1/31/2009 1:52:57 AM #

First of all, I would like to thank my brother, friend and class mate Mr. Masood Al Mulla for his terrific & marvelous thoughts & interest in “financial crises”. Also, my big thanks go to my genius teacher & brother Mr. Mahir Badri for giving me this opportunity to share my modest opinion with.
There is no doubt that global financial crises have mixed up things around us and have shaken the global economy around the World. Indeed, no one (i.e. individuals, companies and governments) could have expected even predicted about the recent financial crises, although it had occurred in the past.
I believe that the financial crises have come in proper time to discover many things around us and give answers to several issues such as “where are we now?” and “what we have done so far”. Although these are simple questions, unfortunately no one really think about it. It is time to evaluate and revise our strategies and admit that we made mistakes.
“Keep optimistic, tomorrow is another day”. This is the message what my brother Masood wanted to say. I totally agree with him that people should always be optimistic and look at the full side of the cup. No matter how crises are big, “things get back on track again (and they will inshallah)” you should get the opportunity....


Thanks & Regards,
Jassem AL Mulla

Jassem Al Mulla

1/31/2009 6:07:37 PM #

Thank you Jassim for the kind words, just remembered this caption from an article I read in the Economist where they mentioned that 75% of credit booms that were externally funded, ended up in a bust. This means if you have 4 economies that are growing (growth in lending that grows businesses and grows everthing fron construction, to real estate, to services), and if this growth in lending is from foreign sources (foreign banks, foreign funds, etc), on average 3 of these economies will end in a bust. We always knew that FDI had its dissadvantages (also its advantages so lets not be too cynical), but this is different, this statictic talks about foriegn debt that give domestic credit a boast, an un-natural growth that leads to inflation in everything (asset prices, consumer goods, the whole 9-yards). And appearantly to the article, usually this foreign debt find its way to real estate because it is one of the easiest assets that you can inflate value and thus store in more of the foreign debt. This is interesting because it suld give us an idea of what could save us in the future, which is internal demand! and how can you generate internal demand? is by allowing everyone to have enough income so that everyone could spend and the economy would circulate cash, and how can we make everyone have enough income? will, there are 2 ways..either you have a super rich government that will hand everyone millions and advocate spending, or the more fundamental and stable way in which the population grows its middles class through entrepreneurial activities..imagine this, if majority of the population was in SME sector, where they need to spend cash and employ people, where they need to rent space and import goods, where they earn enough cash to be able to pay for all these products and services, then the economy will have enough cash circulating internally without the need for foriegn debt, then if the SME's become succesful then maybe they can export their service/products abroad, somehting like India where the local educated population have succeeded in insulating the Indian economy (more like softening the blow of the downturn) because they were net exporters of services...just a thought..Iam looking forward for the day we reach India's status..barakah belshabab (wel shabat)

Masood.

Masood Mahmood

2/1/2009 10:00:20 AM #

I have to say Masood, you need a timeout ma'man how about desert dunning! Just to get that ton of stress off your shoulders you and my brother got to relax...

Dude we all need it, and how about I offer you a cup of Chay-Haleeb or a Market-Meltdown!

Rgds
AR

AR Al Hashemi

2/1/2009 12:21:38 PM #

Salam,

well what you say its true, ever since everywhere in the world facing the same problems,but we should focus on our need rather than what our wants. If uae may start thinking or producing for their local market better than buying, and maintaining. I also seen huge oppurtunity for uae need to be explore than always focusing on outsourcing labour because of cheap, and hoping expetriate because wanna be famous. Believe in ourselves is have too. Anyone can build a great buildings,but what is the profit to our society,our country especially our religion. We should only think to serve the world, but serve our society. They are ways to solve the matter, of course not out of sudden, first think knowledge and technology as your fundamental based, where you learn and study not bring others to do for you but you do your own, start thinking emiratesse for emiratess which not yet happening until today. Mergers, certain company in order to eliminate risk. Dont always depend on tourists which is seasonal,but more to producing,trading or brookings. Supply your neighbour and no need to enemy of them,specially if they were same vision with us, except those destroy us in short or long term. Call upon rich soceity to issue bond, like amanah saham for gov project, never think want to be big alone, sharing in mutual benefit base on islamic economic is the best. Back to Islamic Financial terms, law and order. Mind your steps...!!! and Good Luck..

