By Damian Reilly
Damian Reilly's on the lookout for someone, anyone, who will tell him everything is going to turn out fine in 2010.
Would you like to be on the cover of Arabian Business? I'm on the lookout for someone, anyone, who will tell me that everything is going to turn out fine in 2010.
So far, in November alone, we've had both leading Gulf economist Eckart Woertz and Saatchi and Saatchi CEO Kevin Roberts on the front, both of whom have used the platform to explain patiently and persuasively that 2010 is going to be unrelentingly awful. They say 2009 was just the warm-up act for next year's unprecedented twelve-month global horror show.
Inflation, unemployment, second crashes, poverty, violence - these were the central motifs of what they had to say. It makes great copy, sure, but it's depressing. Is there anyone out there who can provide us with balance? Is anyone prepared to stand up and say 2010 is going to be dreamy?
If you can do it, cogently, and you don't have a face that scares small children, get in touch. We will make you famous.
As I type, the price of gold ticks ever upwards, breaking the all-time high record near-daily. At the moment the spot price is just above $1,145 an ounce. By the time you read this, there's a good chance it will be higher. Analysts are talking confidently of seeing $1,200 by Christmas. Woertz, who has a distinguished track record of being right on gold, says it will be up above $1,300 next year.
These days gold is the anti-dollar. And the dollar has devalued some sixteen percent against a basket of currencies since March, the losses exacerbated by massive quantitative easing. This, of course, means all of the GCC currencies pegged to the dollar have also lost the same sixteen percent. The Fed could boost the dollar's value in the short term by hoiking interest rates, which are currently close to zero for short term borrowing, but chairman Ben Bernanke has only recently reiterated his promise not to.
He says interest rates will stay low "for an extended period" to aid economic recovery, but that he is keeping a close eye on the inflation rate, which many of the analysts Arabian Business has spoken to over the last twelve months predicted would start rising towards the end of the fourth quarter as the consequences of printing money started to be felt.
"We are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability," Bernanke told the Economic Club of New York last week.
His statement wasn't enough to assuage the concerns of the 41 leading private sector economists surveyed by the Fed. They have slashed their economic growth projections from 2.65 to 2.35 percent and predicted that the US unemployment rate will continue to grow beyond its current ten percent in 2010 - the highest rate since 1982.
Households have little money, but the American government is desperate to tempt them to spend again. By the time the fiscal stimulus packages run out early next year, will they be spending? Because if people aren't spending, employers won't start employing. Bernanke is confident: "My own view is that the recent pickup reflects more than purely temporary factors and that continued growth next year is likely."
However, rumours are beginning to circulate that the White House is debating fresh stimulus spending for February 2010.
As we career towards the end of a desperately tough year, it would be wonderful to hear some good news. Perhaps from your vantage point you can barely see the woods for the green shoots. If that's the case, let's hear about it. They say no one saw the crash coming.
Perhaps now is an opportunity for anyone who can see a recovery coming to make a name for themselves.
Damian Reilly is the editor of Arabian Business English.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Comeon Damian, Almost everyday you publish comments from the local experts who paint a rosy picture of the economy. It is difficult to differentiate facts from wishes. When the world turned in 2008, you( including AB) were still in denial mode
In the past couple of months, I have noticed a clear shift of negative to positive attitude in Dubai. Most people I speak to are cautiously positive and believe that it'll take time but will get better in 2010. Having said this, real estate related people are definitely not so optimistic but rather very pessimistic.
In times of recession - where demand is falling back in most sectors, the econmic forecasting as a tool is more to do in digesting the facts and figures of the situation. There seems to 59 to 50 split in this modelling and hope lies on the leadership which comes out with daring initiatives in the corporate and other sectors. Lut us hope and pray that it should be on the optimistics side.
Dubai unfortunate is not more in fashion, the bubble was big , the growing went fast and the down turn even faster. Many of my clients are waiting the right moment to sell and I can tell you there are many!! 2010 it will a much difficult year and from mid 2011 the growth will slowly come. My contact in Dubai is expiring in 3 months and I am more than happy to go back in Europe.
