Add to Technorati Favorites expat Abu Dhabi Dispatches: This is Really Scary

Sunday, February 8, 2009

This is Really Scary

Is it as bad back in the States as all the news reports I have seen and read say? If so, it is really frightening. I have been around the block a few times and, if what is being reported is true, this has to be the most rapid and steep decline of economic health in the U.S.A. that has happened in my lifetime.

Should I worry or is it overblown media hype? I have a healthy distrust of the popular U.S. media. One of the reasons for this is the many times I have seen the Weather Channel "reporters" broadcasting live from a  potential hurricane landfall site when said hurricane is still days offshore. They look ridiculous in their expensive, hooded Columbia all weather gear when you can see families in swimsuits cooking weenies on the beach in the background. It hurts their credibility 

What concerns me though is that since I live halfway around the world I have access to news networks that resident Americans cannot get. BBC World, France 24, Deutsche Welle, and the infamous Al Jazeera, all in english. They report the same bad financial things but with a worldwide perspective so I am inclined to believe there is some really bad stuff going on globally. Hell, Iceland seems to be on it's last legs! Please pardon me here, but I don't think that many people would notice if Iceland sunk beneath the waves tomorrow even if they knew where it was. Not that I would wish that, of course.

There is is a saying that when America sneezes, the world catches a cold. That certainly seems to be the case here. I don't know what happened or why it happened so suddenly but it seems to have started with a relaxation of standards by banks for people to get credit. I remember when I bought my first house years ago and getting the mortgage to facilitate this was like a financial rectal exam.
In the past decade though it seems that credit became readily available to anyone.  In a few short years, it seemed everyone had a new car, a big house and was taking exotic vacations because of the easy money. Real estate appreciated like a rocket and folks got equity loans against the house. Sounds like good times, and it was. What I can't understand is how things deteriorated so fast. There should have been a soft letdown. What was the pin that popped the bubble last November? 

Why couldn't the supposedly smart and highly paid bankers see this? After all, they had the most to lose by being left holding a bag of worthless assets and foreclosures. Of course they ended up being compensated by taxpayer's money to cover their losses but where did they all get the green light to radically loosen credit in the first place? I am not a conspiracy theorist but someting smells here.

The U.S. started the bailouts first and then the rest of the world quickly followed suit. This exposed how closely your local Hometown First National Bank is connected with the Sushi Yen Depository in Tokyo. All the value went somewhere and now almost every government on Earth is pumping trillions of public dollars into private banking concerns. 

Geez, I wish I could get that kind of support to replenish my meager bank account after a four-day marathon of booze and bad judgement at my favorite Las Vegas casino! Hell, I have difficulty making $500 last a few hours at a Blackjack table and I seem to posess a better grasp of financial risks than some of these Captains of Finance. The difference is that I walk out of the casino broke and they get reimbursed for THEIR losses by a very generous casino management through other losers' money. I just don't get it.

The United Arab Emirates is not immune to the global financial slump. The news is that Dubai is practically bankrupt and has hat in hand toward it's wealthy, oil-rich brother Abu Dhabi. Real estate prices are dropping fast and a lot of the flippers are out of the market. Employment is flat and giant construction projects are on hold.  Oil back down to ~$40/bbl have the Gulf countries in a panic. However, the local U.A.E. banks are rather autonomous and disconnected from the world banking giants, so they are doing OK. That's where my money is.

If the news reports are true, then I think in my case it is better to be here in the Emirates for awhile than back in the States. I don't see my going back by choice in the next year as I would see myself umemployed for the foreseeable future, and as much as I hate to work, I still need food and beer money.

To anyone who saw Tom Hanks in "The Terminal", I feel the same way as his character in the movie. I left my country and since I have been gone, that country has gone through some horrible turmoil which doesn't make good sense for me return to right now. I kind of feel trapped in a way.


No comments: