In case you were wondering, here’s another article, courtesy of Trader Mark, discussing where at least some portion of our gas dollars are going.
Where is Your Gas Money Going?
We’ve discussed this many times in the past [Jan 21: A Tour Through the Middle East] and as I wrote in January
While we wring our collective hands about how the infrastructure companies are going to lose all their business as crude drops from $100 to $75, and projects will be cancelled due to their rich customers actually giving a rat’s behind if crude is $100 or $75 let’s take a look at reality. I noticed a story in the NY Times this weekend on Saudi Arabia – so I’d like to overlay that with just a snapshot of what is going on in some of the other countries in this part of the world – the Kuwaits, the Oman’s, the Abu Dhabi’s, the Qatar’s….
… because perhaps I think most of us still are very inward looking as Americans and do not realize what is truly going on in this globe. I keep returning to the theme of this transfer of wealth – each day we become more of a debtor nation and our wealth is being transferred out. Only to return to buy our assets from beneath us (and not just banks). If not with imports (to Asia) than with the "great tax" that is petrol. A "tax" on all of us, and our country as a whole. Instead of devoting resources to stop taxing ourselves, we just give lip service or misguided pushes into corn ethanol of all things. We just don’t seem too worried about it, because it’s a creeping problem – it’s incremental, like erosion (or inflation). I would like to highlight we are in a global economic ‘competition’, but there seems to be very little awareness of this from ‘leadership’. Thankfully, we have some of the most financially innovative institutions to lead us through this…. errr, wait. Never mind that. But that’s neither here nor there as an investor; I’ll let others argue about the implications – I have my views, but I am just trying to make money off the trends. But I do have to say, it is interesting to see an over reaching national vision proposed by many of these "3rd world" countries ‘leadership’ – something we used to do here… but I guess you need money to do any large scale projects; along with a government that can actually pass something useful and not only in self interest.
Now as with all good booms (as we see in Asia and the Middle East) there is no clean situation – there will be intermittent booms and mini-busts, but I am speaking to the greater long term trend here. Specific to the Middle East, it appears this go around, as opposed to the 70s, the countries realize that their oil reserves are not unlimited and this time they are reinvesting the monies in ways that can leverage today’s riches into future rewards. Maybe they’ll succeed, maybe they won’t, but they seem intent on trying.
I’d recommend clicking the link I posted to the January story and taking a view of some of the pictures as well – it really pays to educate yourself so when the talking heads talk about the end of this or that boom because the dollar rallies 2% you can feel the confidence to simply chuckle at them, instead of making the mistake of actually listening to their old world view. We are selling off America piece by piece to sustain our addiction.
- The Chrysler building, an Art Deco icon of the New York City skyline, has sold to a fund controlled by Abu Dhabi for $800m. The Abu Dhabi Investment Council, a sovereign wealth fund controlled by the oil-rich sheikdom paid $800m for the 77-story building, Bloomberg reported.
- Middle Eastern investors have spent $1.8bn this year on commercial real estate in the US, more than other international buyers
It’s a free market and Americans used to buy assets in other countries just the same way, so it’s coming full circle. (p.s. Japan used to do this – i.e. buy US assets – in the 80s before their country’s financial system imploded – however their wealth was not based on commodities)
While inflation is a serious threat in these countries right now, I guess with a starting salary of $180K USD, they will be able to handle it a lot better than our middle class. Take a look below at where your gas money is going… people are living the high life off our lack of addressing our overuse of everything. The amount of money is staggering as I outlined in [Feb 27: $2 Trillion of Petrodollars Needs a Home this Year]
