Outside of following the politics of developing countries, I also like to follow the markets. Especially the markets in countries that are up-and-coming or not even on the radar. Markets where a lot of people don’t even know markets exist. Others they would. Places like Mexico have been booming. But so have many places in the Middle East; for example, Saudi Arabia, which introduced the Tadawul stock index in 2001, began at 8000 points and topped 20,000 in mid-February this year. Kuwait and Egypt have also been riding uphill at lightning speed, a lot of this due to rising oil prices.

Saudi Arabia is an incredibly interesting story, as it is one of the most unfree countries in the world. The index was introduced as a means to begin privatizing, to a degree, many state-owned companies and allow for the people to invest in their country. It was the beginning of a liberalization program that would, in years, make for a more market-oriented economy and hopefully a populace less apt to opt toward Islamic radicalism. By mid-February, over half of the entire population had invested itself in the Saudi stock market. The prospects for growth and hope in the future were infinite.

The only problem is that Saudi Arabia is also a notoriously corrupt country, where relationships between market regulators, stakeholders, and government officials are ambiguous.

It is a sad tale of dramatic irony that since this article was written in mid-February, in which a multitude of “experts” claimed that the index would soon surpass that of South Korea and India, the market has gone into an all-out depression. The index is down 23.70% since then. Why?… Look no further than the same reasons that caused the depression of 1929 here in the United States. Rampant speculation by incredibly wealthy investors. They drove up the prices and pulled out all at once. Market regulators totally failed, and because of it, some nine million people are seeing heavy losses.

Like any government, even the Saudi royal family gets its props during an economic boom. But when such a top-heavy economy like this goes bust, it really goes bust. Now an attempt to make many people wealthier has made many people poorer, which is going to fuel resentment against the monarchy, the markets, and any other kind of Western concept. If you thought any kind of democracy in Saudi Arabia was far off, well, it’s even farther off now. This is going to have huge strains on Saudi society, and the biggest force for social change in the country is the very much overt radical Islamist strain of thought.

The lesson here? If you’re going to liberalize, do it right. All this has done is make a couple people really wealthy and put the vast majority of people in financial crisis. If the bust continues, expect unrest.