Economic implications from natural disasters

In continuation with my earlier write-up, Fareed Zakaria over at CNN has written an interesting article about the recent earthquake in Japan and its impact on their economy.

Although he commends the Japanese along the following lines:

-- (their) precautions and preparedness.
-- (their) safety codes and drills.
-- (their) advanced safety measures at nuclear plants.

But it appears from his writing that the Japanese had not prepared themselves from an economic disaster despite knowing the fact that their country being on a fault line was prone to natural disasters. This disaster came in the form of a tidal wave of economic downturn last Friday with the numbers continuing to rise on the final invoice.

In endorsing Mr. Zakaria's essay, I am of the opinion that countries should work on having a back-up (in place of ridiculous structures & other absurdities) plan to deal with disasters of such magnitude whether they are man-made or natural to avoid being a burden on others.

I seriously believe there's a lesson to be learnt from the Japanese disaster, which if seriously considered and put to use would help us all in the long run.

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."

DFM, DIFX, Borse Dubai - Who's Who ?!?

DFM is known to everyone and so is DIFX. But recently the media started talking about Borse Dubai. Some searches on the net pointed out Borse Dubai to be DIFX, until I found the website for Borse Dubai itself. According to the website of Borse Dubai is:

"Borse Dubai is the holding company for Dubai Financial Market (DFM) and Dubai International Financial Exchange (DIFX). Borse Dubai was created 6 August, 2007 to consolidate the Government of Dubai’s two stock exchanges as well as current investments in other exchanges, expanding Dubai’s position as a global capital market hub."

The site goes on to explain Dubai Financial Market as:

"The Dubai Financial Market (DFM) was established in March 2000 as a public institution having its own independent corporate body. It has recently turned itself into a public shareholding company and lists its shares on its own platform; a first in the region. Its goal is to create a fair, efficient, liquid and transparent marketplace that provides choices through the best utilization of available resources in order to serve all stakeholders. DFM is operating as a secondary market for trading of securities issued by public joint-stock companies, bonds issued by the Federal Government or any of the Local Governments and public institutions in the country, units of investment funds and any other financial instruments, local or foreign, which are accepted by the Market."

Dubai International Financial Exchange is introduced as:

" Launched in September 2005, the Dubai International Financial Exchange (DIFX) is the region’s first international exchange. A liquid and transparent electronic market with equities, Sukuk, conventional bonds and structured products, with standards comparable to those of leading international exchanges in New York, London and Hong Kong, the DIFX enables regional and international investors and issuers to share in the rapidly growing wealth of its region."

The most Interesting thing I noticed was the tag line on Borse Dubai's website

"Bridging Global Financial Markets- Connecting Liquidity" very interesting ain't it.

Comments welcome

Job prospects and the niqab

Reuters has a longish article about the difficulty women who wear the niqab finding jobs with face-to-face contact with the public. Dubai features prominently. Some excerpts:

It is common to see Emirati women in the workplace, most wearing elegant robes and head coverings, but those wearing the niqab which leaves only the eyes uncovered are rarely seen in front offices.

"Women in niqabs do not sit at the counter. They take administrative jobs," said Abdullah Naser, a manager at a Dubai post office. "Clients need to know who they are talking to."
...
In Dubai, the most modern emirate where multinationals keep their regional hubs and expatriate non-Muslims make up a large proportion of the population, women who wear the niqab find it hard to get jobs.

"Some companies have a policy preventing women from wearing their niqab during work hours, such as banks for example," said Nora al-Bidour, public relations manager at Tanmia.

The niqab has also caused controversy in Egypt, the most populous Arab country, where an increasing number of women are wearing the veil. In June, a court ruled that a U.S.-accredited university was wrong to bar a female scholar who wears a face veil.

In the United States, Saima Azfar, an immigrant from Pakistan, plans to wear her niqab when she interviews for jobs once she passes her medical board exams in Chicago.

"There are Muslim women doctors I know who went through the licensing process here," explains Azfar, 34. "They told me that if you have the talent, then nobody will deny you a job for wearing a veil."

Here's the whole thing.

Dubai, outsourcing hotspot

The Wall Street Journal today reports (subscribers only, I suspect) on page one of its US edition:

Much of the Middle East offers the same appeal other outsourcing hot spots have: cheap, skilled labor. But companies are finding other advantages, including a time zone that roughly straddles the world's three biggest economies -- North America, Europe and Asia. The region's geographic proximity to Europe and a multilingual labor force also help. And with business booming in much of the Mideast, there is more demand for Arabic speakers.
...
In recent years, Egypt, Jordan and the United Arab Emirates have all broken into the top 20 most-attractive offshoring destinations, according to an index published by consultancy A.T. Kearney Inc. Tunisia, Morocco, Israel and Turkey made the top 50 in this year's list.
...
Dubai, in the UAE, is promoting an "outsource zone," one of several zones aiming to attract specific industries. While wages in the UAE are relatively high, officials highlight its advanced high-tech infrastructure and large talent pool, including educated Southeast Asian and Arab-speaking expatriates.

An outsourcing joint venture between Electronic Data Systems Corp. of Plano, Texas, and another UAE emirate, Abu Dhabi, is pouring $100 million into a new center aimed at Mideast customers. EDS recently started hiring in Morocco to service its European clients. It already has 450 employees in Egypt.

New unified contract to regulate the rights and duties of domestic workers :: Gulf News

Link to the story.

Ironic that the new law takes effect on April 1st.

As with any law we have to ask not only what the law says, but also whether it will be enforced. Enforcement involves the desire to enforce the law, the capacity to enforce the law, and the willingness of most persons to respect the law.

The law is meant to prevent the abuse of domestic workers. The only way to effectively prevent abuse is to give domestic workers the right to change employers. Otherwise you are captive to your employer.

But allowing workers the right to change jobs is something that is not likely to considered in the UAE. That puts them one step closer to non-temporary residents, one step closer to citizenship under international standards.

Watch your language

Link - Gulf News - Nation's Mother tongue loses in the race of languages

Languages are like computer operating systems. The more people who use them, the more useful they become and the more people who adopt them. English has become the Windows of languages - And similarly loved and hated. Individual decisions on adoption affect everyone.

Culture and language are closely interwined. What happens to a culture when a language falls into disuse? Certainly many of those in the culture will feel threatened. And when threatened there is a desire to place blame. Does the blame reside in the encroaching language? In fellow members of the culture who have switched to the new language?

Can the native language be protected without closing the culture to economic exchange with the outside world?