You say "Where have all the optimists gone?" I say "Where have all the realists gone?" How about putting someone on the cover who can deal with the facts, not the fantasy and the delusion? Why do you always post stuff that has you ridiculed? You should (as a journalist) be dealing with hard facts, not chasing rainbows. Or are you posting this kind of silliness to attract more hits for AB at the expense of your own reputation?
Dear Arabian Business Editor, in an attempt to fulfill my Generation Y fantasy of achieving at least 15 seconds of fame, I am prepared to play the role of Candide, an optimist, for your pleasure. I will argue that 2010 will be a good year for the the world, UAE, and the region. However, the source of my positive story will not be from a typical list of financial indicators; that would be silly. As an optimist, I will argue, the sufferings caused by the invisible hand predicted by the accomplished gentlemen on the cover of your publications this month, will in the long run prove to be a blessing in disguise; much like a parentâ€™s disciplining her beloved child. Letâ€™s look at the global picture. The big banks gambled for some years. They had a good run, but eventually the odds turned on them and they lost, not just their own money, but those of others too. We bailed them out, because we needed them to do what they are supposed to do, support the real economy. Unfortunately however, the addicted degenerates are at it again, with carry trades and so on. In 2010, they will lose again. But this time, instead of looking for a quick fix, we will face the problem and let them fail. This time we will try to save the real economy, the manufacturers and the consumers. We will decide to put a cap on bankersâ€™ pay, and try to redirect our global best and the brightest from Wall Street back to engineering and innovation. Of course all this will not be easy, but we will step up to the challenge. We will realize the difference between what we need and what we want, and spend accordingly. Are these not something to look forward to? Not as a hedge fund manager, but perhaps as a human being? In 2010, the global economy will be a bit more multi lateral. The US governmentâ€™s deficit will grow further, and dollar will go down with it. The world will see this, and despite political pressures, chose to diversify its currency reserves just a little bit, to show the US government they really need to think about the implications of their actions globally. Our dear American friends will understand, and think twice about colluding to rate their toxic assets as AAA and pass it on to the saving workers in Japan. There will also be positive things in the pipeline in the gulf. The many funds active in the region, hesitant to take another hit betting on short term gains, and re-learning the risk and return relationship, they will rewrite their prospectus and focus a little bit more on longer term projects that will have implications on the real standard of living in the region. What I mean is, they will stop redefining luxury real estate, and will focus on health care and education. The oil, well, who knows where that will go, up, down or sideways. The local governments will get tired of monitoring Bloomberg for oil price movements with their fingers crossed, and will put a little more serious intent behind their diversification efforts. They will also collectively decide with their population that they will start to participate in building their own economy, instead of paying overpriced expats to do it for them, over and over again. And in our good old host, the UAE, the hundred thousand resident Donald Trumps will have a bit of tough year Iâ€™m afraid. But cost of living will drop, and so will the cost of doing business. The out of work real estate brokers will get together in groups of two and three, put their talent, energy and creativity together and start up other businesses. These small and medium sized companies, with a bit of support from the government, will help diversify the economy into areas other than oil and services. The government will also realize that putting people in jail will drastically reduce the chances of them paying their bills and think of other ways to do it. The government will have two separate entities for statistics and advertising. This will result in forecast models being considered as a bit more than just a fairy tale, and planning a bit more realistic. Overall, in 2010, we the logical thinking beings of the universe, will learn our lessons from past and current mistakes, and live happily ever after. Thatâ€™s a positive outlook to cheer you up, no?
Left Dubai some years ago after making lots of money on property and business in general and having a fantastic time in Dubai, returning next year to buy lots more property at prices less than I originally bought which made me rich, whilst doing that I will rent a property more luxurious than ever before for less than it was before. I will be earning dollars which I will save for 5 years and when I leave I will transfer to Europe when gold is worthless as jewellery will be out of fashion, the USA will be booming as it is the first economy in the world (not by a few % but more than quadruple its nearest competitor) so the dollar will be back to the Sarkozy and Merkel preferred rate of 1.2 to the dollar. I think though this time will keep a nice beachfront property there to keep my money in Dubai as there will still be no tax and the sun shines all year round. Was I lucky? Am I lucky? Think not....market fundamentals never change and economics IS predictable, managing greed and profit is not as some are more greedy than others. Lets hope for another 20% drop in property and a good 30% drop in cost of living so the real people who built Dubai get a breather and some recompense for their hard work.