# The Biggest Stock Bubble You’ve Never Heard Of: The Souk Al-Manakh Meltdown

## Метаданные

- **Канал:** Business Casual
- **YouTube:** https://www.youtube.com/watch?v=hk4THbOoho0
- **Источник:** https://ekstraktznaniy.ru/video/41028

## Транскрипт

### Segment 1 (00:00 - 05:00) []

Fictional movie character Gordon Gecko once said, "The mother of all evil is speculation. " And if you study the cause and effect relationships underlying any economic bubble, you'll probably agree with him. Consider the housing crisis of08, the dotcom crash of the early 2000s, or perhaps a lesserknown bubble, the tulip mania of 1637, a time when a single tulip bulb was valued as much as a mansion on Amsterdam's Grand Canal. While each of these bubbles are certainly unique in their own respective ways, they pale in comparison to what some would argue was the greatest asset bubble of all time, the crash of Q8's Suk Alman. This may come as a surprise considering Q8 is geographically 551 times smaller than the United States with 153 times fewer citizens in 1982. Which begs the question, how did this tiny Middle Eastern country once hold the title of the world's third largest stock market, only trailing America and Japan? Without further delay, let's explore the spectacular rise and fall of Q8's quarter trillion bubble. The aftermath of which resulted in the equivalent of $240,000 of debt for every Q80 man, woman, and child. The infamous Suk Almanak. This video was made possible by our sponsor NordVPN. On February 22nd, 1938, U8 struck the jackpot of natural resources, oil. So much so that they still control over 100 billion barrels. The discovery of black gold set in motion what can only be described as the perfect economic storm. A storm as fascinating as it was devastating. After decades of extracting oil, Q8's production output in the 60s began to exponentially accelerate, leaving many Q80s flushed with cash for the first time, an unprecedented phenomenon, considering the country's wealth was previously concentrated in the hands of an elite few, such as the royal family or high-ranking government officials. The rapid rise in the country's wealth can be attributed to its year-over-year increased oil production as well as the unprecedented global rise in the price of oil which quadrupled after Q8 and other oil producing Arab nations embargoed the US and other countries in 1973 over support for Israel during the Yam Kapor war. The commodity's price was driven even higher after a series of production cuts in the Middle East, lowering supply and increasing demand, thus increasing the price of oil. What followed was an economic catastrophe for nations that depend on foreign oil, especially the United States, as it aggravated a severe gasoline shortage, causing multi-hour lineups at gas pumps nationwide. But unlike the West, oilrich Q8 found itself in its best strategic position in the country's history. As Q8 citizens looked for a place to park their newfound fortunes, the government launched its official stock market in 1977 called the Borsa. But much to the frustration of Q8 citizens, the exchange was largely dominated by the country's wealthy who mostly traded amongst themselves in large blocks of stock, effectively crowding out smaller investors. In addition to being controlled by the elite, the heavily regulated Borsa was home to only a short list of Q8 companies as the nation's royal chic rarely permitted new IPOs based on a fear that outofc control speculation would capsize the market. Dissatisfied with the small array of stocks to choose from, the souk almanac was formed the following year in 1978. Unlike the heavily regulated and elite dominated Borsa, the souk allowed all investors to trade in nonQuat companies that didn't meet the strict standards of the royal chic. If the Borsa was the reliable and regulated market, the souk almanac, which literally translates to the market at the resting place for camels, was the wild west of the Middle East, the market for the new world investor. As oil prices continued to climb, largely thanks to the onset of the Iranian Revolution, the souk grew in popularity, gaining a reputation for minting millionaires left and right. As is always the case with bubbles, larger crowds of speculators grew wealthier and wealthier, leaving those watching on the sidelines feeling left out, only to inevitably join the party. As speculation grew more rampant, it wasn't long before the souk earned a reputation for being far more exciting than the Borsa, becoming more of an entertainment center than an investment platform. The growing stock market's rise can primarily be attributed to a curious quirk in Q80 law, which allowed investors to buy near infinite shares of stocks with post-dated checks, which were treated like cash, regardless of the investor's income or assets. And as a result of using the post-dated checks

