Dubai economy going tits up - the new ghost town

Everyone here who has just been overseas is talking about one thing: Dubai - and how it is totally gone dead.

As a dodo dead.

Crossing Maktoum bridge in the middle of the afternoon in 2 mins dead.

The airport is EMPTY. I was there last week and no-one was around except a lot of bored staff. It was spooky. Normally Dubai airport is like the space port in Star Wars. Full of every nationality under the sun and a few from nearby planets. (Think Men in Black for my younger readers).

But now....



Retail sales were already waaay down in November, and tourism and business travel globally have collapsed...

Dubai is in the shit. Construction and a booming global future was the whole reason d'etre of the economy. Even Abu Dhabi must be starting to balk at the liability on the downside.

This will undoubtedly have some knock on effect here, both in reduced buying of construction materials like aggregate, to less fish and transit goods, even overflight fees must be down. And less side-stepping tourists to nip across the border.

But all things considered, HE Mackie can rightly feel pretty good right now. Moodys have just given us a good sovereign rating and said some very nice things. The banks were not heavily into CDOs. And our currency link to the dollar has assisted greatly. The fiscal maintenance plus credit loosening is working. All local investor construction projects in and around Muscat are going ahead, and taking advantage of the cheap prices for cement and steel.

[Aside: although I'm reliably informed that work on the Minister of Tourism's new house extension in Qurm has been in suspension for some time. Strange. ]

Oman is definitely a great place to weather the storm. But hold on tight. A cold wind is howling, and the savings and low borrowing will only last so long. HE still needs an oil price uptick to >$60 by end 2010.

News Update

A few interesting articles in the papers these past few days.

1/ First the collapse of a building in Al Khuwair.

The ROP is conducting interrogations to find out the reasons for the collapse of the building and the extent of damage, a source at the ROP said.

Looking at many of the buildings going up around town, the amazing thing I find is that this is not happening very often! Oman's building style is old fashioned reinforced concrete columns, solid concrete floors, and the gaps filled in the cinder blocks. Its cheap because cement is cheap and it can be built by essentially unskilled NRIs and Pakistani labourers with no safety standards. But the columns always look way too skinny to my unprofessional eye. One big quake in Musandam and I'd be pretty afraid of being in many Omani buildings at all. They look great once all rendered and painted white, but the amount of structural steel and load-bearing cement seems as low as you could possibly make it! Anyone out there studing civil engineering that can make an informed comment?
In the Tribune

Two people have been rescued so far, the ROP added, and said that they were working in collaboration with other civic authorities. “Investigations are also going on to ascertain the reason behind the collapse and the authorities are yet to determine causalities and material damages caused.”
The building is owned by a commercial establishment. In the wake of the incident, the ROP has urged all building owners to take the necessary steps to ensure their building’s safety.

Hmmm. Lets see if we ever hear anything ever again in terms of an actual result from the investigation. Don't hold your breath. My worry is that 30 years ago the buildings were generally built a lot better than now. Of course, if Oman had a decent system of qualified building inspectors enforcing a strict modern building code, we could all feel secure that this was just a freak accident in a 30yr old building where someone was storing solid lead on a cracked mezzanine floor. But somehow I'm not confident that building inspections are all that rigorous even when they occur... As a result, the ever helpful authorities simply urge owners to check their buildings, so if another one falls down it'll be your fault, and certainly not the fault of the authorities actually responsible for setting and enforcing standards. Its the 'Cover Your Ass' system of Government Accountability.

2/ The ROP said the other day that 'drugs smuggling into Oman is 90% less than in the year 2000', thanks to the ROP doing a great job and enforcing strict penalties. I'm not sure how this 'fact' is worked out, as of course it wasn't explained and the crack reportage in Oman failed to ask for any actual data or evidence. Muppets. So, does it actually mean that the ROP - despite increased efforts - are only catching 1/10th of the smugglers they used too? Or is an alternate explanation that they are just no longer busting 90% of the drugs?

A far better measure of the demonstrable success of such efforts is the street price of drugs available in Oman. Now, if they gave me that info, and showed how successfully restricting supply had made prices skyrocket, I'd be more convinced. Similar studies in the US have shown that even while the US customs were busting ever increasing quantities of cocaine, the street price was falling as smugglers just moved a lot more product without getting caught.

Any info on trends in drug prices in Oman gratefully received, totally anonomously. I'll compile the answers and do some graphs for you.