Monday, November 19, 2018

Ominous Dark Clouds Encircle Dubai: 4 Major Negative Global Media Articles In 6 Days

What we have predicted about Dubai/UAE economy since mid 2015, is now turning factual and major media from WSJ to Bloomberg to Reuters and Economist are reporting on it.

However, they are still not able to predict accurately and continue discussing the past and are not permitted to discuss the future.

Besides, they do not even have an understanding, despite having some multiple degree holders writing articles, that majority of GCC crisis is related to currencies around the region who used to trade with UAE (plus some impact of internet) and all of it is being created by the good ol' USA due to a strong dollar and sanctions on various countries.

These media are not even permitted to write that there are 5 civil wars going on in the Middle East because all media are US owned so they cannot write about wars started and funded by the USA whose aim is to destroy the entire Middle East. Nor can these media get the 4 year old news that UAE has banned over a dozen nationalities that negatively impacts trade, banking and tourism.

Thanks to Trump global trade is slowing down of which Dubai was a beneficiary.

Thanks to Trump Iran is supposed to be crushed and as a consequence Dubai gets crushed due to lack of trade.

Thanks to Trump's geo political games in Saudi, Turkey, Qatar, Iran and with Russia, they have all reduced their global trade especially with allies of US in which Dubai sits right in the middle.

In every scenario, Dubai is a big loser.

But people being people will continue to live on hope and just like Saudi and UAE have lost their reserves, so will all the people who will lose their assets including the locals. 

Once higher VAT, capital controls and/or currency depeg occurs, that will shatter the dream of millions living in the region.

We still believe that all this economic fiasco is the price that GCC has to pay because they hold the final cards to a strong dollar which makes them anti American. Once Saudi/UAE decide to accept yuan for oil, we cannot even predict the outcomes because they are so dire.


Here is Economist:


Here is Bloomberg:


Here is Reuters and Daily Sabah:


As we have predicted that some of the best names will fall apart in the Middle East. 

Abraaj and Schon remain the biggest downfalls of Dubai thus far in 2018. We expect at least a few major names to fall apart within the next 2-3 months. We must hear a big name going down or leaving UAE before Dec 2018.

We are aware publicly that some of the biggest businessmen from GCC who are expanding their operations outside of GCC and we know of a few businessmen privately who are also doing the same.

Since majority of companies like banks, airlines, oil companies, aluminum companies etc are Govt owned so they will continue "merging" while private company collapses and runaway businessmen will never make it to the news while the pressure cooker situation will keep worsening.

Flydubai has "merged" with Emirates who has "merged" with Etihad who has "merged" with Saudia who has "merged" with Gulf Air. Except ownership change, they are all doing back office, route alignment, pilot sharing, plane sharing, crew sharing, food sharing together to save a few pennies.

It is for the first time in Middle East that so many airlines have "merged" across different countries and different owners who are all Royal Families.

Same is the fate of all banks, so far 19 banks have merged across GCC.

Emirates Airlines showed a massive 86% decline their profits.


One of the largest developers in UAE, Damac had a 52% decline in profits.


Forget hiring new people, if these companies like banks to airlines to property developers can fire people and somehow survive themselves, that itself will be a big achievement. Multiple foreign banks have left Dubai while local banks are busy merging and closing dozens of branches.

The Bloomberg article quotes a senior Emirati that this downturn is cyclical, however, we know that it is not cyclical since the entire world has grown since 2015 while only Dubai/GCC has dropped like a stone.

Whether it is in stock markets (DFM is 50% down since 2015 while all the global stock indices are up solidly except in the last 2 months), trade (banks won't lend to most sectors in UAE like food or diamonds), banking (19 banks in GCC have merged and almost no merger has happened around the world since 2015 except India which itself is collapsing) or airlines (Etihad is losing billions every year and Emirates can barely make a gain). Real estate has gone down globally since 2017 (not since 2015) but not to the extent of declines seen in GCC.

What is also unknown publicly that 5 Indian banks have shut their operations in Dubai in the last few months which are Andhra Bank, Bank of India, PNB, IDBI Bank and IOB. PNB just closed last week.

Oil has once again become a geo political weapon and has declined for 6 weeks in a row as well as more than 13 days straight down. This is being done by the Americans to crush the GCC.

The pressure on GCC/UAE/Saudi will intensify in the months ahead as Turkey/Iran/Qatar/Russia and USA continue their pressure on oil, on global trade, on sanctions, on regional currencies, all of which singly or collectively are extremely bad for the GCC economies, businesses and real estate prices.


