Posted Oct 23, 2015 by Martin Armstrong
The IMF has come out and warned that Saudi Arabia may go bankrupt within the next five years if the government maintains its current spending habits. Some emails are asking if the IMF is now copying our projections for they have the same timing. Who knows. I would assume the economic numbers are the numbers, but they do seems to be getting bolder in their forecasts.
There are 30 million people living in Saudi Arabia, but only 5.5 million are actually employed. Out of the 5.5 million people in the workforce, 3 million of them work for government, which is part of the problem. Most financial jobs are given to imported foreign labor. The crisis in Saudi Arabia long-term is that they are following the same model as Spain. True, Spain and its treasure ships from America made it the wealthiest nation in Europe. But they squandered their wealth and failed to invest domestically to create an economy. French were imported to unload ships and the Spanish simply enjoyed life. In the end, their spending habits led to the country defaulting on its debt seven times.
Things have changed. In the Middle East, governments simply spent money for there was no end in sight. Then oil prices dropped after they bumped up their spending and now the revenues are collapsing.
Things are changing out there on this cycle. The USA peaked softly in 2015.75, but the rest of the world peaked in 2007 and has been declining (including China). The USA recovery has been very shallow. We see high-end real estate and the share market at new highs, but not wages or middle class housing in most areas. So the slide from here will be much different than anything we have experienced in our lifetimes.