### Segment 2 (05:00 - 10:00) [5:00]

investors had unlimited margin to purchase as many shares of stock as their hearts desired. The reason for this quirk was due to Q80 culture, which prohibited defaulting on a loan because that would be considered unimaginable, bringing shame on the defaulter's entire family. Despite the entire stock market being built upon a house of post-dated checks, investors weren't worried about losing money. After all, the last time a small panic occurred on the Borsa exchange, the government swooped in and purchased shares so that no investor would suffer, demonstrating that the government would always be there to bail out the market. Investors translated this to mean that they could buy shares on the Souk Almanak with money they didn't have with a faith that the government would never allow a crash to take place. At the beginning of the Souk's trading days, post-dated checks were always paid on time because investors were able to lock in profits before their checks came due. This unhealthy level of investor confidence mixed with access to unlimited capital meant that no stock price was considered too high. In one extreme example, a former government employee in his early 20s from Q8's passport office borrowed an astonishing $14 billion with his post-dated checks. Of the 54 companies listed on the souk, the average price increase for that first year was 63%. Some stocks doubled in only a month with others growing 13 to 15fold within a matter of weeks. One of these high-flying stocks was Gulf Medical, a failed hotel turned hospital, which received so much interest from investors that its IPO raised 2,600 times more than the original target, requiring 40 school teachers just to process the pallets of investment paperwork, which arrived by the plane load. Out of this rampant greed came the exact problem that the Royal Chic was trying to avoid. shell scams masquerading as legitimate companies that did not have any customers or revenues, much less profits. The lure of near instant wealth was so great that even Q8's own Minister of Commerce, who was supposed to be in charge of regulating the over-the-counter market, was enticed to try his luck at the Souk Casino along with several members of Q8's Parliament. It's estimated that by the spring of 1982, some $29,000 checks totaling $94 billion were floating in the market when rumors began to spread that most of the companies on the Souk Almanac were simply worthless scraps of paper. By the summer of 82, with stock prices commonly doubling on an hourly basis, the unofficial Q80 stock market had risen from 5 billion to over $100 billion, making it the third largest equity market on Earth. But it was short-lived after one Q80 tried depositing a check early, which bounced. As investor concerns swirled, Q8's finance minister made real the fears that the government would not step in, stating speculators should pay for their sins in accordance with Islamic tradition, which when combined with the risk of defaulting on post-dated checks, triggered instantaneous and widespread panic. Historic data is somewhat murky about what followed next. But it said that trading didn't just slow down. Rather, it simply stopped altogether, leaving creditors holding the bag for nearly $30,000 worthless checks, totaling 12 figures of debt, or the equivalent of $239,000 for every Q80 man, woman, and child. For perspective, America's national debt per capita in 2018 was approximately $66,000. The damage caused by the souk was so catastrophic that the country had no choice but to shut down its official exchange in November of 1984 and rebuild the former Borsa from scratch. This time calling its market the Q8 stock exchange. Unfortunately for Q8, its luck had finally run out as the country was thrust into a recession following an oil glut which slashed the value of oil by some 80% over a 6-year period following its peak. Iraqi forces then invaded the country in August of 1990, further weakening its already damaged economy. The epic story of the Suk Almanak meltdown, now four decades old, contains a series of valuable lessons for today's investors, such as the need for pausing and reflecting when valuations are ignored by other investors, or the muchneeded practice of due diligence and the necessity of exerting caution during booming times as it can become all too easy to get caught up with the market's hype and the hot stock duour. But of course, if there's one thing worse than losing money on the stock market, it's getting hacked online. Which brings us to the sponsor of today's video, NordVPN. If you're watching this video on your phone or a computer without a VPN, you're basically inviting hackers to steal your IP address, who can potentially use that data to pin down your exact location. But because you're a business casual fan, you can hide your IP address with NordVPN's technology

### Segment 3 (10:00 - 10:00) [10:00]

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