Reading Peter D. Schiff’s ‘Little Book of Bull Moves in Bear Markets’ it was intriguing to see him become so frustrated with the US economy that he advocated emigration, at least for a few years.
‘If you are more adventurous, you might consider the nations of the Persian Gulf, such as Dubai, Qatar, Kuwait, or the United Arab Emirates,’ he opined. ‘Flushed with petro-dollars and unburdened by taxes or regulation, the Arab world seems destined to reclaim a more prominent role in the years ahead.’
How prescient! Of course, clearly neither Mr Schiff or his proof readers have much knowledge of the region or they would know that Dubai is a city in the United Arab Emirates and not a separate nation.
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That much any American reader ought to establish before jumping on one of the excellent new Emirates Airlines’ flights from the States and rushing into business in Dubai, and that is what he suggests, ‘if you’ve ever had any inclination towards entrepreneurial life.’ Well, at least buy a copy of my book ‘Opportunity Dubai’ before taking that advice!
The problem is that Mr. Schiff’s world view – only completed this summer – already looks a bit out-of-date. His world then was one of high oil prices, a falling dollar and a US economic collapse isolated from the rest of the world.
What we now know is that high commodity prices insulated commodity producing countries from the sub-prime crisis until the summer. But once commodity prices collapsed – oil from $147 to $34 a barrel – so did these supposedly immune economies.
The city of Dubai’s financial market is 75 per cent down this year, among the worst performers and well ahead of the US decline of 40 per cent for the S&P. House prices in Dubai are down 40-50 per cent this autumn, far ahead of Main Street USA.
The dollar’s devaluation also swung into reverse as capital markets imploded this autumn with a flight to quality and a recovery for the greenback. So much for the US devaluation trumpeted by Mr. Schiff. It is clear that other global economies are also in trouble, and Europe’s debt problem could be bigger than America’s.
However, Mr. Schiff’s free market prescription for US recovery: allowing lame ducks to die, bankrupting major corporations and banks and removing social security, has no chance of being adopted by President Obama.
On the other hand, a very vigorous shake-out is underway in the UAE with expatriate labor summarily dismissed with modest compensation, downsizing of major real estate projects, continued investment in major infrastructure schemes and a rapid reorganization of national debts.
In truth the UAE (and that includes Dubai) can manage something far closer to a free market solution to the economic crisis than the USA can ever hope to achieve. Perhaps Mr. Schiff is right Americans ought to move to the Persian Gulf countries.
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