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The Emirates Economist (50 unread)

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March 06, 2010
18:18
Economist calls himself bizarre
» ‎ The Emirates Economist (uae)

Paul Krugman disagrees with himself. Ad hominem style -- which is his style.
8:30
Greece and Germany; Dubai and Abu Dhabi
» ‎ The Emirates Economist (uae)

What do you think? The Germans don't want to bail out profligate Greece. Is this anything like Abu Dhabi's reluctance to bail out Dubai? The logic of a bail out is that although it rewards behavior, the alternative of letting Greece, or Dubai -- or AIG to give an American example -- would be worse for both parties. Of course, Abu Dhabi was able to extract its pound of flesh.

Here's The Weekly Standard on Greece and Germany:
Opinion polls show that over two-thirds of Germans reject the idea of contributing to a Greek bailout, and the venom with which that opposition is expressed suggests that exasperation has drifted into contempt.

To give more money to the Greeks would be akin to giving schnapps to an alcoholic, argued Frank Schaeffler, deputy finance spokesman for the Free Democrats, the junior partner in Germany’s governing coalition. Focus magazine ran a cover story on “The Fraudster in the Euro-Family” (a reference to the more creative aspects of the Greek government’s accounting) and illustrated it with the Venus de Milo, one-armed and flipping the bird. The tabloid Bild raged at the “proud, cheating, profligate” Greeks. A writer for the rather more heavyweight Frankfurter Allgemeine Zeitung asked whether Germans should have to retire at 69 rather than 67 to pay for Greek workers striking against proposals to increase their retirement age from 61 to 63. The mood in Germany was not improved by Greece’s deputy prime minister. Stung by all the criticism of his country, he grumbled that, having made off with Greece’s gold during the war, the Germans were in no position to complain “about stealing and not being very specific about economic dealings.”
All of which reminds me. I don't recall the voters in Abu Dhabi complaining about a Dubai bailout.

Addendum. The first commenter says Greece hasn't defaulted, but Dubai has, so the comparison is a false to begin with. But, one of the reasons Greece has not defaulted is that it has continued to be able to borrow. Which raises the question, why? Is it because investors are more confident that Germany will save Greece from default than they were that Abu Dhabi would step in prevent the Dubai default? The commenter also mentions CDS rates -- i.e., the cost of insuring sovereign debt. This February 12th article about the high level of Greece's CDS also notes "the cost of insuring Dubai’s sovereign debt against default rose to its highest level since November as concerns resurfaced over the emirate’s large debt." Greek CDS rates have fallen with talk of an EU/German bailout. Is there similar talk that Abu Dhabi stands ready to continue to backstop Dubai?
March 04, 2010
4:57
Famous economics majors
» ‎ The Emirates Economist (uae)

Name this famous economics major.
February 27, 2010
11:27
Latest Wall Street binge: Curling
» ‎ The Emirates Economist (uae)

And, no, it's nothing like a hedge, a straddle, or a stripped mortage-backed security:

NYT:
This slow-poke game, which originated in 16th-century Scotland, has captivated the Type-A world of Wall Street almost by accident. CNBC, whose market chatter is the background music on trading floors, switches to curling from Vancouver shortly after the closing bell.
And so, after a day of braying for money in the markets, traders are winding down with curling. It is, fans say, a bit of after-market therapy. Curling is so slow and drawn out that it becomes mesmerizing.
...
Curling is like chess on ice, and that, Wall Streeters say, it part of its quiet appeal.
Slate explores parts of the allure that the New York Times seems to have missed:
Scales dropping from its eyes, a popular audience has begun to dig curling's mesmeric pace, soothing rhythms, and alluring intimacy. What other sport allows the home viewer so much time to study players' unguarded faces as they focus, fret, and scheme? It is possible to appreciate the sport's charms even while being ignorant of its intricacies, T.S. Eliot having articulated a truth: Genuine poetry can communicate before it is understood.
Four years ago, discussing the Torino games with me, Seth Stevenson neatly defined curling's appeal: "It features the collision physics of billiards mixed with the spin-heavy, long-distance shot-making of golf." Further, he and I bonded in crushing on its ice princesses. The ranks of the besotted grow daily: NBC has ogled the curling-stone tattoo on Nicole Joraanstad's lower belly. John Doyle, a TV critic at The Globe and Mail, is taking heat for deeming the women's game "the sexiest thing at the Olympics." And then there is the fact that, in the matter of exhibitionism, the curl girls make Lindsey Vonn look like an Amish agoraphobe. Once again, Ana Arce—a photographer and a former member of the Andorran team—has shot a calendar that captures these lovely and talented women in poses ranging from the artistic to the sultry to the very sultry to the not at all safe for work in a Helmut Newton kind of way. Is it self-exploitative? Is it self-empowering? Are those categories mutually exclusive? Isn't it good for the sport that the curling stone has gathered some gloss?
Videos: Which way do curling stones curl?; How curling stones are made;
Bikini curling
February 26, 2010

21:45

IMF report on UAE is out

February 18, 2010 --Transcript of a Press Briefing on the 2009 Article IV Consultation with the United Arab Emirates by Masood Ahmed, Director of the International Monetary Fund’s Middle East and Central Asia Department

February 18, 2010 -- United Arab Emirates: 2009 Article IV Consultation - Staff Report; Public Information Notice; and Statement by the Executive Director for United Arab Emirates
Series: Country Report No. 10/42

February 17, 2010 -- Public Information Notice: IMF Executive Board Concludes 2009 Article IV Consultation with United Arab Emirates
Each Public Information Notice contains a background section, a table of selected economic indicators, and an Executive Board assessment.

