Tuesday, February 17, 2009

Dubai, Dubai, doo (or, why the American Century is not over just quite yet)

There was an interesting article in the NY Times the other day on folks who had moved to Dubai in search of, if not exactly greener pastures, then a sandbox in which they could make some money.

Now, like every place else in the world that had employment to begin with, Dubai is laying people off, and the economy is more or less drying up.

But getting out of town is not as easy as it might seem.

One Frenchwoman interviewed was in panic mode.

When she arrived in Dubai to take a job in advertising, she bought a condo, which seemed like a good idea at the time.

Now she's gotten a pink slip.

Without a job, she'll have to leave Dubai within a month, leaving behind her property. But she's of the understanding that, if she can't pay off her mortgage before she leaves, she could end up in debtors' prison. While there's something to be said for people not being able to walk away from their bad economic decisions scot-free, debtors' prison sounds a little harsh - even if it does have AC.

The foreigners who flocked to Dubai during the go0go years, when out-of-towners accounted for 90% of the population, are now leaving in droves. Many of those fleeing are "debt-ridden", and its rumored that the parking lot at Dubai airport is full of abandoned cars, some "maxed-out credit cards inside and notes of apology taped to the windshield." I certainly hoped they parked in long term parking. On the other hand, if they're not coming back, what's the difference if they rack up a big parking bill.

Dubai has entered a spiral, and, if it's not exactly a death spiral, their boom is bust.

At the macro level, Dubai's big run up was fueled largely by financial services, real estate development, and tourism - they are an Arab Emirate without bubbling crude under their sandbox.

As in Florida, when the twin angels of boom - real estate and tourism (which propels real estate development, of course) - start to turn into angels of doom, there goes finance, and just about everything else.

On one hand, it's kind of sad to see the one freewheeling hot spot in the Arab world hit the skids.

On the other hand, when you build your house upon the sand...

What I found really interesting in the article is the fact that the government keeps a lid on economic data and "real" information. In their absence, the rumor mill works overtime, "damaging confidence and further undermining the economy."

Nothing particularly Dubai-an about rumors "damaging confidence and further undermining the economy." It's entirely possible that the 24/7, beat-it-to death coverage of the recession, not to mention the scores of feckless bloggers stirring the pot, is doing the same thing here. (Mea culpa.)

But a mature economy, one in which people come up with new ideas and invent new businesses -  does provide information, more of less transparently. And the society and economy operate more or less in the open.

Instead of moving toward greater transparency, the emirates seem to be moving in the other direction. A new draft media law would make it a crime to damage the country’s reputation or economy, punishable by fines of up to 1 million dirhams (about $272,000). Some say it is already having a chilling effect on reporting about the crisis.

Here's how the Times article ended:

A New York Times employee in Dubai contributed reporting.

Note that this employee goes unnamed.

Yes, our economy is in at least a temporary hopper. Maybe not the worst we've ever been through, but pretty bad. After our years long credit binge, we've got a wicked hangover. And as tempting as the hair of the dog might be, what we're really going to have to do is sober up fast.

But we remain an open society, where anyone and everyone can bash our country's reputation and economy, without getting fined a quarter of a million bucks.

We have laws, and courts, and financial institutions that, if in the case of financial institutions are admittedly on wobbly legs just now, can and will continue to work.

We have, if not 100% transparency, plenty of data around to snack on.

We still have a stable society, orderly transition of government, and blessedly few national politicians trying to foment an us vs. them, we're the real America mentality. (Remember: Rush Limbaugh may be national, and he may affect politicians, but he is not an elected official and I don't think he could get elected to any office north of dog-catcher.)

It ain't perfect, that's for sure, but when you look around at what's out there....

Sure, I'm one of those Eastern, snotty, liberal elites who every once in a while decides that I could just as easily go live in Canada, or Europe, or one of the other places in the world where the population actually believes in evolution.

Still, we got it goin' here in a lot of ways.

I don't think the American Century is over just quite yet.


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