Serious Money: Dubai Vaporizes $48 Trillion


By Sheldon Liber 

Best wishes to all and, next to world peace among people, we should hope for the same among world markets.

Burj Dubai
Burj Dubai

I have let some time pass before commenting on a recent example of how fragile a world we live in. This past year through a time of greater economic danger, fear and volatility than most of us has experienced in a life time, many people cannot fathom how close we came to the edge of Hades.

To me this lack of understanding is most greatly demonstrated in the negative comments we receive from some readers about how the government (which surely created the foundation for the disaster) has crushed the dollar, saved unworthy bankers and meddled in private enterprise.

For those of you that have the mistaken belief that the Bush or Obama administrations had any choice about flooding the market with cheap money, loans, subsidies, bailouts and the like, then you just do not understand how close our world came to bread lines and soup kitchens being filled to capacity with lines a mile long.

If you think 10% to 15% unemployment is nasty, imagine 30% and riots in the streets of every major city.

Evidence the broadly reported potential $58 billion loan default by Dubai World, which scared political leaders, bankers and investors into a cold sweat for a period of 48 hours, causing a not so broadly reported loss of $48 trillion in the equity value of global stock markets, greater than the value of all the banks.

That’s right folks, those ambitious sheiks that envisioned building the latest version of the Tower of Babble (the 818-metre-tall Burj Dubai) — Dubai World, almost created “Gudbai World” instead.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.