Friday, November 23, 2018

Who would want to be in Trump's shoes?

The CIA believes that the order to kill Jamal Khashoggi inside the Saudi consulate in Istanbul must have come from the Crown Prince of Saudi Arabia Mohammed Bin Salman (MBS). Their conclusion is apparently based on a couple of phone calls, one by the brother of MBS and another by one of the alleged killers. US President Donald Trump has refused to take any actions on the CIA report saying, "They have feeling certain ways. I have seen the report, they have not concluded, I don't know if anyone's going to be able to conclude the crown prince did it." Trump has claimed that his defence deal with Saudi Arabia will create lots of jobs for Americans but the actual figure maybe far less than suggested. Saudi Arabia has warned that its royal family is a red line. "The custodian of the two holy mosques (King Salman) and the crown prince are a red line," said Foreign Minister Adel al-Jubeir. Over the years the CIA has missed extremely important events, including the Tet offensive in Vietnam, the Iranian Revolution and the Soviet invasion of Afghanistan. Much worse, its plans to assassinate Fidel Castro of Cuba were so amateurish and comical that they would not have been out of place in a Billy Bunter story. The real reason for Trump's reluctance to blame MBS maybe because of oil. Trump thanked the Saudis for lowering the price of crude oil which had climbed to over $80 a barrel but is now trading at below $60. Lower prices of oil will reduce inflation in the US and may deter the Federal Reserve from raising interest rates. The Fed has raised its Funds Rate three times this year, which now stands at 2-2.25%, but held off at its meeting in November. Trump wants the Fed to lower rates because it will encourage borrowing and stimulate the economy due to increased consumer spending. "I'd like to see the Fed with a lower interest rate," he said. "I think we have much more of a Fed problem than we have problem with anyone else." The problems with that kind of thinking is that household debt in the US has soared to $13.29 trillion, which is higher than the $12.68 trillion that precipitated the subprime crisis. Lower oil prices will hurt the shale oil industry in the US, which will hurt jobs. Increased consumer spending will suck in more imports, even as a strong dollar hurts exports, and increase US trade deficit, which is rising already. Finally, lower price of oil hurts Trump's friend Saudi Arabia whose economy is dependent on oil exports. Saudi is planning to cut oil output by 1 million barrels per day to put a floor under prices. Will Trump suddenly wake up to involvement of MBS in Khashoggi's murder if that happens? Poor Trump, life is not easy.

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