Its skyline erupting from the desert in just two decades, Dubai is a cautionary tale about what money can’t buy: a culture of its own. After gorging on the Viagra of easy credit, the emirate has the world’s tallest building, the world’s most expensive racetrack, and a financial crisis to match. From the Western mercenaries and Asian drones who maintain the gaudy show to 100-odd families who are impervious to any economic reality…

The only way to make sense of Dubai is to never forget that it isn’t real. It’s a fable, a fairy tale, like The Arabian Nights. More correctly, it’s a cautionary tale. Dubai is the story of the three wishes, where, as every kid knows, with the third wish you demand three more wishes. And as every genie knows, more wishes lead to more greed, more misery, more bad credit, and much, much, much more bad taste. Dubai is Las Vegas without the showgirls, the gambling, or Elvis. Dubai is a financial Disneyland without the fun. It’s a holiday resort with the worst climate in the world. It boils. It’s humid. And the constant wind is full of sand. The first thing you see when you arrive is the airport, with its echoing marble halls. It’s big enough to be the hub of a continent. Dubai suffers from gigantism — a national inferiority complex that has to make everything bigger and biggest. This includes their financial crisis.

Read More: Vanity Fair

The Bank of Greece in Athens

From New York Magazine:

The news from Greece today is … well, it’s not good. Greek citizens are angry, European politicians are testy, equity investors worldwide are getting nervous, and the headlines are getting increasingly hysterical. This morning, things even took a dip into surreality when Greece’s Deputy Prime Minister Theodoros Pangalos, frustrated by Germany’s criticism of his country’s accounting skills, actually whipped out the Hitler card.

“They [the Nazis] took away the Greek gold that was in the Bank of Greece, they took away the Greek money and they never gave it back,” he said. “I don’t say they have to give back the money necessarily,” he remarked to the BBC. “But they have to say thanks.”

Compared to that, the Times sounded like the voice of reason with their story pinning blame on our old friend credit default swaps, which prompted Fed Chairman Ben Bernanke to announce he would investigate Goldman Sachs and financial institutions that might use instruments “in a way that intentionally destabilizes” the country. But is the rising price of insuring for risky assets, like Greek bonds, really driven by dastardly speculation, or just common sense? Remember, you can only bet against Greece if you find someone willing to bet for Greece.

Meanwhile, in Nature magazine, Jared Diamond, an esteemed scholar of societal collapse, has cited a parallel between the current crisis and the one suffered by Greece in, yes, the Bronze Age, when an advanced society was plunged into 400 years of illiteracy. This made us feel a bit better, actually. Because we strongly suspect that ain’t gonna happen this time. (Three hundred years, maybe.)

What we do think will happen is that the Greek debt crisis will, before too long, go the way of the Dubai debt crisis. Which is to say, this is a problem that we’ll soon stop having to worry about, because it will get superseded by other problems, such as fiscal crises in Portugal, Spain, Italy, Ireland, Japan, the Baltics, or — can’t wait! — here.

Or we can just worry about where the next earthquake is going to strike…

[continues in New York Magazine]

Last November, a sharp-eyed Israeli woman named Niva Ben-Harush was alarmed to notice a young man attaching something that looked suspiciously like a bomb to the underside of a car in a quiet street near Tel Aviv port. When police arrested him, he claimed to be an agent of the Mossad secret service taking part in a training exercise: his story turned out to be true – though the bomb was a fake. No comment was forthcoming from the Israeli prime minister’s office, which formally speaks for – but invariably says nothing about – the country’s world-famous espionage organisation. The bungling bomber was just a brief item on that evening’s local TV news.

There was, however, a far bigger story – one that echoed across the globe – two years ago this week, when a bomb in a Pajero jeep in Damascus decapitated a man named Imad Mughniyeh. Mughniyeh was the military leader of Lebanon’s Shia movement Hizbullah, an ally of Iran, and was wanted by the US, France and half a dozen other countries. Israel never went beyond cryptic nodding and winking about that killing in the heart of the Syrian capital, but it is widely believed to have been one of its most daring and sophisticated clandestine operations.

The Mossad, like other intelligence services, tends to attract attention only when something goes wrong, or when it boasts a spectacular success and wants to send a warning signal to its enemies. Last month’s assassination of a senior Hamas official in Dubai, now at the centre of a white-hot diplomatic row between Israel and Britain, is a curious mixture of both.

With its cloned foreign passports, multiple disguises, state-of-the-art communications and the murder of alleged arms smuggler Mahmoud al-Mabhouh – one of the few elements of the plot that was not captured on the emirate’s CCTV cameras – it is a riveting tale of professional chutzpah, violence and cold calculation. And with the Palestinian Islamist movement now vowing to take revenge, it seems grimly certain that it will bring more bloodshed in its wake.

The images from Dubai follow the biblical injunction (and the Mossad’s old motto):”By way of deception thou shalt make war.” The agency’s job, its website explains more prosaically, is to “collect information, analyse intelligence and perform special covert operations beyond [Israel's] borders.”…

[continues in the Guardian]

The world’s tallest building, Burj Khalifah or Khalifah Tower, was unveiled in Dubai on Monday:

Dubai is a finance hub, the bubble of which has burst, so the building’s opening now seems a critique of past excesses more than the triumph originally dreamed of. Now that Dubai is having to be bailed out by its oil-rich sister emirate, Abu Dhabi, the tower had to be named for its ruler Sheikh Khalifa bin Zayed Al Nahyan, rather than retaining its original name, Burj Dubai. Many critics have seen it as a monument to hubris likely to remain mostly empty, as the 21st century Tower of Babel.

As you can see, Dubai nevertheless went all out to celebrate the opening.

