"What effect must it have on a nation if it learns no foreign languages? Probably much the same as that which a total withdrawal from society has upon an individual." --G.C. Lichtenberg
I wonder, did anyone think this kind of thing might happen before all the anti-Saudi rhetoric started flying all over the place?
Actually, this is probably a mostly empty threat. There really isn't anyplace else for the money to go, especially given that the world has been thoroughly (if temporarily) disabused of the notion that asset-price bubbles are a good thing. Most likely, the money would be shifted into Europe, but that amount of money going into European assets would inflate prices, with the Saudis taking a major hit just buying them, especially if the money moves en masse. Putting it all into cash, especially Euros, could have a devastating effect on the dollar in the short term, but they'd still be faced with the loss of its returning to a stable exchange rate after they finish buying. Unless they're willing to lose a large chunk of their $750 billion, the majority of Saudi US investments will probably stay put.
Still, it's going to be fun to watch all the (Republican-friendly) American financial institutions running in circles and screaming bloody murder for the Bush Administration to do something about this. It'll be even more fun to watch the latter capitulate.
