Says Wikipedia (not a good source I know):
On July 25, 1990, the U.S. Ambassador in Iraq, April Glaspie, asked the Iraqi high command to explain the military preparations in progress, including the massing of Iraqi troops near the border.
The American ambassador declared to her Iraqi interlocutor that Washington, “inspired by the friendship and not by confrontation, does not have an opinion” on the disagreement between Kuwait and Iraq, stating "we have no opinion on the Arab-Arab conflicts."
She also let Saddam Hussein know that the U.S. did not intend "to start an economic war against Iraq". These statements may have caused Saddam to believe he had received a diplomatic green light from the United States to invade Kuwait.
According to Prof. Richard E. Rubenstein, Glaspie was later asked by British journalists why she had said that, her response was "we didn't think he would go that far" meaning take the whole country. Although no follow-up question was asked, one might assume that what the US government thought was that Saddam Hussein would take only the oil field.
http://en.wikipedia.org/wiki/Invasion_of_Kuwait#Iraqi-American_relations
Your point?
Much has been made of this comment, but there's very little there there.
The US did not have a position on a specific and relatively minor border dispute between two independent countries. What a shock!
If Saddam thought this meant invasion and conquest was OK, he was an even bigger idiot than I thought.