It Would Be Nice to Move to Dubai

In the middle of last week, Dubai World, the wholly-owned investment conglomerate of the Dubai government requested a six month forbearance on its loan payments. In debt for the paltry sum of some $56,000,000,000, Dubai World's request was enough to rack investor confidence causing stock markets to tank worldwide. Investors were reminded once again that the financial peace that has been struck worldwide is still very unstable.

The way things are going here in America certainly gets one to thinking about moving out. And, the best place to move to is a place of established ruin, especially where everything is new and entry costs are significantly reduced. I'm thinking it would be nice to move to Dubai. All of the pictures of Dubai look great and I like the heat. The sheer engineering marvels that have been constructed there, the Burj Dubai, the manmade islands, the indoor ski mountain (in the middle of the desert) all seem pretty marvelous. Over the last five years, there were increasingly more fancy pictures in the real estate magazines as Dubai launched its huge pitch to attract the wealthy. Even Michael Jackson moved there for a while. But now with the overbuilding and the empire on the verge of debt's door, real estate prices have collapsed and us little people might be able to afford something there.

The United Arab Emirates (UAE) has been a facinating outpost in the Middle East, successfully transferring oil wealth into a new Arab capitalist empire. Dubai is one of the seven emirates, nation-states, that is part of the UAE. When it's oil reserves ran low years ago, it sought to remake itself as a financial capital of the middle east in a similar vein to Hong Kong. And so it borrowed and borrowed to build this financial kingdom, much like the US and a multitude of other nations during the aughts when money was cheap and debt-fueled consumption was all the rage.

All of the institutional investors - the major banks that we have to come to know so well - assumed that Dubai World's debt was guaranteed by the government or at least by Abu Dhabi, it's oil rich neighbor. Except, the Dubai government has refused to bail out Dubai World and Abu Dhabi also refuses to guarantee its debt. Nobody wants to help Dubai because it went out on a drunken spending spree this last decade. Unsound familiar? Faced with the same situation, America did the opposite.

We may be angry about the bailouts to our banks and other major institutions because those institutions have, in turn, completely and unapologetically treated us all like garbage. And, Wall Street is "fat" again while the average person sinks into poverty. But, we should consider that if the paltry debt payments of a tiny nation-state can reek so much financial trouble, imagine how the world would have reacted if America had said no to its spendthrift institutions and allowed for even the perception of failure. I certainly don't think I could be sitting here imagining moving to Dubai. Yes, the whole financial market system stinks worldwide but it is not because of the wealth, it is because of the moral bankruptcy that has increasingly accompanied that wealth.