The Trillion-Dollar Mistake -- No End In Sight -- November 28, 2016

On November 22, 2016, I posted this estimate (the $5 billion/month) figure is my "hunch" based on several stories:

Saudi Arabia: until it sees $74 oil, the kingdom is going to spend upwards of $5 billion/month out of its cash reserves to meet payroll -- Reuters, via Twitter.

Today, from FuelFix we get another important data point. For quite some time, it's been reported that Saudi Arabia based their budget on $100-oil. In this linked article we see that the "new" Saudi Arabia budget is based on $92-oil. The data points from the linked article:

• Saudi's finances "fall into disarray"
• current deficit has ballooned to one-fifth of its economic output
• current deficit is about twice the size of the 2009 deficit, the worst year of the so-called Great Recession
• Saudi has burned through $180 billion in financial reserves despite huge budget cuts

Just as bad elsewhere:

• Iraq: fiscal deficit at 20% of its GDP
• Kuwait: 12%
• UAE: 9%

Most important data point: Saudi Arabia needs $92-oil and "we" won't see $92-oil any time soon. We'll be lucky if we get to $75 by the end of President Trump's first term. Except I don't know why we want $75-oil. I think most American consumers "love" $1.74-gasoline.