TRASHFUTURE - Imam's Basement feat. Derek Davison

Episode Date: November 10, 2020

Why are the Gulf countries so involved with backing tech startups? How many sovereign wealth funds are there, and why do they seem to always circle back to SoftBank? To answer this question we brought on Derek Davison (@dwdavison), a writer with Discontents News (@DiscontentsNews) and subject matter expert on the Gulf, to discuss it with Riley (@raaleh), Milo (@Milo_Edwards) and Alice (@AliceAvizandum). If you want access to our Patreon bonus episodes and powerful Discord server, sign up here: https://www.patreon.com/trashfuture We support the London Renters Union, which helps people defeat their slumlords and avoid eviction. If you want to support them as well, you can here: https://londonrentersunion.org/donate Here's a central location to donate to bail funds across the US to help people held under America's utterly inhumane system: https://secure.givelively.org/donate/the-bail-project If you want one of our *fine* new shirts, designed by Matt Lubchansky, then e-mail trashfuturepodcast [at] gmail [dot] com. £15 for patrons, £20 for non-patrons, plus shipping.  *WEB DESIGN ALERT* Tom Allen is a friend of the show (and the designer behind GYDS dot com). If you need web design help, reach out to him here:  https://www.tomallen.media/ Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and Alice (@AliceAvizandum)

Good evening, I've called this press conference here today because I have a very important thing that I want to talk to everyone about. It's about this election, okay? It's being stolen by the Democrats because there were a lot of states where I was winning by a lot. Okay, we're talking about a lot, many, many votes, okay? And my election observers, who the Democrats, by the way, by the way, are trying to keep away.

They're trying to keep them out from observing the voting. Why is that? Okay, they're keeping them away. My observers, they're looking at the voting through binoculars, in some cases, and what they're seeing is these states where I was winning by a lot. They're finding all these extra ballots, okay? They're coming from the mail, and all of these ballots are for Joe Biden. No one knows where they're coming from, they're just coming through the mail.

We don't know who wrote these ballots, we have no idea, okay? And they're trying to steal this election from our voters, from our beautiful voters, and I'm not going to let that happen. But I have found out that Joe Biden and the Democrats, they're working with a man called the Hamburglar, okay? You might be wondering who is the Hamburglar, well, I will tell you. I've known the Hamburglar for a long time because of my very good friend, Ronald McDonald. Ronald McDonald, very successful, very successful restaurant owner, okay?

Very successful clown, very funny guy, actually, tremendously, tremendously funny guy, and he works with Grimace. Okay, I don't have any particularly strong opinions on Grimace. He's a large, a large purple fellow, okay, okay guy, no problems with him, but their great enemy is the Hamburglar. What the Hamburglar does is he steals Hamburgers, okay? He's not exactly a burglar, it's somewhat misleading. He's more of a thief, he's a thief of Hamburgers, and he's working with Joe Biden to steal

this election. If a man is prepared to steal a hamburger, he will absolutely steal a vote. You may have noticed, I had many, many Hamburgers in my life. I have a lot of Hamburgers, I have far more Hamburgers than Joe Biden does, or than he ever will, okay? And we're looking into this very strongly because now we're seeing a situation has begun to arise where I have less Hamburgers than before. Still a lot, but my Hamburgers are being taken away by Joe Biden, by the Hamburglar and by

the Democrats, okay? And what they're doing with these Hamburgers is that they're trying to feed them to the Antifa super soldiers to make them very, very large. They're getting very large, they're getting very, very big, okay? They're trying to get them engorged and very large so that they can fight our brave law enforcement officers. So what I have here is a warrant for the arrest of the Hamburglar and all of his known terrorist associates effective immediately.

Thank you. Hello, and welcome back to this episode of TF, that podcast you're listening to at this, the very present moment here, back in the end of history. It started, it started up again for a little while, but it's over again. It stopped. It turns out that it was just history's death throws and no one has to worry about anything anymore ever. So I mean the time dojo listener, the podcast where you're always listening to it at the

present moment. He's been like this all week. He's been like this all week. Fuck being jokified, I'm gorkified. Yeah, you've taken the Gorka pill, which is just a horse pill. Yeah. That's right. Me, Riley, I'm with Alice Milo and Sebastian Gorka and Milo, who will be going to the

bathroom and being replaced by Sebastian Gorka throughout the episode until of course, he's killed by a sniper and Milo just has to be Milo for the rest of the episode. Yes, the IRA, sniper, father of Murphy and we are also joined by Derek Davison. The editor of foreign exchanges and a contributor to discontent's blog alongside TF Stalwart, Conor Southart and Patrick Wyman. Derek, how you doing? I'm doing all right. You know, I'm pleased to see we've already pivoted from everybody celebrating the Biden

win to punishing the left for its intransigence in record time really. This is as early as I've seen it after a US presidential election. It's been so cool watching everybody do the left and like transsexuals and black people. The reason why we lost with the word lost hastily scrubbed out and replaced with one. I've enjoyed that very much. Except the reason why we nearly didn't win. Yeah. Right.

Exactly. We're just reaching for anything we can use at this point. Oh, yeah. Well, so how are you feeling about history being over again? Are you considering doing some nihilism? I'm going to brunch, although I don't know if any place is open yet for brunch. But that was my plan. I was going to make a Bloody Mary, actually.

So maybe I'll do that later. Tech Charlotte Clymer. I'm sure she knows all the best place. She is sipping her coffee. So hey, I've got a couple of quick hits. With Derek on, we are here mostly to talk about foreign policy specifically. We are talking about like Gulfie sovereign wealth funds in as much as they pertain to foreign policy and like how that affects like.

Did you just make up a word in Gulfie? Yeah. No. Gulfie sovereign wealth funds like the kind that Trump has. Yeah. It's an anglicized version of Khalidji, nevertheless. We want to do two quick hits, first of all, news items. I would say in terms of things that matter to TF, like we have to talk about the US presidential

election. Do we have to? Can I have election outside today? There are two things that matter to TF about the US presidential election. What is its pertinence to the British politics, which is not immaterial? Owned. Owned. Yeah.

The only good thing about Biden really is that he's going to absolutely ruin Boris Johnson's day. I'm here for that. I'm here for 100% of the time. In that particular scenario, I will stand the hell out of Joe Biden. And the other one is Prop 22, which is more about like Democrats being Democrats. Yeah. That's more in our wheelhouse.

But like I'm genuinely into the first like anti-anglo action president. You know? Oh yeah. It's the first president who's probably donated to the IRA in his lifetime. This man has bought an Armalite that has been used in London Terry. I mean, this is really like the Chad donating to the IRA, Jeremy Corbyn versus the Virgin donating to the IRA, Joe Biden, isn't it? So basically, let's review because if you remember, right, in our salad days of sort

of, you might say, optimism. In the salad days, Mr. Biden. No. God damn it. We were talking. The worst part is this is my fault. I introduced him to this bit. Alice opened fucking Gorka's bar.

But in the, let's say, in season one era, we sort of talked about the various sort of impossible dilemmas and impossible trinities that made up the logic of Brexit, which was that basically Brexit is, and this is, I think, not controversial at this point, an Atlantis project. We're going to cut ourselves free of Europe and come join America in like a new grand alliance and we're going to be back to being cool and back to being a first like first rank power again. And then we got Joe Biden as president and all we're getting when we pick up the phone

is him playing come out your blackened hands down it with his phone. So Joe Biden can't use a phone. Come on. He probably doesn't see that offer that one time. Yeah. His nephew. No. So basically the the expert, the brief explanation of what's going on is that Joe Biden takes

Joe Biden has basically said he's going to take the Good Friday Agreement quite seriously. The UK's current Brexit plans depend entirely on not doing that, but also getting a favorable trade deal with the US because Britain isn't really viable as a going concern if it doesn't have a big trade deal with either the US or the EU. I won't put it past the Tories to just decide that they want neither because they want to really infuriate the urban perverts who the small, the urban perverts that they imagine don't make up their base as opposed to the urban perverts that do. But nevertheless, they have essentially fucked Brexit at this point because they completely

banked on Trump being in power and now he's not. And they are panicking. Yeah. We're going to be Belarus. It's going to be awesome. Now, I'm going to Britain. Our main export is potato. Our main good that we consume is also potato.

Balance of payments. Excellent. Coronavirus. None. No, Derek, I'd like to know sort of your view on your view on these developments in any way. In fact. Well, I mean, I think you're right.

