Hello all: How are you? I was reading last Friday about Dubai World's financial problems. It made me realize how deep this worldwide economic crisis really is. I have to admit I wondered when I heard how fast Dubai was building and growing; especially when it was revealed that it was being built on speculation.
The old adage "if you build it they will come" has its share of detractors, especially if you don't show some restraint. For those of you who are unaware of Dubai World, they are the financial arm for the country of Dubai. As of Friday, they asked for their debt to be forgiven for 6 months. Currently the debt is at $60 billion. The problem is Dubai doesn't have revenue coming in such as its neighbors. There are no oil royalties like Abu Dhabi has. Dubai was counting on tourism dollars. With less people travelling due to the global recession, Dubai's days were numbered.
Dubai World comprises the development arm of Dubai. They also invested heavily in ports around the world (this is a profitable venture) and were involved in the new City Center Complex development in Las Vegas. The good news for us here is our banks had relatively low exposure to Dubai World's problems. Much of the exposure is by British banks which doesn't bode well for our neighbors.
Still, what Dubai World's problems show is how deep and profound this economic crisis really is. Even though it appears real estate is on the mend here, there still are a number of warning signs out there that indicate slow or no growth may continue well into next year. The Seattle Times released on Sunday an updated list of banks who are on the FDIC's watch list up here. There were 24 that were in serious trouble and it appears many household names may not make it through next year.
Originally, I thought this economic crisis would subside sometime this year with recovery underway by 2010. Now, it appears that may have been a tad optimistic. All is not doom and gloom and I know some of you are having good years. In fact, my little company is having a record year. But the numbers don't lie. Over 10% unemployment in most states, 500+ banks on the watch list, and real estate sales projected to increase by 1.9% next year here according to John L. Scott. My fervent wish is we get it this time. It's so easy to forget where we are and where we've been.
What do you think? What are you seeing? I'm seeing business better this year than last and next year being improved. But it's a tenuous recovery in spite of what the government is saying. Dubai World and its problems bring it all home! Have a great day!
Comments (8)Subscribe to CommentsComment