Thursday, July 03, 2008

Another Message from Middle East

A reader has passed along the latest missive from that American friend in the Middle East. Having read the latest analysis by Strafor Geopolitical Diary and the latest report by the Bank of International Settlements, he concludes that in the teeth of the liquidity crisis and escalating oil prices, the U.S. Federal Reserve and the European Central Bank are working at cross-purposes.

The Fed is struggling to generate growth, the ECB to constrain inflation. The likely result will be "massive imbalances in the system" that will "move the global economy into massive recession."

Putting the two reports together, the American friend-- who has been working for years in the Middle East -- basically says if these two reports are right, then --
[W]hether or not we slide into a deep global recession is in the hands of the Saudis. * * * My memory is that they have limited excess [oil] capacity but maybe it is enough. Anyway, I guess the point is that the place to watch is Riyadh.
We shouldn't be surprised. That's what you get, as American journalist Craig Unger warned us in two recent books and magazine articles, when you have a "president of the United States... tied so closely to a foreign power that harbors and supports our mortal enemies."

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