There's plenty to read. Here's something from the Staff Report:

While there are widely accepted principles for sovereign and corporate debt restructurings, specific best practices for the restructuring of state-owned entities are less clear. Nonetheless, an over-arching principle is that such entities should be subject to the regular corporate insolvency law as far as possible.

And, then later:

Neither DW nor Dubai Inc. discloses consolidated balance sheet or debt information. There are no official statistics, and it is difficult to build them from company financials because the majority of Dubai Inc. entities do not disclose financials, except to their bankers. Documentation in the public domain covers only syndicated loans and bonds as captured by various data providers, and analysts’ estimates are based on these sources. As such, the estimates are of publicly-held debt and therefore exclude (i) syndicated loans for which documentation is incomplete; (ii) bilateral loans (from global or local banks); (iii) accounts payables/suppliers’ credits; and (iv) derivatives, credit commitments, and other liabilities.

Finally, from the Public Information Notice assessment:

Directors stressed the need for increased transparency of economic and financial data, including financial accounts and business strategies for GREs. Together with improved corporate governance, Directors concluded that these steps would contribute to facilitating access of viable GREs to capital markets.

Directors viewed the adoption of the Federal Statistics Law and the establishment of the National Bureau of Statistics as important steps toward developing capacity at the federal level. They stressed the need to develop an action plan including the issuance of implementing regulations and a strengthening of the Board’s operational independence. Directors also welcomed the authorities’ efforts to compile consolidated fiscal statistics and encouraged them to pursue plans to develop leading indicators and the U.A.E’s international investment position, in line with initiatives under the General Data Dissemination System.

The message is clear: the UAE may be modern in many ways, but not in terms of government data collection.

Previous IMF reports can be found at its UAE page.

18:54
Emergency shipment of condoms headed to Olympic athletes - Post Sports
» ‎ The Emirates Economist (uae)

Vancouver Now - Emergency shipment of condoms headed to Olympic athletes - Post Sports
16:45
Lights out for Chávez
» ‎ The Emirates Economist (uae)

Hugo Chavez has a power failure:
Power failures have become a fact of life in Venezuela, but the energy problems have not affected the presidential palace - until now.

President Hugo Chavez was giving a televised address Thursday when the broadcast on state TV was suddenly interrupted. TV screens went fuzzy for a couple of seconds, then the channel switched to a spot urging Venezuelans to save electricity.
Chavez is known for giving long speeches. In his Sunday program, "Hello President", he speaks for four to six hours.

He has banned singing in the shower:
Despite its huge crude oil reserves, Venezuela relies on hydroelectricity for 70 percent of its power, and a drought has affected power supplies since late last year. “We are ready to decree the electricity emergency because it really is an emergency,” Mr. Chávez said in the first edition of “Suddenly Chávez,” on state radio.

With electricity cuts weighing on Mr. Chávez’s popularity and important legislative elections scheduled for September, the government says the shortages are a result of the drought and soaring demand during years of economic growth, until 2008.

But critics say poor management and underinvestment were responsible for undermining the power grid, and they contend that this has exposed the failings of Mr. Chávez’s policies during his 11 years in office.
Addendum:
President Hugo Chavez said Thursday that Venezuela should boycott the Organization of American States' human rights body, saying the panel wrongly accused his government of political repression.

Chavez took issue with a report issued this week by the Inter-American Commission on Human Rights, which cited widespread human rights violations in Venezuela. The socialist leader called the 300-page report ''pure garbage'' and described the commission's president, Santiago Canton, as ''excrement.''

''We should prepare to denounce the agreement in which Venezuela joined ... this terrible Inter-American Commission on Human Rights and leave it,'' Chavez said during a televised address.
12:31
Markets in everything
» ‎ The Emirates Economist (uae)

What happens to those pre-printed t-shirts for championship games, the ones where the team loses?
Our job on Saturday was to pack boxes for the Haitian relief effort – boxes of hats and shirts. We were all arrayed at our folding and packing tables, staring at a seeming mountain of broken-down boxes spewing these articles of clothing. And for some reason lost on us, every single box was labeled in huge block letters with “LOSER”.

You see – these boxes were all full of t-shirts and hats printed for major championship sporting events of the past few years. And at every one of those events, both teams are presented with boxes and boxes of celebratory gear before the game – gear proclaiming them the champions so they can wear them for television as soon as the game ends. I guess I’d never thought about all of those boxes of paraphernalia with the wrong winning team on them. It turns out they get donated to charity – like the mountain of clothing we were about to ship to Haiti.

