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Saudi plan to reduce US Wealth inequality

Chang29
Posts: 732
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4/18/2016 1:42:23 AM
Posted: 7 months ago
http://www.nytimes.com...

From the NYT, "Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars" worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks."

"The Obama administration has lobbied Congress to block the bill"s passage", to prevent "economy fallout". Thus protecting wealth of America's 1% from falling prices.

Obama and Yellen recently had a closed door meeting, along with a unscheduled closed Fed meeting was Saudi Arabia asset threat the reason, well we will never know, but something big economically is happening.

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
BrendanD19
Posts: 2,050
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4/18/2016 3:19:48 AM
Posted: 7 months ago
At 4/18/2016 1:42:23 AM, Chang29 wrote:
http://www.nytimes.com...

From the NYT, "Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars" worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks."

"The Obama administration has lobbied Congress to block the bill"s passage", to prevent "economy fallout". Thus protecting wealth of America's 1% from falling prices.

Obama and Yellen recently had a closed door meeting, along with a unscheduled closed Fed meeting was Saudi Arabia asset threat the reason, well we will never know, but something big economically is happening.

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.

As soon as I hear Saudi Arabia is involved, I am immediately skeptical.
airmax1227
Posts: 13,245
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4/18/2016 4:03:32 AM
Posted: 7 months ago
At 4/18/2016 1:42:23 AM, Chang29 wrote:

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.

Most of those assets would be in treasury securities.... Are the poor in the US going to suddenly make a run on treasury securities if the prices are lowered because of a devaluation due to a Saudi Arabian sell-off?

You make it sound like Saudi Arabia is about to selloff a freighter worth of cars, and therefore the price of cars is about to go down because the supply will suddenly be greater than the demand. This is not what is meant by Saudi Arabia unloading billions worth of US assets. Perhaps some will be hard assets in the Kingdom and in the US, but most of it will likely (in terms of the actual threat) be related to US debt.

This will NOT mean that the results of this sell-off will result in wealth equality. Rather, the most likely outcome would be a devaluation of the dollar, which would most harm those with fewer dollars and fixed incomes. (An argument could be made that prices will lower too, though this would still not be a net benefit for "wealth inequality")

This is an interesting spin on this story that I haven't heard elsewhere and haven't been able to find in a google search so I'm not sure how you've drawn the conclusion you have in the title of this thread. I hope you are willing to expand on it.

In any case, this is a dicey political situation that I don't know enough about at this moment to have much of an opinion on it yet. The Saudi threat seems unlikely to happen though, since its own currency is directly tied to the dollar. In other words, should they make a move that harms the dollar, their own currency is harmed, and therefor their own economy is harmed.

There is a real cause and effect position of the Saudi's here to be fair. The bill being passed doesn't just automatically make the assumption of guilt on the Kingdoms behalf, but it does allow the freezing of assets by US courts. The only way for SA to avoid this, which might be inevitable given the process allowed by this bill, is for SA to just sell those assets off and cut their losses before it's out of their control. In that context, the Saudi threat becomes a far more rational reaction.

Either way, it's probably best not to test Saudi resolve in their willingness to harm their own economy, so hopefully this issue will be resolved without it coming to that.

The following Forbes article is pretty interesting and delves into the potential economic impact such a selloff might have. The author seems to believe that the effect would be noted, but isn't of too much concern ultimately. So perhaps that puts the entire issue into greater perspective, and largely refutes the case as I understand it, made in the OP.

http://www.forbes.com...
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augcaesarustus
Posts: 368
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4/18/2016 6:25:15 AM
Posted: 7 months ago
At 4/18/2016 3:19:48 AM, BrendanD19 wrote:
At 4/18/2016 1:42:23 AM, Chang29 wrote:
http://www.nytimes.com...

From the NYT, "Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars" worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks."

"The Obama administration has lobbied Congress to block the bill"s passage", to prevent "economy fallout". Thus protecting wealth of America's 1% from falling prices.

