warfare against the President and the courts. It is necessary, because every horrible scenario he is envisioning is right on the money."




Saturday, 30 July 2011

White House says economy to grow despite weak GDP

The interesting thing here is that the White House is acknowledging the effects of high oil prices as well as the effects of Fukushima.



Reuters
Fri Jul 29, 2011 1:40pm EDT

White House spokesman Jay Carney said on Friday President Barack Obama expects the U.S. economy to keep growing despite a slowing trend reflected by weak GDP numbers.

The economy grew at a 1.3 percent annual pace in the second quarter after expanding just 0.4 percent in the first three months of the year.

Carney told reporters the White House sees a lot of impact from the Japanese tsunami and earthquake as well as high energy prices on the GDP numbers.

He said the GDP numbers show the need to avoid causing more uncertainty for the U.S. economy by reaching a deal to raise the U.S. debt

Peter Shiff: Problem is the debt, not the ceiling From Russia Today


From Russia Today


US disarray hits global stock markets


• President Obama pins hopes on Senate leaders 
• Spain calls snap general election 
• Italian bond yields hit 5.89%

29 July, 2011



Barack Obama cleared his diary for the weekend last night to try to find a deal on the US debt crisis as Congress prepared to stay in session ready to vote on any last-gasp compromise.

Speaking after dismal figures for US growth increased the pressure on lawmakers to prevent a fresh meltdown in global markets, Obama said: "I am confident we can solve this problem. I am confident we will solve this problem.

"For all the intrigue and all the drama that's taking place on Capitol Hill right now, I'm confident that common sense and cooler heads will prevail."

But Congress remained in disarray Friday with the Republican leader in the House, John Boehner, wounded and in a dangerous mood after failing to quell a humiliating revolt by the Tea Party wing of the party. Boehner scheduled a vote on Thursday on a Republican bill to raise the debt ceiling and cut spending, but hard-core conservatives refused to back it and the vote had to be temporarily abandoned.

The febrile mood in Washington was matched on Wall Street and the City, where news that the US grew at an annual rate of just 1.3% in the three months to June prompted renewed concern that the world's biggest economy could lapse back into recession should it have its credit worthiness downgraded by the ratings agencies.

Speculation that the Federal Reserve might need to embark on a third round of quantitative easing – the creation of electronic money – intensified after revisions to past figures for US gross domestic product showed the recession was deeper than originally believed and the subsequent recovery weaker. America's peak-to-trough drop in output between 2007 and 2009 is now put at 5.1% rather than the 4.1% originally estimated.

With the International Monetary Fund warning the US that a continued impasse risks reigniting Europe's debt crisis, bond yields in Italy and Spain rose. The interest rate on 10-year Italian bonds rose to 5.89%, while that for Spain – where the government called a general election – climbed to 6.09%.

Shares in London closed down 1% lower, a drop of 58.02 at 5815.19, while the Dow Jones industrial average was on course to complete a week of daily falls with a loss of 60 points by lunchtime in New York.

Sources close to George Osborne said the new figures from the US showed that the American and British experience during and after the global downturn had been similar, weakening the argument for the coalition government to revisit its tough austerity plans.

Obama used the growth figures to urge Congress to come to a compromise on raising the US debt ceiling from $14.3tn (£8.7tn) by Tuesday's deadline. The White House is pinning its hopes for a deal on the Senate, where Obama hopes the Democratic leader Harry Reid and his Republican counterpart Mitch McConnell, a mainstream conservative, can reach a deal.

Obama, in a short statement at the White House, said there were multiple ways to resolve the debt stand-off by the Tuesday deadline.

If the US does not raise its debt ceiling by 2 August, it risks being unable to continue borrowing and unable to pay its bills. Obama has said that default is not an option so the US treasury would prioritise keeping up interest payments, which could mean cuts elsewhere. The president reiterated that the victims could be people expecting federal cheques for welfare, and payments to military veterans and government contractors.

"This is not a situation where the two parties are miles apart," Obama said. He added: "There are a lot of crises in the world that we can't always predict or avoid: hurricanes, earthquakes, tornadoes, terrorist attacks. This isn't one of those crises. The power to solve this is in our hands."

