Its a fun line, but the volume of money they have and the way its managed says they are looking at retaining that wealth somehow
Its a fun line, but the volume of money they have and the way its managed says they are looking at retaining that wealth somehow
Well yes, that is because they have heard the line and took it as a warning.
However just because they are trying doesn't mean they will succeed. Their attempts at diversification still seem very reliant on oil money, and its far from clear that they will eventually be able to stand on their own.
Their whole investment castle is built on sand (pun intended) and when oil even remotely starts to fade out as a commodity, it will crumble instantly. Panic will ensue and corruption will be rampant in order to continue the lavish consumerism. Everything will be sold for pennies. The difficult thing is not to make money once, it's to keep them afterwards.
A sovereign wealth fund with over $1 trillion USD (so with over $1 million per Emirati citizen) which invests heavily in U.S. equities will be sold for pennies?
So U.S. equities will be sold for pennies?
Are you predicting a U.S. stock market crash bigger than the Great Depression, when oil runs out?
Foreign assets are only as good as your alliance with those foreign nations.
When you lose your only bargaining chip(oil), things start to look dicey.
Hhmmmm,
Could be a sell off if it isn't managed...measured buy-backs scaled over a timeline that maybe offers them an opportunity to invest in other commodities may be preferable.
Actually now that I think about it...I should probably keep a pulse on ME holdings about 2 or so decades from now
Money retrained means nothing when cheap oil is gone. Cars are only a thing because we have volumes and energy for large supply chains and scale. A rich person can afford a model-T level car, but large parts of what makes a luxury car are things that they won't be able to get at any price without modern industry that is built on distributed wealth for many people. All the electronics - needs industry. Precision manufacturing - depends on precision electronics. You can't even rebuild a current design if someone thinks to print out the blueprints.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
Petromonarchies invest a lot into alternative asset classes: semiconductor industry, logistics and shipping, power electric machines, biomedical development, etc. Renewables are in the list, too.
Most of those are things that depend on cheap energy [mostly oil] today. Only renewables do not, and it is questionable if we will transition fast enough to not collapse society for lack of energy (though this is looking good)
The 3 generation cycle has proven to be true in the past but families are smarter today.
Retaining wealth is the easy part, retaining political power is hard. They don't want to be regular jetsetting billionaires, they want to rule their own domain. And in order to do that, they need to figure out how to make people want to keep living there.
Money solves a lot, but not everything. At the end of the day it's still a country in a desert. Unfortunately that entire region is a repeating history of temporary wealth and stability that gives way to instability. When that happens the underlying constraints can quickly reassert themselves. Just luck at the history of Kuwait.
The point of the line is not that they aren't going to try, it's an acknowledgement of the extreme challenge in diversifying in the short term and incentivizing the next generations who are very, very comfortable with the status quo to build other income streams in the long term.