11 comments:

  1. What are your views on Peak Oil?

    Does it fit into global as well GCC´s economic situation?

    ReplyDelete
    Replies
    1. Hello,
      Thank you for your question.
      It's very hard for anyone to determine anything about peak oil.
      There are so many moving variables.
      For example, US was the largest buyer but now is the largest producer of oil.
      China was medium sized buyer but now is the largest buyer.
      Saudi was the largest supplier along with OPEC, now OPEC is disintegrating while Saudi is stagnant or shrinking.
      Gas is major game changer and will continue to rise.
      Nuclear energy, electric vehicles, growing population (and oil based vehicles) will keep rising too in total volume simply due to over population.
      Peak oil basically means that we are going to reach maximum oil extraction but I don't believe we have reached there yet because US has just disclosed unbelievable amount of reserves.
      I believe that most major countries lie about their numbers since oil is the life blood of the world economy and oil is power.
      Hence, it is impossible for anyone to even accurately guess which year(or even a decade) we will reach peak production because as I said, consumption is changing, storage is changing, production is changing and finally reserves keep rising.
      Even in his classic on oil "The Prize" Daniel Yergin discussed historical events and never discussed the peak oil because it is inherently unpredictable because the data is unpredictable or a lie or not available.
      Similarly, we simply cannot predict whether we will ever reach peak oil for decades ahead because most information is top secret (and we have seen entire countries like Libya, Iraq and now Yemen have been completely destroyed purely due to oil which shows how high the stakes are) and most people have no idea of the actual numbers except very rare handful of people on this planet. This can never become public information, ever.
      In terms of GCC, they will keep paying the price because in my view the transition of Middle East began with the historical turning point of 9/11, most countries have been destroyed and just 2 remain standing which is Saudi and UAE (and to some extent Oman and Qatar). Since oil and oil money is gone, so is the advantage of these countries. Nobody needs these countries except for oil and they all will return to become like how they were before oil was discovered, back to the desert sand and Bedouin people and we are not far away from arriving there from the American point of view. In short, GCC is over and will keep shrinking and juggle from one crisis to another with no bonuses for expats nor excess wealth for locals until everything collapses.
      Hope this helps.
      Thank you.

      Delete
    2. Thank you for your detailed response.

      Agreed, it is not possible or easy to predict when "peak oil" would be as there are so many variables and underlying complications with accurate information. Simply by reducing consumption, by unemployment, job cuts and cost cuts, the peak oil point can be pushed further into future.

      However, some say that peak oil point was 2001 when 9-11 was used as pretext to capture world´s oil reserves or 2009 when the production of oil could not keep up with the expansion of the financial system and the economy, hence the financial collapse.

      Debt based financial system requires perpetual growth, "exponential growth" to be precise.

      Should be you be interested, you can watch documentary by Mike Ruppert, Collapse.

      https://www.youtube.com/watch?v=9vJ-ZLpTj4c

      Also, Chris Martenson has interesting work on exponential growth and its implications.

      Thank you and all the best.

      Delete
    3. Hello again,

      Thanks for your response.

      I disagree with the documentary which is quite old from 2012 anyways.

      As I mentioned, no one knows how much oil is available where on Earth.

      America has more oil today than it was "revealed" prior to 2012.

      EIA: U.S. overtakes Russia, Saudi Arabia as world's largest crude producer
      https://www.worldoil.com/news/2018/9/12/eia-us-overtakes-russia-saudi-arabia-as-worlds-largest-crude-producer

      U.S. Overtakes Saudi Arabia In Recoverable Oil Reserves
      https://oilprice.com/Energy/Crude-Oil/US-Outstrips-Saudis-In-Largest-Recoverable-Oil-Reserves.html

      Oil is the most critical component of life as we know it today. It cannot change so easily. We will discover alternates but I believe that under Mother Nature we have way more oil and coal than anyone can imagine and we have not discovered it yet.

      Politicians are all liars especially all of them in USA who know how to fool the people with lies wherever money is involved.

      In the past we did not have technology, now we have much better technology enabling shale oil technology, nuclear energy to drive cars, electric vehicles and what not including Tesla and Nio cars and half a dozen car companies will release electric cars in the next 3-4 months.

      The documentary is more of a conspiracy theory based on one man's assessment. and it has already been proven wrong with more oil in USA than in Saudi.

      Thank you and best wishes,

      Delete
    4. Hello again,

      Hope you are having a pleasant weekend and thank you again for your response.

      Your 2 comments contradict each other.

      One hand you say...