As I worked on preparing all of this stuff, my mind wandered all over the place. I folded t-shirts proclaiming the Texas Longhorns the NCAA Football champs from the recent game in the Rose Bowl – and wondered again if the Horns would have beat Alabama if Colt McCoy could have played that whole game.
11:17
Pigeon beats man....
» ‎ The Emirates Economist (uae)

...in the Monty Hall Problem:
Are birds smarter than mathematicians? Pigeons (Columba livia) perform optimally on a version of the Monty Hall Dilemma

Walter Herbranson & Julia Schroeder
Journal of Comparative Psychology, February 2010, Pages 1-13

Abstract: The “Monty Hall Dilemma” (MHD) is a well known probability puzzle in which a player tries to guess which of three doors conceals a desirable prize. After an initial choice is made, one of the remaining doors is opened, revealing no prize. The player is then given the option of staying with their initial guess or switching to the other unopened door. Most people opt to stay with their initial guess, despite the fact that switching doubles the probability of winning. A series of experiments investigated whether pigeons (Columba livia), like most humans, would fail to maximize their expected winnings in a version of the MHD. Birds completed multiple trials of a standard MHD, with the three response keys in an operant chamber serving as the three doors and access to mixed grain as the prize. Across experiments, the probability of gaining reinforcement for switching and staying was manipulated, and birds adjusted their probability of switching and staying to approximate the optimal strategy. Replication of the procedure with human participants showed that humans failed to adopt optimal strategies, even with extensive training.
For more see our previous posts on the Monty Hall problem.
February 23, 2010
7:27
Isn't this a good signal, not a bad one?
» ‎ The Emirates Economist (uae)

Q : I WENT OUT FOR DINNER WITH THIS GUY, and it was great — we got along well, and there was a definite spark. But when it came time to pay, he pulled out a coupon. I'm hardly a princess, but that totally killed it for me. Am I being too hard on him?
A: Here's my little theory. It's a good signal if you're interested in a committed relationship and you want someone who is financially responsible. It's a bad signal if you want someone to pamper you and you're not looking to join your life and back accounts.
February 22, 2010
10:54
Sentence of the day
» ‎ The Emirates Economist (uae)

Inherited family-owned firms who appoint a family member (especially the eldest son) as chief executive officer are very badly managed on average.
That's Robin Hanson summarizing some conclusions from the paper "Why Do Management Practices Differ across Firms and Countries?" by Nicholas Bloom and John Van Reenen.
February 21, 2010
21:02
Drone on
» ‎ The Emirates Economist (uae)

Israeli drone airplane can reach Gulf.

I guess it doesn't matter if it can fly back.
February 20, 2010
22:26
Markets in everything
» ‎ The Emirates Economist (uae)

Google makes 1/2 billion dollars a years off of your typos. A typosquatter might register "emiratseconomist.com" in the hope of getting visits from people who meant to type "emirateseconomist.com".
Moore and Edelman started by using common spelling mistakes to create a list of possible typo domains for the 3264 most popular .com websites, as determined by Alexa.com rankings. They estimate that each of the 3264 top sites is targeted by around 280 typo domains.

They then used software to crawl 285,000 of these 900,000-odd sites to determine what revenue the typo domains might be generating.

If the top 100,000 websites suffer the same typosquatting rate as the sites Moore and Edelman studied, up to 68 million people a day could visit a typo site, they say. They estimate that almost 60 per cent of typo sites could have adverts supplied by Google.

If the company earns as much per visitor from ads on typo sites as it reportedly does from ads alongside search results, it could potentially earn $497 million a year in revenue from typo domains, they conclude.
Moore and Edelman's papers Measuring the Perpetrators and Funders of Typosquatting and Measuring the Perpetrators and Funders of Typosquatting.
February 19, 2010
19:30
The financial bubble burst, but the infrastructure is still there.
» ‎ The Emirates Economist (uae)

Dubai has built the infrastructure investments that many developing countries so desperately need–a well-maintained network of roads, a large air terminal with another under construction, and a port that is among the best in the world. Along with the skilled labor that it attracts from all corners of the world, Dubai has positioned itself as a global leader in trans-shipment, services and logistics systems. Will these investments will be enough to offset its current woes? Whatever the answer, there is no doubt that Dubai’s infrastructure investments are a key ingredient to future growth, not just in the Emirate but in the wider region in which it is located.
That's Vijaya Ramachandran's postcard from Dubai. Ramachandran is an expert at the Center for Global Development.
16:18
Paragraph of the day
» ‎ The Emirates Economist (uae)

I was thinking about close-knit communities built on trust and how they are prone to abuse. Think of the abuse scandals in the Catholic Church for example. Or how Bernie Madoff was able to so easily manipulate the Jewish community. So I went look for some research that I thought be out there. Instead I found this:
The full toll that Madoff took on golf may never be known. The tally so far registers in grim estates: a staggering $1 billion-plus purportedly swindled from the membership of Palm Beach CC; a reported $100 million from those at Hillcrest and Oak Ridge country clubs in Minnesota; and on. But the damage to the game can't be measured in dollars alone. In his wide-ranging betrayal, Madoff not only stole a fortune, he frayed the social fabric from which golf is stitched. His still-unraveling scheme has left some players questioning the sense of trust supposedly inherent among golfers, and others contemplating the cruel irony of having joined clubs that were built to keep the riffraff out, only to discover that the worst kind of riffraff was already in.
Read more: Golf.com
February 16, 2010
12:22
Why are there no Arab democracies?
» ‎ The Emirates Economist (uae)

