sounds like Charles Kindleberger’s Manias, Panics and Crashes should be required reading for those investing in dubai (and in particular its real estate).
Samuel Brittan: 'New opportunities for profit are seized and overdone “in ways so closely resembling irrationality as to constitute a mania”. Once the excess is realised “the financial system experiences a sort of distress, in the course of which the rush to reverse the expansion process may become so precipitous as to resemble panic”. In a panic the reverse movement takes place “with a crash in the prices of commodities, houses, buildings, lands, stocks, bonds – in short whatever has been the subject of the mania”.'
highlights: i) The native-born want to enjoy the profits and products that immigrant labour makes possible. But they do not want to face the competition immigrants bring. ii) The GCC is guilty of a “me-too” approach ... which raises the risk of over-capacity iii) According to McKinsey: the Gulf needs to create 280,000 jobs a year to employ the young ... a quarter of native employees in Bahrain, Saudi Arabia and the UAE fail to show up for work... many emerge with few marketable skills iv) If the Gulf is now a financial superpower... it has had its greatness thrust upon it. Its surpluses accumulated more by accident than design v) According to a study by three IMF economists, a doubling of the oil price results eventually in a 50% rise in the price of non-tradable goods (such as housing), relative to tradables. This shows up as inflation. But the price rises should peter out once they have served two useful functions: diverting demand to goods from abroad, and increasing the supply of those goods and services that must be produced at home. Office space in Dubai now costs almost as much as in midtown Manhattan.