      " Similarly, we simply cannot predict whether we will ever reach peak oil for decades ahead because most information is top secret (and we have seen entire countries like Libya, Iraq and now Yemen have been completely destroyed purely due to oil which shows how high the stakes are) and most people have no idea of the actual numbers except very rare handful of people on this planet. This can never become public information, ever. "

      And on the other hand you say..

      "America has more oil today than it was "revealed" prior to 2012.

      EIA: U.S. overtakes Russia, Saudi Arabia as world's largest crude producer
      https://www.worldoil.com/news/2018/9/12/eia-us-overtakes-russia-saudi-arabia-as-worlds-largest-crude-producer

      U.S. Overtakes Saudi Arabia In Recoverable Oil Reserves
      https://oilprice.com/Energy/Crude-Oil/US-Outstrips-Saudis-In-Largest-Recoverable-Oil-Reserves.html"

      So either we know it or we don´t know it and everyone is lying and lying can go both ways, overstating as well as understating.

      Secondly when people say "shale oil" it already means we have run out of the good stuff and now we are "scraping the barrel" so to speak.

      You don´t go offshore and try to squeeze "tar sands" aka bitumen, to get little bits of oil.

      Also not all barrels of oil are equal. Much of the what is called "crude oil" is what is actually referred to as "condensates."
      North sea oil and Venezuelan oil is mostly condensates. Shale oil is condensate. Canadian oil is even worse, its much closer to bitumen, "tar" then crude oil.

      Okay, Mike Ruppert was a "conspiracy nut" how about Matthew Simmons, energy investment banker and Advisor George Bush.

      https://www.youtube.com/watch?v=YT6Mtraumuk

      He also wrote a book, "Twilight in the Desert" in 2005 about Saudi oil shock.

      You are an intelligent individual and I follow your posts on internet boards and interested in your view on things.

      Best wishes to you.

      Delete
    5. Hello,

      Thanks for your reply and the opportunity to discuss this much complex matter.

      I think there is a misunderstanding.

      My first point that you quoted above is in the drift that USA never told anyone how much oil they had until the last 1-2 years once they started drilling shale oil. In the past 20 years, they destroyed entire Middle East, Venezuela, Africa and never allowed Nigeria or Africa to develop and then suddenly (after using Canada for about a decade post 9/11) sprung a surprise on the world that they indeed have more oil than any other nation in the world.

      That is what I meant by top secret and that no one nows how much oil lies under which country.

      America abused this information (while knowing very well that they had a lot of oil and not telling anyone and then destroyed or controlled the world and now says it already has oil in the first place.

      So why did they destroy all of Middle East? Partly the answer is to create a boogeyman of all Muslims as "terrorist" and partly to ensure that they keep buying armaments and keep sending the billions back to USA and some to allies (as petro dollar).

      Coming to my second point that you quoted, it has the drift that until 2012 when the documentary was made, Ruppert relied on the available data which was all fake. What has now been revealed in the last few years that USA has more oil than Saudi in 2018 and not only has more oil but also produces more oil than Saudi or Russia as on date which was publicly unknown even to Ruppert despite all his research.

      So both my quotes kind of flow with each other but belong to different points of time, before USA declared they had oil and after USA declared they had more oil.

      No one will ever overstate oil unless it serves some short term political purpose because it impacts the price of oil as well acts as attracting bees to the honey. The country with highest oil like Venezuela, Iran or Nigeria will be targeted and destroyed and that list now includes Syria, Iraq and Iran as well which essentially means all nations with oil. Americans just cannot penerate Russia and hence the useless sanctions on Russia.

      Your second point, allow me to explain my views.

      We are not scraping the barrel. Those are words used to scare people away and keep them in control. Oil is not finishing by any stretch of imagination as we have seen with more production and consumption globally for several decades now and as Ruppert mentioned oil is used in multiple areas besides vehicles. Peak oil is way ahead in the future, if at all, but I believe human ingenuity will allow us to develop an alternate prior to oil finishing.

      I think I have written a post on oil some time ago, but here goes a snapshot.

      Oil was discovered in 1901 in Iran where it was cheapest to take it out of Earth, literally 5 feet under the ground. Hence cost was low so price of oil was low for years.

      Delete
    6. Then they found it in Saudi/GCC/Nigeria/ Venezueala where it was 20-30 feet below the ground hence price still remained low.

      Then they moved to offshore so the cost of extraction rose, hence oil started moving above USD 20 per barrel.

      You will notice that after 9/11 USA dramatically reduced buying oil from Middle East or Nigeria and since 2008 US and UK oil companies started leaving from Middle East, Africa etc.

