By Martin Armstrong of Armstrong Economics:
Further evidence that 2015.75 is really the peak in a Massive Debt Bubble: The Middle East has always been on a cash basis as their revenues from oil exempted them from ever borrowing money – that is not the case today.
As oil prices rose, spending programs also anticipated no end in sight. So as oil peaked and has begun a technology-shift bear market, those spending programs are causing budget deficits to appear in the Middle East for the first time. Not only has Saudi Arabia issued its first bond issue of $4 billion to cover budget deficits, other countries may follow in the region.
The May turning point has indeed been a profound turn on the long-term setting the stage for the reversal in the short-term come 2015.75. If you can comprehend how everything is connected, you can see these events coming. Since May, Saudi Arabia’s foreign assets have entered crash mode. In May, foreign asset holdings fell over $672 billion. Saudi Arabia sold assets drawing down its reserves to cover the budget deficit.