So much for BMW’s run-flat tires. Believe it or not, I’m actually sitting on the side of the A3 motorway in central Germany, about halfway between Frankfurt and Munich, waiting for the tow-truck to arrive.
Apparently you’re supposed to be able to drive on these tires even when they’re flat… and with such confidence in their country’s manufacturing capabilities, the German rental car company didn’t bother providing me with a spare. Call me old-fashioned, but I’ll take a spare and a jack over run-flat tires any day.
Given what we put this car through, though, it has performed admirably– about 2,500 miles of hard driving in just 4 days at speeds usually exceeding 200 km/h. You see a lot of interesting things when you spend that kind of time on the road, and one of my observations leads me to believe that we are in for a major shift world finance.
For starters, customs agents across Western Europe are visibly out in force, patrolling the highways and major travel hubs. Their mission? Generate revenue, coercively if necessary.
In just a single 12-hour period, we were stopped twice in France by government thugs. Similar to my treatment that I described last week at Helsinki airport, the encounter felt more like an inquisition– where were we driving from, what were we doing there, what do we do for a living, and most importantly, how much money were we carrying…?
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Tagged as:
bad governments,
bank accounts,
Dubai,
Hong Kong,
Malaysia,
panama,
Singapore
The ticking time bomb in Dubai finally exploded late last week.
On the eve of their most important Muslim holiday, which happened to coincide with the eve of Thanksgiving in the west, Dubai authorities made two statements spaced a few hours apart.
The first– that the heavily indebted, government-owned flagship holding company Dubai World had successfully raised a few billion dollars. Investors collectively exhaled, temporarily relieved that the company would be able to make good on its colossal debt payments.
The second statement came only hours later: Dubai World announced that it was asking creditors for a standstill on its outstanding debt… in other words, everything freezes– no more payments.
It’s a real life example of the adage, “If you owe the bank $100K and can’t pay, you have a problem. If you owe the bank $100 million and can’t pay, the bank has a problem.”
In Dubai’s case it’s around $80 billion.
Default and debt restructuring occur all the time, especially in the worst downturn of modern history. The part that stings investors about Dubai, though, is the utter lack of transparency and potential subterfuge. For months, the emirate has been reassuring investors that it would be able to raise money and make its debt payments.
Even Dubai’s ruler, Sheikh Mohammed gave worried investors the “talk to the hand” earlier this month, insisting that Dubai World (essentially his personal holding company) would be well capitalized and supported by Abu Dhabi, its rich neighbor.
Just a few weeks later, after months of tap-dancing, Dubai finally pulled back the curtain and confirmed investors’ fears– it had run out of cash. The nonchalant, innocuous way in which it was handled, however, will continue to infuriate investors for a very long time.
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Tagged as:
Dubai