Exhibit Dubai:
See also: Skyscrapers and Business Cycles
Via Paul Kedrosky
Source link: http://archive.mises.org/9440/was-it-too-good-to-be-true/
Was it too good to be true?
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That is a fascinating segment, a beautiful illustration of Austrian capital theory and business cycle theory.
Normally, the more the prices go down, the more they will buyers, hence ending a period of contraction in the real estate market.
But instead, as usual, I expect the governments in the region attempting to prevent those prices to go down any further. Add a little spice of nationalism to the soup of government intervention, and we have a souffle called a protracted crisis in the real estate market. Sadly, the same thing can be expected in other markets as well to a degree.
Near the end of the video are shown homes on a sand island, Palm Island. They look identical in style, size, cheap construction, and minuscule lot size to the McMansions that have popped up all around me in So. California. The pictures reminded me of an old nursery rhyme kind of song I learned in Sunday School ages ago. “The foolish man built his house upon the sand…†In this case both geophysically and financially on sand.
And both the woman real estate agent and male real estate developer show no understanding of what is going on around them. The woman anticipates a downturn of 6 to 9 months and the man is still plugging away on huge residential development.
I wonder if the Dubai government will intervene to re-inflate market prices.
It’d be great once the prices do start coming down- a lot of their offices are very well done- won’t sound like a bad place to start business
Dubai may end up being a scary place if production of petroleum in the region slows significantly. The beaches there look nice from 10,000 feet, but they’re not pleasant beaches. They’re polluted, the sand is dirty, and the dust from the condo construction blows onto the beach during the day. And if people are not going to Dubai to shop or do business, there’s no reason to think this area will be survive on tourism.
My friend who works in Dubai tells me that there’s no parking at the airport because as people leave the country, they call the bank to tell them they’re not paying their loans and that the cars are at the airport. The banks just leave the cars at the airport because they can’t sell them even if they were to repossess them.
Oh, and over half the city is Desi and not citizens of UAE. Dubai is one of the last places on a planet I’d want to be right now.
Yesman: I was thinking the same thing. I have a friend who is a real estate investor and if the prices there fall to where they should….well, it looks pretty good! I’m going to have to show her this video.
Her trouble here in the US right now is the financing. Big surprise eh? The banks won’t extend credit to her company any more, unless she guarantees the loans personally.
As a Marxist, I am inviting you to go to http://kapitalism101.wordpress.com/about/
and try to refute our theories if you can.
How do you spell malinvestment? D u b a i !!!
But there is more than one way to spell malinvestment: j u s t l o o k a r o u n d !!!
How do you spell criminal scum?
u n C o n s t i t u t i o n a l c o u p !!!
to marxist,
this may come as a shock to you, but it’s been done – mises in his 1920 work – “Economic Calculation in the Socialist Commonwealth”.
here’s the downloadable version, if you’re open-minded -
http://mises.org/pdf/econcalc.pdf
most people on this site are well-versed in marxism. “media” has stacks of mp3′s dedicated to marxism; key in “marx” in the media search window, and knock yourself out! maybe “the marx nobody knows” as a starter…
Marxist, I skimmed your web site and think you do a fair job of representing Marxism. But refuting all of the Marxist fallacies would take a large book. As newson pointed out, Mises has already done it, as has Hayek. For a contemporary writer who addresses each of your point specifically I would recommend you read George Reisman’s “Capitalism.” Dr. Reisman takes on the labor theory of value and most of the fallacies in Marxism.
I recommend Requiem for Marx, also available freely on this site.
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