There was a certain level of expectation that the United States would bail Britain out basically with whatever was lost in a no deal or at least kind of Canada like Brexit. And it looks increasingly like it's going to be at least initially a no deal situation. And I don't think Biden is going to just kind of tell the UK to fend for itself. I don't see that happening. But I do think that his view will be that the US would rather the US US interests are better served dealing with the European Union and it would have been better for the United States if the UK had remained in the European Union.

So I don't see him going out of his way to do a solid for Boris Johnson. The way that Trump would have been inclined to do at least. Yeah. And I think the way to see this right is that is that the the grand assumption of Brexit, the way it was being pursued by Johnson was that there was going to be a kind of international trigger the Libs solidarity, which was like it was like the axis of cringe that was going to be the US. It was going to be, I guess, Brazil, India, Google, Venezuela and what's very funny to

me is that the the British press is or the right wing press. So the Daily Mail, the Sun and the Express in leaders and then the Times and Telegraph and editorials are essentially trying to do Biden like they did Corbyn and just be like, Joe Biden's not a British patriot as though like the the revealing thing is like the main position of these papers is that everybody in the world should be a British patriot. Yeah, that's right. Britain's the greatest country on earth and everyone should like the right and correct position is that if you are a person, then you should recognize how specially wonderful

Britain is otherwise like you're going to lose votes in the former Red Wall. The chances are Britain has built a railroad near you unless you live in Britain, in which case it hasn't. I think I think Biden might be in trouble in terms of his in terms of his vote share in like red car hate to see that working to man not not voting for Biden. Yeah, I don't. So I like they're like the Daily Mail has published like one of their shock op-eds where they say that a picture of Joe Biden has emerged with Jerry Adams, who was associated

with Sinn Fein and all of this stuff. Like again, like they're doing the Corbyn playbook of Joe Biden is no British patriot. Yeah, first and I just will not work like by what mechanism do you expect that this kind of campaign against Joe Biden in the press is going to make a political difference in Britain? Although that photo of him with Jerry Adams was pretty weird because they were both naked and on a trampoline with his dog. There is I do think there is a sense that's been baked into the entire Brexit process

that Britain is still a lot more important to the world than it actually is. And and, you know, you have to I think I think it's important to bear in mind that whatever vision Boris Johnson had of a, you know, right wingers friends club that was going to bail him out, you know, all he had in terms of a promise of a deal, a trade deal with the United States was Donald Trump's word, which is worth shit. I remember what you said. Again, I reference you all of everyone who's ever worked for Donald Trump. Right. Yeah, exactly.

So I mean, there's no guarantee that the UK would have had anything come out of this positively either way. But but I, you know, you keep sort of waiting for there to be a reckoning with the British right and Britain's actual place in the world. And I guess it's more likely. But I don't see it. Imperial psychosis reigns and we're recording this recording this on Remembrance Sunday, after all, which is like now the peak day for that sort of thing.

And so we're just going to cover ourselves in poppies, you know, and fucking like more poppies all the time, all the time, and which is never going to come to terms with the fact that we are like this small island country that has now inadvertently fucked its way out of the last messages of its own imperial power by by betting it all on Donald Trump. It rules. I personally have been spending a day going around knocking on my neighbor's doors to check that they're remembering something. All right.

You got a spot check. Have you remembered the fall in today? Because if you haven't, you better end your fucking sleigh. That's why they hate Joe Biden so much is because by this point, he's not capable of remembering anything. I don't remember the fall. It's disrespect. Yeah. So anyway, to round out that little quick hit. Yeah, Britain is absolutely getting its its delusion serve back up to it today.

I have a question. I have a one real quick question before we move on, which is, does anyone think that there's an appetite in the EU to like, to for the mood to turn, right? Because if they so wanted, and we know that they've done it before in Greece and in the Balkans and Spain, if the EU wants to, it could give us an absolute shooing. And my question is whether they're going to or whether just like kind of shared racism and nostalgia is going to be enough to keep them from like, absolutely fucking us over. Well, I'll throw it at Derek for that one, actually.

I'm interested to know what he has to say. I don't think it'll get that bad. I mean, Greece is the UK is not Greece. The UK isn't what it thinks it is or what Boris Johnson thinks it is. But it's a wealthier country. Historically, you think you are from Greece. We create your culture. You must respect the great nation of Greece with the plates.

I mean, it's it's a wealthier country. It has a larger military. It still has a major role to play in terms of European, general European wide security issues. So I don't think there's going to be an appetite to punish the UK too much. That said, I mean, there's always been, I think, a need on the part of the EU to make sure that no other country looks at this and says, hey, the UK got kind of a good deal for getting out of the EU. Maybe we should do that. So there has to be this has to be a punitive process to some extent for the EU.

But but just on the basis of security issues alone, I don't think there's especially at a time when you've got a lot of European leaders, Macron, even Angela Merkel now talking about the need to sort of divest European security from the United States. And the fact that you really, you know, the US is one election away from electing some reality TV dipshit to, you know, screw everything up again, that there needs to be a more independent European security posture. I think inevitably, the UK has to be part of that on some level. So they won't they won't go too far. I don't think it's very funny that they've like the need for them to do that to like punish us for Brexit thing has been

obviated by a large extent to which which we've tripped over our own. Yeah, I mean, I have to say Brexit is really bad news for the European wide vigilante Pido Hunter initiative because that force was going to be mostly made up of British volunteers. So I want to move on a little bit, though, to the other the other thing I think we have productive to say about the US election, which is a proposition 22. So for those of you who don't know, California has a proposition system where like they essentially are able to put changes to the law into a plebiscite where that's able to be voted on in any kind of national election. So in addition to like president and representative and senator, you'll have various ballot measures.

Prop 22 was a ballot measure that was basically astroturfed by the app based gig companies, your Ubers, your Lyft, Instacart, DoorDash, et cetera, et cetera, that they would be able to contrary to some legislation that had passed in California recently continue classifying all of their workers as contractors rather than employees, which exempts them from things like minimum wage, which exempts them from things like. Labor law is now optional in California if you if you have an app. Well, effectively, what it means is that labor law is from the point of view of the employer optional and from the point of view of the worker labor. It's it's we've essentially created kind of classes of citizens. Once again, reality is a heavy handed satire of itself given that the the rule, which is always interpret interpreted in favor of the ruling class, which everyone hates and is very confusing is literally called catch 22. That's right.

Where essentially it has forestalled and forestalled permanently because it requires a seven eighths majority of the state legislature to overturn. It's going to be it's going to like part of the thing about the proposition system in California is that you can just entrench these gains like this. It's the reason why it's basically impossible to raise taxes at the state level in California is because companies is because a very similar proposition passed in I think the 70s or 80s that required something like a two thirds majority to raise any income taxes. And so it's just it's just frozen that way now. Um, so cool. So I mean, if you want, I mean, the thing is right. And is it we've long we've long spoken about the idea that only it is only politics that will fight the uberization of everything for workers. But it's also through politics that that can continue.

And, you know, the yes on 22 campaign is an example of a two hundred million dollar monster organization that was basically and we'll get into this Saudi oil money that was channeled into a bunch of like, again, democratically aligned lobbyist consultants, celebrities, the apps themselves made you agree in principle to prop 22 before you got an Uber ride in California. Yeah, which was legal somehow. Yeah. And like every single app that was going to benefit from this was essentially just getting free advertising on their own platforms all the time. I thought it was weird when Uber made me agree that Wahhabism was the way forward. You simply have to say the Shahada into your microphone in order to get your ride. And I think that the key thing here right is like the proposition 22 has been an unalloyed win for the tech for the tech industry in as much as it stands for dehumanizing and degrading people around the world.

And people say they don't stand for anything. What's important to remember is that this happened in California. The most safe democratic state where the speaker of the house is a long time incumbent where the senior member in the judiciary committee in the Senate is a long time incumbent. There is no safer state than California and they did not only did I not come out for it, they spent no money fighting it. All of the 20 million that was spent against 22 was through organized driver groups. The Democratic Party did fucking nothing. Zero. Because Uber is a good liberal company. You know, they're Democrats.

