Dubai the House of Cards we saw coming…

Never has there ever been a bigger house of cards than the city of Dubai.  

The vision of creating a giant business oasis with false land masses, ostentatious spending, ridiculous architecture, lavish luxuries, and not a lick of natural resources made very little sense to many people.  
You can’t gamble in Dubai, and drinking alcohol is basically done in the privacy of your own home.  Dubai is an odd incompatible mix of Western materialism with strong middle eastern religious ideology.  
Too make matters even more interesting, Dubai is built with slave labor from Pakistan.  These poor souls are driven in and out daily on dirty “jailhouse buses” from the old city to the new   – if you understood the extreme wealth difference between the rich and the poor you’d be somewhat shocked. 
The infrastructure is terrible, poorly planned.  One must take a visit there to understand, the traffic in Dubai makes L.A. gridlock seem like a walk in the park. There are cranes everywhere, incomplete projects — it’s generally a mess.  
People are slow there.  You want something done?  Forget about it – it’ll get done when they want it to get done.  The kids are lazy, and somewhat spoiled.  Oh, and if you plan on doing business there and you’re not Arab then get ready to sit at the back of the line on pretty much everything.

So in the whirlwind of excess and greed these guys forgot about one major thing. Where’s the middle class?  I’ll give you a hint, there isn’t one.  Dubai was meant to be a playground for the obnoxiously rich, where Russian Oligarchs and Swiss Bankers buy “islands” and putter around on their yachts. Unfortunately when the world economy collapses even the rich are careful how they spend their money. Woops.  I guess they never considered that a possibility.
So first, I’d like to say that anyone who understood Dubai likely knew this thing was on the verge of collapse approximately two years ago.   Ask anyone who has worked there!  Brand new cars were being abandoned at the airport as people fled the country to go back home. Companies were shutting their doors, shopping was dying, and real estate development basically halted.
Next thing to go?  The Saudi’s haven’t been honest about their oil reserves.  In my opinion they have overstated their numbers significantly.  Yes, I think they’re running out, faster than anyone expects. The Saudi’s need something, other than oil to maintain the future of their economy.  Perhaps that’s why they invested heavily in Dubai, not to mention multiple businesses including Global Foundries.  
So my friends, you all know I love oil.  I’m long $NEP (Northeastern China Petroleum), I’m big BioDiesel and coal.   I’m also heavily invested in a number of oil sands plays.  Alberta Oil Sands is heating up.  There must be a reason that companies like Petro China are investing.  You watch, even though the oil sands seem “dirty”, they are as close to black gold salvation as we’ll get.  The oil reserves in Alberta are estimated by some to be 7 times that of the middle east.  You read that right.  One of my favorite oilsands deal is private, it’s called Sunshine Energy, and I own a massive position.  I’ll let you all know what happens when it happens.
Whatever the case, oil will continue to go up – and that’s probably a good thing for everyone. long as it stays around $90-$100 I think we’re okay.   

So relax, smoke some hookah, and watch what happens over the next few days in regards to Dubai. Don’t panic.  These guys are very smart, they just need a little time and creativity to fix this mess. 



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