Dubai? No, I'd suggest selling ASAP!

Good People,

I wanted to share some comments I recently received from a good friend and business associate, Pia Ault, who currently lives in Dubai. She has been there long enough to see both sides of the equation: Boom & Bust... For a time, the Emirates (read Emirs) made the suggestion that they were immune to a downturn in Oil Commodities pricing, and perhaps an economic downturn in general... Seems the perpetual geyser has been downgraded to "dribble" status...

Pia's comments:

"Data is good but sometimes it's interesting to personally observe what happens around you....

The National - our local newspaper, yesterday on the front page reported that IMF says GDP growth will slow as economic crisis continues, yet on page 3 several sheiks (and thus almost by default ministers) said there "is no crisis in Dubai" - "people are absolutely NOT leaving by the airplane load, leaving cars at the airport (with and without keys) and the govt still issues 1000 visas per day". Hmmnn, must be why I saw a car auction last week for 2000 hi-end cars. "Slightly used 2008 Porsche Cayenne, no keys available, for sale at great discount"!! That also explains the mile long line of Indian men at the check-in counter in terminal 3 the other day....no, there is no crisis here!

Usually we have construction 24/6, Fridays are absolute with no exception holidays, so quiet - but now there are no night shifts, Saturdays too are quiet, the 65% of the world's cranes at full stop. The line of sewage trucks going to the treatment plant, usually 3-4 miles long, have been reduced to 30-40 trucks.... construction projects on hold = less workers. Less workers = less crap. Less crap = less trucks - you get the picture. Traffic has become tolerable, people here say Dubai is now like it was in 2006.
However, there are apparently grumbles among the ranks and local Emiratis. The govt injected a lot of cash into - well, the govt, where else, which consists of just the royals - some 420 sheiks. That has caused a stir among the locals. But "there is no crisis".

Rents have come down 30-40% (of course AFTER we signed and paid a year ahead...) and food prices are expected to decrease by 50%.

Between September and now it's a whole different picture. But there "is no crisis". Several friends who have their own enterprises here, are in liquidity as the govt owes them money for consulting or training etc. The shortlist for companies owed money stands at 492, that's just the shortlist. Apparently nobody inside govt and royal families who own most of Dubai, can agree which [govt owned] company should pay the debts.

Anyway, that's my personal journalistic observation from the sandbox! Funny, 4 weeks ago a new law was passed that "journalists will not be jailed, only fined, if they publish anything negative about UAE and the economy and the Royal family"....no there is no crisis and certainly no censorship here!

Pia"

Thanks for sharing Pia... We share your pain here in the USA...

Best,

Mike

The New President of Bubbles...

...No, not Jacko's Chimpanzee!

I'm talking about the Debt Bubble... They would like you and me to think this is all really complex stuff with labyrinthine formulae that nobody less than a PhD from Princeton School of economics could understand.

Well, I have managed to find a short treatise written by another PhD, J.D. Foster (working with the Heritage Foundation) that spells it all out in simple terms. I really encourage you to read through this so you can understand where all this profligate debt creation by Congress and Barry O. will leave us... A very well founded document worthy of your valuable time!

Here is the opening paragraphs:

President Barack Obama and top Congressional Democrats are leading the world toward a new global government debt bubble. The United States appears headed toward a multi-trillion-dollar increase in publicly traded federal debt in just the next two years, with much more to come. Other nations appear to be following suit.

This debt explosion is likely to raise interest rates significantly for government debt, thereby increasing interest costs for future generations. More troubling at the moment, this policy will increase interest rates for all private debt such as home mortgages, consumer loans, and business loans. The near-term consequences of this debt bubble will be a deeper recession, a longer recession, and a weaker eventual recovery.

And the link to the full article:

http://www.heritage.org/Research/Economy/wm2257.cfm

Best,

Mike

A bit late to the gunfight...

...but better late than never, yes?

I received the following e-mail from Senator John McCain's website CountryFirstPAC.com:


Dear Michael,

Yesterday, the Senate began debate on an economic stimulus package that is intended to get our economy back on track and help Americans who are suffering through these difficult times. Unfortunately, the proposal on the table is big on the giveaways for the special interests and corporate high rollers, yet short on help for ordinary working Americans. I cannot and do not support the package on the table from the Democrats and the Obama Administration. Our country does not need just another spending bill, particularly not one that will load future generations with the burden of massive debt. We need a short term stimulus bill that will directly help people, create jobs, and provide a jolt to our economy.

I believe we need to evaluate every bit of spending in this stimulus proposal with one important criteria - does it really stimulate the economy and help create jobs - if the answer is no, it does not belong in a so-called stimulus package. Furthermore, the stimulus must include significant direct relief to American workers in the form of payroll tax cuts and programs to help homeowners keep their homes. Finally, we need an end game to this stimulus so that when our economy recovers, these spending programs do not remain permanent and saddle our children with a skyrocketing national debt.

I appreciate the discussions President Obama is having with my Republican colleagues, but the time for talking has come to an end and we must now begin some serious negotiation. But as of yet, Republicans have not been given the opportunity to be involved. The House of Representatives passed a stimulus bill without a single Republican supporting it. In the Senate, the Democrat leadership is trying to jam the existing proposal through regardless of reservations from a number of members. With so much at stake, the last thing we need is partisanship driving our attempts to turn the economy around.

I have long been a fighter against wasteful spending in Washington and long an advocate for a balanced budget -- that will never change. I realize we face extraordinary challenges with our economy today, but that is not an excuse for more irresponsibly from Washington. I hope you will join me in saying no to this stimulus package as it currently exists by signing this petition.

Sincerely,

John McCain

The link to digitally sign is here:

http://www.countryfirstpac.com/petition/economic.aspx

I'd also encourage you to e-mail your State's two senators and let them know they need to vote "Nae" on this devastating bailout package bill.

Best,

Mike