I mean, again, I want to throw in our guest here just in terms of Derek, I want to know how you see the relationship between like sort of technological wiggism and the Democrats and why they couldn't oppose this. Well, I mean, the Democrats are. I mean, you saw it back in 2016 and I guess, you know, now they're going to feel vindicated. But the the whole, you know, for every working class voter we lose will gain two Republicans in the suburbs is the animating principle of the Democratic Party and it has been for a long time. I mean, it's been been that way since the Democrats sort of consciously in the 90s made the decision to become the centrist technocratic party and appeal to basically college educated whites as opposed to the old working class coalition. So, you know, they're they're fundamentally geared to sort of be the party of Silicon Valley. I mean, they're they're sort of that's that's what they're built for. That's their constituency now.

It's it's not the New Deal coalition. It's not even the Great Society Coalition anymore. It's it's, you know, tech pros and finance guys. Yeah. So if you want to talk about tech pros, Uber CEO, Dara Khazrashahi emailed drivers to celebrate, quote, the future of independent work being made more secure because so many drivers like you spoke up and made your voice heard. And voters across the state listen again, because we basically sent you 10 push notifications a day and worded this thing. So no one knew what the fuck they were voting for. And specifically that they he congratulated drivers for not being taken in by and I encourage everyone listening and everyone on this call to please hold on to something.

The big the big money unions. Yeah. Okay. Cool. Famously a well organized sector. Like this isn't even a case where it's like say the UAW where you can complain about big unions, but even though you've spent like millions of dollars and decades trying to destroy them when they actually are unions. This is like an basically unionized workforce. We have the ID we have in the UK.

We have the IWGB doing wildcat strikes only on behalf of delivery workers. And that's basically it. It's it's them and there are games workers. I think there are other. I'm sure people who are involved in the IWGB will at us and tell us because the IWGB is a genuinely great union. But at least we have one. I don't think there is a union at all big money or not in California. Damn, all that money and nowhere to unionize.

But hey, you know what? If there wasn't one, they're now legally can't be one because that's also in Prop 22. Amazing. It's also that this fucking like the stupid like more kish way that they phrase it all as though that like they're just concerned about maintaining flexibility for their drivers. Like are they fine? They might as well say like here we believe that gender is a construct, which is why we don't believe in forcing our drivers to identify as employees. Don't tempt fight. They're going to do that.

You might as well say many of our drivers live in their cars and we believe that in order to go green, we have to reduce their commute. Anyway, so look, these the two big takeaways from from the US election for for our purposes are I believe those two, which is yeah, Joe Biden, the accidental Fenian was sort of elected by default and is kind of fucking up Brexit in a very funny way. And Prop 22 tells you how he's going to govern, which is in favor of Silicon Valley, ignoring or sort of you might say shitting on unions and so on and so on. So, you know, great. A wonderful four years to come where finally Grandma's boy will be remade and we can all enjoy the comedy stylings of Dane Cook again. Oh, the coach is going to be so good. So cool.

But here's that we're really here to talk about one of my favorite topics to like think about and obsess about and read. Much of TF is really just like things that I've been obsessed with for like quite a while. And I've been finally able to like have a platform to talk about. And Gulf States sovereign wealth funds is if only the most recent manifestation of that. You love them because they're onto our shit, right? Guys being dudes, but the extent to which they can be dudes and the weird shit they can get into is basically unlimited. A bunch of guys being shakes. So, Derek, can you just can you as a as a sort of Middle East foreign foreign affairs specialist, can you kind of introduce the concept of a Gulf sovereign wealth fund for us?

Sure. I mean, there are sovereign wealth funds all over the world and they basically are countries way of kind of getting getting into the market playing playing the market diversifying their economy, investing in companies that look like they're going to do well. And obviously, there's a political component to that. Since these are national things, you pick and choose in some cases investments that will further some political aims. What makes them particularly relevant in the Gulf is that there's disproportionately a very large number of the highest kind of or largest by asset sovereign wealth funds in the world are Gulf sovereign wealth funds. You know, the largest like Norway has a very large one, I think is over. It's close to $1.2 trillion.

China has a couple very large ones sort of, you know, you would you would expect that, I think. But, you know, you get into like the top 10 or top 15 of these things and you're looking at the Abu Dhabi Investment Authority, the Kuwait Investment Authority, the Saudi Private Investment Fund. There's a couple. There's a Dubai Investment Corporation, the Qatar Investment Authority, you know, it's just like there's a high percentage of Gulf states sovereign wealth funds on this list. And the reason for that is the Gulf states Gulf leaders have sort of, you know, they're they're not. We have this sort of image, I think of, you know, Gulf states just kind of sitting there spending money until the oil runs out and then they're going to be, you know, left holding the bag. But that's not the case. They have embraced the sovereign wealth fund and the investment vehicle as a way to try and use what fossil fuel money they can still, you know, extract over the the remaining life of their resources and over the, you know,

as humanity at least talks about transitioning away from fossil fuels, whether we do or not, you know, to sort of make their economies a little less one note and a little more resilient to those kinds of changes. So they're they're they're particularly relevant, I think, to the the Gulf where you have a genuine need to sort of diversify economically and get away from this one thing that's made that region extraordinarily rich, but it's maybe not going to be a great, you know, thing to rely on in the future. Because what we would hate to see is for fossil fuels to stop being a thing overnight and a bunch of Emiratis to have to sell all their Dior belts on Depop. That would be a real shame. So I think the thing to add to this as well, just a little bit of vegetables before we get into the dessert of what they're actually investing in is that sovereign wealth funds are also a great way for resource rich countries to avoid something and Milo's going to do a voice as soon as I say this to avoid to avoid something called Dutch disease. Join me in the Dutch dojo.

So Dutch disease is essentially when you're a resort for everything in tulips. Yeah, exactly. Nobody needs polish and clogs anymore. I'm just I'm just going to wait. So Dutch disease is this it's a sort of concept in economics where the rapid appreciation of a resource exporting countries currency as those resource rents flow in because basically like if I'm selling oil and everyone's buying my currency to buy the oil that's denominated in my currency, suddenly the like price of my currency goes way up. And then all of a sudden, you know, your workers can't buy bread because, you know, buying guilders is far too expensive. I believe there's a solution to this in the Gulf already known as slavery.

Well, so what a sovereign wealth fund does in this case is it takes a lot of those resource rents and it converts them back into other currencies. So it kind of it is in effect a rebalancer because what you're doing is you're saying, OK, well, yeah. Number one, even in the case that like oil is bought in US dollars, which it is, a sovereign wealth fund is able to say, well, we're able to then we are able to not just invest in US dollar assets such as you American denominated companies or Treasury bills or what have you. But we are able to invest in a multi in a basket of currencies, which sort of protects us against our currency being driven crazy by us exporting this resource denominated in our or other currencies. So like it's there is as Derek, as you were saying, there is this long term strategic diversification aim. There's also a short term tactical, like more monetary aim as well. And that's why you see sovereign wealth funds mostly cropping up in resource exporting company countries generally.

And so a little bit of a note on on history so we can understand how these things came about is that the first one was in the Gulf was started in 1951. It's called the Saudi Arabian Monetary Authority or SAMA and the Kuwait Investment Authority started shortly afterward. But the real story of the real story though of the Gulf sovereign wealth fund as we know it kind of because what they were doing right is they were taking that money and they were either just buying buying assets denominated in other currencies or they were taking that money and reinvesting it directly in stuff at home. It's like trying to develop like trying to develop in those strategic lines like other complimentary industries. So like that's when like Sabik what the chemical company was started same thing. But the real story of the Gulf sovereign wealth fund is we know it begins in 1973 with the Yom Kippur war where OPEC the oil producing Middle Eastern countries imposed heavy sanctions in the U.S. for its support of Israel which in turn caused enormous amounts of money to flow to countries like Saudi Arabia because even though

because they basically they raised the prices of oil but you couldn't stop buying oil and so. An extremely rare handshake meme between like leftist praxis and OPEC. So effectively what happened was after like in neoliberalism as we understand it kind of was created to respond to this particular crisis. And so where what you have is you have tons of U.S. dollars flowing into Saudi Arabia but and similar Gulf states but then you need that then they need to spend those U.S. dollars. And so the U.S. brokered an agreement for the Saudis to bill for oil and dollars reinvest that money in U.S. Treasury bills effectively starting what is called this what this financial flow this very particular historical type of financial flow called petrodollar recycling where money that is spent by the U.S. on oil through Sama the monetary authority is then re spent loaning either loaning the U.S. government money where it's then able to spend that money on social programs and then in the military and things of that nature or that money is then deposited in banks in London where it's then loaned out to either developing countries or our companies and so on and so on.