Second paragraph:
The continuing absence of even a single democratic regime in the Arab world is a striking anomaly—the principal exception to the globalization of democracy. Why is there no Arab democracy? Indeed, why is it the case that among the sixteen independent Arab states of the Middle East and coastal North Africa, Lebanon is the only one to have ever been a democracy?
Last sentence:
When the global revolution in energy technology hits with full force, finally breaking the oil cartel, it will bring a decisive end to Arab political exceptionalism.
Larry Diamond, Journal of Democracy, January 2010.
7:13
Dubai World may offer 60% on money owed
» ‎ The Emirates Economist (uae)

Dubai stocks fell again, though only slightly, and the price of insuring against a default in the city-state rose on Monday, on the second day of market upheaval following news that flagship corporation Dubai World may offer creditors just 60% of the money they are owed as part of a deal to reschedule $22 billion in debt.
Full article at the WSJ.

More:
The wider spread [r.e. credit default swap insurance] reflects "a combination of…a massive debt buildup, overreliance on short-term debt of variable quality and help by a wealthy neighbor," said credit strategists at BNP Paribas SA in a note to clients. "While all eyes are on Greece, it is worth keeping an eye on the situation in Dubai where considerable uncertainty prevails."
5:34
50 economics twitter feeds
» ‎ The Emirates Economist (uae)

The list is entitled "the best to follow the economy". Not sure about that, but it's a list worth perusing.
February 15, 2010
22:01
Annals of false advertising, through the hour-glass
» ‎ The Emirates Economist (uae)

Here, using fMRI, we found that males show activation in brain reward centers in response to naked female bodies when surgically altered to express an optimal (~0.7) WHR [waist to hip ratio] with redistributed body fat, but relatively unaffected body mass index (BMI). Relative to presurgical bodies, brain activation to postsurgical bodies was observed in bilateral orbital frontal cortex. While changes in BMI only revealed activation in visual brain substrates, changes in WHR revealed activation in the anterior cingulate cortex, an area associated with reward processing and decision-making.
Read it all here.

The study used images that were used in an earlier study, Beauty is in the Eye of the Plastic Surgeon:
To evaluate the role of WHR, independent of BMI, we secured photographs of pre- and post-operative women who have undergone micro-fat grafting surgery. In this surgery, surgeons harvest fat tissue from the waist region and implant it on the buttocks. Post-operatively, all women have a lower WHR but some gain weight whereas others lose body weight. Results indicate that participants judge post-operative photographs as more attractive than pre-operative photographs, independent of post-operative changes in body weight or BMI. These results indicate that WHR is a key feature of women’s attractiveness.
15:53
The Economics of University e-Libraries
» ‎ The Emirates Economist (uae)

Inside Higher Ed:
E-books are cheaper across the board — most notably in space and maintenance. Courant and Nielsen don’t get into precise modeling for e-book storage, but they note that the digital media repository Hathi Trust stores five million copies at $0.15 per volume, per year (that cost could rise to $0.40 for color volumes). Not only can e-book databases put many more books at scholars’ fingertips, but the medium seems intuitively suited for long-term storage: “While [print] books deteriorate with use, the reliability of e-books tends to be improved with use,” Courant and Nielsen write. (Though, as Henry and Spiro note, as technology evolves preservationists face a challenge in making sure e-books remain compatible with the hardware used to access them.)

“Where it is legally and functionally possible to make the move to electronic storage and use of the working copies of academic materials, there is substantial economic gain,” Courant and Nielsen add.
But not everybody is happy.

More: The New York Times recently featured a debate, Do school libraries need books?
13:30
Sentence of the day
» ‎ The Emirates Economist (uae)

Merit is intrinsic, concentrated, and atomistic; value is relational, decentralized, and social.
That's Shikha Dalmia writing about meritocracy at reason.com.
February 14, 2010
21:18
Good work if you can get it
» ‎ The Emirates Economist (uae)

LA Times
In the past decade, LAUSD officials spent $3.5 million trying to fire just seven of the district's 33,000 teachers for poor classroom performance — and only four were fired, during legal struggles that wore on, on average, for five years each. Two of the three others were paid large settlements, and one was reinstated. The average cost of each battle is $500,000.

During our investigation, in which we obtained hundreds of documents using the California Public Records Act, we also discovered that 32 underperforming teachers were initially recommended for firing, but then secretly paid $50,000 by the district, on average, to leave without a fight.
February 13, 2010
22:31
First floor: Ladies lingerie -- and male sales clerks
» ‎ The Emirates Economist (uae)

In Saudi Arabia, except for a few renegades, lingerie is sold to women by male sales clerks. And the sales clerks are not from Saudi Arabia. The Emirate Economist has covered this story for several years; the posts can be found under the lingerie label.

Here, is the latest report from the BBC:
Reem Asaad, an economics professor from Jeddah, organised the boycott through her Facebook page, as public protests are illegal in Saudi Arabia.
...
Parts of Saudi society are still very traditional and do not like the idea of women working - even if they are just selling underwear to each other.

