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"sugamo stomach" Discussed on The Indicator from Planet Money

The Indicator from Planet Money

03:12 min | 1 year ago

"sugamo stomach" Discussed on The Indicator from Planet Money

"Okay Darius everything's looking good right now. Stocks are going up. People are quitting their jobs as doctors or engineers or whatever to trade on the stock market. Obviously this could not last well. As you'll recall people were using the system post dated cheques to create this market but then as the stocks started to go down people started trying to call in those checks they went down to the bank and said I wanNA cash this check check because I'm not sure that this is going to be worth anything soon. And it quickly became clear that there was not enough cash to cover all of these checks and so the government stepped stepped in. They put together this committee and said we're going to look at this and everyone said great. The government's got it under control and they met over a weekend Monday. They made an announcement. There would be no bailout and at that point. All trading stopped. Just a stunned reaction paralysis. I imagine this. The third largest stock market in the world in an instant grinds to a halt suddenly worthless. Nobody knows who owes always what to WHO who is bankrupt. Who is solvent? It's just this this mess. They could all of the dealers under house arrest and and everyone was told no capitals Louts League Kuwait until it's all sorted out so the government scrambling and the collapse of the sugamo stomach. It destroyed the Kuwaiti economy. I mean it plunged the country into a recession that lasted almost ten years. All but one of the country's banks were insolvent in the end all of the losses adjusted for inflation totalled nearly two hundred and fifty billion dollars which for reference with five times the size of the Kuwaiti economy. At the time so this would be the equivalent of losing one hundred trillion dollars if it had happened in the US Suba Araya's who was a prominent businessman man. Like I said he says when it crashed just affected everyone. That was the biggest thing that ever happened. In Kuwait everything went went when and whether it's a stock or whether it's appropriate to everything thing when when I think there's an interesting lesson in all this and I think it demonstrates demonstrates the two forces that are kind of battling each other at the center of capitalism which is you know the forces of financial innovation and sort of human. I'm an engineer. That can't be stopped and the forces of financial regulation and trying to earn a bend that ingenuity so that it fits into some kind of master plan and I don't think Kuwait's mistake was seeing the value in financial innovation. I think the mistake was thinking that they could somehow separate that from the rest of the economy. You're never gonNA be able to contain human ingenuity. I think that the most you can hope for is to try to find some balance between control all in chaos very nicely said Darius how the Sukhoi menaka explains the world for at least financial history. thanks man. PODCAST was produced by Darius roffe on edited by Paddy Hirsch. The indicator is a production of N._P._R...

Darius roffe Kuwait government Suba Araya Paddy Hirsch sugamo stomach capitals Louts League US engineer