WSJ: Dubai's Debt Cloud

Friday the Wall Street Journal ran an article about market concerns over the level of sovereign in Dubai. An ungated copy of the article is here. Among other things the article points out that big investors want more transparency such as access to Dubai government's books.

The UAE student blog Broadcasters of Tomorrow astutely observes: "In the end, if Dubai gets into financial trouble it would take its neighbours with it. Or perhaps they're counting on a regional bailout."

Similarly, for the Emirates Economist (shameless plug) the money quote from the WSJ article is this one: "The assumption is that Sheikh Mohammed or his government will come to the rescue in a pinch. And if Dubai gets overextended, analysts expect the emirate's much-richer cousins in Abu Dhabi will lend a hand."

With that attitude you've got the same element that fueled the savings and loan real estate scandals in the US in the 1980s - removal of downside risk.

So what do you think? Would Abu Dhabi do a bailout? Are Dubai's investors counting on it? And if so, what can Abu Dhabi do about it now?

UPDATE - Marginal Revolution links here and writes "sell short."

Credit Card Warning

How many times have you handed over your credit card to a cashier only to have it returned as soon as its been swiped without your signature being checked against the one on the card?

I tell the cashier "please check my signature", but I wonder if the message sinks in. They don't care if someone has just paid for something with a stolen card.

If it happens to you, I think the best course of action is to educate the cashier as to why they should be checking signatures. Then, you should inform the management that signatures aren't being checked and how it is in their interest that they do this in future. You could also threaten not to go back to the shop as you don't feel happy using your credit card in there while the signature is not being verified.