      Then the price of oil rose further post 9/11 since US started buying from Canada where cost of extraction is higher around USD 40-50 being under the rocks or in cold mountains. so the price of oil had to be taken higher to make it sustainable for the USA (and for Canada to keep producing).

      This enabled Russia to also produce more from Siberia etc.

      Then oil zoomed up when shale oil started in 2010-12 and oil price had to rise to USD 100 plus upto USD 140 so that shale oil cost of extraction that was around USD 70-80 at the time could be profitable/sustainable.

      Then in 2014, America started becoming sufficient and shale oil improvement in each drilling point went exponential taking productivity higher. I believe every 3-6 months, the production was doubling at the time.

      Then America took oil price down to below USD 30 which I had predicted in mid 2014 because friction between Saudi and USA had begun and Iran deal was eventually signed in 2015 which also I had predicted in Sept 2013 despite many close friends from top hierarchy in Iran warning me that the deal will never occur.

      USA took oil price lower after Iran deal because they wanted to crush Middle East, Russia, Latin America etc because they themselves were self sufficient. Shale companies went bankrupt but USA could handle the pressure and many others could not. We still see shipping companies, oil traders collapsing to this day.

      But Middle East is a quagmire and no one ever gets out of Middle East until they are vaporized. Eg, America is still in Afghanistan and Iraq after 17 years and Americans keep dying for no reason except CIA controlled opium smuggling and control of oil. But it does make money for the same people who control oil prices via military spending which is MIC.

      Now Saudi has Trump in a twist and Trump also has Saudi in a twist.

      The cost to save MBS is very heavy for Saudi and I advised Saudi in a few posts ago that they should jump to China and save themselves but obviously they wont do it for now (but eventually have to), because it's such a difficult decision.

      Whatever Saudi does is bad for them, if they choose America, its bad and if they choose China it is bad for them. Although in the long term china is better for them. Hence, I project that Saudi will accept yuan in the very near future which is the main reason behind all the turmoil of Saudi that we are seeing between Saudi-Turkey-Trump.

      So in essence, America has safely insulated itself by placing sanctions on aluminum and steel so that no foreign power can hold them hostage on price or delivery plus is self sufficient in oil so no one can hold them hostage over oil which is very critical for any nation.

      This is a major transition the world is going through over the last decade. Only insulated countries will be successful and survive, others will likely have major crises like we are seeing in France today or in Zimbabwe or Venezuela and almost all of Africa where money has simply finished and people are on the streets starting a revolution. This is what America is preparing for in case Saudi or any country stops supply of oil to them.

      Hope this is helpful and clarifies a bit more of my views.

      Have a great weekend.

      And thanks so much for following me and reading. Appreciate your kind words.

      Delete
  2. Thank you for an interesting and informative exchange of ideas, much appreciated.

    Best wishes and and kind regards to you.

    ReplyDelete
    Replies
    1. Hello,

      Sorry missed replying to you. Thank you for visiting and for your very kind comments of appreciation.

      Season's Greetings to you and Happy New Year!

      Please do keep visiting and share our blog with your family and friends.

      Delete
  3. Dear Manoj, your article is very informative and discusses the issue faced by GCC in great detail. Can you shed some light on the condition of banks which are lending to SME's in UAE like RAK Bank. And why are they still lending inspite of huge losses in the SME business

    ReplyDelete
    Replies
    1. Hello,

      Thanks for your question and for the kind appreciation.

      There are 2 reasons why banks are lending:

      1. Banks are being forced to lend mostly to local nationals due to pressure by Govt because banks are Govt owned and they need to support their own people.

      2. Most foreign banks are in dire straits which is why ABN AMRO, Barclays, Lloyds have shut after 5-6 decades and others like Citibank and local banks are closing branches. 75 branches were shut just in 2017 across UAE. There will be another 100 odd branch and ATM closures in 2018.

      Since foreign bank are retrenching so the onus is on local banks to lend because they get more business opportunity and money flows as deposits also to them since number of banks is shrinking.

      If you go look in jails, there are thousands upon thousands in jail for small amounts on credit cards, mortgages, personal loans etc. They eventually get deported after a few months.

      Regardless, the system needs to keep moving and bankers think that they are very smart people which they are not. They will keep lending to prove to their bosses that they can make money and recover the capital however, bulk of the loans will disappear into thin air as operational costs and non payments in business when someone flees causing a larger domino affect.

      Remainder banks have no choice but to keep lending due to the above 2 reasons until they all collapse into just a handful of banks in each country.

      Delete

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