Someone posted a blog about the speech made by Mr. Lee Kuan Yew concerning Dubai. It is reported here.
Dubai is now facing difficult in repaying its large borrowings that were used to develop its visionary facilities.
I first went to Dubai in 2006 and was also impressed with the bold and visionary steps that were taken to develop Dubai. Few could have foreseen the collapse of the global economy at that time. I did not.
Tan Kin Lian
Without proper and strong fountain, the building will collapse alike building built on the sand compare to solid ground.
ReplyDeleteThis is what I learnt from Alexander the Great. He has good and noble vision but the weak fountain ruins all after he passed away.
Why so? By not marry earlier and have a son of Greek blood to success the throne, the throne is open for political infighting after his death. The empire broke away soon after his death. Sad but true.
Dubai World is in debt
ReplyDeletehttp://hongjun.blogspot.com/2009/11/dubai-world-is-in-debt.html
Dubai Support Fund Insufficient To Meet Debts
http://hongjun.blogspot.com/2009/10/dubai-support-fund-insufficient-to-meet.html
hongjun
the leaders(main blame) not only foolishly miscalculated, they were misled by "ambitious and self serving talents"(i wonder by who and what).
ReplyDeletesome economic model should not be blindly followed.
Back in 2006, Nouriel Roubini was forecasting major financial crisis due to property bubble. But I think even he didn't expect the worldwide scale of the contagion. Anyway, he was a bit early --- US property indices peaked in early-2006, while stock mkts peaked in late-2007.
ReplyDeleteComing back to Dubai, the chilling similarity with S'pore is that it also relies very heavily on "foreign talent". In fact up to 80% of productive workers in Dubai (at least before the fallout) were foreigners. 2 yrs ago PAP leaders even pointed to Dubai as shining example why FTs should be encouraged to come into S'pore.
What happened since Lehman Brothers collapsed in Sep 2008? It has been widely reported that tens of thousands of expats in Dubai has run-road, coz kenna retrenched or pay-cut. They just abandon houses and condos i.e. heck care about paying the mortgage and rentals. Thousands of cars are sitting at the airport car parks -- abandoned by those FTs. Who gets to settle all these defaulted car loans and mortgages etc? The local banks, govt and the citizens will have to suck thumb.
With all these mess and indebtedness, Dubai has the dubious distinction of being the most 'teroh' property market in the world. Residential property is down at least -50%.
Maybe some prince or sheikh in the ruling family got pissed at these run-road FTs, and now is giving the same medicine to the foreign banks and the rest of the world mkts.
I foresaw it in 2004 where I learn that you can snow in Dubai. When one goes against nature, especially when there are no natural resources or assets, it is bound to fail. Like a ponzi scheme. That's why I don't bother to set foot in Dubai.
ReplyDeleteAll rapid expansions tend to overstep in some areas so that part doesn't worry me. I had always wondered about the viability however. There was some insane promises being made for investors in Dubai property in the UK last year which were never sustainable. What i don't really get about Dubai is what they exactly do there. Singapore (and Hong Kong) have for a long time been investments centers where people from China and Asean could put their money and know that is was safe which is not always true for some of Singapore's neighbours.
ReplyDeleteSingapore also has the port and the oil processing businesses.
The only people I know who work in Dubai are all involved with the infrastructure, construction and related services. Once its built what does everyone do to earn the high wages to pay for all that amazing property ?
Dubai was just an aspiration.
ReplyDeletePerhaps it's time for the local Dubai talents to join the foreign talents in the flight to greener pastures.
Think mercenary & global. Not loyalty and local.
Kin Lian,
ReplyDeleteAn economy based on the principle of taking and receiving interest rate is bound to fail.
The so-called Western economic concept will lead us all into total disaster.
The Arabs worship their white masters economic concept. That is why they ultimately fail.
They failed in a mass of luxury.
Only Islam has the answer to all these failures.
Mr. Tan, you did the right thing by selling off your stocks last week! :) Good timing!
ReplyDeleteThe spectacular and beauty of man-made projects are not to be compared with sustainable and practical projects for mankind.
ReplyDeleteThis is the rich men's game. The awesome nature is destroyed every minute and every moment to make way for economic progress in terms of wealth hoarding.
There will be much borrowings from the leaders, the establishments, etc to continue this rich men's vanity game.
Rex comments as follows,
ReplyDeleteThe root of financial meltdown of any society is almost always traced to the issue of bad loans, i.e. borrowers default. We learnt in 2008, that when enough borrowers default, you have the cdo-related products collapse (a.k.a.sub-prime loans repackaged) leading to Lehman brothers, DBSHN, etc collapse. Likewise in Dubai it is caused by same issue of bad debts.
In the first place loans if properly administered, will never lead to such tumultous turn of events such as in 2008 in usa and now in dubai in 2009.
I would like to prophesie (huh. what is the verb of the word Prophecy, i dunno) that within 15 to 20 years, singapore banks will collapse too. Because the goverhment today is encouraging people to take 30 year loans to pay for absurdly priced government hdb flats. Even for private property, too many people are borrowing much more than they should, believing that they would still be able to service their loans right to the end of term. But one should always ask, can one hold on to one's job all of 30 years?
So I think we are in grave danger of singapore style subprime crisis - the very same factors which caused the collapse of the financial system in 2008, and now this Dubai market collapse. Of course in 20 years time, the PAP is quite certainly gone to the dogs and the incoming new politicians will have to sort out the mess created by pap now.
Don't believe?
REX
Time and again as have been shown,the cause of a financial crisis is always due to bubble in assets prcs. The next big one--China . For those who recently purchased million dollar home well I guess you just have to pray that the same problem will not hit home. Of course the developer will not pain gloomy picture as it is their business to sell houses.
ReplyDelete"The only people I know who work in Dubai are all involved with the infrastructure, construction and related services. Once its built what does everyone do to earn the high wages to pay for all that amazing property ?"
ReplyDeleteas such, dubai is unsustainable so any bailout is just a temporary solution until they are forced to do the inevitable.
sg, similarly built in glitz, is luckier but for how long?
once nations wake up to the fact that protectionism or building an internal self sustaining economy may not be that dumb, this place reliant on external human fuel to power growth will back fire.
Dubai should have stayed as a fishing village instead of trying to outdo the other arab neigbours.
ReplyDeleteOf course the greedy outside world thought that Dubai was rich and started lending money. The truth is Dubai fooled everyone and was using other people's money to look rich.
The truth is Dubai was using a PONZI scheme and now caught in a situation where foreign money is not POURING in as fast as the debt is due.A moratorium of 6 months is a bullshit. Dubai is buying time and to make the outside world believe that the problem isn't as big. It is more than meets the eyes.It may be even worser than Madoff ponzi,. Just watch. The 2 banks will be worse hit will be the HSBC and Standchart.
The fallout from this implosion will not be wide spread. It is confined to Dubai and some greedy lenders who judged by the cover(oil). Their oil wells are dry and bring up enough money to pay off the debts and the stupid lenders still don't know die.
Another lesson to learn. Don't think the arabs are rich forever.
have you heard of Arab conman?
ReplyDeleteHave you heard of Nigerian oil stained money?
You are mistaken that Arabs are rich. And becuase they know that others think they are rich it makes it easier for them to con,. Even Standchart and HSBC got conned.
Hi, the views are so different from what you read in the Sunday Times page 1 and 2.
ReplyDeleteVery interesting and i agree too.
Is this the 2nd phrase of the global economic crisis?
ReplyDeleteI say yes.