Under the leadership of the murderer Mohammad bin Salman, the Saudi royal family (and the Saudi state it controls) have embarked on "Vision 2030," a plan to shift the country's economy from oil to not-oil.

Extraction-based states are always dysfunctional. All you need to run an extraction economy is a hole in the ground surrounded by guns. Being a leader of such a state requires merely that you be able to judge which mercenaries and diggers to hire.

When these leaders are called upon to do anything more sophisticated - particularly anything that requires forbearance, tolerance, and a degree of personal discomfort - they fail, badly.

Sure, MBS was up to the task of going to NYC to drink Starbucks with Bloomberg.

But when he was faced with a routine leadership challenge - tolerating a critical journalist rather than dismembering him and dissolving his remains in acid - he totally failed.

Vision 2030 is proceeding as you might expect from a program named under the misconception that 20/30 vision is like 20/20 vision, only better.

(It's worse)

Take the IPO for Saudi Aramco, the state-owned oil company.

The IPO was "omni-toxic." Aramco doesn't own its wells; it's a royal piggybank that funds a stream of multibillion-dollar royal boondoggles, it has discovered no new oil sources in decades, oil itself is unsustainable, etc.


The Saudis pulled every trick to make the IPO a success: offering preferential loans to investors so they could buy the stock, threatening local power-brokers to coerce them into buying in, and guaranteeing sky-high dividends ($75b/year!).

And then covid hit, and MBS started an oil-price war. Profits fell 50% in H1-2020. The company is still making those massive dividend payments, though.


Those payments are coming from somewhere: capital expenditures and free cash flow. The company is suspending both projects that would help it increase its output and projects that might help it wean itself off of oil.

What's more, the cupboard is bare everywhere else. Other arms of the Saudi state have been starved by the price-war, and can't make up the difference. Instead, Aramco is digging itself into debt, with a $48B bond issuance.

Obviously, the shut-down of the oil industry is great news. But collapses are messy. As the world's hydrocarbon barons thrash around looking for their future, they're inflicting a lot of collateral damage.

Uber (and many other exploitative, money-losing gig businesses funded) is just an extrusion of Saudi oil money, via the Saudis' massive investment in Softbank, which allowed it to run predatory, money-losing, business-destroying grifts for years.

The people who grew unimaginably wealthy and powerful presiding over a hole in the ground surrounded by guns are not going to throw themselves into their holes and pull the dirt in on top of themselves. They are armed, rich, and psychotic.

At least they're not very bright.


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