One scenario would be for the Senate to pass a compromise bill over the weekend that would raise the debt ceiling until the end of next year, after the White House election, and make deep cuts in spending. It could then be passed to the House for a vote in the hope that a combination of mainstream Republicans and Democrats would get it through. Tea Party Republicans could vote against, able to return to their districts and tell activists they remained faithful to the cause.

Boehner, in an attempt to recover ground after Thursday's debacle, rewrote his bill to make it more appealing to the Tea Party wing of his party. But even if the House was to pass that version, the Senate would vote it down. The White House, too, promised to veto it because it would only be a stop-gap measure, lasting only through to February or March with the prospect of another crisis then.

Reid, speaking on Friday morning in the Senate, described Thursday as a wasted day because of the Republican fiasco in the House and the blamed the crisis on "extremists in the Tea Party". He called for mainstream Republicans to back a compromise. "Will the Republicans back away from the shrill voice of the Tea Party and return to the Republican party of Ronald Reagan?" he said.
He urged McConnell to meet him to resolve the stalemate.

"I will listen to any idea to get this done in a way that prevents a default and a dangerous downgrade to America's credit rating. Time is short, and too much is at stake, to waste even one more minute," Reid said. He will push to a vote his plan to raise the debt ceiling and to cut about $2.5tn in spending over the next decade.

McConnell also took to the floor of the Senate and did not sound encouraging about a deal, though he may be saying something different in private.

"Lawmakers should be working a solution to this crisis, not a blocking strategy. Our Democrat friends here in the Senate have offered no solutions to this crisis that could pass either chamber," McConnell said. He blamed Obama too, accusing him of having blown up a bipartisan compromise last week.

Futures Plunge As Boehner Unable To Get Enough Votes, Essentially Cancelling Deficit Plan Vote, Dollar Plummets


28 July 2011


Tonight just got that Lehman Brothersy feel to it. 

After hours of delays, Boehner just experienced a supreme dose of humiliation after he announcing he would cancel tonight's much delayed vote on his deficit plan after apparently being unable to get the requisite 218 votes to pass his plan though the Congress (forget that it would never pass Senate or the President). 

Boehner has said he will instead hold an emergency meeting with members Friday morning but the damage has been done. 

The result: the markets are now in absolutely terrified mode, with ES just plunging by over 12 points on the news, the dollar hitting fresh post March 17th lows against the Yen following the Fukushima explosion, and overall total chaos appears to be on the horizon. 

And with Europe about to open, all hell is about to break loose. Something tells us that the deer in headlights will be on prominent display tomorrow, not to mention the bear cavalry.

US economy shows worst quarter since recession

Russia Today
29 July, 2011, 20:20



Here’s a surprise: the American economy is not expanding at what experts had hoped.

Economists had predicted that second quarter consumer spending in the US would increase by 1.8 percent. Instead, the growth domestic product in the States managed only to go up by a 1.3 percent annual rate.

March’s earthquake and subsequent wave of tragedy in Japan led to a severe decline in automotive production, which Reuters reports largely limited cars available for the American public. Coupled with high prices in gasoline, the automotive industry largely played a role in the weak GDP growth. May’s average price for a gallon of gasoline, around $4, was the highest the country has seen in almost three years.

Household consumer spending, nearly three-quarters of the country’s economic activity, rose a meager 0.1 percent this quarter. That's the weakest rise the country has seen since the recession ended two years ago. Earlier this year that pace was at 2.1 percent.

Taking into consideration higher prices and fewer employed Americans (the most recent unemployment figure is at 9.2 percent), it should come to no surprise that GDP growth isn’t quite what experts had hoped it would be.

Experts predict that it won’t get much better in the near future. "All the data we got for June thus far suggest that as we entered the third quarter, we did not gain any momentum setting up for a good third quarter," Christopher Probyn, chief economist at State Street Global Advisors in Boston, tells Reuters. "We are not starting the third quarter on a positive note," he adds, in a statement issued even before the GDP report was released.

To Bloomberg, HIS Global Insight economist Nigel Gault echoes those thoughts, saying hopes for a rebound in the second half of 2011 are “melting away.”

