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Dubai’s Economy is melting like a Glacier in the Desert
submitted 8 months ago by kit8642 from moderndiplomacy.eu
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[–]magnora7 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 0 fun4 insightful - 1 fun - 8 months ago (4 children)
Wow that's crazy. They already had so much natural wealth from all the oil, but they still got greedy and had to overreach and write checks they couldn't cash. How ridiculous. I imagine they're probably still trying to live like oil is at $100/barrel even though it hasn't been for years.
[–]kit8642[S] 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 0 fun4 insightful - 1 fun - 8 months ago (3 children)
Seriously, I'm glad you recognize how rediculious this is. It's mind blowing to think I could have cut a bunch of post dated bunk checks, bought some property, sold it and ran away. I kid, but at the sametime do you think any of those people will be caught? I honestly wonder wtf is going on over there. It's like the worst kind of ponzi scheme, where anyone can buy in and out without a hard sale.
[–]magnora7 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 0 fun4 insightful - 1 fun - 8 months ago* (2 children)
Some superficial people will probably be caught to give the appearance something is happening, but I would imagine the real perpetrators will be "bailed out" by the very governments they've captured. Just like in the US in 2008.
The west needs the government of Dubai to remain stable so they can keep extracting oil. If things actually go bad, that might impede oil flows. So the oil companies will do anything to keep the governmental machinery operating, as long as they're able to maintain a profitable existence within the country.
[–]kit8642[S] 2 insightful - 2 fun2 insightful - 1 fun3 insightful - 1 fun3 insightful - 2 fun - 8 months ago (1 child)
It's a valid point. If it was a different circumstance, I would think it was intentional by an outside force trying to undermine them, but it looks self inflicted by ignorance... Not sure what to make of it.
[–]magnora7 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 0 fun3 insightful - 1 fun - 8 months ago (0 children)
Probably a little of both. Some people definitely want them trapped in debt, like almost ever nation is. And their entire economy and government depends almost entirely on oil, and thus on the price of oil. I bet they just expected oil to be higher than it has been over the last decade, and wrote checks based on that expectation. Checks which are now bouncing.
Like the credit crisis in the US where mortgages and credit cards were offered too easily, and then later became unrepayable, Dubai is going to undergo something similar.
Of course this could all go away in a snap if oil goes back to $100/barrel for a sustained period. And I think that's exactly what a lot of people in Dubai are desperately hoping for.