But at some point the Saudis own 20% of all foreign owned U.S. debt that's now much lower because of China but nevertheless like this is a quite significant kind of financial flow because it creates these kinds of money where it's not really useful for say human flourishing but it does have to get spent immediately either on as we say Dior belts or making sort of large high interest loans to develop. It's also like in a recently created Brewster's millions type of scenario building like massive highways between like two cities that don't need them. I love to build the King Khaled economic and cyber warfare center for posting excellence and it spent 20 trillion dollars on it. All because tons of American money whether that's money from companies or that's much more much of it money spent by the government from taxes on energy is then just going to be shakes were like. That's the point we're getting at here is that like I suppose the general point to as with sovereign wealth funds or with Petro dollars is that we're not calling the leaders of these Gulf States stupid. I mean some of them are but they're not like acting in a stupid way. It's just that what we've done is inadvertently incentivized spending money in the dumbest possible ways as fast as possible as much as possible until you just end up with the what we've got all of this money.

We have to throw it at something we may as well try and like diversify away from oil by building the posting center. So Derek I'm interested to sort of understand sort of your your view on petrodollar recycling in this way. I mean I you know I sort of my background is is in the Gulf. I spent some time living in Qatar and sort of observing the way that these countries are trying to prepare for the future I guess. And it's it's I wouldn't go. I think you're right to sort of not go too far in the direction of kind of attributing. I don't know the kind of focusing on the political end of this. I mean there there definitely is a genuine interest in kind of building a more durable economy.

That's you know but just by kind of moving away from from oil and fossil fuels. So you know I think to some extent these things are I guess maybe well intention is the wrong way to put it. But you know the Gulf the leadership in the Gulf States understands that there is a bargain and effect that they've made with the people that that they you know. With the people living in the Gulf which is you know we will take care of you. We will you know we'll maintain a very large kind of welfare networks and you know enable people to to sort of live comfortably in return for you all looking the other way about the absolute monarchy thing. And the fact that you know there's not really a lot of space for political activity. That's a bill that's coming due and you already see a lot of in a lot of ways you know the the weakening of the welfare state and rising unemployment and there's a lot of tension underlying that and so the monarchies in the Gulf I think for no other reason than self preservation is that that you know they've got to kind of transition to some other model and and part of that involves sort of you know change moving their the economy away from this very simple one note kind of resource extraction.

I hate I hate when I'm simply trying to enjoy a feast with my bros and this weird writing appears on the wall. What's up with that. Not a fan. So the thing is right. Fortunately, that's an additional challenge right because because oil purchases are denominated in dollars. Then all of that any social spending in the Gulf also has to again be channeled through Euro dollar markets in places like London where they can where they can where they can sell those dollars and then sort of basically transfer them into their own currency. It's extraordinarily convoluted because they have to get rid of those dollars and and so effectively right there are several places that those get disposed of. They get disposed of in terms of domestic spending Derek as you were saying they used to get disposed of in high interest bearing loans to developing countries.

But then the when basically after as the oil crisis was happening those petro dollar loans to less developed countries got jacked up which is one of the reasons that like I honestly think if you want if you want to look at one financial flow to understand where we are today you can't really do worse than petro dollars. And as much as that explains an enormous amount of why suddenly throughout the 1970s, 80s and 90s less developed countries weren't able to pay interest on their loans because most of them were this kind of loan where all where it was a petro dollar loan and those that interest was coming do it was being jacked up. And they were also unable to then buy that energy because what you're doing with the petro dollar flow is you're buying energy and then borrowing the money that you've spent on energy back from the person who sold you energy. But that person that sold you energy they're unable to maintain the domestic balance of power unless they know that they can keep selling you energy. Do you ever get the feeling you're watching a game of three card Monty being played by an idiot. Well I always feel like it's a game of three card Monty being played by two people who both think they're the dealer.

And so I think honestly like what do we do about the petro dollars has been this structural question answered by every major country in the last play in the world for the last 50 years. It was why we had the big bang of deregulation because there was this money to was sloshing into Britain that needed to be allocated that couldn't be with with as I think currently standard. That's why Thatcher needed to deregulate the city. It was at the heart of it was one of the main like sort of forces sort of undergirding and and and behind the dissolving of Bretton Woods at the structural level. It was the birth of neoliberalism. It was this idea that everything has to be about the management of risk because suddenly everything is about debt because everything is about this balance of owing money to Gulf States. And at the specific level it's also why you can't buy property in central London. It's why Uber was able to pass Proposition 22 to spend two hundred million dollars on it.

The Saudi money is behind literally who keeps down the electric car. It's it's the Saudis via Petro. It's because this has been since the 1970s. What has defined the West? It is what do we do with Petro dollars? How do we keep coming up with them? And how do we get them to spend them so that they come back to us? That is everything.

Bryn absolutely loves spreading its bussy for some foreign cash and we do not care where it comes from. I mean, we love a petro dollar. It comes from us. It comes from us just via them. Yeah, but we also love a bit of a stolen Russian oligarch money. We're a fan of that. And you know what? If it has to make a housing crisis in London and also a few people have to get like maybe poisoned or padlock themselves into suitcases and jump off the roof of their house in an unfortunate suicide attempt.

Well, so be it. So but the thing is right. Most of the petro dollar recycling we're discussing here was it's recycling. So it's good for the environment. Well, but that was around like bank deposits and lending. So there were these sort of intermediaries. What's happened since 20 sort of to the financial crisis since 2008 and especially accelerating since the coronavirus crisis this year is that the petro dollar recycling has become much more direct. As many of these Gulf East sovereign wealth funds begin to invest directly.

This is either investing in companies or investing in asset managers such as Blackstone or sponsoring the soft bank vision fund as the Saudi public investment fund. And to a lesser extent, I believe the Abu Dhabi Mubadala fund as well. Did there are several Abu Dhabi sovereign wealth funds? What's the cool stuff that we all know and love that we've been exploring on this show? And also, so we're going to be talking about three Mubadala, the Qatar investment authority and then the Saudi public investment fund like Sama and ADIA and KIA are like much less funny. They're just a little bit more competently invested. Just normal. They're more like normal.

It's just a regular kind of evil as opposed to our preferred Baroque kind of evil. Yeah, kooky evil. So vision fund two, by the way, is mainly Kazakhstan. The high ends for this Borat shit have gone far. I would like to invest in your business. So Derek, just my understanding is the way to understand these three funds is that the Qatar investment authority is a landlord with a twist. Mubadala is an arm of UAE foreign policy and the PIF is MBS trying to be an entourage character. Do you think that sound right to you?

I certainly the PIF is definitely Mohammed bin Salman's kind of play thing. It's his vehicle for realizing his Vision 2030 plan, which is partly about kind of shifting the Saudi economy, but partly about cementing his own legacy and his own power as the heir to the throne. The Mubadala, I'm less familiar with Mubadala. My sense is that it's kind of the, you know, we've talked about the Abu Dhabi investment authority. That's sort of the kind of let's play it safe and keep things in sort of relatively normal investments. Mubadala seems to be the vehicle for kind of taking a little more risk, kind of doing a little bit more off the wall stuff. And that that leads you into the things like buying, you know, or investing in self-driving cars and, you know, getting into Uber and, you know, some of these kind of getting into the Malaysian, you know, one MDB thing, which there's a whole relationship there that's a little bit weird, you know, kind of not well covered, but a little bit strange.

And, you know, the Cutter Investment Authority, that's a very political thing, you know, in addition to being sort of the kind of vehicle for the Cutteries to kind of use their gas money, mostly their wealth is in natural gas now, to build out their economy. There's also a big foreign policy arm of that company. There was a story, I think, in Vanity Fair some time back earlier this year, I think, about the Cutter Investment Authority having leased office space in a building partly owned by Donald Trump. And just like parking an office there, there's nobody working there and there's nothing going on in it. It just exists as a way for them to kind of pay Donald Trump some money, some red money. And that was rooted in, you know, the 2017 collapse of the relationship between Saudi Arabia and Cutter, and the Cutteries looking for ways to kind of build back their influence in Washington at a time when it looked like the Trump administration was going to side very heavily with the Saudis in that dispute, and the Cutteries were trying to, you know, kind of forestall that.