Remember there is only 1 way to go to heaven,iman and taqwa but too many ways to go 2 rome,so Dubai will solve it, of course but they need to appreciate local expert not only those white,with black mind.tq

amoora

2/2/2009 7:53:59 PM #

Hello Everyone,

It was a pleasure to read the above written article by Mr Masood Mahmood.

How true.., being an expat, I convincingly feel that this topic of financial crisis has crept up on all of us, residents of UAE. Interestingly to note though, that last Friday the MOE parking was no less packed all the way up to the roof than prior to financial crisis times, and residents had no reservations parking on the pavements and sidewalks despite police issuing fines on the spot! (What a desperation to get into the mall!) Inside MOE the business seemed as usual: shops were packed with customers, restaurants had limited free tables, and it was apparently impossible to find a seat in a coffee shop.

My other personal observation is that I see more and more posh cars on Dubai roads each day. On my daily drive of 120 km I routinely spot at least one Bentley a day, 4-5 Porsches, countless BMWs & Mercedes and many other exotic and luxury cars on still very much congested roads...

In fact, at times I feel that this financial crisis was good for Dubai, somewhat filtering out residents that don't belong here: opportunistic entrepreneurs and semi-professionals, who aim to earn as much and as fast as possible to enjoy the quality of life UAE offers, while bringing down the image of the country by often improper and arrogant public behavior.

So all in all, in my optimistic opinion, Dubai is still standing strong despite the common fears, and is growing better, stronger and more upbeat than ever before!

Natalia

2/4/2009 12:28:01 AM #

Caught my eye the other day RBS's posted losses of GBP 28 Billion! Wow! Convert this to UAE Dirham, and let’s use today's ridiculously cheap pound rates of 1:5 dirham, that’s ~ AED 140 billion of losses! That’s one bank! One bank out of many British and foreign banks in the UK. That’s one bank, in one sector, out of several sectors that have been hit..imagine the total losses in the UK economy...and we over here are worried about $50-$80 billion in loans (no one seems to have a grip on this slippery debt figure for some reason)...and let’s not forget that these are loans that have repayment schedules (so we do not need to cough it up all in one go), and apparently the government has not defaulted on any interest payment yet (otherwise the IMF would've stepped in and our fiscal and monetary policy would've been decided all the way from DC - IMF's headquarters)..my point is that our losses, are insignificant to the colossal figures that we have been seeing everywhere..
Of course, one have to put things in perspective and compare the size of UK economy versus the UAE, also apparently the losses of RBS are not all in cash, there were some major write downs of a bad acquisition they made - apparently another bank! Could be BNP Paribas...

just a thought...

Masood Mahmood

2/5/2009 6:11:34 AM #

Hello,

I have been following this discussion since it started and I would like to share some of my thoughts now. First of all, I was very impressed by Masood Mahmood's article "Do You Want Financial Crises with That?". I found it to be not only skillfully written, but also very engaging, entertaining, and easy to understand for even the average reader without a financial or business background.

As a future psychologist, I can say that the psychological ramifications of this recession is quite interesting. It almost seems that not only is the "financial crisis" the topic du jour, but psychologically it almost feels like it is a bonding experience for individuals and nations. Since this is a worldwide phenomenon that is impacting every country to some extent, the ability for individuals from different countries and locations to discuss the financial crisis seems to be a way of connecting with each other and finding some common ground.

The ability to converse about a common struggle, the worldwide "financial crisis" may help individuals to not only discuss the situation, but also bring them together and unite for a common goal- the resolution of this recession.

