Tuesday, March 13, 2007

Is this your economy? :: Gulf News

Gulf News bravely reports:
breakneck growth, expanding wealth and "lagging" internal auditing controls make them prone to factors which brought down Enron and Barings Bank.
...
"There is general consent that fraud is acceptable and it's okay to pay commission on every deal. It's part of doing business here and is a mindset we must change."
...
A culture or regime that does not tolerate mistakes is very dangerous.
The environment that's being described?: Dubai.

There's another factor that's not mentioned. Banks' nonperforming loans are routinely covered. That only encourages banks to make more risky loans. That's a disaster in the making.

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2 Comments:

Blogger Macthomson said...

The piece struck me, too. I re-blogged it at http://sandlander.blogspot.com but stopped short of citing any examples, for obvious reasons.

Do you have a mathematical model to share with your readers which can explain the business model behind decisions to knock down thirty year old buildings housing rent-capped tenants? I can't figure it out on y own!

10:23 AM  
Blogger EclectEcon said...

Hmmmm. Gubmnt covering non-performing loans. Sounds a LOT like the potential future financial crisis in China.

9:05 PM  

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