And also, you know, carrying paper with Donald Trump always works. Which is the key thing. I mean, they also invested in the Kushner property in Manhattan. I mean, there was a lot of that going on at that time. I think it's continued. Yeah. So, I mean, the way to understand the Cutterie Investment Authority, as far as I can tell, is that it's essentially the Altanis becoming like the world's buy-to-let landlord, where they've bought a great deal of central London, most of Mayfair, including the old U.S. embassy, many like prestigious hotels, things of that nature. They're now aggressively buying real estate in New York and D.C.

Damn, who do they think they are? The University of Cambridge? Yeah. But what I think is very funny, though, is that, because basically, like, all of these funds invested, like, I think, like, the PIF invests in the stuff that a character from Entourage would invest in. Mubadala, I think, as much as I like to own sort of institutional investors on this show, it's like, as much as it takes risks, like, it seems to take, like, quite calculated risks, like, it seems relatively sensible if very cynical. Whereas the QIA seems largely to just want to be a landlord. It mostly just buys property or leases property, prestigious property. So what I thought was very funny is that in October 2014, the Sunday Telegraph, owned by the billionaire Barclay Brothers, launched a multi-month campaign called Stop the Funding of Terrorism to stress about, like, Qatar's persistent negligence, encountering terrorist financing activities through the Middle East.

It's not negligence if you try to do it. Yeah. No, sorry. That was what they did. For legal reasons, I must say. Negligence. But what's funny is that this coincided with the QIA trying to buy three Mayfair hotels that the Barclay Brothers, the owners of the newspaper, also wanted to purchase. Just slap thighs between landlords. Awesome. I do like the idea of a terrorist landlord.

Just, like, trying to get your safety deposit back and he, like, comes around, points at a bunch of marks on the carpet and then blows up the fucking apartment. Yeah, he's very angry that you've taken down the black flag that was hung up in the living room. You're going to have to replace that. The boiler goes out so he gets his cousin to come over and blow it up. So this is a situation, right, where, like, everyone, limiting myself to what has been in print, everyone is right about everyone else and everyone is a piece of shit. Yeah. Also, like, imagine as, like, you know, like a big British Tory getting angry about the Qataris trying to be like landlords. I mean, that's the most British thing you can do. It's cool assimilation.

Yeah. Yeah, exactly. They keep moving the goalposts. They want them to integrate. They don't want them to integrate. What is it? But I think the main thing for me that's funny about the QIA is, yeah, just the, um, let's say the persistent and not entirely unfounded rumors about funding certain activities involving the purchase of large numbers of Toyota Hiluxes. Yeah.

Yeah. And, and how that is conflicted with, say, the attempts to purchase prestigious real estate in London from other people who are as big of pieces of shit. The world's largest Toyota pickup truck collector, the Qatari government. All of these are for personal recreational use. They're going to increase in value. They're a special edition. Yeah. I have a landscaping company in Philadelphia.

They're all necessary. Oh, beautiful reference. Beautiful. So, uh, move, I want to move on a little bit though to a Mubadala. Um, and I think like you can't talk about, about Mubadala without talking about, as you said, Derek, like the transformation in the sort of constitutions of these countries, because just this week, the UAE essentially secularized their legal code as well. Yes. They, they've, uh, they've taken a number of steps and, um, uh, you know, they sort of loosened laws about drinking alcohol. Um, they've, uh, yeah, I think, I think secularized is, is probably the, the right umbrella term.

Um, but it's, it's sort of, yeah, it's, it's similar to what some of the things that have happened in Saudi Arabia, not quite, uh, as oriented around kind of the, the religious aspects of, of things that are prohibited under Islam. But, uh, you know, you see in Saudi Arabia them, this effort to kind of relax restrictions on entertainment and, uh, you know, have concerts and movie theaters. The WWE, which was such a real fucking affair. Well, wrestling, I mean, wrestling, pro wrestling has always been huge, uh, in the Gulf. So that's, I mean, yes, the kind of inviting the WWE and is a, is another, is a step, you know, in a, in a certain direction. But it's, it's one that's very in keeping with, uh, kind of the, the entertainment interests of the Gulf. It's always been a, uh, a major, uh, major attraction. They're revealing what their priorities are, isn't it?

That it's like, yeah, okay, we have now legalized, we've legalized drinking, you know, no, no sharia. But if you are a dissident, if you say shit about the, the Tani's or the Saudis or whoever else, we will get a wrestler to choke, slam you through a folding table. That's absolutely right. So a guy has to wrestle a Toyota Hilux, a very exciting man. Because ultimately, like a lot of these, a lot of these funds are dedicated to, um, not just, not just like modernization, not just diversification of the economy, but also like playing, playing catch up with it with industrialization beyond just like oil extraction or natural gas extraction. And so a lot of them then in heavily invest in domestic enterprises. So like Mubadala heavily invest in like, like a UAE data center and AI capacity. But one of the interesting things is that what's unique about the UAE fund structure is that instead of having one or two funds, like the Saudis have a serious fund and a fund fund.

Business in the front, policy in the back. The Qatar is basically just a landlord. The Kuwaitis have like one serious fund and so on. The UAE had like dozens of different funds, all of whom have several different portfolio managers, all of whom basically compete with one another. And so it's quite cutthroat where you have a crown prince up top, many portfolio managers underneath, all of which with competing strategies. And I believe that the chief executive of Mubadala or like one of the, the person really pulling the strings is actually a civilian unrelated to the royals who was just able to rise to the authority level of a minor royal by sheer competence at investing basically. And also between UAE and Saudi, there are heavy tie ins with the defense industry and the attempts to like create BAE systems. Do you remember the American Army Aviation Colonel who the UAE hired in to be a general?

And they just like, they gave him the promotion that he always wanted that he wasn't able to get in the US. Yeah, but that, I mean, that's how it works in the private sector. If your company won't promote you, then another company that has a need of your skill set will hire you. This guy was just doing like, was like organizing airstrikes in Yemen. I think he was still technically a US Army officer, but he was like picking up the phone and answering it like a rank higher in Arabic and just be like, yeah, no, I'm subcontracted to these guys. It rules. That's the gig economy, baby. Yes.

You have to have multiple jobs. That guy's lost out in Prop 22. You have to approve a little message before you fire the Hellfire Messer. Yeah, he doesn't get health care in Abu Dhabi. So there are a few more things about Mubadallah, but they also are like their involvement in the 1MDB scandal in Malaysia. Like they owned a Swiss bank that was essentially, I think, rolled up because of its involvement in that bribery scandal. And you know things are bad when you're too corrupt to be a Swiss bank. As far as I understand it, and again, Derek, I welcome you to correct me here, is that Mubadallah in many ways functions as an arm of UAE foreign affairs.

And I'm not just looking at like influence peddling here as well. I'm also looking at investments in companies like Group 42, which is a Chinese AI firm, which is essentially a way for them, which is a PLA cutout, which is a way for them to funnel money to China. Yeah, I mean, my understanding of Mubadallah is limited and it's opaque. I mean, all of these funds really try as hard as possible not to broadcast their business, I guess, for understandable reasons. But yeah, I mean, you mentioned the 1MDB scandal, Mubadallah kind of absorbed the Abu Dhabi's International Petroleum Investment Company, whose managing director wound up being arrested over his role in the 1MDB scandal. So that was a kind of, you know, absorbed IPIC and its portfolio in the midst of that, you know, in the midst of that kind of fallout from that scandal. I think it's fair to say that there's a political component to all of these funds.

And in a sense, I mean, you know, they're there to fulfill a wide range of national aims. It's not just about kind of diversifying the economies of the Gulf States. Mubadallah does seem to be, you know, the place where the Emirates, or at least Abu Dhabi anyway, kind of puts the things that, you know, are on the one hand kind of riskier investments to some degree, although, you know, certainly, I agree, they haven't taken anything that looks like a stupid risk. And also the things that the investments that maybe have other goals, other aims to kind of strengthen aspects of Abu Dhabi, or aspects of the Emirati foreign relations interests. So, yeah, I think it's, you know, ADIA and the investment company in Dubai are sort of more traditional kind of stay-at-placid sovereign wealth funds.

Mubadallah is the place where Muhammad bin Zayed and, you know, the people under him can kind of play around with things that aren't necessarily just, you know, the traditional kind of aim of a, yes, moonshot investment. We're funding a Chinese company that plans to literally shoot the moon. Hang on though, didn't they hire some company to actually build a big fake moon in a Saudi city? No, that's Saudi Arabia, yeah. So, one last thing about Group 42 in Mubadallah, right, is that if the Group 42 investment happened about two weeks ago, maybe less than that. And, again, they are just, they are essentially a, they are a Chinese company that is focused on military application,

military and healthcare, but mainly military applications of AI. It's funny how the wars works out, huh? So, if there was to be a way to send money to the Chinese PLA more directly, I haven't yet seen it. We're not calling these funds tools for, like, grotesquely obvious bribery. We're not saying that. But if we were saying that, then I think it would be very easy for us to say that on account of how they are. Weirdly, this is more or less a direct message to one Australian listener. And we are strangely too up on this kind of thing.

