Sometimes in a recession, it's worth watching the little things for signs that the economy is getting worse.
Dubai is, by most measures, part of one of the richest countries in the world. It has vast supplies of oil, even though it is a small country Dubai is small geographically.
Yesterday, the news came out that a government-owned investment fund had fired 10% of its employees. According to the AP, "Istithmar World said Sunday it is cutting the 13 jobs because of 'external market conditions' and to match its resources with its current needs."
Granted, the price of oil has fallen, but the news may have a broader meaning. Middle East sovereign funds have provided investment capital to the West, including making large investments in some of the world's largest financial firms.
The U.S. government is still hoping that private capital will come into troubled U.S. banks so the the taxpayers are not the only investors. At the very least, the Treasury would like to see some of the money it has put into financial firms purchased by private equity operations sometime in the next year or two.
For now, it looks like the federal government won't get much help from formerly flush investors like the ones in Dubai.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-18-2009 @ 10:37AM
Samer Kamal said...
how can i trust the author when he's calling Dubai a country, Dubai
is an Emirate (more like a city than a country) in the United Arab Emirates (UAE)
1-18-2009 @ 11:03AM
MD said...
I understand that the person who wrote the article has an extremely small brain for calling Dubai a country, but what about the person who reviewed this? Does he even have a smaller brain or is he simply non-existent? You guys have been making way too many mistakes like that, I, for one, am unsubscribing from your feed...
1-18-2009 @ 11:14AM
Sheynk said...
while we are on the topic of bad research.... Dubai (the Emirate where Dubai, the city is located) doesn't have that much oil.
Dubai is mostly marketing/construction/media.
1-18-2009 @ 11:46AM
thedude said...
Does this author do any research ?
Dubai freely admits that there may be less than 10 years of oil left in their sandbox. Which is why they have proactively begun courting the "jet set" by becoming a world class tourist destination.
Ski Dubai anyone ? It's crazy, but you have to love it.
1-18-2009 @ 1:20PM
Sam said...
Thanks Cheynk, that is exactly what I was going to respond.
Everyone in the U.S. assumes that Dubai's revenue comes from oil, it is certainly not the case I wish the writers on this blog would do a minimum of research...
1-19-2009 @ 5:44AM
seekingtruth009 said...
Dubai has no oil revenues....how can people be writing on topics they are so unaware about? wish the current credit system falls totally. It is this "third party" (banks) that are the "non value adding" element in this whole supply chain of business activity, which is the biggest cost and aparently have caused the collapse...the greedy banks should shut down and organizations can get governemnt investments by letting public own the organizations....no free money
1-19-2009 @ 6:20AM
al coholic said...
Please! I wonder how many of you could even find Dubai on a map. Accidently calling it a country doesn't change the essense of his post.
As for the oil, where do you think the money came from to build all these new playgrouds for tourists? Dubai is apparently trying to plan for the time when it's oil reserves are depleted. Currently Dubai produces about 240,000 barrels a year or about 12 billion dollars.
Doug's point is that the US needs to understand that the so-called endless supply of capital from "entities" like Dubai may not be available much longer.
There....fixed that for you....LOL