If statistics often tell a story, here’s an interesting one.

A recently conducted survey revealed that as much as 68 percent of Dubai’s households feel that they have been negatively impacted by the financial crisis. [click to read]

But if this data has led you to believe that most of the city’s residents have consciously shunned their habits of lavish spending; then you are grossly mistaken.

Dubai residents have refused to dramatically alter their spending habits in the wake of the downturn, according to another survey. In a poll of 400 Dubai residents with a minimum household income of AED3,000 ($815), 58.8 percent said they did not reduce their spending on groceries in 2009 and 64 percent of respondents said they had not cut down on personal travel last year. [click to read]

Yet, what is slightly concerning is this forecast: more than 80 percent of people who took part in a recent poll think that the job market has not turned a corner and started to improve with the beginning of the New Year. [click to read]

Of course, not all of those polled above have been equally (and acutely) hit by the effects of the economic crisis. But if one is to read the results of the three surveys in the same breath, it does suggest the need for some financial introspection.

At a time when most individuals are reeling under the effects of salary freezes (not to forget the rising inflation, the battered bourses and unfriendly banking policies), what if there was a ‘smart’ way in which we could bypass/ sever our financial destinies from the actions of our governments, corporates or stock markets?

Perhaps the basic, age-old way would still prove ’smart’ - one which calls for discipline, patience, sacrifice and hard work – how about managing our personal finances based on two principles – frugal living and wise investing?

Before one could confuse frugality with austerity or view it as a shameful compromise, Amy Dacyczyn’s observations in her bestseller, ‘The Complete Tightwad Gazette’ might help dispel such myopic notions.

“Frugality is viewed by many as a necessary evil, something to be employed only when there are no good alternatives. It’s that kind of thinking that causes us to throw away so many exciting opportunities to live bigger and bolder and better,” Dacyczyn said.

“Frugality is not something you turn to when you are blocked into a corner. It is something you embrace when you have a vision of a better life that you want to see brought to fruition before the sand runs out of the hourglass.”

Dacyczyn’s hit the nail on the head. So many people ‘earn’ so much of money only to realise one day that they haven’t really ‘accumulated’ enough.

Let’s not be one of them. What do you say?

The Gulf Times leads with a story on Sheikh Abdullah Bin Zayed Al Nahyan, Minister of Foreign Affairs, speaking at the UN General Assembly about nuclear power.

“The UAE’s commitment not to enrich uranium and reprocess fuels locally is among the most salient features of this model. This is a model supported by enhanced international transparency and cooperation mechanisms,” he said.

The National also led with this, adding that the GCC may have a major role to play in “attempting to settle mounting concerns over Iran’s atomic programme.”

Arabian Business has a cracking story (even if we do say so ourselves) about some UAE construction firms charging workers recruitment costs. Bound to be a hot topic.

Khaleej Times reports that swine flu fears are falling as more pupils return to school for the start of term. Most schools recorded a 95 percent attendance rate on Sunday, the paper said, but then you would hope that seeing as they started on Wednesday the previous week.

Meanwhile, 7days has spoken to Rita Dutt, the sister of Ruma Ghose-Puri, who was killed by stalker Rashid Daabaz.

“She was my sister and my best friend. I am begging the people of Dubai to help. We need new laws and new police procedures for dealing with stalker cases. It could happen to anyone and you feel so powerless,” she told the paper.

Have you got a story? Let us know, email elsa_baxter@itp.com

Free, The Future of a Radical Price, by Chris Anderson
Random House Business Books
$14.55 (hardcover) at amazon.com

What happens when advances in technology allow many things to be produced for more or less nothing? And what happens when those things are made available to us for free?

This is the question posed by the latest book on global business trends by Chris Anderson, editor of US new economy magazine Wired, and author of The Long Tail, which considered the impact of unlimited digital shelf space on how goods are bought and sold.

Anderson argues that as computer processing speed doubles every 18 months (Moore’s Law) and internet bandwidth trebles every year (Gilder’s Law), the cost of anything made of bits and bytes will reduce in cost so far over time that you might as well round it down to zero.

He then explores a host of other business models that survive by making it possible to offer one product or service for free, by charging for other related products or services.

A quick trip through history finds the obvious example of Gillette razors, where the reusable razor was virtually given away because customers would buy disposable blades forever.

Or the budget airline model where seats on flights can be sold for free because money is made in other ways: advertisers paying to reach the passengers; credit card handling fee; charging for check in bags, even charging cities who want the airline to land there because it boosts tourism.

The book rambles a little as it compares different business models and illustrates their strengths and weaknesses with examples from the past and present. Most readers will draw inspiration from only a handful of these examples that chime with their thinking or directly relate to their current businesses.

The central idea - that free is a price that touches ever-expanding parts of our personal and business lives - is woven throughout.