Treasury Leaks Worst Case Contingency Plan: Creditors Get Priority In Case Of Technical Default


28 July, 2011


Things are getting real. After all the bluffing, huffing and puffing by Geithner, the rating agencies, and anything with a pulse and a TV or radio pulpit has failed, the last trump card is coming down. 

While yesterday the Treasury informed that it would not disclose any details of its contingency plan, Bloomberg has just learned via a Treasury leak that the US government will give priority to bondholders. 

From Bloomberg: "The U.S. Treasury will give priority to making interest payments to holders of government bonds when due if lawmakers fail to reach an agreement to raise the debt ceiling, according to an administration official. The official requested anonymity because no announcement has been made. The Treasury has said about $90b in debt matures on Aug. 4 and more than $30b in interest comes due Aug. 15. Overall, more than $500b matures in August." 

And so it begins: while the Treasury has not yet pushed the big red flashing button, this leak is nothing but it latest and greatest bluff. It also means that America will, indeed default, next week, as the absence of a contractual payment is a default. 

And then we get into the fine print with the rating agencies whether or not X is default but Y is not. 

At that point however it won't matter: every form of intermarket liquidity will be permanently gone as Lehman will be a cherished walk in the park. 

Thank you Tim Geithner and your total lack of contingency plans.

Friday, 29 July 2011

Singapore Airlines 2Q profit plunges 82 percent

Yahoo Finance
Jul 28, 2011 at 14:31

SINGAPORE (AP) — Singapore Airlines Ltd. says quarterly profit plunged 82 percent as soaring fuel prices pushed up costs.

The carrier said in a statement Thursday that its net profit in the second quarter was 45 million Singapore dollars ($37 million) compared with SG$253 million a year earlier.

Quarterly revenue at the world's second-biggest airline by market capitalization rose to SG$3.58 billion from SG$3.47 billion a year earlier.

Singapore Airlines said expenditure increased to SG$3.57 billion from SG$3.22 billion as jet fuel prices jumped almost 50 percent from a year earlier.

The airline said high fuel costs will remain its biggest challenge in the coming months while advance bookings for travel in the next few months are almost flat compared to the same period last year.

A life of crime....


US debt crisis: Speaker delays vote as Republicans fight over spending bill

The latest from the political theatre in Washington.


Markets increasingly nervous as US political parties remain deadlocked on strategy to tackle economic crisis

guardian.co.uk, Thursday 28 July 2011 20.31 BST



The US debt crisis worsened on Thursday when a proposed Congressional vote exposed the extent of divisions within the Republican party.

The Republican leader in the House, John Boehner, highlighted the extent of the chaos that was engulfing Washington when he scheduled a vote for 6pm (Eastern Time) on a new bill. The proposed legislation would raise the $14.3tn (£8.7tn) debt ceiling in return for billions of dollars in spending cuts.

But the House Speaker met fierce resistance from hardline Republican conservatives who demanded even more spending cuts. To the embarrassment of Boehner, he had to postpone the vote for hours as he tried to round up enough Republicans to pass his bill.

To see the article GO HERE.


More commentary from the Guardian:




US debt crisis: Boehner's vote blunder edges US closer to the brink

Republican disarray and Democrat gloating is not a recipe for solving the US debt crisis and heading off financial turmoil

Richard Adams Friday 29 July 2011 06.00 BST

The failure of the Republican leadership to even hold a vote on its own debt ceiling proposal edges the US government closer to running out of money. Get ready for a rocky ride in the financial markets on Friday

For article GO HERE

Eurozone debt crisis resurfaces as markets punish Italy and Spain for Merkel delay on bailout package


The Telegraph, Friday 29 July 2011





Spain and Italy's borrowing costs marched back towards euro-era highs on Wednesday, as markets renewed their eurozone fears less than seven days after ministers agreed a €159bn (£140bn) second bail-out for Greece.

Yields on Spanish ten-year government bonds climbed to 6.08pc on Wednesday morning, slightly below the highs of 6.337pc seen before Greece's new bail-out package was announced last Thursday.

Italian bonds climbed to 5.793pc, just 20 basis points below its highs of 6.008pc. Concerns are now mounting that yields could reach the 7pc 'point of no return' mark that prompted smaller euro partners Greece and Portugal to seek bailouts.

