Senate Passes 9/11 Bill That Would Force Saudi Arabia to Dump $750B in Treasuries

Oh boy, another possible trigger to the collapse of the US bond market. Today, the Senate unanimously passed a bill that would expose the Saudi Arabian government to lawsuits by victims of the 9/11 attacks. Saudi Arabia has threatened to dump its $750B worth of US government bonds if this were to happen. That, well, sort of hints that the Saudi Arabian government is partly responsible for sponsoring 9/11, otherwise they wouldn’t care.

President Obama, whose first responsibility is protecting his own ability to borrow ad infinitum in the bond markets to fund his socialist paradise spending schemes, has threatened to veto the bill because he doesn’t want the Saudis to dump the bonds and send his borrowing costs through the roof with a $19 trillion debt hanging over his head.

So to hell with 9/11 victims and their families, he’s going to protect a muslim government responsible for more public beheadings than ISIS.

But here’s the interesting part. It looks like the Senate and House will successfully pass the bill over Obama’s veto. It was already passed unanimously, and nobody, no Republican or Democrat or whatever other silly label or letter they put after their names, wants to vote against this bill because everyone knows that it should pass. The politicians on Capitol Hill aren’t even aware that this could really crash the bond market. Here’s NYT:

Senator Chuck Schumer of New York, a Democrat and bill sponsor, said the legislation would help the families of the victims seek justice. “For the sake of the families, I want to make clear beyond the shadow of a doubt that every entity, including foreign states, will be held accountable if they are found to be sponsors of the heinous act of 9/11,” he said shortly before the bill passed.

“If the Saudis did not participate in this terrorism, they have nothing to fear about going to court,” the senator said. “If they did, they should be held accountable.”

Mr. Schumer also said he believed Democrats would override a veto from Mr. Obama.

He said he believed Saudi Arabia’s threat to pull its assets, a concern of the administration, was “hollow,” adding, “It will hurt them a lot more than it hurts us.”

Where Schumer is wrong is that it’s not a hollow threat. It’s not like the Saudis would have a choice. Once they become open to lawsuits, their treasuries become collateral and can easily be confiscated by US courts no problem. The Saudis would be forced to sell everything before that could happen. It’s not a threat, but a necessity.

Hey, if the tax spender in Congress want to really jack interest rates higher and bankrupt themselves, go for it. They need two thirds to override Obama’s veto, which will come. They already have unanimity, so two thirds doesn’t seem all that difficult. It’s not exactly an uphill battle.

 

Advertisements

2 thoughts on “Senate Passes 9/11 Bill That Would Force Saudi Arabia to Dump $750B in Treasuries

  1. Action. Reaction. The people in Washington (ok, maybe only some of them) are smart enough to see the next few moves that are most likely to happen. I expect that the policy makers have already thought of counter measures to the Saudi reaction. I, on the other hand, am not that smart. Or maybe not that devious. Or bloodthirsty.

    In the event of a Saudi sell off, what could the U.S. do to prevent (or delay) a meltdown in the bond market? I’m sure there are financial and diplomatic moves they’ve already thought of. Some forms of capital controls, certainly. Freezing assets. I wonder if the ace-in-the-hole is a military move that I can’t fathom. I don’t put anything beyond the imagination of desperate people intent on protecting their power.

    • There comes a point when the games can no longer continue and it won’t matter what the US tries to do. Is that point now? I don’t know. But it could be.

Comment here.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s