Doc - Great points. But let's remember the KSA doesn't have a $2 TRILLION kitty today nor are they likely to have one anytime soon
The article below seems to suggest that the $2 trillion refers to the total value of Armaco plus the existing value of the rainy day fund(~$600 billion). That would value Aramco at only around $1.4 trillion. That comes in on the low end of estimates I've heard for Aramco's value($1.25 trillion - $10 trillion). But most of that will be the 95% ownership that the Saudi's still own. They are only liquidating 5% of the shares initially.rockdoc123 wrote:I believe they are referring to proceeds from the sale of 5% of Aramco for source of funds. I have no idea (nor doubt anyone does) what the total value of Aramco is.
Hard to believe it is $40 trillion though. I have seen a number of $10 trillion which would mean a sale of 5% would bring in 500 billion or 1/4 of the 2 trillion he is referencing. Would be interesting to see where he gets the numbers from for sure. They have started to take on international debt now so that might be a source....hey if the US can take on 19 trillion in debt with a 3 trillion annual revenue the Saudis have lots of room to layer on debt.
Certainly times they are a changing in SA
Why There's Less To Saudi Arabia's New $2 Trillion Wealth Fund Than Meets The EyeHe now says that less than 5% of Aramco will be floated on the local stock market in 2017/18. At the same time, the government plans to expand the existing Public Investment Fund (PIF) to $2 trillion. The increase in the size of the PIF will largely come from the government transferring its remaining shares in Aramco to the fund. “It reflects a shift on balance sheets, rather than any new assets.” Overall, Jackson says the latest comments from MBS “don’t seem to suggest anything fundamentally new that will change the near-term economic outlook.”
However, there are some other interesting points worth noting from the interview. MBS says the government wants to turn Saudi Aramco into an industrial conglomerate. The oil giant is generally seen as a well-managed corporation and the government has often turned to it in the past to manage non-oil projects. In that context, the idea of giving it a wider remit in the economy makes sense.
Saudi AramcoSaudi Aramco's value has been estimated at anywhere between US$1.25 trillion and US$10 trillion, making it the world's most valuable company.
GASMON wrote:"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 drive a delivery van in London"
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No need to hold your breath. They already started cutting back on military spending:ROCKMAN wrote:I don't think I'll hold my breath waiting for them to cut military spending. Remember the shah in Iran had the most powerful military in the region and that didn't save his ass. LOL.
Oil crunch bites: Russia and Saudi Arabia cut defense budgetsThe collapse in crude prices has forced Russia and Saudi Arabia to cut their spending. Military spending for both has dropped this year. Defense spending was cut despite the worsening security situation in the Middle East region. Defense spending in the Middle East grew faster than in any other region globally between 2012 and 2014. But then oil prices crashed. "We saw the first marginal cuts in 2015 but, those cuts are now expected to deepen in 2016."
Peak_Yeast wrote:I wonder what kind of purchasing value 2 trillion $ will have in a post-fossil fuel world . . .
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