Sunday, January 24, 2010

Dubai on Lake Michigan: The Emirate of Chicago, Sheikh Richard M. bin Richard J. Al Daley Ruler



Ever since I established an email address (ken@wallstwtf.com) connected to this blog I have been getting all kinds of email. Some have emailed me suggestions for things to write about and other have suggested things I should stop writing about altogether. Some have encouraged me and others have suggested my talents may lie elsewhere. These emails I take in their stride. Then there are some that concern me, one recent commenter suggested that I am an ex-DIFC insider who was terminated and is taking my revenge. This is untrue but it gets at the question of motive. I have tried to address that before but I have thought of a better way to make that point.

I am originally from the City of Chicago which I think has a lot in common with Dubai. Both are the commercial centers for their regions, and aspire to be truly global cities. They are similar generally and there are many specific things they share as well. Both are ruled by absolute monarchs who derive their power from their fathers. These men are at their core honest champions of their cities but both are surrounded by questionable people and are often given bad advice. Both have political machines that reward the friends and punish the enemies not of the City but of the machine. The ruler though himself clean decides who among his associates can get rich, and just how rich.

I have written about Naser Nabulsi who fired the head of the DFSA for not playing ball with him politically. In Chicago we have the Cook County Board President firing the political supporters of his rivals. Chicago's problems are so deep that it seems we need watchdogs to watch the watchdogs.

I have written about Dr. Omar appropriating for himself wealth that should belong to the DIFC bondholders and ultimately to Dubai itself. In Chicago we have a state representative who has stolen art from a public university to adorn her office and refuses to return it. We have City Employees setting up a fake charity, compelling thier subordinates to donate to it, and paying themselves the money.

I have written extensively about the Dubai financial crisis at the level of municipal finances. Chicago faces its own fiscal problems. I have suggested Dubai equitize assets, Chicago faces the same tough choices of privatizing city services and infrastructure.

Similarly in the same way that Dubai looks to Sheikh Khalifa to save it Chicago looks to Barak Obama to deliver federal support to the city.

So you see, fiscal irresponsibiity, dishonest politicians, patronage, cronyism, self dealing none of these things are unique to the Dubai experiance or the Arab experience or even the emerging market experience.

They are part of the human experience.

There are two important differences between Chicago and Dubai. One is that in Chicago there is almost always a US attorney who, if he throws enough Chicago politicans in jail, can become a Senator. Thus the feds are always out there hunting the Chicago politicians. The feds are usually a few steps behind and usually require something like a bitter ex wife as a star prosecution witness to get anything done but the crooks in government have to sleep with one eye open.

The other is that Chicago has a realtively free press. Not entirely, the City and the State Government do initimidate the press to some extent and the press sometimes tries to play kingmaker by glossing over the problems of one candidate and focusing on those of another. But now and again there have been true heroes who have emerged like Mike Royko who point out when the Emperor has no clothes. Though his columns were sarcastic you could tell how deeply he cared about Chicago.

Though I am no Royko to be sure, I care deeply about both Dubai and Chicago. One is my home and the other a place where I spent some of my most productive years. Both are a complex mix of deep flaws and great potential . The potential of each can only be realized if the flaws are identified and addressed. Dubai has a generational opportunity inside this crisis. There is an opportunity for Dubai to save itself if Sheikh Mohammed can only convince himself to limit his own power and make everyone, including himself, equal before the law. If Sheikh Mohammed can save Dubai and reassure foreign investors by instituting a more limited monarchy, that model can be followed by other monarchs in the region to benefit not only investors but the Arab world writ large. I think that bloggers in the region have a part to play aiding the reformers by pointing out the errors of the current system.

I know it makes some people unhappy to read my criticism but in the face of the present crisis, which threatens both Chicago and Dubai, the silence of reasonable people is far more destructive than my or any words can ever be.

10 comments:

Anonymous said...

just don't stop writing!

Anonymous said...

Philip, Alexander's father,

Sent Sparta a message: "If I enter Laconia, you shall be exterminated."

He received just one word in answer: "If".

Rupert Neil Bumfrey said...

Ken, just carry on, the more such topics are discussed, the sooner the veil of opaqueness will be removed!

Q80 said...

Ken? Don't do this to me! I am wallstwtf-aholic now… I'll go cold turkey. Don't stop writing, mate. Stix and stones "ken" break my bones but words can only hurt those whom the shoe fits.

I don't see any vengeance in your writing and certainly not any malice. But then again, what do I know? English is not my first language.

Even my kid cracks up when we read your writings aloud. And, mind you, he is way less than a decade old.

Your ability to write in layman's terms (wall-street-for-dummies), makes these complex, non-transparent wheeling & dealings a lot easier for anyone to understand.

Thank you for your time and effort to keep us all in the loop in a practical and humorous way. Keep up the good work and moreover keep your faith. You know you have at least one dedicated junkie here…

Anonymous said...

Ken: i concur 100% with RNB's comment.

To all commenters: focus on the message, not the messenger.
And ,please, keep it civilised.
Cheap thrash belongs in other blogs.

Anonymous said...

I think you've got a valid point in that both cities used overheated property markets to compensate for fiscal issues. In Dubai, instead of using the HK path of selling property to developers and using that to fill city coffers, it put development on its own balance sheet with Nakheel. Residents took the corruption as just a cost of doing business. Now that the property markets have turned, both cities are left with their pants down.

However, what happened in Dubai was of a completely different scale, both fiscally and in corruption. Daley at worst projected a $300M deficit against a $574B economy, granted that he used a lot of gimmicks. Dubai is facing something much larger, both absolutely and relatively. The corruption in Dubai wasn't $100k or less, like these examples. I think that all corruption has a detrimental effect on society and the economy, but it's important to distinguish scale. The scale of corruption/handouts needed to sustain the current political order in Dubai is just incompatible with the city continuing to flourish. One has to go, and I'd prefer that it be corruption.

Ken said...

Excellent point, I considered mentioning the scale issue when I was writing it but I wanted to make the point that political corruption is universal. I think we are in agreement generally and this is why I continually hammer the point about the rule of law home. Thanks for your comment. Interestingly I used to quote that Chicago GDP figure all the time in the region.

To all the other supportive comments, thank you. I wrote this to explain my motives not to fish for complements. I have no intention of stopping writing and the story is far from over so there will be plenty to write.

Omar said...

Will Chicago have better luck with federal funds if Rahm Emanuel becomes mayor after RM Daley decides to leave office and spend more time with Maggie Daley?

Anonymous said...

Ken,
GCC of course is not only Dubai, or even UAE. It's much bigger than that.

Can you comment on the financial bazaar in other parts of the GCC as well or you feel your expertise is mostly UAE and therefore you can't (or won't) comment on other parts of the GCC in such detail as you cover Dubai (+ADhabi)?

Desert Scorpion said...

Ken

Agree with all the comments

Not to sound sycophantic but awesome blog

Came across it recently and going thru the archives!

All the pointers where there!

Keep it up