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muslim-women-buying-barbies

Muslim women buying Barbies

Dubai, unlike it’s neighbor Abu Dhabi, does not have oil riches. Though oil and gas were discovered in the 1960s, the Al Maktoum Emirs of Dubai knew early on they had to capitalize on oil money in the 80s, 90s, and 00s before the gravy train ran out of steam. Dubai creek was dredged several times over those decades so that today Dubai is the largest deep water port in the region.

Dubai’s rulers have also worked hard to make their town a financial center, giving sweetheart deals to major western financial houses to locate offices there. With finance comes real estate, which, according to Wikipedia, accounted for 22% of Dubai’s GDP before the housing bubble of started to inflate in 2004. It is difficult to find up-to-date figures on the financial situation in Dubai, probably for two reasons: first, if its economy was driven by a bubble, those interested in it do not want to spread the news it has popped and cause a panic; second, the government of Dubai and the UAE does not seem to be particularly transparent, at least if you are looking at the official website. (This article is indicative.) That said, my eyeball estimate of the economy in Dubai shows three salient categories of economic activity: commerce, service and tourism, and finance, under which I include real estate. (If you don’t like my categories, go talk to a professional economist.)

1) Kelly McEvers of Marketplace reported a couple of months ago that confidence in the Dubai’s real estate market has evaporated. 2) If players like Morgan Stanley are in trouble here, then you can be sure they’re in trouble at the Dubai satellite office. 3) And news that China is rethinking its investment in USD bonds should make any country with its currency pegged to the dollar (like the UAE) think twice about its future purchasing power. That leaves us with the service and tourism sector.

Kareoke machine in the Emirates Mall

Kareoke machine in the Emirates Mall

It’s true, everyone loves kareoke. And in the Mall of the Emirates you can record yourself in sound and vision doing a cover of Bowie to send to your friends back home.

Indoor skiing at the Emirates Mall

Indoor skiing at the Emirates Mall

I was particularly thrilled to know I could leave cold, rainy New York to go to the warm, sunny desert, and not have to miss a day of skiing. Not that it was so cold in New York. On the day we left for Dubai a friend who lives near Whiteface ski resort upstate lamented in a Facebook status update that it was unnatural to have 60 degree days at the end of December. But that makes indoor skiing in the desert all the more desirable.

Westerners working at the ski slopes in the Emirates Mall

Westerners working at the ski slopes in the Emirates Mall

When they close down mountain resorts in the US for lack of snow all the ski bums will be able to get jobs at the Mall in Dubai. The Dubai Mall also has ice skating and hockey…

dubai-ice-rink

Ice rink in the Dubai Mall

… and a massive indoor aquarium.

dubai-aquarium

Dubai Mall Aquarium

Cool huh?! Notice all the folks in Western dress. That’s because most of the people in the malls were either Indian/Pakistani or European. I saw a few Emiratis, but not enough to keep these massive emporia open. Most of the shops are Western too, from Hardee’s and KFC (the writing is Arabic)…

dubai-hardees

YUM brands

… to lingerie.

dubai-baby-doll-nightie

This may be what Emirati women wear under their black robes, but I wouldn’t know.

Lingerie shoppers?

Lingerie shoppers?

The malls all have a space for “local” stuff, either tourist kitch or jewelry that is dressed up in a faux souk.

dubai-gold-souk

Gold "souk" in the Dubai Mall

If you have any problems shopping, any disgruntled counter help or problems with your credit card, you can appeal either to the mall management or to God.

A higher power

A higher power

In sum, as long as tourists can afford to spend money, as long as novelty and kitch can last, as long as a flower can grow in the desert, Dubai will have a future.

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burj-dubai-2009

Burj Dubai

The Burj Dubai is the tallest building in the world and holds records for many “biggest” and “most” categories including tallest structure, tallest freestanding structure, building with the most floors, and highest vertical concrete pumping for any structure. The picture above was taken (by me) from the roof of Al Ghaya Residence on Sheik Zayed road, a pitiful 30+ story building. In the foreground you can see several other buildings in various stages of construction.

dubai-skyscraper

This is the building next door to Al Ghaya Residence, some 80+ stories tall. It has been under construction for more than a year, and it looks complete from the outside. It is empty, however, and the entrances are sealed. This building became emblematic, for me, of our unique historical moment.

The Baharain Tribune noted on October 2nd 2008 that Dubai’s growth is “founded to some extent on a burgeoning property market heavily dependent on borrowed money”, and Norton Rose, a corporate law firm specializing in investing, said on its “credit crisis blog” that “there are rumors that some large projects will be placed on hold.” The analyst at Norton Rose is optimistic, if not in the near term, at least in the medium term:

The “real” market, that is where construction has commenced (and therefore finance is in place to complete the project) or the property has been completed, is suffering a short term state of confusion although the medium term view is that the market will bounce back particularly in quality sectors in quality locations.