Anyway, I want to move on, though, to Saudi, the dessert course of this particular discussion. The greatest country on earth. The one that everyone should be a patriot of. So, Saudi, as I mentioned, has two big sovereign wealth funds. Sama is the monetary authority. That's the one for counteracting Dutch disease. That's the one that's most like normal. That's the one that's not stupid.

We're not going to talk about that one. We're not going to talk about that one. We're going to talk mostly about PIF. So, essentially, Derek, as you mentioned, PIF is one of the main vehicles for the fulfillment of Vision 2030. Vision 2030 is Mohammed bin Salman's idea for what Saudi Arabia has to be like in 2030. So, it can continue. He's dragging on, kicking and screaming into the 17th century. No sharia, no dissident.

And everybody who opposes you is hit over the back of the head with a folding chair. But also, you really impress every woman you meet. Everybody has a job working at the posting center where you go online and threaten to 9-11 other countries. But also, everyone also has a job like as either you're like Eric or Johnny Drama. I'm really harping on this, like, MBS has entourage brain thing. For reasons that we will explore when we see what he's... The peak MBS entourage moment was the Saad Hariri photo where he went out drinking and took photos for the gram with the Prime Minister of Lebanon whom he kidnapped.

And the guy is sitting next to him, wearing his best... Hey, I just got kidnapped by this guy's smile. And MBS is just having a great time. He's like, hey, what's up with this guy? Awesome. I have to say, I mean, just from... I mean, I don't know that much about Saudi Arabia, but I do think it's an extremely Chad move that the House of Saud renamed the whole country after them.

Imagine if Britain was called like Mountain Baton Windsorland. Like, wouldn't... Yeah. That should be called... And you know what? It was a Chad roll family move. And once Scotland and Northern Ireland go their separate ways, we can be called them. Custodian of the two holy mosques, Queen Elizabeth II.

Oh, yeah. By the way, I was reviewing the documentation for the PIF. And there are like sort of like glamour portraits of Mohammed bin Salman. Wait, he's got his tits out? No nipple though. He's got the like news and briefs thing from the sun. Well, Mohammed bin Salman aged 43 from Riyadh thinks we should invade Iraq, actually.

So it's that there are basically these like glamour shots of MBS and King Salman, where like King Salman has been retouched to the point that he looks like a mannequin. Yes. Well, that's what he's going to do with him after he dies, surely. That's going to be a big Lenin-style morselium. He is absolutely going to give other golf monarchs unrealistic body image expectations of the air fresheness. My favorite Salman story, by the way, and it says something that I have a favorite Salman

story was literally... By the way, Derek, I'll be asking you for your... Literally last year, because when he was still like... When they were still trying to pretend that he was still kicking, right? He had a diplomatic visit from a delegation from Libya. And he was like, hey, how's it going guys? How's Gaddafi doing? Just perfectly innocently.

It's like, I'm not sure how you broach that, but that's an awkward conversation. Yeah, he actually got out of a hole recently. Derek, your favorite King Salman story before we go on, if you have one. I think my favorite one is the story of the Salvador Mundi painting, the supposed Da Vinci masterpiece that was purchased, I can't remember. It was a couple of years ago by an unknown Saudi investor for an extraordinary amount of money. I want to say like $500 million.

This was in, I think, 2017. And they finally attributed the purchase to this like random Saudi prince nobody had really ever heard of, who was obviously a cut out for Muhammad bin Salman. And supposedly the story at the time was that Muhammad bin Salman had bought this as a favor to his friend in Abu Dhabi, Muhammad bin Zayed, the Crown Prince of Abu Dhabi, because Abu Dhabi was building and has since built a modern, well, it's not modern art, but a very kind of modern museum of fine art. They leased the name Louvre from the Louvre in Paris.

So it's the Louvre Abu Dhabi. It's not connected with the actual Louvre, but they've leased the naming rights. It's a franchise. Yes, but it's supposed to be. This was supposed to be the centerpiece of this new museum's collection. But then there was a lot of speculation. There were a little like some speculations that maybe it wasn't really a da Vinci. Maybe it had been done by one of his students.

Maybe it was a da Vinci. And the painting just kind of disappeared. And it's never been given to Abu Dhabi for the museum. Supposedly now it's on one of MBS's yachts. Cool. A very safe place to keep a price this work of art. Part on this yacht. And it may eventually wind up in an art museum that the Saudis are trying to build in Al-Lula,

which is a city in the northwestern part of the country. But just the sort of the display of unbelievably useless extravagant wealth coupled with having no real idea what he wants to do with this. And what made it even better really is that this happened, this $500 million, $450, whatever it was, million dollar purchase of this painting happened right around the time the Saudis started throwing all their wealthiest citizens in the Riyadh, Ritz Carlton, and shaking them down for millions of dollars. Supposedly because they were all corrupt.

And here you have the Crown Prince kind of directly kind of funneling money out of the country to buy a painting to the tune of hundreds of millions of dollars. This is literally what happened when Julius Caesar started prescribing wealthy senders. This is just like a bunch of Praetorians rolling up to like Cicero's house and then just deciding to spend his money on another triumph. Yeah, it rules. So basically Julius Caesar building a second moon. I mean, to what extent could you call certain cities like on the Anatolian coast Neom?

I guess we'll never know. Socrates going down to Neom to have a little discussion with his friend. I met Glaucon the other day in the artificial beach. So basically the connection between the PIF, this investment fund in Vision 2030, is basically this is the vehicle for its delivery, but it was not ever thus. So PIF was set up in 1971, much as the other sovereign wealth funds in the Gulf were originally before they took on these like other purposes, was set to re-channel resource wealth into A, local currency crucially, and B, to spend that local currency

on developing non-extractive resource rent business models essentially. So it was the basically permanent private investor in like Saabic, Petrochemicals and Saudi Telecom, but it was largely dormant until 2015 when an enterprising Saudi defense secretary, Mohammed bin Salman, then took it over as the vision to drive this 2030 economic reform plan. And as soon as he took it over, he then stacked it with his friends. So basically, let's say I've reviewed sort of certain analyst commentary about the fund and a lot of it's very diplomatic. My favorite one was from one analyst who said,

a lot of the experience that people have at the top is very narrow. This guy's very experienced. He's bought over 400 bottles of champagne in clubs. One thing they're not experienced at being a fake friend. The decision-making is all in the hands of Saudi royalty, and expats are largely brought in to present due diligence, but as a semblance of a rubber stamp. Look, it's better to have a vision fund full of people who love you than a whole party full of sharks hungry as well.

I genuinely want that job as the like kind of expat fixer who sits in an office and is like, yeah, that seems fine to be honest, and I get paid $20 million a year to do this. Wait, I've got the name for this, Imams Basement. Well, that's the episode title. So, John Svaka-Nanakis, a golf expert at... Just move past it, he's got a Greek name. A golf expert at Cambridge said there's a disconnect

between a dire domestic fiscal situation and the fund's continuous, profligate outward investments, and that complicates the economic... Thanks a lot for a Greek to say that. ...to the finite sources of funding. So, before we go into the specific sources of funding, can we sort of speak a little bit about like what position Saudi Arabia is in versus like, again, the fact that much of what they're spending their oil wealth on

is quite frankly, fucking insane. Well, the key to this from a policy standpoint is this Vision 2030 plan. And Vision 2030 is there's a number of these kind of initiatives in the golf. I think Qatar had the first one, which they started actually back in 2008. I looked at Qatar's Vision 2030, it was pretty normal. Yeah, it's very normal, and they actually preceded a lot of this because where the Saudi Vision 2030 comes from, and I think Kuwait has a Vision 2035,

and Abu Dhabi has its own Vision 2030 plan. I think Abu Dhabi has Vision 2021. They're quite sort of urban. They did, but I think they... My favorite... My favorite... They've named all of this with an English pun for Vision 2020, and nobody has told them that the higher number means that the vision is worse.

