Lion of the Blogosphere

Investing in Saudi Arabia

The question to ask isn’t why companies are suddenly pulling out.

I say, the question is why did anyone want to invest there in the first place? Saudi Arabia is an Islamic revolution waiting to happen. (Which would be much worse for Middle East stability than the King killing an occasional journalist.)

Written by Lion of the Blogosphere

October 17, 2018 at EST am

Posted in Uncategorized

47 Responses

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  1. It’s pretty obvious; the Saudis have a lot of money. And they’re doing deals with favorable economics to bring in foreign investment, as they’re trying to diversify their economy (won’t work though, due to HBD).

    Eventually the House of Saud will fall, as all houses do in time. Maybe U.S. investors will be wiped out in this event, or maybe the new government will still be open for business. Maybe it will happen in 100 years, maybe in 10.

    Reactionary revolutions do happen, but the general tendency right now is for countries to become more open for business, more owned by the neolibs, not less.

    So if an investment could get a 10% return in the U.S. or 20% in Saudi, it might be worth the risk to gamble on Saudi. Especially if you’re a large, diversified investor operating all over the world.

    Wency

    October 17, 2018 at EST am

    • Good answer.

      Lion of the Blogosphere

      October 17, 2018 at EST am

    • And do they ever have $$$$. Robert Baer wrote a book about it. Never before had another country had so much so effortlessly, it was unprecedented. I think the book was called “See no Evil.”

      Frau Katze

      October 17, 2018 at EST pm

  2. I lived 6 years in Saudi Arabia as a child when my father took a job with Aramco, and I also traveled there on two business trips as an adult. So, that’s my qualifications for what I am about to say.

    People look at the chaos in the middle east and assume that each country is basically equivalent to each other and the that the chaos in other countries is going to reach Saudi Arabia, but these countries are not interchangeable.

    A very large portion of the workforce of Saudi Arabia is foreign workers. I think it is above 40% of the workforce. They are there because of the high pay and don’t have any solidarity to each other, so forget a general strike bringing down the government. The operation of the country doesn’t depend as much on the native population, so they don’t have the power to shut down the country.

    The standard of living is very high relative to other countries in the region. Everywhere I went had electricity, running water, internet, phone service, and the hospitals are modern and free to Saudi subjects. Education is free for Saudi subjects. Yeah, it’s not quite up to North American or European standards, but that’s not the way to measure it.

    Saudi Arabian subjects have seen what has happened in revolutions and wars in other countries and that serves as a warning to how bad things can get. As unhappy as some people are in the kingdom, they know it could get much much worse, and that is a source of stability for the royal family.

    Saudi Arabia has had a policy of sending its radicals abroad. A lot of those conflicts in the middle east are proxy wars between Iran and Saudi Arabia. The leaders of Saudi Arabia would never allow that nonsense in their own kingdom.

    The biggest threat to stability of the Saudi Arabia is a low oil price. When instability of the middle east increases, the oil price also increases, so paradoxically Saudi Arabia gets more prosperous and then more stable. The real threat to Saudi Arabia would be a technological change that would permanently lower oil prices.

    STL

    October 17, 2018 at EST am

    • Another good answer.

      Lion of the Blogosphere

      October 17, 2018 at EST am

    • Whatever happened to hydrogen fuel cells? I remember Jerry Pournelle remarking years ago that for all the money we spend on intervention in the Middle East, we could build a bunch more nuclear power plants, power our cars with fuel cells, and “tell the Arabs to go drink their oil.”

      Hermes

      October 17, 2018 at EST am

      • Chernobyl and Fukushima happened. Nuclear power now unpopular anywhere citizens have a voice in how they’re governed.

        (Actually, the upshot of Chernobyl is not as bad as one might think. It’s become an unofficial nature reserve. Radioactivity doesn’t seem to hurt the animals and plants. Apart from immediate deaths right after accident and some predicted thyroid cancer, there’s seems no long term side effects on the citizens. Of course everyone had to leave the area).

