As Dubai crashes from wonder to blunder, who will go down with it? Business The Observer:
"As Dubai crashes from wonder to blunder, who will go down with it? The Gulf state's dream has turned into a desert mirage, casting doubt on the fledgling Islamic finance market."
I think it is fair to say that there were doubters or concerned observers about the way Dubai tried to spend its way out of oil-dependency since they are running or already out of oil into being a financial powerhouse and international center. With this vision came the frenzy construction boom and the many breath-taking and innovative mega structure built with money - some real and many more via credit!
If you have a chance to see a series of photos showing how Dubai has been transformed in the last 20 years you can appreciate the magnitude and scale of the construction master-plan!
Lessons for me are:
1. hardware development can be achieved with relative ease vs. the efforts and challenges to build software to complement and sustain the hardware. It is often the people who need to make the hardware work, maintain and sustain the hardware that determine if any project is going to be successful on a sustained basis;
2. international publicity is easy to gain as long as you throw money at the media people. They love a party and a story as they do not really suffer serious damage when the heroes that the media trumpeted become zeros! It is the people who invested or came along just before the party ended that will be hurt big time;
3. real estates completed do nothing for human being unless they are rented out, operated on to generate revenue and pay wages to workers so they can in turn consume or invest with their wages earned, so that the interest on the debts taken by the businessmen can be repaid. When the properties are built and no one are coming, the interest payment stalled and the wheel of credit spinning slower or come to a halt, that's when troubles start!! You just cannot borrowed your way out of troubles - unless you are the USA government where the world has no choice, FOR NOW, but to let it print money to shore up its economy and keep the 'world financial system' functioning as we know it.
Let's hope that the debt crisis of Dubai is localized and restricted to the reported USD80+B or as some boldly doubled it to USD160+B as Abu Dhabi CAN finance this with its huge oil exporting capability. Otherwise, we just have to hold our breath for the beginning of this week till Friday to see how bad it really is!!
Allah is great and God bless the humankind with money in the financial market everywhere!!