Well, no, Alice, it's because they all hired McKenzie. Yeah, and what McKenzie told them was... McKenzie, it's like 2020, but it's better. But 2030 is worse than 2020 Vision. Yeah. But before I throw back to Derek, no, McKenzie copy pasted most of this. There are things that I know about McKenzie in the golf that I cannot repeat on this forum.

In terms of things they have sold to Dupes. Sorry, Derek, please carry on. So Cutters predates a lot of this, but the motive for the Saudi Vision 2030 at least, and I think the others as well, is the UN's Sustainable Development Agenda, which they rolled out in 2015, which was called the 2030 Agenda.

So I think that that's part of where this fixation on the year 2030 comes from. Also, it's like far enough in the distance to be... You're not promising anything, really. You're just kind of putting a year out there by the time... We're going to have it all done by this point. But the Vision 2030 is sort of Mohammed bin Salman's attempt to rewrite something I talked about a little earlier, the sort of social contract of Saudi Arabia,

which as it stands now is, we've got all this oil wealth, we're going to extract it, we're going to sell it, we're going to use that money in part to sort of build a very comprehensive network of social programs so that everybody gets taken care of at some minimal basic level that keeps people comfortable. I get a Da Vinci, you get a job at the Beheading Factory. Yeah, right.

Yeah, in return for that, you all can look the other way as we kind of extract the rest of that wealth for ourselves and as we rule the country in a relatively authoritarian way, you'll kind of not worry so much about that. So part of the concern here is, of course, that oil is maybe not going to be the vehicle that it has been for maintaining this kind of state. Part of the concern is that the Saudis were very worried in 2011

when the Arab Spring happened, they were very worried there was going to be a protest movement in Saudi Arabia and they very much want to prevent that from happening. And so the idea is as Saudi Arabia kind of necessarily transitions out of this world where very pricey oil financed a lot of stuff that they could then provide to people in exchange for their compliance. They're sort of changing the social contract in a way. They're trying to keep the economy strong, trying to create jobs.

There's initiatives in all the Gulf States really. They all have, they're also named something like Saudization or Cutterization or Emeritization, which are these movements to kind of put jobs that have here to fore been filled by expats and some of them brought under very dubious considering circumstances from South Asia and other regions and treated very badly. Some of them brought from other Arab countries.

Some of them brought from the West to fill these jobs that maybe either the people in Cutter, the people in Saudi Arabia didn't have the skills to do necessarily the training to do or were not interested in doing. There are initiatives in all these countries to kind of create or kind of fill those jobs with Gulf Nationals to kind of counter what is a rising unemployment really. So there's that, there's this sort of opening of society.

Something I mentioned earlier, we're going to do big tech cities and movie theaters and concerts and wrestling and all this stuff so that you can all have a good time, hopefully in a bread and circus type of way, hopefully so you don't pay attention to still kind of look the other way on the bad stuff, I guess. But also, what really strikes me about how Vision 2030 is being executed in the way that you're talking about, Derek, is that it's being executed in terms of what would I, MBS want?

Wrestling. What would you like me? Well, yeah, I mean, he sort of has his idea of what a kind of you know, kind of urbane, younger, 20s, early 30s guy likes and he's imposing that. It's a blow kind of a thing. But there are other things happening. You know, women have been given the right to drive now

and they're relaxing kind of the obligations for women to sort of be under a guardian's protection. So there's some social changes happening. But it's happening in the context now of an oil price crisis that I don't think the Saudis envisioned. I don't think they envisioned oil prices collapsing as quickly as they have. Certainly they didn't envision the pandemic kind of adding a lot to that crisis. So they are starting to finance a lot of this stuff on deficits

and their budget deficit for 2020 is skyrocketed past I think any level, you know, far beyond any deficit they've run in the past. And so they're in a little bit of a bind and I think things are moving a little faster than they had anticipated in terms of forcing a transition away from oil. So with that in mind, right? With the idea that Saudi has essentially been like caught with its Louis Vuitton pants down,

we have to then understand like what their investments have meant in the last few years and what they intend to sort of spend going forward. And a lot of that investment, again, like one of the reasons that they invest in Softbank, one of the reasons that they wanted the first investors in Uber after, and I researched this, after MBS saw the app. What? Yeah, he saw the app in 2015. He was like, well, we'll buy 5% of the company.

Hell yeah. He just looked at the app and was like, yep, this is a good app. He's a Matt Hancock guy. Yeah, because like Matt Hancock. Because ultimately like a Matt Hancock person is just like turtle from entourage, but as an MP, right? Like that's the same guy. MBS is going to try Parkour for the first time and it's going to blow his mind.

So they're also a strategic partner of Softbank because like much of what they want to do is, there's two levels to this kind of investment strategy, which is number one, become a monopolist. That's the first one. With that one just makes sense from that point of view, which is we want to control all of transport. Number two is the delusional asshole tech bro thing, which is like we want to invent the future,

which is I'm pretty sure a lot of what's going on here as well. But from a pure returns point of view, if you're trying to invest petrodollars in a world where government bonds have negative returns, or negative or low returns, especially versus your home currency inflation, then of course you invest in a monopolist a company that has a 5% chance of becoming a monopolist is a better investment than a company that has guaranteed a government bond

that is guaranteed to lose you 1.8% against inflation. We've guaranteed like we've built into this the stupid investments you have to like throw money away because otherwise it just backs up. You're making too much of it. Yeah, so effectively this is much as like the first crisis in petrodollar recycling created like Thatcher and Reaganism and created this sort of persistent balance of payments crisis that like led to again, sort of permanent underdevelopment not led to,

but like we're the most recent sort of causal force of permanent underdevelopment in the developing world and so on. The most recent sort of petrodollar recycling crisis is leading to the funding of completely stupid companies because the idea is if it's a 5% chance of getting a monopoly of creating a monopoly that it can then dominate, great. So of course you'd invest hundreds of millions of dollars in a dog walking startup because there's a small chance that you could get a few dollars

or a few like pounds or whatever it's nominated in from every dog walk that happens in the world. So if you have that much money, then that's what you have to do. Just based on the pure logic of the market. And so it's no surprise from that point of reasoning that the PIF is sort of filled with these level of stupid investments. So in addition to Uber directly, they've invested in Uber twice, one directly and one via funding the Vision Fund,

which also invested in Uber and a bunch of other stupid stuff that we've discussed ad nauseam. They also spent about a 67% stake in not Nikola, but a Nikola clone. So a clone of the Tesla clone called Lucid Motors, which as far as I'm aware has produced about as many electric vehicles as Nikola. Awesome. I want to meet the kind of guy that names a company Lucid Motors, that rules. They kept investing more. They've also invested $400 million in Magic Leap,

the augmented reality company that was supposed to revolutionize the way we experience the day-to-day world, but that laid off like half of its staff. Magic Leapening. And they also set up a number of domestic firms, such as, quote, The Helicopter Company, which seems to be a vehicle for buying non-functional Leonardo helicopter. Yes.

Awesome. That's the... Fuck, the Leonardo is the civilianized version of the V-22 Osprey. It indeed is. Fuck, was it Cuomo or Bloomberg? This is the only guy in the US who wants one. It's just like, yeah, I want the tilt roaster that kills like Marines constantly. I want that, but like to fly around between Manhattan or between Riyadh and Jeddah.

Yeah, awesome. Cool. He just likes killing Marines. I'm not saying necessarily, because I don't know if it's those. I know that the helicopter company, which was set up, and I have the quote here from their PR, the company will provide private transportation services within and throughout the main cities, as well as tourist trips to various attractions around the kingdom.

The helicopter company will cater to emerging demand and luxury tourism, which is, again, entourage. That's pure entourage thing. Where you're just projecting your rich guy perversity on the rest of the world. Oh, do you reckon? Because they love a workaround, don't they? Do you reckon they think that's a way to let the infidels do tourism in Mecca, because if they don't touch the ground, they're technically not in Mecca.

Yeah, I love to get on the Mecca blimp. They say also an untapped device is a Mecca blimp. That is absolutely the kind of shit that the Saudis would do. Yeah. Is it also the moon? In addition to accessing an untapped existing demand for urban helicopter transportation, they're trying to be blade. They're also buying Newcastle.