Because of the strict segregation laws barring physical contact between the sexes, women also cannot be properly measured for their underwear.
Other reports:

Saudi women to boycott lingerie shops with male staff
AFP - ‎JEDDAH, Saudi Arabia — Saudi women angry at being forced to buy intimate clothes from male sales clerks were urged on Saturday to begin a two-week boycott ...

Saudi campaign against 'manned' lingerie shops - paper
ArabianBusiness.com - ‎BOYCOTT CAMPAIGN: The campaigners expect a minimum of 40000 women participating in the boycott. A fresh ...

'Manned' lingerie shops targeted
Arab News - Abdul Ghafour I - ‎Feb 12, 2010‎
JEDDAH: The second phase of a yearlong campaign to get rid of men who work as sales clerks in lingerie shops has commenced with activists calling for a ...

The Takeaway interviewed Professor Asaad. So does the BBC. Rana Jad is a 20-year-old student at Dar al-Hikma Women's College, and one of Reem Asaad's finance students:
"Girls don't feel very comfortable when males are selling them lingerie, telling them what size they need, and saying 'I think this is small on you, I think this is large on you'. He's totally checking the girls out!"
February 07, 2010
17:16
Maybe the pope is on to something
» ‎ The Emirates Economist (uae)

Is this something like the law of diminishing marginal utility?
Six studies demonstrate that interrupting a consumption experience can make pleasant experiences more enjoyable and unpleasant experiences more irritating, even though consumers avoid breaks in pleasant experiences and choose breaks in unpleasant experiences. Across a variety of hedonic experiences (e.g., listening to noises or songs, sitting in a massage chair), the authors observe that breaks disrupt hedonic adaptation and, as a result, intensify the subsequent experience.
Don't put off 'til tomorrow what you can do today. Unless it's pleasure. Source: Barking Up the Wrong Tree, who is quoting Nelson and Meyvis.
8:30
Toyota sales sped out of control
» ‎ The Emirates Economist (uae)

Question of the day: If Toyota's sales were speeding out of control causing quality to suffer why didn't they raise the price?

For the context watch Jon Stewart, where he shows the head of Toyota USA, Jim Lentz, saying that quality may have suffered because their cars were so popular.

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Toyotathon of Death
www.thedailyshow.com
Daily Show
Full Episodes Political Humor Health Care Crisis
February 06, 2010
21:33
Annals of customer service
» ‎ The Emirates Economist (uae)

The taxi driver who finally chauffeured me home was pleasant enough, although a stark notice on the back of the seat reminded me that it would not be wise to push my luck.

"Do not use your mobile phone in this cab," warned the hand-written sticker, "it annoys your driver."

Under the circumstances, even though I was paying for this ride, I felt unable to ask this clearly sensitive man to turn down his deafening rap music.

Guess which country before following the link.
14:32
Sentence of the day
» ‎ The Emirates Economist (uae)

"The state was too intrusive in Brasília and almost non-existent in Dubai." - economist Paul Romer.

That's from his article in Prospect Magazine in which he is explaining his big idea of charter cities.

Context of the sentence:
Other urban economists fear new cities will repeat the unimpressive history of government-planned ones like Brasília, or Dubai’s recent bust. But these are both extreme examples. The state was too intrusive in Brasília and almost non-existent in Dubai. Hong Kong is the middle ground, a state ruled by laws not men, but one that leaves competition and individual initiative to decide the details.
Translation: Government was very much involved in Dubai's development but rather than over planning, there was under planning. And great uncertainty about law, especially property law.

Nonetheless, too much is made of Dubai's faults. After all, the expatriates came to Dubai by choice. And the vast bulk of these are coming from countries where economic prospects are dim because government incompetence and corruption.

Crossposted to UAE Community Blog.
February 05, 2010
16:17
You might be an economist if you ....
» ‎ The Emirates Economist (uae)

... you adamently refuse to sell your children ....

... because you think they might be worth more later.
15:24
Revisions in the Sponsorship Law
» ‎ The Emirates Economist (uae)

Seabee has a great post on employee sponsorship law in the UAE. Read it here.

He begins by noting a Gulf News reports that Dubai is thinking of revising its law. But what is more interesting to me is another article in The National about New York University and Abu Dhabi. NYU is demanding certain labor conditions for workers building its Saadiyat Island campus. NYU and Abu Dhabi have agreed to a charter of rights.

What Seabee notes is that these rights are no different from current law. In short, Abu Dhabi is agreeing that it will enforce its own laws on the companies building the campus. Abu Dhabi is funding the construction.

Follow the link to Seabee's post for links to the news articles, and to current law.
February 01, 2010
16:06
keYne$ and Hayek
» ‎ The Emirates Economist (uae)

"It's like legit. It's really good rapping," Ke$ha told NPR.
12:01
Top economics bloggers grade U.S. institutions that influence economy
» ‎ The Emirates Economist (uae)

Watch for complete results tomorrow of the first 'Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers'. Here's Kauffman's preview of the results.

I was privileged to be asked to participate in this survey.
January 31, 2010
18:23
Name this economics major
» ‎ The Emirates Economist (uae)
January 25, 2010
7:28
Searching when there is no content
» ‎ The Emirates Economist (uae)

What's a search engine worth when there's little content in your language? Or on topics of interest to your region? That's a problem for Google because if there's no incentive to search for something that's not there then it has fewer eyeballs to sell to advertisers.

