Monday, December 7, 2009

Dubai is emptying out

Dubai is emptying out,” said ted.

No, this conversation didn’t take place yesterday or the day before. It took place last February.

Yesterday, he e-mailed me an article he’d read back then with this note: “I warned you.” Here’s an excerpt...

“Police have found more than 3,000 cars outside Dubai’s international airport in recent months. Most of the cars – four-wheel drives, saloons, and ‘a few’ Mercedes – had keys left in the ignition.

“‘Every day we find more and more cars,’ said one senior airport security official, who did not want to be named. ‘Christmas was the worst – we found more than two dozen on a single day.’”

That, of course, was last Christmas.

Under Sharia law, bouncing a check is a serious crime. Dubai routinely jails deadbeats. Hence, the mad rush out of town by the expat owners of those cars who’d been living beyond their means.

I couldn’t let Ted’s message go without asking him if there were any more Dubais in our future. This is what he told me...

“I expect serious debt problems from about a dozen nations. The three most serious ones should come from Russia, Ireland, and Latvia.”

Then Ted dropped this bombshell...

“Down the road, even wealthy countries like the U.S., the United Kingdom, and Japan could have trouble repaying their debts once interest rates start going up.

“Besides the governments, I’ll be shocked if we don’t see one or two more corporations with supposed backing from their governments asking for relief. And that’ll do then what the Dubai situation is doing now: raising the price of gold as investors seek shelter from the storm.”

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