Final Remarks About The Dubai Mess

An update some hours after the original posting.... I forgot to include this in the post but doesn't the report out of England a few months ago citing secret discussions of Middle Eastern economies conspiring to replace the dollar in oil exchange seem just a little ludicrous now? And so do the discussions of a pan Arabian peninsula currency. Would anyone accept a pan Arab currency for global exchange? Please. These are some of the most systemically corrupt, indebted, puppet economies on earth. They make the U.S.'s problems seem comparatively insignificant.

It seems we are already seeing many in the financial community discount the recent Dubai announcement as "manageable". How often have we heard this one? This from an industry which has completely mismanaged risk and society's money. An industry which clearly doesn't understand what "manageable" means.

Supposedly the current crisis is associated with the Palm development. I'm sure most everyone is aware of the man-made residential islands but if not, there is a nice Youtube video showing the level of the development's hubris and extravagance. It's no irony that much of Dubai's development was to become the playground for the world's mega rich and it is indeed the mega rich who are losing massive sums of wealth - a timeless sign of the foolishness of the human ego. When in history has humanity every achieved a life of permanent leisure? I seriously doubt if the Palm will ever become anything other than an unfulfilled fantasy. It could easily end up being consumed by the ocean due to neglect. Just like failed societies from times past.

Goldman Sachs has been very active in the oil fiefdoms over this cycle. And, in fact, opened their offices in Dubai right at the peak of globalization. We wrote of Morgan Stanley and Goldman Sachs' foolish involvement in the Middle East before the global economy collapsed.

While CNBC was taping from the United Arab Emirates and fawning over their perceived brilliance, we were also writing of its impending doom. CNBC has literally been on the wrong side of every trade be it fawning over the brilliance of private equity, hedge funds, China, the Middle East, housing executives, mortgage bankers, Wal-mart and on and on. Each were glorified at the very peak of their bubble.

The trivialization of the coming crises in the Middle East continues with this Dubai default. It won't be trivialized before it is all over. These pseudo nations are likely to experience decades of economic consequences associated with their incredibly foolish behavior. That is, if they don't experience outright collapse.