        I don’t know anything about the fuel cells, though.

        Frau Katze

        October 17, 2018 at EST pm

      • Fuel cells were this amazing technology that everyone was going gaga over in the late 1990s, but then it was realized that it wasn’t commercially viable.

        Lion of the Blogosphere

        October 17, 2018 at EST pm

      • > Nuclear power now unpopular

        1) None of the cost projections on nuclear power were remotely close to reality, and people still trot out obvious bullshit estimates about costs. It’s very expensive, and we frankly don’t even really know how expensive it will ultimately be because we don’t have much experience decommissioning plants, and the waste still hasn’t been permanently dealt with anywhere at all.

        2) We’re just about over peak-uranium. We will be lucky to maintain the nuclear generation capacity we currently have over coming decades. It is not a thing that can be seriously increased to compensate for declines in oil production. Uranium plants were only ever thought of in the 60s as some temporary bridge to fusion power. They were fully aware that there really isn’t all that much viable uranium.

        bobbybobbob

        October 17, 2018 at EST pm

      • 1. There’s a huge amount of potential in breeder reactors which create more fuel than they consume.
        2. The amount of uranium reserves is vastly understated because reserves are only booked as what’s profitable to mine given current prices. But uranium is the least expensive part of operating nuclear plants. There’s enough uranium to produce thousands of years of electricity for the world, even without breeder reactors.
        3. Nuclear plants are expensive because of cost disease and not because they have to be expensive. https://lionoftheblogosphere.wordpress.com/2017/05/30/cost-disease/

        Lion of the Blogosphere

        October 17, 2018 at EST pm

      • @Lion Breeder reactors have consistently failed. See “Atomic Accidents: A History” by James Mahaffey. The technology requires liquid sodium. Sodium is extremely reactive. If you think the Russian RBMKs were bad…

        I have read (but not at book length) about a completely different approach. The uranium reactors we use were originally intended for assisting with building nuclear weapons. A scaled down model worked well for nuclear submarines.

        And so we have gone that route. Apparently you can create something that will generate electricity using thorium.

        Frau Katze

        October 17, 2018 at EST pm

      • Chernobyl happened way before fuel cells came out. Nuclear plants are expensive and suffer heavy regulatory burdens and NIMBYism thanks to environmentalist groups, who apparently would prefer that we continue burning massive amounts of fossil fuels rather than store a bunch of radioactive waste under a mountain.

        Hermes

        October 18, 2018 at EST am

    • low oil prices are good for SA because it decreases incentives to find alternatives to oil. the break-even price is low enough that low oil prices are sustainable

      grey enlightenment

      October 17, 2018 at EST am

    • There are moves to get the Saudis themselves working more. Many foreigners sent home,

      But overall, they’re having problems with this new policy (not a surprise!). From what I’ve read Saudi Arabia is one of better places in the Middle East to live.

      Kind of sucks if you’re a young teenager and your father marries you off to an old man, but no place is perfect.

      Frau Katze

      October 17, 2018 at EST pm

    • Well if they can cut off the hands of the ordinary thieves, it seems they could execute radicals as blasphemers of Islam or some such.

      not too late

      October 17, 2018 at EST pm

  3. Saudi Arabia also has a security guarantee from the United States. If there were a revolution in Saudi Arabia, the US military would arrive to restore the government. That’s not a maybe, it will happen.

    STL

    October 17, 2018 at EST am

    • This arrangement was made in exchange for them selling oil in dollars. This boosts, and hence America’s wealth. More realpolitik.

      MoreSigmasThanYou

      October 17, 2018 at EST pm

      • Oil is a surprisingly small fraction of global trade, and the dollar’s reserve currency status really has nothing to do with oil in particular anymore. The whole “petrodollar” thing is an outdated concept from the early 70s.

        bobbybobbob

        October 17, 2018 at EST pm

      • With a bit of effort, the car manufacturers were able to dramatically increase efficiency. Lots more mile per gallon than, say, the 50s and 60s.