As reported in the New York Times, Google is working on that:
The company is sponsoring a contest to encourage students in Tanzania and Kenya to create articles for the Swahili version of Wikipedia, mainly by translating them from the English Wikipedia. The winners are to be announced Friday, with prizes including a laptop, a wireless modem, cellphones and Google gear.

So far the contest, Google says, has added more than 900 articles from more than 800 contributors.

“Our algorithms are primed and ready to give you the answer you are looking for, but the pipeline of information just isn’t there,” said Gabriel Stricker, Google’s spokesman on search issues. “The challenge for searches in many languages for us no longer is search quality. Our ability to get the right answer is hindered by the lack of quality and lack of quantity of material on the Internet.”

Sitting in a Google cafeteria, Mr. Stricker outlined all the ways information eludes the search engine — wrong language, not digitized, too recent, doesn’t exist but should. Feeding the maw is clearly an obsession of Google’s.
Another example is lack of content in Arabic.
January 19, 2010
10:09
Abu Dhabi's bailout of Dubai
» ‎ The Emirates Economist (uae)

Less than previously advertised
Dubai has revealed that half of its $10bn (£6.1bn) bail-out from Abu Dhabi was actually from a previous deal.

Abu Dhabi lent the money to its United Arab Emirates neighbour in December, averting a potential default that had severely rattled financial markets.

Dubai now says that the total included $5bn raised from Abu Dhabi in November.

The statement may raise further questions about the levels of transparency and disclosure from governments in the Middle East.
Ya think?

Read it at the BBC.

See, also, the Wall Street Journal's coverage:
The disclosure Monday cuts by 20% the funds that analysts had assumed Abu Dhabi, the capital of the U.A.E. and its financial powerhouse, had committed to Dubai over the course of last year.
...
Dubai has been criticized for a lack of transparency around the debt restructuring. In response, it announced earlier this month a new media office to coordinate the emirate's communications strategy. Ahmed Al Shaikh, director of the new office, wasn't reachable for comment Monday. A spokesman for the federal government in Abu Dhabi was unable to comment on the matter.
Dubai has engaged in such double counting in the past.
January 16, 2010
11:10
The logic behind the bizarre Emirati borders
» ‎ The Emirates Economist (uae)

Dubai, the next Emirate to the north of Abu Dhabi, is the second largest and occupies 5% of the land of the UAE. Dubai’s territory is basically unified in a neat block, with the only exception being the Oman border town of Hatta.

The remaining five emirates occupy less than 10% of the land, and their borders are a collosal mess, containing enclaves, narrow bands of territory, and disputed tracks of wasteland that look chaotic. It’s a wonder this messy border situation survived—but has was it created and why does it still exist, almost 40 years after the UAE was founded?
A map and further explanation here. Recommended, especially for those new to the UAE.
January 07, 2010
11:26
Wind towers
» ‎ The Emirates Economist (uae)

Aren't solar updraft towers an idea that have been employed in Dubai and elsewhere for many years?

These new ones would be nearly as tall the Burj Khalifa.
January 06, 2010
10:27
Most expensive naming rights in history
» ‎ The Emirates Economist (uae)

Pride takes a fall:
The last-minute switch carries a symbolic weight in light of the billions of dollars oil-rich Abu Dhabi has poured into Dubai in order to cover its debts. Once the most pridefully autonomous of the United Arab Emirates, Dubai’s financial troubles have made it more dependent on Abu Dhabi and likely to be drawn closer into the federation.

“Dubai not only has the world’s tallest building, but has also made what looks like the most expensive naming rights deal in history,” said Jim Krane, author of City of Gold: Dubai and the Dream of Capitalism. “Renaming the Burj Dubai after Sheikh Khalifa of Abu Dhabi — if not an explicit quid pro quo — is a down-payment on Dubai’s gratitude for its neighbor’s $10 billion bailout last month.”

The National (Abu Dhabi state-owned newspaper) - "Fanfare is for Sheikh Mohammed, too"

The Australian:
There has been speculation for weeks about what Abu Dhabi might extract for the financial lifeline. Few expected the price to be so public. Minutes before the tower's official opening, Dubai's hereditary ruler, Sheik Mohammed bin Rashid al-Maktoum, dedicated it to the head of Abu Dhabi's ruling family - who did not grace the ceremony with his presence.

Dubai's Declaration of Dependence:
The newly named Burj Khalifa is now a symbol of Dubai's loss of independence. But by swallowing his pride, Dubai's Sheik Mohammed may have guaranteed his emirate's economic future, and given anxious investors owed more than $80 billion by the city-state reason to breathe easier. ...

Now, Dubai seems to have acknowledged reality: The United Arab Emirates is one country, dependent on Abu Dhabi and its vast oil wealth. Investors must hope that Sheik Khalifa, in allowing his name to be attached to the new tower, also has acknowledged Abu Dhabi's new reality, and that his support for his troubled neighbor is now nailed down.