They're trying to buy Newcastle United, which is a football team. They've also tried to... Wait, wait. Hang on. There's going to be a meeting between MBS and Mike Ashley. That is some shit I want to be a fly on the wall for. There have never been two more psychotic rich people in the history of the planet. I'm afraid that that purchase did not go through,

because of the unpleasantness with Jamal Khashoggi. They see a journalist. No one knows what happened to that guy. You could have went backwards. Yeah, he walked into the Saudi embassy, and then he moonwalked back out again backwards, and then no one ever saw him again. That's exactly right.

Right back to his journalist office in Langley, Virginia, that happens to be in the same building as the CIA. Anyway, also... It was this rent sharing initiative. He was trying to keep the overheads down. Here's the thing. They also started two companies, the first of which I mentioned before,

which is SAMI, which is an attempted Saudi version of BAE. So again, this is just an attempt to try to stem the amount of money they have to spend through Al Yamama to Britain. Because, again, Derek, as you said, they can't afford it. Right. I mean, the bottom line is, they're not bringing in enough revenue now to afford these grand projects

that are supposed to be part of the plan. Yeah, but they also can't afford to keep being like, well, we're going to buy everything BAE systems makes. We're going to spend all the money getting RAF consultants to load the bombs for us. They don't have the money anymore. Quite simply. That's it.

It couldn't happen to nicer people, you know? So they're trying to build their own company. But again, like, do they have the... Do they have the domestic base of expertise? Like, that very much remains to be... Let's put it diplomatically. That remains to be seen. And also, here's something really funny.

There's also starting something called the Saudi Mortgage Refinancing Company. Oh, that sounds good. So, hey, what do you think about the 2007 crisis? Do you think that all of the factors that led to the 2007 crisis, that will keep the Saudi economy going if they can resell mortgages? Let's just not worry about what happens. Sure. Let's put those together. We can package them up in a little credit default swap here and there.

I don't want to say tranches, but maybe slices. They've also... So, yeah, they're also creating a company to do... And then again, we're not even talking about what are they called, the Giga Projects. Here, this is just their sensible investment that they're doing. Yeah, we're going to create Fannie Mae, but for Saudi Arabia. A country that already is carefully trying to liberalize its society. We're introducing punitive lending charges too.

I just like the idea that you could be like... You see all of the other parts of the sharia getting discarded, but I'm very into the idea of an Islamist being like, wait a second, you're going to do interest? I'm pretty sure it says here that you shouldn't be charging interest. No, we're going to do a sharia compliant version of this. Yeah, it's a lot like payday lender. Everything is fine.

Alice, you need to understand, it's going to be service fees, not interest. Exactly. But we're still securitizing the shit out of it. You get the payday loan and then you have to give Mohammed bin Salman a big boat as a gift. I'm still stuck on this idea of somebody who sees how cynical the Saudis are about every other aspect of Islam, but is like scandalized, like being like, wait a second, is he drinking alcohol? So a couple more things.

They're sat on the Budweiser blimp. Something about this really doesn't sit right with me. So a few more things. They also have these things called the Giga project, which we won't go into because we've been going quite long. That includes two projects called the Red Sea project and the Kadiya project, both of which are like working to make Saudi Arabia tourist destination. Good luck with that.

We should devote an entire episode to Neon. But it's essentially, to put it briefly, it is their city of the future that's going to have an artificial moon glowing beaches. It was designed by McKinsey. So they just said, yeah, whatever you want, flying taxis. Sure. You have a helicopter company, right? You played the documentary, Spec Ops the Line.

So I can't wait for them to try and get like package tours from Britain to Saudi Arabia so that like Baz can go to Saudi Arabia on holiday and be like, oh, it's fucking all right here, isn't it? Well, you got bang as a mash. And they're like, no, that is a ram. And he's like, get me fucking bang as a mash. You can't. But one of the things they did to want to like get people to these various tourist destinations

was they, as soon as Carnival Cruise Lines was like, we have no more business and I think are never trading again and are purely a pile of liabilities. The Saudis did a mob and a miserable pile of liabilities. The Saudi PIF essentially did like what a bunch of idiots on Robin Hood did and bought an enormous amount of Carnival Cruise Lines so they could get boats to like plague ships to ferry people to their like white elephant tourist projects in the deep desert.

We'd love to say it. I mean, Derek, is that about the size of it? Yeah, I mean, there's a there's a dark side to some of this stuff. I mean, you mentioned Padilla, which is sort of a plan to build like a giant amusement park in Riyadh, which is just strange. I mean, literally, you know, the first one of the first projects there is a Six Flags project. They're going to get the Six Flags guide in a cup. There's a plan.

The Five Flags of Islam. Six Flags all black. There's a plan to develop like a Red Sea resort kind of thing along the lines of, you know, what the Egyptians have at Sharma Shake and Sharma Shake and in the Sinai and the Southern Sinai. And but Neom is is a really interesting and not altogether just kind of funny parts of it are very funny. Don't get me wrong. But the story there, I mean, this this is a city that would occupy a big chunk of

like the far northwestern corner of the kingdom. And the intention actually was initially, I don't know if it's still that's still the case, is to expand it into Jordan and a part of Jordan, Southern Jordan, and into part of the Southern Sinai. So into Egypt, it would be kind of span the the borders. There's no land border between the United Arab Republic. They would fix this. I mean, we did too much tech and we accidentally brought NASA back and he's pissed.

What is it? It's radio of the Arabs, but it's a podcast. I mean, I think I think part of it is is, well, I don't know what the rationale really is other than to sort of, you know, increase the level of enthrallment that Jordan and Egypt have to Saudi Arabia, which is obviously a political thing. But I mean, that project has struggled quite a bit since the Khashoggi assassination. You know, they lost a lot of investors that they were, you know, people they were hoping to invest in this project as a result of that. You know, to some degree, we've kind of swept that under the rug now.

So I assume, you know, some people are coming back, but I don't I don't know that to be the case. But the real dark side of this project that doesn't get a lot of attention is there are people living in this part of Saudi Arabia, the the Ho'aitat tribe, and they've lived there for, you know, the generations. They were told that when the Saudis built Neil, or at least they claim they were told when when Neil was built, you know, the the the Ho'aitat would see, you know, a lot of development. They'd get jobs in Neil, you know, their people would get get jobs in this region. And, you know, they have a lot of wealth kind of flowing into the region that would would accrue to the tribe. Instead, what's happened is they've been offered, like, you know, Saudi government went in and offered them like some ridiculous

pittance, like 2,500 bucks or something. I don't I don't know exactly what it was, but it was a ridiculously low amount of money to leave to just clear out. And, and, you know, obviously, many of them have said, no, we're not leaving. And Saudi, you know, the Saudis have sent security forces in there. There's, you know, a man named Alia Abu Tayah, Ho'aiti, who was killed by Saudi security forces allegedly. You know, he was killed by Saudi security forces ostensibly, because he supposedly had was amassing weapons and, you know, doing some nefarious thing. The local, you know, tribes, tribal leaders say he was set up that the Saudis planted evidence to sort of justify going in and taking out. I was very vocal, you know, kind of about this, the treatment of their tribe, whether they see any compensation at all for that is far from clear.

But it's going to be a displacement of this group of people that have no political power, obviously, and are just sort of going to lose their land as a result of this project. It's there is this kind of very ugly, dark side to the Neon Project that that unfortunately exists. But it's sort of par for the course, I guess, in Saudi Arabia that there's there's always some nefarious stuff going on behind the scenes. So I think that's as good a place as any as any to end it. Just if you want to take anything away from this is just to I think there there's quite a bit going on here. There is a lot to do with like foreign policy and like the development of the right of like sort of if you might say like just the general rights of people in the Gulf, but also like to understand sort of what the forces are eliminating, for example, if you work for Uber, your rights in the West. And yeah, it is the same the same struggle, just the different facets of it.

And it goes and also I think if you want to ask the question of why things are stupid, you can't not include Petrodollars. You can't not include Petrodollars. That's a massive part of it. And there has been a huge history of Petrodollars that has gone from the investment we talked about earlier to all of the investments we've been talking about the last sort of 30 or so minutes. So I guess I just want to say to Derek, thank you very, very much for coming on and talking to us today. I have had a lovely time discussing this nonsense with you. Sure, happy to do it. Thanks for having me.

And just as a reminder, our next live show is in Jeddah. As a reminder, you can find Derek on foreign exchanges or you can subscribe to the discontent newsletter. I strongly recommend you do both. And also this is going to be a free episode. So don't forget we have a Patreon five bucks a month. You know the deal. Yeah, you get arrived on the moon blimp. You can you can ride on our delicious moon blimp.

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