There is reportedly evidence–censored pages of the official 9/11 report–that some of the 9/11 terrorists received funding from Saudi Arabia, possibly including Saudi officials. A bill in Congress would allow Saudi Arabia to be held liable in any court proceedings. Now Saudi Arabia is saying that if that bill passes, it will sell off its $750 billion in American treasury notes and other assets. This could dramatically lower their value and harm the U.S. economy.
Beyond this specific issue (more details on that after the jump), the Saudi threat shows a big vulnerability in national security. Countries that own lots of American property or that America owes lots of money to have leverage over us. What if China cashed out its holdings in the United States? Or simply stopped buying American debt? Our national debt is being funded, in large part, by selling our bonds overseas. Which not only makes us dependent, but makes us vulnerable to foreign coercion, as the Saudis are trying to do. [Read more…]