Comment by dvfjsdhgfv
6 years ago
Frankly, after all these years I still don't get it. Are the Saudis that gullible? How much more they need to lose to understand they're being duped?
6 years ago
Frankly, after all these years I still don't get it. Are the Saudis that gullible? How much more they need to lose to understand they're being duped?
They've only really known oil for 3 generations, so yes.
And they're also desperate. The future where the world doesn't need their oil (or they've run out) isn't a distant future anymore. It's coming, and coming faster and faster. They need to diversify anyway they can if they want to avoid going back to just being a desert. And so they're jumping at pretty much any deal they see
It's not coming and coming -- it's here. Prices are negative, and they need at least something like ~$60/barrel to keep their government running and closer to $80/barrel to keep their whole country running.
But yeah, I agree with your main point: they're jumping at deals and chasing big wins, a la Dubai. Cuz they don't really have any other choice.
Sheikh Rashid's quote [1] kind of sums up the desperation of several countries in the Middle East to somehow diversify out of oil: "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel"
1: https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum
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>The future where the world doesn't need their oil
We'll need oil for plastics even if we stop using it for transportation, and Saudi oil is just about the easiest/cheapest to extract, so we'll be using their oil for a long time, but it won't be as grotesquely profitable for them as in the past.
Yes. Though we don't really "need" oil for that. You can make plastics out of any source of carbon and hydrogen.
Oil is just convenient, because you need less energy to make the plastic than if you start with eg water and CO2.
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Matt Levine's column Money Stuff touches on these questions every once in a while.
Until WeWork really blew up, it wasn't too hard as an investor to keep up the impression that the track record of Softbank was good enough.
(That's not to say that you couldn't re-interpret the track record in a negative way, even before WeWork. But nothing really forced you to.)
Some people can make a profit playing at casinos (more so in the past than now).
Does that make casinos dumb? No, just imperfect.