http://online.wsj.com/article/SB125936720204567249.html?mod=rss_Today%27s_Most_P opular

I think this was the place Republicans here said they liked. No taxes (to Arabs anyway), few regulations, mostly unregulated development I think. Separation between corporation and state, none.

Can't wait to hear the (R)'s who formerly admired Dubai trying to distance themselves from Dubai now... twist, twist, squirm, squirm.

mostly unregulated development I think.
Are you a Marxist?

Right after independence, Dubai's economy was primarily based off of oil revenue from state owned companies. The people who controlled these nationalized oil companies then began to build infrastructure with state owned real estate companies. Once the Emirate began to take off, they made two more state-owned real estate developers, and they began to finance off of debt instead of oil (Dubai has a relatively small amount of oil, especially compared to Abu Dhabi, the Emirate which produces most of the UAE's oil.)

Private development is very highly regulated in Dubai, but mostly not even allowed. If you look at a picture of Dubai, just about everything you see was made by a nationalized real estate developer.

Now, the big problem in Dubai is that these state owned companies would sell units with a very low % of money down, which encourage investors to buy a bunch of them in hopes of the values rising. Since the % was low enough, it wouldn't hurt as much if you had to walk away from the property. The bubble became so big because the government overestimated the demand for units there and kept on building.

...because you must be if you consider that 'mostly unregulated.'

The Heritage Foundation works with the Wall Street Journal to compile a list of the most "free" economies every year, of course with a "republican" bias. The United Arab Emirates never scores particularly high. In fact, it's score dropped from 2001 to 2008. It's ranked #7 in the region, after Bahrain, Israel, Oman, Qatar, Kuwait, and Jordan. The UAE scores high in taxes and government size, but rather poor in everything else (on their metrics that is.)

Anyways, back to your argument that 'unregulated develop causes bubbles,' let me remind you that the USA has some of the highest government intervention in real estate development in the 1st world. We have FHA to back loans, Fannie and Freddie to buy up loans, mortgage interest write offs, government backing of thrifts, loan regulations such as the CRA, and FDIC (which encourages banks to make more loans.) While most 1st world countries have a counterpart to 1 or 2 of these, not a single one has such a large amount of government intervention in the general housing market (ie housing for non-poor people.)

This is what happens when you waste tens of billions of dollars building indoor ski slopes in a hot desert and glitzy megatowers in hope that rich people will blow a lot of money there -- and then a recession hits and they don't. A case of poor investment strategy more than anything else.

What’s tiny, dry and poised to bring down the entire global economic system? (http://opinionator.blogs.nytimes.com/2009/11/28/goodbye-dubai/?8dpc)

Hey, thanks for the tip to "Republican" land rankings. Funny... Hong Kong is #1. Part of a communist country. LMAO!
And look what such freedom gets ya, lots of cheap lead based toys for your kids dining pleasure. Baby food enhanced with melamine. Paradise!

Hey, thanks for the tip to "Republican" land rankings. Funny... Hong Kong is #1. Part of a communist country. LMAO!
Hong Kong's economic system is rooted more in Britain than China. Hong Kong was a British colony until 1997. Part of the deal of giving Hong Kong back to China is that China would be able to appoint some of the politicians in the otherwise democratic SAR, and Hong Kong would have economic autonomy for 50 years. Hong Kong is the financial capital of Asia, and it logistically wouldn't be able to hold that position with Chinese banking laws.

I explained most of this to you a few months ago, but guess you forgot.

I also remember a few months ago how you said how China is mostly unregulated, and you just said now that the problems of Chinese manufacturing is a result of lack of regulation. This is absolutely false. China has plenty of regulation in virtually every area. But you're following the false assumption that regulation can solve all problems, when it can't. China has extremely bureaucratic regulations as well, which only encourages corruption.

If you look at Transparency International's latest list of (least) corruption, you'll see that Hong Kong is rated #12, ahead of Luxembourg and Germany, and China #79.

http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table

Hong Kong has far fewer regulations on its books, but it's better in practice. Hong Kong's regulations are lean and effective, while China's are burdensome and bureaucratic. You regulation fundamentalists need to realize that...

Are you a Marxist?

Right after independence, Dubai's economy was primarily based off of oil revenue from state owned companies.

Strange, here I thought that Dubai was one of the emirates that did not have oil. Apparently that was the reason why the invested so much into becoming the trading/vacationing/shopping/doing-everything-Allah-has-forbidden hub of the entire region.
It could even have worked if the Wallstreet meltdown had happened two years later.


Eri
(p.s. and what has Karl Marx have to do with this?)

Kamion, I am familiar with Hong Kong's history. But it is part of China and China is a communist country, right? Yes, of course.

And it's very interesting how most of the top 10 Economic freedom countries have nationalized health care. Singapore is somewhat short on civil rights. Hong Kong too if it's following in the footsteps of the mainland. But Republicans like authoritarianism. As far as business regulation in China, it will come. China's growth as exceeded it's ability to regulate. And much of their success is probably due to them holding down the value of their currency.

Other than the US and China, I believe all those other countries in the top 10 have nationalized health care.