For article GO HERE

China to Press Ahead With FX Reserves Diversification


CNBC
Thursday, 28 Jul 2011 | 6:27 AM ET




China will press ahead with diversification of its $3.2 trillion in foreign exchange reserves, and does not pursue large-scale currency holdings, the State Administration of Foreign Exchange said on Thursday.

"We will continue to diversify the asset allocation of our reserve assets and continue to optimise the holdings based on market conditions," the foreign exchange regulator said in a statement, responding to questions from the public.

The SAFE said the rapid build-up of China's reserves, the world's largest that swelled by $152.8 billion in the second quarter, was "not a direct" cause of inflation, which hit a three-year high of 6.4 percent in June.

The central bank has been using various tools, including the rise in banks' reserve requirement ratios and open market operations to sterilise capital inflows, it added.

"We don't purse large-scale reserves and don't pursue long-term surplus in international balance of payments," the SAFE said in a statement. It added that China needs sufficient reserves to maintain its debt repayment ability to fend off risks and safeguard the country's financial safety.

But as a long-term goal, the country needs to adjust its economic structure and change its economic model, which will "fundamentally" ease capital inflows, the SAFE said.

It seeks to answer some public question about the reserves.

Chinese officials have long pledged to diversify the huge reserves — as much as 70 percent o which are now in U.S. dollar assets, according to analyst estimates — but the process has been gradual.   

Xia Bin, an adviser to the central bank, told Reuters earlier this month that China should speed up reserve diversification away from dollars to hedge against risks of the U.S. currency's possible long-term decline. 

The SAFE pledged to make its reserve investment more transparent but it cautioned against giving too much information to international speculators trying to profit from any changes in China's reserves holdings.

The SAFE also pledged to widen the channel for capital outflows and take gradual steps to make the yuan convertible on the capital account.



Chinese Officials ‘Appalled’ by Impasse on Raising Debt Ceiling


Jul 28, 2011 9:51 PM GMT+1200



Senior Chinese officials are “appalled” by the impasse among U.S. politicians on raising the nation’s debt ceiling to avoid a default, said Stephen Roach, non-executive chairman of Morgan Stanley Asia Ltd.

“Coming so shortly on the heels of the subprime crisis, the debate over the debt ceiling and the budget deficit is the last straw” for China, New York-based Roach, 65, said in an e- mailed note today. He said his assessment was based on visits to Beijing, Shanghai, Chongqing and Hong Kong.

For article GO HERE





'The Global Recovery Is Over': Siemens CEO


Thursday, 28 Jul 2011 | 5:29 AM ET




Siemens, the German engineering and power giant, on Thursday posted third-quarter earnings that missed analyst forecasts blaming a slowdown in the global economy for the drop in profits.


“What we see is the early tail wind of the global recovery is over. We have Europe within the debt crisis and budget discussion in the U.S. and volatile commodity prices and political situations around the world. Although we continue to see a growth story in emerging markets,” Siemens chief executive Peter L√∂scher told CNBC.

For article GO HERE


Caterpillar Profit Misses Estimates on Japan Quake Impact; Shares Decline




BloombergJul 23, 2011 8:26 AM GMT+1200

Caterpillar Inc. (CAT), the world’s largest construction and mining-equipment maker, posted lower- than-expected profit for the first time in 10 quarters after the Japanese earthquake reduced sales and manufacturing costs rose.

For article GO HERE

Jim Rogers: US debtonation doomed, Asia owns future

From RT

In Secret, Senate Panel May Re-Up Vast Surveillance Dragnet



Spencer Ackerman



Most of Congress is busy debating whether to raise the debt ceiling. But starting Thursday, Danger Room is hearing, a group of Senators meeting behind closed doors may consider renewing a controversial law permitting widespread government surveillance of Americans’ communications.

For the article GO HERE

Heads Up: The Next Bad News On The Economy Comes Out Tomorrow


Joe Wisenthal,
Business InsiderJul. 28, 2011, 8:00 AM

There's all this interesting news happening out there (the US slowdown, the European mess, etc.) but it's all being eclipsed by the debt ceiling nonsense.

Tomorrow though, everyone will have to pay attention when Q2 Advance GDP comes out.