Perhaps the most insightful moment in the book comes from research by behavioural economists who compared the reaction of people to buying a chocolate bar at a very low price, to their reaction when given it for free. Even though the chocolate with a low price tag was so cheap it made little difference in people’s wallets, the psychological barrier of parting with any money at all was enormous when compared to the instant uptake of the free offer.

In summary, any business that is able to offer something for free will find a much larger customer base than a business that charges. That hardly qualifies as the greatest innovation in business thinking this century, but finding ways to exploit a price of zero, and make money elsewhere for a business, is a challenge that is increasing day by day.

Transparency looks set to be the only winner in the fallout from the Algosaibi and Saad groups.

Exactly what has happened at the Saudi firms at the centre of a corporate scandal rocking Saudi Arabia is still not clear.

What is clear, however, is that it has changed how family owned companies in the region will be able to do business.

The practice of “name lending” has been widespread in the Gulf, where companies have been able to borrow money based solely on their name recognition and reputation.

But as the dispute between Algosaibi and billionaire Maan Al-Sanea moves into a New York court room and banks brace themselves for losses amid debt restructuring at the two companies, privately held firms are going to have to become more open or face having their financing cut off.

Friday’s move by Algosaibi to pursue its claims against Al-Sanea through the courts marks a departure from the private culture of the region’s family owned companies.

So private are they that many Gulf firms do not even have a public relations department for media professionals or other people seeking information about them. (A well known retailer recently fired its entire media relations team – tellingly, without informing the media about it.)

That privacy has extended to the debt markets, where the same companies have been unwilling to communicate key financial information to banks, credit rating agencies and other financial institutions.

Banks across the region are now feeling the effects of that secrecy, as names that were previously thought unsinkable default on bank loans and bonds.

The UAE central bank has said the country’s lenders have “significant” exposure to the Saudi companies, and has asked all banks operating in the country to inform it of the size of any loans extended to them.

Omani banks are the only ones in the GCC to have publicly announced their exposure to the beleaguered conglomerates.

Other banks would do well to follow their example and provide the market with some of that transparency their borrowers seem to lack.

At the time of writing, shares in Emaar Properties are down 10 percent in the first five hours of trading since it announced it would be acquiring Dubai Holdings companies Sama Dubai, Tatweer and Dubai Properties Group.

Investors are trying to absorb the complexity of the deal and, in the absence of hard facts about the future of the business, they are taking the obvious course of action: clear out of the stock until reliable information emerges.

Sama, Tatweer and DPG are private companies without published accounts. In essence, all three are holding companies - subsidiaries of the daddy of all holding companies: Dubai Holdings.

As such, they are the sum of their assets, rather than assets in their own right. To illustrate the intangible role of these companies, you only have to read their mission statements. For example, on Tatweer’s web site, it has a frequently asked question section that provides the following insight:

Question: What is Tatweer’s main strategy?

Answer: Tatweer will focus on leadership development to achieve business excellence and world class quality standards for all of its subsidiaries.

Tatweer will become a world class enterprise through value generation, customer focus and excellence for our people and stakeholders. In addition, it will focus on developing and diversifying the business portfolio by capitalising on market opportunities in existing and new sectors.

If anybody can find a statement with less meaning than this, please send it on a postcard to Arabian Business.

The assets under management by these holding companies are considerably more meaningful, but no easier to value.

Emaar has said that the combined companies will have assets worth a total of $52.85 billion. Not $52 billion, not $53 billion, exactly $52.85 billion - precision that suggests real mathematics and accounting is involved.

In its current trading statement, Emaar says that its assets are valued at $16.5 billion. The combined total for Sama, Tatweer and Dubai Properties is therefore $36.35 billion.

The value of Sama, Tatweer and Dubai Properties assets are therefore priced at more than double the value of Emaar’s assets.

Judge for yourself whether that calculation seems reasonable, by comparing the value of these assets:

The first thing that strikes me when comparing these lists of projects is that Emaar is considerably more diversified in terms of its geographic spread. Between Sama, Dubai Properties and Tatweer, only three projects are outside the UAE. For Emaar, the majority are non-UAE.

Real estate values are falling all around the world, but nowhere faster than the UAE. Emaar’s asset value should therefore be more robust than those of its new businesses.

The real question for investors is how to value these assets, what are the business plans of each project (cashflow, revenues, profits), and what will be their impact on the overall profitability and growth prospects of the group.

This would require a full time team of forensic accountants and researchers several years to evaluate.

Which makes it all the more surprising that a value of $52.85 billion has been established only moments after the news was released that these companies would be merging. I’m not saying that it isn’t $52.85 billion, but I expect I could make a case for $52 billion or $53 billion just as easily.

You do the maths, and let me know what you conclude.