Dubai's Decline Gives Way to Abu Dhabi's Rise
Abu Dhabi's plans also have the benefit of a direct pipeline to one powerful ruling family. Dubai's Sheik Mohammed has to share wealth with the emirate's influential merchant families to rule.

The new relationship between the two sheikdoms is based on Dubai's subordination to Abu Dhabi, analysts say. "Abu Dhabi views political dominance of the UAE as an important goal, and sees its current pre-eminence in the federation as permanent. Dubai's leadership, however, still views Abu Dhabi's dominance as matter of short term expedience," Sabra of Eurasia Group said.

Gulf News (Dubai influenced paper):
By renaming the Burj, the most prominent milestone in Dubai's long list of achievements, after President His Highness Shaikh Khalifa Bin Zayed Al Nahyan, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, reminded the world, and the residents of the UAE, of the basis on which this country was founded — seven emirates, but only one people.
...
Dubai has given the UAE and the world a new landmark.
January 05, 2010
9:42
Didn't see this coming
» ‎ The Emirates Economist (uae)

Burj Khalifa?

I've been saying there would be a price to pay, but I didn't expect this. Surely, if Abu Dhabi was buying naming rights it should have chosen the name Burj Zayed.

The story as reported by The Times:
Burj Dubai becomes Burj Khalifa as Emirate loses out on crowning glory

It was heralded as Dubai’s crowning achievement but the cash-strapped emirate was forced to swallow its pride yesterday and rename the world’s tallest building after its financial rescuer — the ruler of its oil-rich neighbour.

The humiliating announcement was made by Dubai’s own leader at the dazzling launch of the $1.5 billion (£930 million) Burj Dubai, which will now be known as Burj Khalifa in honour of Sheikh Khalifa bin Zayed bin Sultan al-Nahyan, President of the United Arab Emirates.
December 21, 2009
5:51
The code of trust
» ‎ The Emirates Economist (uae)

Trusting in Allah but treating man with greater caution was followed by the pearl fishers, both in their dealings with each other and with their captain. Whilst the oysters were being opened, four 'guards' or 'watchers', haras, from among the crew would sit inspecting the work to make sure no one who found a large pearl could hide it away to keep it for himself. ... There was no wage economy. This was their profit he would be stealing. ... The crew also had witnesses present when their captain was selling the pearls.... Nevertheless, they were aware ... that some captains secretly accepted presents from merchants.
Shaikhdoms of the Eastern Arabia, Peter Lienhardt, Palgrave.
December 17, 2009
16:01
How did the market take this?
» ‎ The Emirates Economist (uae)

Headline from Reuters:
CORRECTED-(OFFICIAL)-UPDATE 1-Dubai seeks govt dept surpluses
Thu Dec 17, 2009 11:55am EST

(Corrects after Dubai government clarifies earlier statement which it says was meant to refer to government departments only, not to state-related entities)
This is what happens when you rush to, um, build investor confidence.

More from Reuters:
Dubai's ruler on Thursday issued a law ordering government departments to transfer their surplus revenues to the emirate's treasury, and to improve transparency and control of public spending.
...
The new law allows profits and revenue surpluses to be reinvested, with the approval of the Supreme Fiscal Committee, in consultation with Investment Corporation of Dubai, which oversees the emirate's investment portfolio.
...
The new law announced on Thursday also aims to regulate government departments' public spending "and control government revenues (and) provide an accurate database for revenues and expenditures." Top Dubai officials -- the heads of the Supreme Fiscal Committee and ICD -- were due in New York on Thursday in an effort to rebuild confidence in the Gulf emirate's finances after a stop in London the day before.
In other words, the budgets of the government and the government-owned businesses are being unified?
9:31
Paragraphs to ponder
» ‎ The Emirates Economist (uae)

And it was decreed...
Dubai World is a decree corporation, meaning it was established through a decree of the Ruler of Dubai, and consequently has a unique legal status. Among other matters, the obligations of Dubai World are not guaranteed by the Government.

Due to its status as a decree corporation, Dubai World does not have the ability to seek protection under the provisions of the UAE Commercial Code that govern bankruptcy and insolvency (see Part 5 (Bankruptcy and Composition) of Law No. 18 of 1993 (UAE Commercial Transactions Law).

Because of the absence of a reorganization law applicable to Dubai World, the Government of Dubai developed the Decree, which provides a legal framework for the restructuring of the obligations of Dubai World and its subsidiaries. The Government’s intention was to develop a law that would permit a restructuring of the obligations of Dubai World and its subsidiaries in accordance with international best practices following a fair, equitable and transparent legal process.
From a Gulf News story about Decree No. 57 of 2009, effective as of 13 December 2009, the date on which it was signed by the Ruler of Dubai.
December 16, 2009
10:35
Who blinked?
» ‎ The Emirates Economist (uae)

A better title would be who won the game of chicken?

Only the players know for sure, and they're not talking.

I refer to Abu Dhabi's last minute 10 billion dollar loan to Dubai, allowing Dubai to escape default for now.