Officially, it's expected to come in at just 1.8%, though there are growing concerns that it will come in much worse... the lowest guesser for the survey expects just 0.9% growth.

After yesterday's durable goods disaster, that's a possibility.


Peak Oil: When Saudi Spare Capacity Falls Short

One Step Ahead of Saudi Panic
By Keith Kohl, 27 July, 2011









The last few nights have been restless, to say the least.

And the worst part is I know exactly why I keep up my insomniac pacing. A single thought has been rushing to the forefront of my sleepless psyche: Let's hope it won't be us asking the Saudis for more oil.

That's what we were left pondering after seeing firsthand how hungry China is for Canadian energy.

Unfortunately, it's more likely a U.S. diplomat will be making that future phone call, apologizing to the Saudis for past grievances and promising we won't stray from their oil taps again...

The real kicker is there's a good chance they'll say no.

Their refusal won't come from some repressed anger, but rather the fact that all they can do is shrug their shoulders helplessly...

Turns out the Saudis might not be able to feed our addiction any longer because they've fallen victim to their own racket.

The Sight of Saudis Panic

We've listed Saudi Arabia's varied issues countless times before. The panic, however, won't stem from the country's declining fields, or even the fact that the extra oil it can produce is heavier and more expensive to refine (that's also assuming that some European refineries can even handle the stuff)...

The problem is the Saudis have gone from providing for the world's oil addiction to developing their own fix. Imagine a heroine dealer who can't sell any more of his product because he's too busy using it.

And the Saudis' domestic oil consumption is heading higher — much higher.

Right now, we believe they're producing about 9 million barrels per day (of course, the way they cook their books, it's hard to be sure of anything when it comes to OPEC).

Last year, the Kingdom consumed approximately 2.4 million barrels per day — a 50% increase just within the last seven years. To give you a comparison, U.S. demand for crude oil and petroleum products declined by almost 4.5% during the same period.

Although they have a long way to go before they reach our nation's level of dependence on the stuff, the fact that the Saudis are headed down a path to oil addiction should be alarming in itself.
And think about this...

If Saudi Arabia's domestic consumption is increasing by nearly 6% per year, its demand will exceed three million barrels per day by 2015 and four million barrels by 2020 — and that's in the unlikely scenario that demand growth remains steady.

No Leftovers for Us

Saudi Arabia is one of few countries left on a very short list that will be able to increase its domestic oil production.

Depending on to whom you're listening, the Saudis can pump out an additional 2 to 3 million barrels per day. For now, let's give them the benefit of the doubt and assume they can push their output to 12 million barrels per day...

Not only is that amount supposed to make up for any gaps between the world's supply and demand, but now it's practically guaranteed they'll have less available oil to export.

And we've already seen those headlines. Anyone else recall last December, when Saudi oil exports fell 4.9% to around 6 million barrels per day? That's 20% less oil they're shipping than they were in 2005.

We'll confess that this decline is not to blame on their rising consumption rates alone, but the Saudis themselves are expecting to see more of the same going forward. They're anticipating a decline in exports to 5.6 million barrels per day in 2020, and a fall below five million barrels per day in 2030.

When the longtime kings of oil realize that the cheap, easy-to-get crude is long gone, they're going to have a difficult time subsidizing energy prices...

We wince at the thought of $5 a gallon; imagine how we'd feel if we were paying only $0.60, as the Saudis are right now...

Beating the Saudis to Oil Profits

Even though the Saudis are headed for a Peak Oil disaster, there's certainly no shortage of revenue right now.

Catching word of the $1 trillion paycheck OPEC will take home this year from its oil addicts is enough to make anyone's blood boil. That total is nearly 30% higher than 2010.

And taking home the biggest purse, as we would expect, is Saudi Arabia.

But no matter how indignant we are for the $228 billion Saudi payday, we'll have the last laugh... Because while they continue to rattle off unlikely production numbers and build a dependence on fossil fuels, we're busy securing our own oil wealth.

As my colleague Christian DeHaemer recently explained to me with a wide-eyed grin, “Good oil is hard to find. But these guys, Keith... These guys stole $267 billion worth from right under the Saudis' noses.”
So much for begging the Saudis for more oil...

Perhaps they'll be asking us for a few extra barrels in the decades to come.