        Frau Katze

        October 17, 2018 at EST pm

      • It’s not about energy efficiency increases. The dollar is the global reserve currency because the USA is the only sovereign nation in the world that over 200 years has: A) never cancelled a cash note. B) not defaulted on the national debt. You could argue Nixon closing the gold window was a form of default. But you have to compare that to the reality that pretty much all the European and Asian nations rescheduled interest payments or cancelled a currency in the 20th century alone. Nobody else has clean credit going back to the late 1700s.

        “A” is a big deal that probably doesn’t occur to most people. You can deposit a century+ old $100 greenback in an American bank, no problem. There are vast amounts of US printed cash circulating all over the planet and people trust it. Other countries cancel notes all the time: hand it in by date X or it’s trash.

        bobbybobbob

        October 17, 2018 at EST pm

      • “With a bit of effort, the car manufacturers were able to dramatically increase efficiency. Lots more mile per gallon than, say, the 50s and 60s.”
        Lots more cars as well…and not just in the USA

        Dr Hook

        October 18, 2018 at EST pm

  4. The positions of the “sober”, “serious”, “adults in the room” who comprise the US foreign policy establishment are pretty weird when you stop to think about them. The death of this journalist has generated a firestorm, but I’ve seen very little discussion of Saudi Arabia’s role in the Yemen war. Only a few pundits with views outside the mainstream seem to mention it.

    fakename

    October 17, 2018 at EST pm

    • The Middle East has been in a constant state of low-level proxy wars for decades. And much worse wars than that, such as the very deadly Iran-Iraq war.

      Lion of the Blogosphere

      October 17, 2018 at EST pm

    • One time I chilled with a guy who fought in the civil war in Yemen. I uploaded some videos of him to my YouTube channel (doing as TheLion does, and editing out the more negative and personal stuff he said). In this article:

      https://tribunist.com/news/special-forces-legend-explains-why-death-of-navy-seal-wasnt-trump-admins-fault/

      He states that “If you have a white face on the streets of Yemen, it’s a death sentence. There is a very high chance that you will get captured and killed.” I think the fact that there are so many low-level terrorists there makes things muddy enough that you can get away with killing a non-terrorist that no one has heard of.

      The problem is that the individual the Saudi government killed in the Turkish Embassy was a professional journalist. According to the MSM, professional journalists should have more rights than any other class of humans. Also the dead guy wasn’t a radical Muslim who would have killed you himself. He was probably one of those nice moderate Muslims who, if watching you be killed by a radical Muslim, would have only stood around peacefully chanting Allahu Akbar.

      The professional journalist thing just seals the deal. Hollywood defends Roman Polanski and Woody Allen in spite of what they’ve done because being big directors overrides the fact that they’ve also raped children. Whatever embassy dead guy did or didn’t do, apparently he was a credentialed journalist working for the MSM. Protecting MSM employees is worth starting a war over, even if said MSM employee supported the death penalty for apostasy, and criticizing Islam, and had been friends with Osama Bin Laden, and supported attacks on Christians or Jews simply for the crime of being Christian or Jewish.

      MoreSigmasThanYou

      October 17, 2018 at EST pm

      • #MeToo didn’t hurt Polanski a bit. Why not? Maybe because the (now) woman doesn’t seem to care.

        Frau Katze

        October 17, 2018 at EST pm

      • This.

        not too late

        October 17, 2018 at EST pm

      • Defense attorney Mark Geragos says that when a client is charged with having relations with an underage victim, you always try to drag the process out so that the victim is a full grown adult when they take the stand; thus the jury looks at them as an adult.

        MoreSigmasThanYou

        October 17, 2018 at EST pm

      • TheLion is truly a benevolent dictator protecting us from ourselves.

