3 ms·
asset liquidity matters though, right? amazon or msft stock are highly liquid. stolen renaissance paintings, giant palaces in the middle of a desert wasteland,
by metaphorm 9y ago
asset liquidity matters though, right? amazon or msft stock are highly liquid. stolen renaissance paintings, giant palaces in the middle of a desert wasteland, and hereditary claims to mineral rights are not very liquid assets.
- TremendousJudge 9y agooil is an extremely liquid asset. and not just literally
- metaphorm 9y agowhen pumped out of the ground and put into the holding tank of a giant ocean-going ship it sure is. but I was referring to hereditary mineral rights, which is really more about political power and the (very expensive) maintenance of an oppressive regime. those mineral rights eventually convert into oil on tanker ships but it's really incredibly precarious and a single political shift (internal revolution, invading army, etc.) makes it all vanish in a heartbeat. the amount of oil-on-ships wealth that an Arab tyrant has on hand at any given time is relatively modest. most of the wealth is future claims to continue selling that oil, and that's not a very liquid form of wealth at all.
- bousaid 9y agoNo good is a liquid asset. You realize it takes weeks to get from crude oil to something you can pump into your car (including shipping time), right?
- ChrisBland 9y agoNot really -- if you are in control of Oil wealth you are most likely part of a family that runs a country. Your fortune is dependent on staying in power and in favor of the patriarch. If there were to be a cultural revolution, uprising or falling out, you can't jump on your g6 and fly to whatever western country you pick and bring your oil with you like you can with stocks, bonds and other globally traded holdings.
- yorwba 9y agoIf you are in control of Oil wealth because you are part of a family that runs a country, you most likely already own stocks, bonds and importantly real estate in a number of safe countries, so you can flee there when your dynasty is toppled.
- icebraining 9y agoYes, but you'll "only" control those assets, not the oil that supposedly made you the richest man on Earth.
- robotresearcher 9y agoOnly literally. It is buried in miles of rock and the transaction cost to turn it into cash is very large.
- dredmorbius 9y agoNot for Saudi Arabia it isn't. Though that's much of Venezuela's present problem. Also the U.S. and Canada. Fracking, deep water, tar sands.