As I reflect on its impact so far in Canada, I can say that the financial crisis may be a humbling experience for many who became too comfortable in their security and lifestyle. Perhaps the recession can serve as a reminder for us to remember that everything in life is fleeting and momentary, and that our situation can easily change for the better or worse.

Finally, while financial security may be unstable and fluid, I think Mr. Mahmood's article is a good reminder to focus on finding creative solutions to this issue as opposed to dwelling on the past. The human mind is a powerful tool, and individuals will have to use their unique skill sets to think creatively and outside the box to actively resolve things, as opposed to passively waiting for the market to change.

Aneesa

2/5/2009 4:32:24 PM #

Thank you all for your contributions and thank you Masood for initiating this debate. Let me get straight into a few points I’ve spotted:

Masood, you mentioned that UAE dirham going to buy more steel, more cement, business class tickets…..do we really need that? And especially when every single financial expert or even non-expert as you mentioned taxi driver is urging us to do more saving, hold our money and not to spend them while some of them also recommended to collect all your money from the bank and put then under your pillow (that of course if your bank still have your money ). So does it matter if our currency can buy more cement or business class?!!

Also what about our basic need, correct me if I am wrong, I can not see any reduction on the price of food, bred, rice, bottle of water…etc plus we still paying the same amount, for fuel and rent!!

On the other hand, I agree with you that we need small businesses to rotate the economical wheel (like India) but I have doubt about the power of our SME, when have the majority of our SMEs are resellers of A product or service (simply distribution channels), so I have doubt again if we actually have those innovative companies to really take the wheel of economy and turn it and make people spend and hire more people (i.e. Google, Apple, Adobe “small ideas became big”)

On top of that, and if we assumed that you have the wheel, now, you have banks which stopped lending, so no cash or fuel to turn on the wheel.

Correct me if I was wrong, I think AR suggestion is good – we need a trip to desert.

Mahir

2/7/2009 8:16:21 PM #

Thank you everybody for your time and your critique. Honestly when I first blogged I did it out of frustration from the status quo – the bleak outlook and the gloom and doom scenarios that I kept hearing from all sources around me, from radio, to TV, to newspapers, to tabloids (only fortune cookies are still positive but give it couple of months and you’ll see) all are reporting bad news. So decided to take a contrarian view and decided to write about it, as I kept coming back to the blog, I discovered that this feeling is shared among mot of us, so in the end, we are not alone and all of us are going through the same endeavor each in his/her own way.
Just reporting from my own observations, my feeling is that November was the most difficult month in 2008, by that time Lehman had gone under, Merrill taken over by Bank of America, there was this sense of panic that nothing is too big to fall, that no one was immune, that not even governments were safe (the government of Iceland went under after the UK refused to refinance its loans). We were hearing of layoffs left right and centre (in the US, the UK, and other western economies), but we thought they were too far, and we were too insulated. Then when the news started to spread about layoffs in Dubai every person thought his/her industry where immune. Marketers thought salesmen will go first, salesmen thought brokers will go first, brokers thought project managers (PM) will go first, PM thought construction workers will go first, and poor construction workers probably had no clue what’s coming to them, in the end they all went under the knife and layoffs spared no industry and left no man or woman without a layoff storey, if it’s not their own storey then it’s a storey of someone they know. Each and every individual of us knows at least one person that got laid off. December came in and there was this gloom and doom feeling among all, partly because the people left behind after the layoffs carnage felt like they’ve been hit by a tornado and now they are deserted on this quiet and dead silent disaster zone to pick up the pieces. Lots of people went on leave not knowing what to expect when they are back, nor they knew if they will be able to come back. The town was a ghost town and every one was waiting for that piece of good news, that upper picker that will come and change things, they waited for something, anything that would bring back the trust in the market and the economy, a trust that evaporated in a head spinning fashion (not even a ‘G-force defying’ fighter pilot could sustain the deceleration that the economy experienced). Then came January, and somehow things started to feel better. It wasn’t a sudden feeling of relief, nor was it a clear change of mood. There wasn’t a distinct piece of news that signaled a turning point - It was just that people were so fixated on anticipating the next mean jab in the chin that they were somehow numb to current punch in the stomach that they were receiving. The somber mood had somehow changed to a shy sense of resilience that gradually gained courage (mojo) and people dared to feel positive for the first time. By no mean this is the end but at least people have developed thicker skin and a stronger immune system to such turmoil. If we survived this, then I think we can take on 2009 and make something out of it. Inshallah (in God’s well).

