Asia Times: Beggar, I thy neighbor

[marmar]

Beggar, I thy neighbor
By Chan Akya


Across the world, a number of previously autonomous republics are being forced to swallow their pride in the wake of the unfurling economic crisis. Often the cost of a bailout from a rich neighbor has been political accommodation, but even here shifts are only just beginning.

One of the more interesting stories deals with Dubai, the previously sleepy smugglers' port in the United Arab Emirates (UAE) that suddenly had aspirations to global dominance, as exemplified by the Burj Dubai, the world's tallest building (as an aside, building the world's tallest building almost always condemns the country to an economic downturn; the skyscraper curse is not urban legend).

Anyway, for a country with global aspirations and supposedly US$100 billion in asset values through the stock and property markets, Dubai found it well-nigh impossible to fund the ruling family's hobby horses in banks, hotels and ports around the world, not to mention the real-estate boom that has been ongoing from 2002.

....(snip)....

Then there is California. The nearly-bankrupt state had to corral its lawmakers into a deal designed to rebalance its budget and open the state's access to financing; however, even this deal may soon fail, leaving no alternative but for the state to depend on Washington for a bailout. The state that proudly bills itself as the world's eighth-largest economy is, in the absence of Federal assistance, for all practical purposes bankrupt

Even that is the tip of the iceberg as US$2 trillion of municipal securities, issued by various US towns and cities, head towards default by the year 2011. In many of these cases, the only potential saviour is the federal government itself. What all this means for the famously proud federal districts of America and the political and cultural independence cherished by generations of people in each of these towns and states, we do not yet know. All that we can surmise is that Americans' sense of identity will likely face big changes in coming months, all to the benefit of the center. ........(more)

The complete piece is at: http://www.atimes.com/atimes/Global_Economy/KB28Dj02.html