But this may be a species of optimism ridiculed by Paul Farrell (my new favorite Wall St. contrarian) in his Marketwatch.com editorial today. Norton Rose thinks the fundamentals of Dubai’s growth are strong, and that the financial problems of the last year will clear up soon, but one could also make the case that demand in Dubai has always been artificial, and that its incredible ten (really five) year growth spurt is an effect of the global bubble that has driven over-production in all sectors to astonishing, never-before-seen levels. As the New York Times reported recently, globalization led to global growth, and now it is leading to a global contraction. Is it implausible to postulate that globalization, growth, and blowing bubbles were interconnected, self-reinforcing phenomena?

But beyond a global contraction, Dubai has other worries. Norton Rose again spins the situation in positive terms:

Dubai has built itself as a trading hub, financial centre, tourist resort and is an attractive and exciting place to live. The number of expatriates moving to Dubai from throughout the world is staggering; all of these people will need a home. Office space still remains in very short supply with heavy demand. Rents in all sectors have continued to increase and demand remains strong, however owner occupiers are struggling to find lenders to accommodate them.

On one hand, many of the immigrants to Dubai are from India and Pakistan, and those people are definitely not the people Dubai wants filling up its empty towers. Certainly, Dubai’s planners have gone to great lengths to lure Western investment. Investment banks are able to run by Western laws — within the walls of their own buildings.

The lush courtyard of the Dubai Financial Center

The lush courtyard of the Dubai Financial Center

But outside the walls Dubai is still a theocratic state run under Sharia law. The world chuckles at Vince Acors and Michelle Palmer who were caught having sex on the beach and sentenced to three months in prison. The situation is made human and poignant, however, by the case of Marnie Pearce who was accused of adultery by her estranged husband and consequently convicted and sentenced to six months in prison. As a result she may lose custody of her two children entirely. In the print version of the article from January 5th, Ms. Pearce tells the reporter for the Telegraph with obvious passion that Westerners need to remember that Dubai is not a liberal state. A woman — any woman — can be punished for being alone in the company of a man who is not her husband or kinsman. And that is a kink in Norton Rose’s projection of continued demand for Dubai properties.

The New York Stock Exchange on Wall St

The New York Stock Exchange on Wall St

As of the closing bell the Dow Jones Industrial Average is up almost 900 points to 9062.12, closing above 9,000 for the first time in a little over a week. Financial news organizations that were pessimistic in the extreme this morning (e.g. Paul Farrell’s piece and David Brooks’s editorial in the NY Times), and are ebullient this afternoon. What’s going on?

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The New York Post is reporting that nearly 3,000 people showed up for the Chelsea Job Fair yesterday (Wednesday October 15th). They compared it to a bread line. Remember when I said the world-wide intervention by governments to save the banks would at least keep us out of bread lines? <Gulp.>

Lou Dobbs makes me laugh! He’s so funny! He said tonight on CNN that the markets should be allowed to take care of themselves! Abso-smurfly Mr Dobbs! Just like Herbert Hoover said in 1929! We’re all just a bunch of old rugged individualists in here! Pullin’ ourselves up by our bootstraps!

I said in an earlier post that the Repubs might have scored some political points for — once again — being the only party that will stand up for what it believes in. Sadly what they believe in is wide spread unemployment, a run on banks, and if we’re really lucky a civil war.

Oh boy!!!

Alabama Congressman Richard Shelby

Alabama Congressman Richard Shelby

They won’t be able to just admit they were wrong.

They won’t be able to admit that took the idea of a self-regulating free market on faith. Or that a misplaced faith in their intellectual powers was all they ever had. They won’t be able to admit that reality is more complex than their simple, moralistic ideologies can handle. And yet it looks like the Freemarket Fundamentalists might actually score some political points from the financial crisis.

Who is responsible for the credit crisis that is ripping through American and foreign financial markets like a spasms through an epileptic? It’s like asking who is responsible for the torture at Gitmo or Abu Ghraib. If you’re still one of the faithful, it was all the work of a few bad apples and not a massive systemic failure that is bound to happen cyclicly until the end of time — or until real reforms are implemented. But conservatives don’t believe in reform. They believe in human nature. They believe the eschaton is coming. They know Evil will be with us until it’s final, apocalyptic showdown with Good.

In the meantime, Democrats only got about 55% of their due political realigment out of this once-in-a-lifetime political opportunity.

get the rest here…

(For mah peeps living the bohemian novelist’s dream.)

A Moveable Feast is Hemingway’s memoir of life for the young ex-pats who enjoyed the first blush of American global economic dominance in France after the end of the First World War. Though he and Gertrude Stein, Ezra Pound, and John Dos Passos complained about being poor and put on a show of living a bohemian lifestyle, they were all supported by the strength of the US economy and money sent to them from the states. The fact that the French franc was close to trash compared to the dollar supported their artistic ambitions.

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