Jun

5

In discussing history the other day with a client he happened to mention, and educate me on, his family's losses in the Kuwait's Souk al-Manakh Stock Bubble of the 80's and the dabbling in foreign markets. He said that the lessons learned were obviously numerous and that the recent Dubai boom "to him" smelled of the same setting in other asset categories. Anyone remember this or have experience with such?

Greg Van Kipnis replies:

I remember it well.

The Kuwait Souk al-Manakh was an over the counter exchange largely designed for speculation by guest workers and immigrants. The official Kuwait exchange was off limits to all but citizens.

The bubble was financed by virtually infinite leverage. Speculators were allowed to put down margin in the form of post-dated checks and/ or un-cashed checks. The market soared, then crashed, and the Kuwaiti Gov't intervened with a bailout. There is a lot more to the story.


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