Obama and Yellen recently had a closed door meeting, along with a unscheduled closed Fed meeting was Saudi Arabia asset threat the reason, well we will never know, but something big economically is happening.

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.

As soon as I hear Saudi Arabia is involved, I am immediately skeptical.

I concur. I wouldn't be taking lessons from a country like Saudi Arabia, with its poor human rights record and appalling treatment of women; not to mention the high levels of poverty there.
Chang29
Posts: 732
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4/18/2016 10:33:53 AM
Posted: 7 months ago
At 4/18/2016 4:03:32 AM, airmax1227 wrote:
At 4/18/2016 1:42:23 AM, Chang29 wrote:

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.

Most of those assets would be in treasury securities.... Are the poor in the US going to suddenly make a run on treasury securities if the prices are lowered because of a devaluation due to a Saudi Arabian sell-off?

You make it sound like Saudi Arabia is about to selloff a freighter worth of cars, and therefore the price of cars is about to go down because the supply will suddenly be greater than the demand. This is not what is meant by Saudi Arabia unloading billions worth of US assets. Perhaps some will be hard assets in the Kingdom and in the US, but most of it will likely (in terms of the actual threat) be related to US debt.

This will NOT mean that the results of this sell-off will result in wealth equality. Rather, the most likely outcome would be a devaluation of the dollar, which would most harm those with fewer dollars and fixed incomes. (An argument could be made that prices will lower too, though this would still not be a net benefit for "wealth inequality")

This is an interesting spin on this story that I haven't heard elsewhere and haven't been able to find in a google search so I'm not sure how you've drawn the conclusion you have in the title of this thread. I hope you are willing to expand on it.

In any case, this is a dicey political situation that I don't know enough about at this moment to have much of an opinion on it yet. The Saudi threat seems unlikely to happen though, since its own currency is directly tied to the dollar. In other words, should they make a move that harms the dollar, their own currency is harmed, and therefor their own economy is harmed.

There is a real cause and effect position of the Saudi's here to be fair. The bill being passed doesn't just automatically make the assumption of guilt on the Kingdoms behalf, but it does allow the freezing of assets by US courts. The only way for SA to avoid this, which might be inevitable given the process allowed by this bill, is for SA to just sell those assets off and cut their losses before it's out of their control. In that context, the Saudi threat becomes a far more rational reaction.

Either way, it's probably best not to test Saudi resolve in their willingness to harm their own economy, so hopefully this issue will be resolved without it coming to that.

The following Forbes article is pretty interesting and delves into the potential economic impact such a selloff might have. The author seems to believe that the effect would be noted, but isn't of too much concern ultimately. So perhaps that puts the entire issue into greater perspective, and largely refutes the case as I understand it, made in the OP.

http://www.forbes.com...

So, you are implying that the Yellen/Obama and Fed secret meetings might have been about something else?

Lower asset values would decrease the wealth of the top 1%, thus decreasing wealth inequality, the poor will no purchase the asset other buyers would which more supply causes values to fall.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
triangle.128k
Posts: 3,675
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4/18/2016 7:48:25 PM
Posted: 7 months ago
At 4/18/2016 3:19:48 AM, BrendanD19 wrote:
At 4/18/2016 1:42:23 AM, Chang29 wrote:
http://www.nytimes.com...

From the NYT, "Saudi Arabia has told the Obama administration and members of Congress that it will sell off hundreds of billions of dollars" worth of American assets held by the kingdom if Congress passes a bill that would allow the Saudi government to be held responsible in American courts for any role in the Sept. 11, 2001, attacks."

"The Obama administration has lobbied Congress to block the bill"s passage", to prevent "economy fallout". Thus protecting wealth of America's 1% from falling prices.

Obama and Yellen recently had a closed door meeting, along with a unscheduled closed Fed meeting was Saudi Arabia asset threat the reason, well we will never know, but something big economically is happening.

If Saudi Arabia did sell off US assets, it would lower value and prices of similar assets, thus reducing wealth inequality in America.

As soon as I hear Saudi Arabia is involved, I am immediately skeptical.

+1