It seems that the ‘Green shoots’ of a financial recovery that the world has been prepared for by multiple hundreds of desparate politicians and economists has been dealt a severe blow.
All this time, we have been witnessing the economic miracle that is / was Dubai in awe and respect. But hey, it seems that they have built their massive towers not on sand but on debt! Sand might be unsafe, but debts are worse. And we thought they were all bazillionaires in the UAE…
Earlier in the year, we learnt about the end of the Dubai property boom as prices plummeted. Various stories are becoming ‘legend’ about expats leaving their Mercedes at the airport as they fly out to avoid their debts. Now we find that the Dubai government is in serious hock and pulling global stock markets down.
Will the sheiks be leaving their Maseratis at the private runway when they leave? That’ll be the place to go car hunting.
With so many banking stocks already in trouble - even after positive recent results - there seems to be no visible route for a genuine recovery in the financial sector. One thing that seems ever more clear, if major banks have been proved wrong about lending to Dubai - the home of global extravagance it would seem - then it is easy to imagine that there are many more loans in deep trouble.
It certainly proves the ability of the financial services and banking industries to spray money around. From NINJA loans in the USA to sovereign governments in the Middle East, they were certainly equal opportunity lenders.
What never ceases to amaze me, is the level of debts that seemingly wealthy individuals, corporations and nations have. Is there anyone or anything left in this world that isn’t up to his / her / their necks in debt? Would that man, woman or organisation please stand up? (‘Cos the rest of us need a loan…)
When you read about countries like Dubai and Latvia struggling or going under ( Puerto Rico went bankrupt earlier in the year ), it doesn’t need a big stretch of the imagination to forsee bigger nations next.
This isn’t a domino effect for nothing you know…
For sure, it will take time before a genuinely large government goes under. Perhaps I should start a ‘debt pool’ in a similar vain to Dirty Harry in The Dead Pool to see who can pick a ‘winner’. Of course, finding a politician willing to fall on his or her sword over their handling of the recession / depression / financial crisis really is the needle in the haystack.