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GLOBAL SYSTEMIC CRISIS. In This Issue: • The end of cheap oil, or more exactly of the indirect control of oil prices through the protection afforded to the oil monarchies • Saudi Arabia contagion triggers Gulf rout • Trichet n'exclut pas une hausse des taux en avril • Bernanke Doesn't Rule Out More Bond Buying to Aid Economy • Investors become wary of emerging economies • How Mideast unrest may affect Spain, Italy • Dollar Losing Safe Haven Appeal • Pound Declines, Gilts Advance on Signs U.K. Economic Recovery Is Stalling The end of cheap oil, or more exactly of the indirect control of oil prices through the protection afforded to the oil monarchies Between 1945 and 1975, the US strategy in the region has been determined by the desire to ensure control over the vast oil reserves in the region, then by the objective of forcing payment for oil in “paper-” dollars, that’s to say, a dollar free of any fixed parity with gold. This double objective was achieved in the 1980s. In 2011, the whole structure is collapsing under the battering of the Arab populations. Because, as regards oil, the real shock emanating from Tahrir Square that has been felt in Riyadh and in the oil monarchies of the region, is the discovery that the United States is not a reliable "bodyguard". In practical terms, as local reactions show for that matter, the Egyptian crisis and the lack of US support for Mubarak, has initiated a review process of the entire relationship with Washington in Riyadh and other oil monarchies, including the dependence of these countries’ leaders on military trained and equipped by the United States... LEAP/E2020 – Excerpt GEAB N°52 (Feb. 16, 2011) Saudi Arabia contagion triggers Gulf rout Fears of sectarian uprisings in Bahrain and Saudi Arabia have set off the first serious wave of investor flight from the Gulf, compounding market turmoil as civil war in Libya pushes Brent crude over $116 a barrel. Saudi Arabia’s Tadawul stock index has tumbled 11pc in wild trading over the past two days, led by banks and insurers. Dubai’s bourse has hit a 7-year low. Telegraph Trichet n'exclut pas une hausse des taux en avril Le président de la Banque centrale européenne estime qu'une «grande vigilance s'impose» concernant l'inflation. Le principal taux d'intérêt directeur reste pour le moment à 1%. Alerte sur l'inflation. Le président de la Banque centrale européenne, Jean-Claude Trichet, a prévenu qu'une hausse des taux d'intérêt «est possible» dès le mois prochain, afin de contenir la reprise de l'inflation observée ces derniers mois. Le Figaro Bernanke Doesn't Rule Out More Bond Buying to Aid Economy Federal Reserve Chairman Ben S. Bernanke didn’t rule out expanding the central bank’s asset purchases aimed at stimulating the economy, saying he doesn’t want to see the U.S. relapse into a recession. Asked at a House Financial Services Committee hearing today what conditions would warrant a third round of so-called quantitative easing, Bernanke said that “what we’d like to see is a sustainable recovery. We don’t want to see the economy falling back into a double dip or to a stall-out.” Bloomberg Investors become wary of emerging economies Finance ministers and central bankers in a number of emerging economies knew trouble was around the corner. Until recently, financial managers appeared fixated on the attractive investment opportunities in emerging markets. But nations like Brazil and China were reluctant to accept the surge the foreign capital, and now that unrest has spread throughout the Arab world, their reasons have become clear. Deutsche Welle How Mideast unrest may affect Spain, Italy Rising oil prices may give ECB another excuse to hike rates. Turmoil in the Middle East and North Africa could provide another source of trouble for the euro zone’s ailing periphery, but the pain won’t come directly from the gas pump. Market Watch Dollar Losing Safe Haven Appeal Long seen as a place of safety in times of turmoil, the dollar may be losing its haven appeal. Soaring oil prices, driven by upheaval in the Middle East, falling equities and elevated volatility have all made investors uneasy. CNBC Pound Declines, Gilts Advance on Signs U.K. Economic Recovery Is Stalling The pound declined against most of its 16 major counterparts after a report yesterday showed the economy shrank more than initially estimated in the fourth quarter. Oil prices rose to a 30-month high in London as political tensions in Libya and the Middle East added to concern that higher energy prices will derail Britain’s economic recovery. Two-year gilt yields rose the most in three weeks. Bloomberg Featured Links • LEAP / Europe 2020 • GlobalEurope Anticipation Bulletin (website) • Global systemic crisis - All our selected news • GlobalEurope Press Review (NM blog)