The Burj Khalifah is a symbol of everything wrong with our present moment. Rooted in a finance and real estate bubble, planned as big for the sake of bigness, opulent, now saved from disaster by Abu Dhabi’s unsustainable oil revenues, it casts its shadow on a nation of guest workers, many impoverished and exploited. If global warming proceeds at the pace some climate scientists fear, and the seas rise substantially, it may, ironically enough, be all that is visible of the low-lying United Arab Emirates a century from now.

Read More on Informed Comment

In February 2010 I’ll be returning for the second ICAS, which again features a stellar lineup including another Disinformation author, Graham Hancock. Needless to say, I’m greatly looking forward to it and this time I’ll actually have an official role as MC (but don’t let that put you off). I asked a friend of mine who lives there if the recent news about Dubai World would have any impact on ICAS and this was the somewhat surprising response I received, essentially assuring me that the Dubai World debt problem is a smokescreen for something far more serious:

“I doubt it. Not much has changed here and people here just wonder what all the trouble is about. The fuss is about one single company (called Dubai World) who simply said it would delay (not default) its first installment repayment to a couple of international banks by 6 months. The amount is about 4 billion dollars which is a drop in the ocean considering banks in the US and Europe will have to actually write off about 2.8 trillion by 2010. Does it make sense that this rather common occurrence sends world markets crashing down? I mean, in the US alone hundreds of banks and companies actually defaulted since 2007 and hundreds everyday are probably requesting to delay payments in their quest to remain afloat. Even the actual international banks who lent the money to Dubai World are not very worried and are also wondering what the fuss is all about. So why all the fuss? It is a diversion. Something darker is going on and the perpetrators were just waiting for an excuse like this one to play their cards once again. No one really cares if Dubai World delayed or not their installment, the story was used as a smoke screen and the press fell right into their trap as usual. If you read the news it sounds like suddenly it is not just the company but the city of Dubai and the whole United Arab Emirates that ran out of money, “oh poor world, we are bound for global bankruptcy now that they have run out of cash”. Bollocks. But unfortunately journalists are not expert economists… it is as if everyone forgot that the UAE is the third largest oil producer in the world, selling comfortably millions of barrels at 75 dollars each every single day. It is unlikely they will run out of money for the next 50 years and are sitting right now on hundreds of billions of hard cash. No no, this must be a diversion for something going on elsewhere, but for what?

A couple of sinister things are happening right next to your doorstep. One of them is the Swine Flu scam. [Note: H1N1 is a fast spreading but very low fatality virus, most probably genetically engineered in a lab. It has killed in 1 year 400% less people than most of the common influenzas we all catch at least once a year yet it is the only one on the red list of the World Health Organization... the recommended treatment and vaccine are both miraculously provided exclusively by Donald Rumsfeld's own companies, one of these is Tamiflu. Another coincidence? Now Tamiflu is also known to reduce your lifespan and has a high chance of causing neurological problems. The probability of getting sick due to the Tamiflu treatment or the new vaccine is higher than actually even feeling the symptoms of H1N1.] The international press sure fell for that one… but does it need a smoke screen?

Another is the zero support of the new US administration to the peace process in the Middle East. Although Obama probably had good intentions when he gave his speech in Cairo, Hillary practically told the Israelis they could continue the Jerusalem evictions and building illegal settlements wherever they wanted with no fear of punishment. Basically they are evicting Palestinians, Christians and Muslims alike, from the family homes they have occupied for at least 150 years (some for several centuries) saying “sorry, your title deed is worthless now. This is ours. Bye bye.” Entire families left with no homes and if they dare complain, they get shot and called terrorists. That might require a smoke screen because Hillary was not able to negotiate with the current nutties in power right now in Tel Aviv. Extremists are all the same, no matter what religion they are from. A smoke screen for failure could be a good reason.

Another one is the other nut case in Iran who is brandishing his nuke card like a child with a new toy. That is turning into a major issue and if not dealt with properly could trigger a third world war… especially if the nutties in Israel decide to go for preemptive strikes. A very ugly scenario that very few people are currently aware of, which could drag the US, Europe, China and Russia into a very nasty conflict. This might need a smoke screen as well in order to gain some time. It seems the press hasn’t caught on to this one…

Then you have your usual conspiracies… for instance crashing Asian and European markets for a couple of days whilst your market is closed for Thanksgiving can in fact make a very quick buck for those who knew this in advance. Basically, you know the market will only crash for 2 days, you send it crashing with some bogus news, buy the shares cheap and let it recover before it really hurts at home. Bingo, you made a couple of billion.

There could be various other things that may require a smoke screen right now, I just don’t know them. But for sure, the real issue can’t be what you read in the papers because that just doesn’t make any sense.”

Of the many economies that gorged on debt in the boom years, Dubai stood out. In the space of a few years the emirate’s investment arm, Dubai World, racked up $59 billion in debt, borrowing to build lavish developments like a giant island shaped like a palm tree to entice celebrities like Brad Pitt, and to invest in glittery properties like the MGM Grand Casino in Las Vegas.

Now that the boom has gone bust, both in Dubai and in the United States, Dubai is stuck with a glut of real estate that no one wants to buy or rent. Creditors and markets had always assumed that when push came to shove, its oil-rich neighbor Abu Dhabi would bail out Dubai. But that assumption was called into question this week, and the resulting fear that Dubai might not be able to pay its bills sent a wave of uncertainty rippling through markets just as investors thought the worst of the global financial instability was over.

The anxiety reached Wall Street on Friday, sending the Dow Jones industrial average down more than 150 points, as investors worried about hidden debt bombs in other countries and institutions — heavily indebted nations like Greece and even Britain, high-flying emerging markets and even European and American banks that had lent Dubai money.

Image: Dubai montage via Wikimedia Commons

Read More: New York Times