Masood Mahmood

2/15/2009 3:37:27 PM #

Masood,

I have to say I’ve never seen so much negativity, but I have to say lighten up as it is a bad dream! With all the losses there are lots of beneficiaries. The turmoil or the market meltdown you’re referring to will never end as you and I know it!

We all understand and been taught through our educational career for every action there is an equal or greater reaction... Yes true we might have developed a thicker skin but so has the reaction... we have not seen the end, but lets hope that as long as we are not pulling our guns out of our pockets pointing them at one another or sleeping with knife under our pillows then hay there is a light at the end of the tunnel...

Life goes on as Mahir said prices did not change in our local market but it is a global virus ... and Amoora said smell the coffee and work and rebuild within I have to agree with that but with a big question mark!

And please oh please stop comparing us to the US or Europeans... cause none of the development was meant for you or I! Let’s fix our population percentages as we are the minorities till now for crying out loud...

Have I said that and I am still among you people! Are we still on for desert bashing???

AR Al Hashemi

2/16/2009 11:20:55 PM #

Masood,
Many thanks on this, Unfortunately we waste our time on rumors, eg. one of the brokers mentioned few weeks ago that Abu Dhabi is planning to in inject AED 18 billion in Dubai banks to support the economy (he was trying to increase the share price with these messages)....and just yesterday i got a call from one of the real estate companies in Dubai convincing me to buy a flat, i said: no its not the right time to invest in such projects, imagine he told me the same story of the 18 billion injection!!! see how fast people circulated this!

I'm not trying to scare everyone, yes the crisis is there, impacted many people and yes in Dubai, but we should be positive and trust our government

Omar

Omar

3/5/2009 10:08:30 PM #

Just reporting from my own observations, my feeling is that November was the most difficult month in 2008, by that time Lehman had gone under, Merrill taken over by Bank of America, there was this sense of panic that nothing is too big to fall, that no one was immune, that not even governments were safe (the government of Iceland went under after the UK refused to refinance its loans). We were hearing of layoffs left right and centre (in the US, the UK, and other western economies), but we thought they were too far, and we were too insulated. Then when the news started to spread about layoffs in Dubai every person thought his/her industry where immune. Marketers thought salesmen will go first, salesmen thought brokers will go first, brokers thought project managers (PM) will go first, PM thought construction workers will go first, and poor construction workers probably had no clue what’s coming to them, in the end they all went under the knife and layoffs spared no industry and left no man or woman without a layoff story, if it’s not their own story then it’s a story of someone they know. Each and every individual of us knows at least one person that got laid off.....Masood


Dear Masood,

Your comments reminds me of a chain reaction similar to a food-chain.
Every link is as important as the other. And any removal will impact affect the rest of the chains. This impact has unfortunately been demonstrated by the current global economic situation.

Before this crisis, everyone is promoting "GO GLOBAL" to be a successful enterprise. Perhaps it is not such a good idea after all?


Here are my humble opinions.

Quoting from Aneesa~ Canada,
As a future psychologist, I can say that the psychological ramifications of this recession is quite interesting. It almost seems that not only is the "financial crisis" the topic du jour, but psychologically it almost feels like it is a bonding experience for individuals and nations. Since this is a worldwide phenomenon that is impacting every country to some extent, the ability for individuals from different countries and locations to discuss the financial crisis seems to be a way of connecting with each other and finding some common ground.


I find her observations intriguing. And I agree that the psychological state of fear in the top Financial analysts and CEOs to panic, resulting to unnecessary immediate cost cutting measures (thinking and believing it to be a farsighted measure and strategies), postponing projects, delaying and withdrawing investments and increasing retrenchments.