        The guy I mentioned who participated in the Civil War in Yemen is in my FaceBook feed today complaining that someone else went to the press with his exploits, endangering his personal safety. Two and a half years ago, he said ‘we did blah blah blah to a high value target’. Today I can read a news article and learn the name of the high value target.

        Long live the House of TheLion

        MoreSigmasThanYou

        October 17, 2018 at EST pm

    • The Washington Post, and other media entities broadly, have to make a big deal about this because they can’t let their employees think they won’t back them up if they get in trouble and or fail to eulogize them if they get killed. And politicians respond to whatever is in the news.

      Gozo

      October 17, 2018 at EST pm

  5. “I say, the question is why did anyone want to invest there in the first place? Saudi Arabia is an Islamic revolution waiting to happen. ”

    No it’s not. It’s nothing like Iran, where you had a lot of disaffected young Iranians who could take the streets.

    Good news, The Conners premiere was way less than Roseanne. Of course the MSM are spinning it madly, but it can’t be denied that the show is not the mega-hit that Roseanne was.

    gothamette

    October 17, 2018 at EST pm

    • Young Iranians taking to the streets made a positive impact on me. My impression is that young Iranians resent that the Islamic revolution took place in the late 70s before they were born. They know their country used to be much more secular/western and they wish it was today.

      Saudis never had wide protests like Iran and I assumed it was because they embrace everything about their culture, even the most radical elements. I suppose a bigger factor is Saudi would absolutely not tolerate protests, plus they have a high standard of living and people don’t want to risk losing it.

      Then you had the Arab Spring. My impression is those protests were the polar opposite of Iran. Where Iranians wanted more secularism, the Arab Spring countries wanted to topple secular leaders (such as Egypt’s Mubarak) and replace them with radical Islamic crazies.

      Jay Fink

      October 17, 2018 at EST pm

      • Khomeini overplayed the Islam card and made Islam unpopular with many people. No let up in sight on this policy.

        Some homegrown nutcases did try a takeover in Saudi Arabia. They seized the Grand Mosque in Mecca in 1979. I read a book on the subject. Apparently French police or military experts were brought in and permitted to defile Mecca long enough to get rid of the nutcases.

        The Saudis blamed Iran but it turned out to be strictly local.

        https://en.m.wikipedia.org/wiki/Grand_Mosque_seizure

        Frau Katze

        October 17, 2018 at EST pm

      • Average IQ of Saudis much lower than Persians. Almost all historical, scientific, or cultural achievements of “Islam” were done by Persians or Levantines.

        PerezHBD

        October 17, 2018 at EST pm

      • @PerezHBD Judging from the number of memoirs the Persians are miles ahead of the Arabs. Apparently there are also large numbers of books translated to Farsi. One memoir I read noted how esoteric some of them were (no doubt unauthorized translations).

        Still, note that some Lebanese have done very well (like Carlos Slim).

        Frau Katze

        October 17, 2018 at EST pm

  6. All the press around the world is speaking non stop about Kashoogi and MBS … except in France where it is absolutely not on TV neither on the first 10 pages of major newspaper. It looks that they have been told not to speak about that here …. no idea why.

    (I read Spanish, English and German press, and there it’s a n1 headline)

    Bruno

    October 17, 2018 at EST pm

  7. because saudis aren’t as dumb as blacks, and if they could get their TFR under control they’d be okay.

    in terms of sovereign wealth fund value per citizen the richest countries on earth are the gulf states excepting saudi.

    so norway’s swf has like 200k per citizen. qatar’s has 1m.

    this guy is the nephew of adnan. the richest man on earth in the early 80s. they’re turks, not arabs.

    the rebel yell

    October 17, 2018 at EST pm

    • my point is there are so many uber rich people in all the gulf states (as a result of oil) that they don’t need a real economy. they can do okay without working just living off the income from their capital.

      the rebel yell

      October 17, 2018 at EST pm

  8. Nobody is really pulling out and Saudi Arabia is not on the verge of an Islamic revolution. All the countries in the middle east that are unstable are poor countries, rich countries don’t have revolutions and that’s also why you don’t see Saudi Arabian immigrants around the world. They are richer and have better life than you have. As per usual I suggest you go out of Manhattan and explore the world a little bit.

