The other day after meeting a blog reader in a local bar I was accused of being an academic. “You’re so smart” she said. It was very touching but I spoke up and told her that my educational background was actually quite embarrassing. I never went to University and had an up and down time at sixth-form college. Seemingly shocked she asked how I knew so much. Again I told her that I don’t know very much at all, I just talk a good talk when I need to and give the impression that I may just have half a clue what I’m talking about.
I enjoy talking and I enjoy talking about things that matter. When I meet people I like to talk about the world, its problems, its good points (yes, there are some) and sport and so on. I don’t like to talk about Kim Kardashian and her made up world (whose life, as it transpires, some believe to be real) or some stupid TV program where everyone lives in a house and shows off their genitals for attention. These are the hallmarks of an idiot. However there is one topic of conversation that I have to be weary of, one that I never thought I would be interested in nor know anything about: global economics.
Global economics does not go a day without making headline news. Ever since the collapse of Lehman Brothers the world – including the
UAE – has been thrown into fiscal turmoil. I understand the principles; I know the Euro is in dire peril, the UK economy is in tatters, the US dollar is mathematically certain to fail and so on. The IMF is running around trying to plug leaks with their fingers whilst all the while Greek civilians are in tears wondering how they are going to feed their families for the next decade.
These are scary times, and no matter where you go in the world the troubles with the economy will find you. The world’s largest economies are starting to sweat. China are worried that their biggest customer for raw materials, Europe, are going to stop buying from them. This in turn is making Australia sweat as they are the ones who are selling all the raw materials to China in the first place. Brazil is also in a tiff because 20% of their export and import market is with Europe. The Eurozone is South Africa’s biggest trading partner and over the last year or so their economy has fallen 20% against the dollar.
Then we have the UAE who have time and time again stated that they will not be affected by any Euro crisis nor will they provide any money to help with a bailout. Hmm…I’m not sure they have that right. First of all the UAE has $130 billion worth of debt financed by European and British banks. A collapse would cause huge damage to the UAE’s economy. In fact it would be one stop short of bringing it into complete financial ruin. Secondly business development and tourism largely comes from Europe. Any issues over there and there will be fewer businesses to develop and less tourists boarding the plane…the results will be plain to see.
If things do go belly up in Europe – or gulp, the USA – then you will notice and you will be affected. For those of you that were not here in 2008 when Lehman brothers collapsed, over $100 billion was wiped off the value of the UAE stock markets pretty much overnight. When it happened the cranes stopped moving, the builders hung up their hard-hats and nearly 5000 cars were abandoned at Dubai Airport, a result of the poor American, British, Canadian, French, Italian, South African, Australian, Irish architects and contractors who all lost their jobs, houses and money.
Look around now, especially in Dubai, how many half-built or half-started buildings have you seen lay dormant for the past few years? Burj Khalifa was going to be called Burj Dubai, but takes its name from His Highness Sheikh Khalifa Bin Zayed Al Nahyan after Abu Dhabi bailed Dubai out to the tune of over $40 billion. The remnants are there to serve as a reminder that nowhere is safe.
So here’s me worried about not knowing enough about it. But then you take a step back and think that the banks, the governments, the economists, the IMF couldn’t see this coming nor have they even got an answer. There are still governments out there that still don’t have a clue what is going on now. What chance do I have of grasping the details?
All it took to know the above was little bit of reading and I still don’t fully understand…I suggest the powers that be get down the library.