Economic Crisis

Well, things here don't seem to have hit the same levels of panic as in the rest of the world. Although there have been huge drops in the Dubai Financial stock exchange, I think most of the folks here don't have their wealth tied into stocks the same as in the US.

Nervousness here is more tied into the real estate market. Values here have been going up by 20% to 50% per year for several years now. Recent reportings have about 140,000 new properties coming onto the market in the next 18 monts. I'll repeat one hundred and forty THOUSAND new properties. That alone would make folks think there might be a softening in prices (or perhaps bursting of a bubble). The credit crunch has also hit here, too. So, getting loans to buy the new properties has started to be a concern. But really that's only a concern for the small-time buyers. Big buyers here are so flush with cash that there's very little need for loans. Still though, the government here injected US$18 billion to help free up the credit market.

A second concern would be a bottoming out on the price of oil if there was a depression. For sure the economies here are driven by oil prices. The boom of the past several years has been fueled by the high prices the rest of the world is paying for energy. I've seen estimates of something like US$3B surplus cash per day is generated in this region when oil is at US$90/barrel. So, if prices drop, then the surplus starts to dry up - and that would certainly slow things down.

But the reserves of cash here are pretty vast. And people/governments are looking for ways to invest that cash and make returns. For oil rich nations, Dubai is an attractive investment destination. It's a muslim country that actually welcomes them (as opposed to the "welcome" they get in the US as evidenced in the recent mob-scenes at McCain rallys).

Certainly a financial crash around the world will have its impact here. There'd be no way to avoid it. How much certainly remains to be seen. But it does seem that this region is better positioned to recover.