Mohammed Bin Salman, Saudi Arabia’s Deputy Crown Prince, interviewed in Riyadh, Saudi Arabia, on Wednesday, March 30, 2016. Source: Saudi Arabia’s Royal Court.
$2 Trillion… that’s big enough to buy Apple, Microsoft, Google, and Berkshire Hathaway while leaving room for dessert.
“IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince said in an interview at the royal compound in Riyadh that ended at 4 a.
m. on Thursday. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”I have a very hard time believing this. They basically want to replace oil with an investment portfolio which means their economic well being is even further out of their control and completely intangible. At the end of the day, the have nothing else of value except oil. That’s like saying Warren Buffet’s economic well-being is out of his control. Or Harvard’s endowment fund. It’s their money and it can be moved around, it’s not like they’re stuck in the same investments forever once they’re made. As for being intangible, that pretty much applies to everything. Unless you want a pure barter system, even physical commodities like oil ultimately have to be exchanged for intangibles like currencies in order to acquire other goods. Not to mention that commodities fluctuate in value (as we’ve seen with oil) based on ‘intangibles’ anyway, so it’s not like holding oil or pork bellies insulates you from the market just because you can hold them in your hands.
Norway did that from the start. They could only invest oil revenues, the dividends from those investments could be used to fund government programs.
Residents of Saudi Arabia have been getting shook up at ideas like showing up for work and paying realistic electricity prices.The sale of Aramco, or Saudi Arabian Oil Co., is planned for 2018 or even a year earlier, according to the prince. The fund will then play a major role in the economy, investing at home and abroad. It would be big enough to buy Apple Inc., Google parent Alphabet Inc., Microsoft Corp. and Berkshire Hathaway Inc. — the world’s four largest publicly traded companies.