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Sun 31 Jul 2011 12:25 PM

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The US debt crisis is already a disaster

Debt deal or no debt deal, the economic outlook still looks bleak for the US

The US debt crisis is already a disaster
The high price of gold is an indicator the global economy is becoming unstuck

It’s not much fun watching the global economy fall to its knees, but I fear that is exactly what we are witnessing in the coming days.

Tuesday is the deadline for the US to agree a deal to raise its debt ceiling beyond the already astronomical $14.3 trillion. In all probability, a compromise will be reached, and talk of a “catastrophe” is premature. But has the damage already been done in the West, and is it so great that this region is inevitably heading for a double dip recession? Most experts agree that, regardless of a deal being reached between Democrats and Republicans, the rates of US Treasury bonds are sure to rise, and the dollar set for decline — not to mention a downgrade of the US by credit agencies. Add to this the eurozone debt crisis, and the latest data from the UK showing its economy grew by just 0.2% last year, the signs are ominous for the West. Spending cuts in the Europe may have been too great to stimulate growth, while President Obama’s plan to spend his way out of recession looks spent.

But what about the Middle East? I’ve spoken to around a dozen CEOs in the past month, and they all seem to say two things: in public they say that Arab countries are all experiencing positive growth (UAE will likely top 3% this year, KSA 6% and Qatar 16%). The lessons from the past have been learned, cost bases are much less, and businesses have been restructured and transformed to adapt to the new global economic model. But in private they admit that Q2 has been awful, Q3 looks scary, and that this is the most worrying time since the collapse of Lehman Brothers. When the last Arabian Business Think Tank met earlier this year, the consensus of opinion amongst business leaders was the 2011 would see at best modest growth, at worst, a slide into a second recession. A good guide to where we are at any given point is the price of gold: the greater the fear of recession, the more investors prefer commodities. As one panel member told me that day, “When the price of gold hits $1,650, you know things are beyond repair.” As I write this, gold is $1,621.

“Everyone thought it was Islamists”

“On Friday, after the explosion, I didn’t go to work, I stayed at home. Everyone thought it was Islamists.” These words, from a Somalian taxi driver plying his trade in Oslo, summed up the feelings of many observers around the world on hearing of the massacre committed by Norway’s Anders Behring Breivik. It was the Islamists, no question.

Ignoring the fact that owner Rupert Murdoch is currently facing brickbats about journalistic integrity, the Sun newspaper ran with the headline ‘Norway’s 9/11’ and put blame for the massacre directly at Al Qaeda’s door.

Anti-Muslim commentary from the US right-wing talkboards was much worse, and pretty much unprintable here. It seems strange that at a time when the values of tolerance are more important than ever, a select minority tends to descend into baseless accusations of hate. So here’s a cautionary tale that is worth bearing in mind, particularly during the holy month of Ramadan.

When Caliph Umar entered Jerusalem in 637 after the city surrendered to an Arab siege, he was invited to pray in the Church of the Holy Sepulchre. However, believing that the ground on which he prayed would be venerated by Muslims and later turned into a mosque, he declined the offer and prayed in another location, above which the Dome of the Rock was raised several decades later. By contrast, when the Crusaders took the city in 1099, they slaughtered everyone they found. Who were the terrorists then?

Whichever religion they choose to hide behind, terrorists are by definition outside society. Tying that religion into one man’s act of insanity only adds fuel to fire of fundamentalism.

(Ed Attwood is the deputy editor of Arabian Business. The opinions expressed are his own.)

langyaw 8 years ago

I thought this was an article about the economy, when midway through, he suddenly takes a 90-degree turn and ends up with religion. it's like a dish that tastes first sweet then suddenly salty. an assault on the taste buds. incomprehensible.

Telcoguy 8 years ago

I think they just pasted two different articles together. Second part is a pastiche btw, first is ok even daring for AB standards.