To put it plainly, it seems like "Monkey see, monkey do" phenomenon causes a chain of massive economic fears, spreading worldwide much too quickly, transferring and heightened fears global wide. The existence of modern technology in communications and media furthers worsen the dire situation, giving individual countries little time to access and analyze their own country's economic situation.


This phenomenon further spreads out like a dangerous cancerous cell, destroying any and many industries, resulting in high unemployment, financial instability and towards economic doom.

My 1st question is....."IS SUCH A WIDE-SPREAD PANIC NECESSARY?"
2nd question....."WHAT HAPPENED TO THE YEARS OF LOCALIZATION CONTROL EXPERIENCE PRACTICED BY THE GOVERNMENT AND CORPORATIONS?"

As much as any financial analyst would hate to admit, It seems to be amazing that the economic situation of a super-power country has caused such an unanticipated super impact on the global economy in such a quick pace. Simply to say, an overreacted response.

Many economies due to the new millennium globalization trend, has various Free Trade Agreements with vast continents and relies heavily on Direct Foreign Investments and Exports for economic growth.

However, many of these developing and trans-developed economic continents have the lack of strong FDI and monetary regulations and often do not anticipate the impact of over reliance on the FDIs. The sudden high flux of these continents FDI pull-outs plunges the economic stability of these continents, affecting their neighboring continents and the others around their region.


Sure the financial systems of the super-power economy has failed. Many economies that has enjoyed and relied on the good times now blames their own economic disaster on this one super-power economy.
What these GLOBAL ECONOMIES FORGET is that, similar to the product's life cycle, economies start from: Market Introduction Stage (undeveloped countries), to Growth Stage(developing countries), to Mature Stage (stable economy), to Saturation and Decline Stage(questioning the sustainability), where it improves further by restructuring and eventually returns to Mature Stage (stable economy).






Since this chain of reaction has started, it is useless crying over spilled milk and blaming it on another economy. What are the lessons we can learn from here?
1. Improve Local Economic Governance
2. Restrain From Global Panic
3. Analyze Local Economic Stability and Sustainability
4. Learn From Others Mistake
5. Improve Local Regulations


Globalization is a double edged sword. It can help improve an economy by leaps and bounce and bring it down overnight. Strong FDI regulations and Internalization of FDI knowledge transfer can cushion such economic impact. “Help thy neighbors during these troubled times. Our economies are no longer ours alone.”

Joeyvoen Teo

5/11/2009 12:44:08 PM #

Masood,

The moral of your article is "Turn negative into positive".

Abe Hamm

5/26/2009 1:35:24 PM #

I was just thinking about financial crises and you've really helped out. Thanks!

Loan Modification Service

7/16/2009 2:10:31 AM #

Good to know, never realized it worked like that

Bratt

9/24/2009 11:17:03 AM #

Salaaaam to all,
Finicial crisis have in somehow gave each and every person the chance to say something about the world economy... i mean it gave everyone the courage to discuss what others should do and dont...
however i dont see that as a negative thing but i can see it has created a great debate on the issue and resulted to knowing how it has effected everyone starting from the Richest Shareholders to the street man... after all, all of them get efftected by the crisis and have the right to speak abt their damages!!!!

From my own view... i guess everyone knew that the crisis will happen someday in somehow... coz there was no way at all the everything will keep increasing forever and i guess it was a reality call for alot of ppl to re-think their startgies and re-orgainze their whole plans and future projects...

i agree that the damage was really painful but to any crisis there are some opportunity- hunters who can make the best of it (who might be as well got damaged by the same but the didnt stood still and did smtg abt it) and encorage the other to move on and not considere it the end of the world...

what made dubai shine in less than 10 years and be the most known city in the arab world... will make it shin again by the great effort of its ppl and the creative ideas we always be amazed by

this is a call to all the young business enterpenurs who have delayed starting their own business for so long... its time to raise and start
Good luck in that

Emma....

Emma