Strange, here I thought that Dubai was one of the emirates that did not have oil. Apparently that was the reason why the invested so much into becoming the trading/vacationing/shopping/doing-everything-Allah-has-forbidden hub of the entire region.
It could even have worked if the Wallstreet meltdown had happened two years later.
Dubai does indeed have oil. If you actually read what I said... "Dubai has a relatively small amount of oil, especially compared to Abu Dhabi, the Emirate which produces most of the UAE's oil."

At independence, Dubai was very poor. Oil was a major part of the economy early on. As the non-oil sector began to grow, oil become a smaller and smaller share of the economy. But the government still uses oil as collateral for loans. They borrowed against their oil when it was over $130 a barrel, and that's one of the contributing factors to them putting a freeze on paying off their debt.

China's growth as exceeded it's ability to regulate.
Huh? One of the most regulated market economies from 1950 to 1985 was India, it was also one of the slowest growing economies in the world during that time frame. The literally 10,000s of pages of regulations that every business had to follow meant little. You can't have effective regulation enforcement with high corruption, and over-regulation more often promotes corruption. It has nothing to do with growth rates.

And much of their success is probably due to them holding down the value of their currency.
The PBoC holds down the value of the Yuan? News to me.

The accusations of currency manipulation in China are rooted in the fact that they don't hold down the value of their currency. Most of the time, the Yuan is pegged to the dollar. Over the past decade, the US had a weak currency policy and China had a strong currency policy, yet they kept the exchange rate, more or less, the same.

The reason why economists want the Chinese to float the Yuan is because they think the exchange rate doesn't reflect the true value, and that investors would bid it up vs other currencies.

If a weak currency was the way to economic prosperity, than the 1990s currency devaluations into Mexico, Thailand, and Russia (and 2001 Argentina) would've lead to economic prosperity, not sharp recessions/depressions.

If a weak currency was the way to economic prosperity, than the 1990s currency devaluations into Mexico, Thailand, and Russia (and 2001 Argentina) would've lead to economic prosperity, not sharp recessions/depressions.

Indeed. And the USA would, in fact, learn the same if not for the fact that most of the world's trade and certainly the most critical trade is done in dollars so that a weak dollar is hidden by making the other currencies appear strong. It does have one advantage though, it makes exporting relatively cheap. This is what China profited from the past decades, by keeping their currency chained to the dollar and thus artificially cheap (relative to that of their competition). The weak dollar was shored up by the very generous economic policies by Greenspan, which set up the unhealthy economic interdependence between the USA and China. The USA made it insanely cheap to borrow money, which lead to inflated consumption, which fueled the industrial production in China, which ended up with holding a significant part of the deficit of the USA. The housing bubble was the way how all this cheap money entered the consumer economy in the USA, and as everybody who thought about it (and no few economists warned against it but were ignored against general feelings amongst bankers of having achieved infinite growth and having banned risks).
The funny thing is that China is now complaining about the current economic policy of the USA (of allowing banks to borrow money at (close to) zero interest rates). It makes it increasingly expensive for them to maintain their link between the Yuan and the Dollar. (And if you are thinking that China has a long and glorious economic prosperity ahead of it, you probably also thought that banks had banned all risks with their CDS and other obscure trading schemes. They have a couple of huge economic issues just across the horizon. The trillions of dollars worth of clean up operations resulting from decades of ignoring environmental issues and laws. A one-child policy that will lead to a retirement problem on a massive scale. A population that increasingly will want to be able to use those products they are making for the rest of world, which requires a massive increase in income which translates in a massive increase in production cost. And of course the fact that as their economic weight is growing they will be expected to do more to maintain the global economic system. While they were an upcoming economy it could be overlooked that they only followed the rules when it profited them and ignored the rest.).


Eri

I had been watching something on Ted on the subject of Hong Kong, with the way it was set up. This guy was suggesting, to set up these regions like Hong Kong, Dubai, in places like Africa to further their developement of third world countries into 1st and second world countries.

quote"If a weak currency was the way to economic prosperity, than the 1990s currency devaluations into Mexico"

exico had paid off it's debts, or at least the vast majority of it and was rebounding prior to the current debacle. They were going to hit a good bit of economic prosperity.

Edit added some stuff while I remembered.

Hungary, I think it was, has the same issue Dubai does, except they were not threatening a global economy though.

If a weak currency was the way to economic prosperity, than the 1990s currency devaluations into Mexico, Thailand, and Russia (and 2001 Argentina) would've lead to economic prosperity, not sharp recessions/depressions.
Seems to be working well for China. For the moment anyway.

Seems to be working well for China. For the moment anyway.
Pana, since I guess you didn't get the explanation in my last post....

A currency devaluation is when a central bank expands the money supply far beyond what the market would do on it's own. This isn't what happened in China. The People's Bank of China (PBoC, the PRC's central bank) actually had a tight monetary policy over most of the past decade, with some of the highest interest rates in any major economy.

By contrast, in the wake of the tech-bust the US had an extremely loose monetary policy, and predictably, investors on the currency markets hammered the dollar.

The USD is a floating exchange rate currency, meaning that it's exchange rate is set on international currency markets. By contrast, the CNY is a fixed rate exchange currency, meaning that it's exchange rate is set by the Chinese government.

The USD / CNY exchange rate is mostly unchanged in the past 15 years. What economists believe is that the CNY should've risen against the USD in that time frame, so that's why they want the Chinese government to turn the CNY into a floating rate currency, so investors -as opposed to the Chinese government- sets the exchange rate.