Tuesday, December 1, 2009

Dubai-ous Goals

Somewhere between the bloviating on Tiger Woods's car accident and reaction to a speech on Afghanistan that President Obama hasn't given yet, few people have noticed and fewer people seem to care about the precarious state the emirate of Dubai is in.
Dubai, a part of the United Arab Emirates and one of the few places on the Arabian Peninsula that has little if any oil, has been building itself up as a fantastic tourist destination through the the will and the personality of its emir. Dubai has constructed several skyscrapers housing offices, apartments and hotels, looking like wet-drip sand castles, along with man-made islands in the Persian Gulf, an indoor skiing facility, and a $100 million golf course (designed by Tiger Woods). Rents and sales of these properties were supposed to enrich the small emirate, but such deals have fallen short of these expectations, as much of Dubai's real estate stock was built with - you guessed it - borrowed money, and the emir can't pay his bills.
Dubai has turned to the more fiscally conservative Abi Dhabi for aid, which may come with strings attached. It must be understood that the United Arab Emirates are not a strong federation like the United States is, and this is evident by my use of the plural person with the former and the singular person with the latter. The seven sheikdoms that make up the union are largely autonomous, with their own set of laws and a federal government run by a Supreme Council to manage foreign affairs. The president of the U.A.E. is usually the emir of Abu Dhabi, where the federation's capital is located, and the prime minister is usually . . . the emir of Dubai. Abu Dhabi will almost certainly help out Dubai to preserve the union, but will insist on strict terms for any loans it makes.
So what does Dubai have to do with Dubuque? Well, if there's a good deal of American money invested in Dubai's exorbitant earthly paradise, that could rattle the banks and investment firms in this country, which could have a ripple effect on the U.S. economy as a whole. Apparently, though, it's not seen as major problem on Wall Street . . . yet. Stock prices dipped a bit in half-day trading on Friday, when the Dubai crisis erupted, but the market seems to be on an uptick now.
Stay tuned.

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