Economy
Related: About this forumThe Untold Story Behind Saudi Arabia’s 41-Year U.S. Debt Secret
Failure was not an option.
It was July 1974. A steady predawn drizzle had given way to overcast skies when William Simon, newly appointed U.S. Treasury secretary, and his deputy, Gerry Parsky, stepped onto an 8 a.m. flight from Andrews Air Force Base. On board, the mood was tense. That year, the oil crisis had hit home. An embargo by OPECs Arab nationspayback for U.S. military aid to the Israelis during the Yom Kippur Warquadrupled oil prices. Inflation soared, the stock market crashed, and the U.S. economy was in a tailspin.
Officially, Simons two-week trip was billed as a tour of economic diplomacy across Europe and the Middle East, full of the customary meet-and-greets and evening banquets. But the real mission, kept in strict confidence within President Richard Nixons inner circle, would take place during a four-day layover in the coastal city of Jeddah, Saudi Arabia.
The goal: neutralize crude oil as an economic weapon and find a way to persuade a hostile kingdom to finance Americas widening deficit with its newfound petrodollar wealth. And according to Parsky, Nixon made clear there was simply no coming back empty-handed. Failure would not only jeopardize Americas financial health but could also give the Soviet Union an opening to make further inroads into the Arab world.
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It took several discreet follow-up meetings to iron out all the details, Parsky said. But at the end of months of negotiations, there remained one small, yet crucial, catch: King Faisal bin Abdulaziz Al Saud demanded the countrys Treasury purchases stay strictly secret, according to a diplomatic cable obtained by Bloomberg from the National Archives database.
With a handful of Treasury and Federal Reserve officials, the secret was kept for more than four decadesuntil now. In response to a Freedom-of-Information-Act request submitted by Bloomberg News, the Treasury broke out Saudi Arabias holdings for the first time this month after concluding that it was consistent with transparency and the law to disclose the data, according to spokeswoman Whitney Smith. The $117 billion trove makes the kingdom one of Americas largest foreign creditors.
Yet in many ways, the information has raised more questions than it has answered. A former Treasury official, who specialized in central bank reserves and asked not to be identified, says the official figure vastly understates Saudi Arabias investments in U.S. government debt, which may be double or more.
http://www.msn.com/en-us/money/markets/the-untold-story-behind-saudi-arabia%e2%80%99s-41-year-us-debt-secret/ar-BBtRLGL?li=BBnbfcL&ocid=iehp
Too good to let slip through the cracks over the weekend.
leveymg
(36,418 posts)EdwardBernays
(3,343 posts)I always thought that our $ spent on SA oil come back through the crap load of military equipment they buy from us. Aren't they in the top 5 or so nations in the size of their military? And a Wahabi state. If the house of Saud falls...
That and Saudi investment in US companies and real estate, to be expected when you run a significant trade deficit.
Why can't the obvious solution ever be tried? Research and conversion to alternative energy. In the long run it would have been cheaper and less destructive than the choices made so far.