    Hashed

    October 17, 2018 at EST pm

    • I was outside of Manhattan three days ago.

      Lion of the Blogosphere

      October 17, 2018 at EST pm

      • I think he meant farther than Staten Island.

        Hermes

        October 17, 2018 at EST pm

      • I wasn’t in Staten Island.

        Lion of the Blogosphere

        October 17, 2018 at EST pm

      • Manner of speaking, but my point is, although I enjoy your writing on the issues you know well when it comes to international matters most of the comments seems to be a bit below par. Still enjoying it because I like to argue and to be contrarian. Still think you should explore the world a bit.

        Hashed

        October 18, 2018 at EST am

  9. ‘The Dirtiest Money on Earth.’ Silicon Valley Has a Saudi Arabia Problem:

    https://www.barrons.com/articles/saudi-arabia-tech-fundraising-1539808510

    Exhibit A: Uber Technologies, which landed a staggering $3.5 billion from Saudi Arabia’s Public Investment Fund in 2016. Yasir Al Rumayyan, managing director of the fund, is one of a dozen members on Uber’s board of directors.

    The deep financial ties and chummy relationships illustrate that “the most idealistic companies in American capitalism—especially Silicon Valley in its rhetoric—are more than happy to take the dirtiest money on Earth to be bankrolled,” Anand Giridharadas, author of “Winners Take All: The Elite Charade of Changing the World,” tells Barron’s. “It is a hollowness when one considers damage down to climate change by Saudi Arabia, and its oppression of women.”

    But the debate goes beyond Uber, whose massive Saudi investment helped the company push off an IPO while pushing its private market value to $72 billion.

    The Public Investment Fund took an estimated $2 billion stake through secondary markets in Tesla (TSLA) in August. And in April, the sovereign wealth fund plowed $400 million into augmented reality startup Magic Leap.

    The Crown Prince is also courting American CEOs and billionaires to help him build a new smart city called Neom. In a statement this week, Sam Altman, head of the influential Y Combinator tech incubator, said he would suspend his work advising the Saudis on Neom.

    In a visit to the U.S. last spring, Salman also discussed the project with Amazon (AMZN) CEO Jeff Bezos, Apple (AAPL) CEO Tim Cook, Google CEO Sundar Pichai, and Google parent Alphabet (GOOGL) co-founder Sergey Brin.

    Jimmy Ellis

    October 18, 2018 at EST am

  10. Scott Adams has disseminated one of the best idea ever that could solve the Israelo-palestinian conflict. As a punishment and Reward to Saudi Arabia :

    1) They recognize the state of Israel
    2) They create a big fund (billions) co-administered by saudis, palestinian and israelis exclusively dedicated to the palestinian territories (health, education, infrastructure etc)
    3) They are rewarded with the custody of Al-Asqa mosque.

    The last part would make it swalloable by the most conservative wahhabite clergy because tue custody of Al-Aqsa mosq is one of the most important thing in the world for a muslim after Meqa and Medina. Because it is the place who suroundings are believed to be blessed by god, when he proposed to Mohamad the night trip, from the holiest mosque (Meca) to the furthest mosque (al aqsa meaning the most remote).

    That would be such a win win win situation. Extermelly good for him to be receptive to genious.

    Bruno

    October 19, 2018 at EST pm

    • Don’t the Jordanians already have control of both mosques on the Temple Mount? (Al Aqsa is one of them.)

      The Israelis took it in the Six Day War. But control of both mosques (and I think the whole Temple Mount, but I’m not positive) was returned to the Muslims.

      Frau Katze

      October 20, 2018 at EST am


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