The game of chicken
models two drivers, both headed for a single lane bridge from opposite directions. The first to swerve away yields the bridge to the other. If neither player swerves, the result is a costly deadlock in the middle of the bridge, or a potentially fatal head-on collision. It is presumed that the best thing for each driver is to stay straight while the other swerves (since the other is the "chicken" while a crash is avoided). Additionally, a crash is presumed to be the worst outcome for both players. This yields a situation where each player, in attempting to secure his best outcome, risks the worst.
The stakes of the actual game in this case of course include bystanders like the bond holders, and any adverse macroeconomic effects that might arise from a collision. As Bertrand Russell put it,
As they approach each other, mutual destruction becomes more and more imminent. If one of them swerves from the white line before the other, the other, as he passes, shouts 'Chicken!', and the one who has swerved becomes an object of contempt. As played by irresponsible boys, this game is considered decadent and immoral, though only the lives of the players are risked. But when the game is played by eminent statesmen, who risk not only their own lives but those of many hundreds of millions of human beings, it is thought on both sides that the statesmen on one side are displaying a high degree of wisdom and courage, and only the statesmen on the other side are reprehensible.
If you're like me, you'd say it was of Dubai's making (along with its not so innocent bondholders who believe Abu Dhabi would bail them out in case of default). But others take the view that given potentially adverse effects of delay, Abu Dhabi have should immediately said it would bail out the bond holders. And still others, like me again, think Dubai should have offered some of its crown jewels (Emirates Airlines, for example) as a collateral for an emergency loan from Abu Dhabi. But none of that happened, at least until the 14th of December: Abu Dhabi and Dubai were locked in a game of chicken.

So the game of chicken was played. Given that there was not a collision, there are two essentially possibilities: (1) Abu Dhabi played chicken and made a no-strings loan to Dubai, or (2) Dubai played chicken and offered collateral for the loan.

No video embed available, but click here to see how James Dean played the game of chicken in the movie Rebel without a Cause. Here's the trailer to the movie:
December 09, 2009
14:51
Even more sentences to ponder
» ‎ The Emirates Economist (uae)

The average Yemeni spends one quarter to one third of his income on qat. Three quarters of the population devote four to six hours daily to buying and chewing the leaves, consumed in the later afternoon after the day’s main meal. Although qat has no nutritional value, a third of Yemen’s agricultural land — double the acreage of a decade ago — is devoted to it.
That's from Le Monde.
11:36
Another sentence to ponder
» ‎ The Emirates Economist (uae)

New Geography:
Dubai attracts only 1/10th of tourism of Las Vegas, while having more than one-half the hotel rooms.
9:09
Sentences to ponder
» ‎ The Emirates Economist (uae)

In a sign of the struggles Dubai World could face to keep its prized assets, Istithmar World lost its W Hotel in New York in a foreclosure auction Tuesday. The hotel was sold for $2 million. Istithmar World bought the property for $282 million in 2006.
That's from Reuters.
December 08, 2009
11:28
Big unfinished building projects; Is the little guy finished?
» ‎ The Emirates Economist (uae)

And not only that -- you're dealing with a government-owned company.

The National
Mr Nassour’s home should have been completed at the end of this year but construction has not even started, nor is it likely to any time soon. He paid more than Dh350,000 in 2006 towards two properties at the long-delayed project, and now he is worried he may never see any return on his investment.

“They just cancelled my contract and I won’t get my money back,” he says.
Mr Nassour has turned to the Land Department for clarification and to find out what his rights are, but the experience has left a bitter aftertaste.

“That’s enough,” he says. “They need to make the issues they have clear to the investors. I can’t invest without having a clear view of what’s happening.”
But he did invest without a clear view. He's not alone as the article on small investors threatening court action makes clear.
December 04, 2009
14:20
A blog to watch: Suq Al Mal
» ‎ The Emirates Economist (uae)

Suq Al Mal follows the financial sector in the GCC. Recommended. Especially in these times.

I'll be adding it to my blog roll.
13:22
Timely
» ‎ The Emirates Economist (uae)

A survey of the world's smartest cities appears in New Geography.
11:23
Neutral about everything except minarets
» ‎ The Emirates Economist (uae)

The Daily Show With Jon Stewart Mon - Thurs 11p / 10c
Oliver's Travels - Switzerland
www.thedailyshow.com
Daily Show
Full Episodes Political Humor Health Care Crisis
December 03, 2009
16:48
Other sovereign debt concerns
» ‎ The Emirates Economist (uae)

The New York Times has a graph on other countries which may be facing debt problems; the same graph shows the exposure of bond holders by country. Thanks to The Gulf Blog for the pointer. Not of course that the U.A.E. has a debt problem. It's Dubai that has the problem.

Since Dubai announced it had a problem other countries have received more scrutiny.

The Wall Street Journal reports:
Greece's finance minister promised Wednesday that the country wouldn't default on its loans as the cost of insuring its bonds soared to the highest among the 16 nations that use the euro.
...
He said speculation that Greece would not be able to pay back its borrowing was "completely unfounded" and there was "absolutely no risk to holders of government bonds."

Spreads on Greece's bonds -- the cost of insuring them against the risk of not being repaid -- overtook Ireland as the widest in the euro zone a month ago, even before markets were rocked by an announcement by Dubai's state investment company that it wanted to postpone debt payments.
...
"The battle with the markets is one that you win every day with a view to the credibility of your policy and this is what we are trying to build — credibility," he said.

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