Originally Posted by
HedgeFundFlyer
Dubai doesn't have any oil or natural gas to speak about. It's debt-financed.
It sure is, and boy, have those chickens come home to roost. I'm heading to Dubai tomorrow, my first visit since late 2007. I'm wondering if I should bother finding a taxi, or if I should just grab one of those free BMWs with the keys in them that are supposed to be all over the airport parking lot.
I've had long discussions about the future of Dubai with a lot of people, including many UAE residents, in the last couple of days. My initial impression of the place, which appears to be borne out by recent trends, was that it was a complete house of cards that was only held together by cheap debt, a pegged currency, and a housing bubble. Once the cheap debt was gone, the housing bubble evaporated too, along with the rationale for a lot of the population to come there (i.e. flipping real estate or building it). Sadly for the UAE, the currency peg (to the USD) is NOT gone, which means that the country has gotten vastly more expensive for pretty much everyone that might have gone there on vacation.
What the general consensus seems to be is that Dubai will remain in existence, but mostly as the world capital of money-laundering. That's what it is really perfectly suited to.