The global economy is at its most critical phase since the dark days of 2008. Two crises are looming that, according to some experts, could hurl the tentative recovery back into a full-blown recession and undo the gains of the past couple of years.
In the US, the unthinkable is looming fast: America, the biggest economy in the world and the hub of the financial system, could default on its obligations, with its sovereign debt downgraded. If the politicians cannot do a deal by August 2 - and so far the omens are not good - the US will be in breach of its borrowing limits.
For you and me, this would be a serious matter. If the bank tells us no when we ask for an overdraft or a new loan, we're likely to face some stark financial choices.
But for the US, and the rest of the world, it would be disastrous. American debts are already at an all-time high and will go through the agreed borrowing limit of US$14.3 trillion (Dh52.52tn) early next month.
Barack Obama, the US president, wants a temporary increase in that facility, no more than a couple of trillion, in exchange for a longer-term deal on permanently reducing the deficit. The Republican-led House of Representatives is saying no, especially to any deal that involves tax increases without cuts in public spending.
If no deal is done by the deadline, some federally funded services would simply seize up. Food production, for example, would be hit because government food inspectors would have to be laid off. This risk to people's food supplies is a measure of how serious the repercussions are for all Americans.
The global financial consequences would be enormous. If the US loses its triple-A investment status, dollar-denominated assets around the world would plunge in value. Big investors, such as the Chinese, might consider dumping more dollars. Foreign currency markets would go into spasm. The supply of credit, just freeing up after the 2008 crisis, could be switched off again.
The president, with only a hint of brinkmanship in the talks with congressional leaders, has talked of Armageddon.
But, as if to prove that they can match the Americans in anything, on the other side of the Atlantic the Europeans are brewing up their own financial storm.
Last week, the year-long crisis over Greek debt finally burst out of Athens and threatened to engulf Italy, Spain and the rest of the euro zone. Commentators have talked before of the "end of the euro", but those warnings were suddenly more real and imminent than at any time before.
As in the US, the argument in Europe is not about what to do but how to do it. Greece needs to agree on a refinancing deal with creditors in order to obtain its next cash injection from European and international lenders.
European finance leaders floated the idea of a deal that would share the pain of any Greek default between governments and private institutions, but the markets took fright at this. If Greece were allowed to default on private debt, why not Italy (Europe's biggest public debtor) or Spain? The ghastly prospect was of a domino effect through the euro zone's bigger economies.
If the US and euro-zone debt crises both broke together, it would be a "perfect storm" in the financial markets. In those circumstances, even the Chinese economy, the main force behind the recovery to date, would suffer badly and could not be expected to compensate for the transatlantic meltdown.
Such crises tend to focus the mind of even the most parochial of policymakers, and it could be that the political players get their act together to avert catastrophe.
Likewise, the current patchiness of the global economy could be only a brief interlude, before we get back to Asian-led growth.
But the alternatives if both those eventualities fail are stark indeed. Some financial experts are talking of the need for the US and Europe to "monetise" their debts, which in plain speech means printing more dollars, euros and pounds - the inflationary consequences for the rest of the world be damned.
Again, that would create havoc in currency markets and raise the possibility of China and other dollar investors simply dumping the currency, the financial equivalent of a declaration of war.
The world suffered summer financial crises in 2007 and 2008, before a couple of years quietly rebuilding. The risk of another global financial storm in the next few weeks is increasing rapidly.
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'Young girls thinking of big ideas'
Words come easy for aspiring writer Afra Al Muhairb. The business side of books, on the other hand, is entirely foreign to the 16-year-old Emirati. So, she followed her father’s advice and enroled in the Abu Dhabi Education Council’s summer entrepreneurship course at Abu Dhabi University hoping to pick up a few new skills.
“Most of us have this dream of opening a business,” said Afra, referring to her peers are “young girls thinking of big ideas.”
In the three-week class, pupils are challenged to come up with a business and develop an operational and marketing plan to support their idea. But, the learning goes far beyond sales and branding, said teacher Sonia Elhaj.
“It’s not only about starting up a business, it’s all the meta skills that goes with it -- building self confidence, communication,” said Ms Elhaj. “It’s a way to coach them and to harness ideas and to allow them to be creative. They are really hungry to do this and be heard. They are so happy to be actually doing something, to be engaged in creating something new, not only sitting and listening and getting new information and new knowledge. Now they are applying that knowledge.”
Afra’s team decided to focus their business idea on a restaurant modelled after the Leaning Tower of Pisa. Each level would have a different international cuisine and all the meat would be halal. The pupils thought of this after discussing a common problem they face when travelling abroad.
“Sometimes we find the struggle of finding halal food, so we just eat fish and cheese, so it’s hard for us to spend 20 days with fish and cheese,” said Afra. “So we made this tower so every person who comes – from Africa, from America – they will find the right food to eat.”
rpennington@thenational.ae
Specs%20
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
SPECS
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Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
WHAT ARE NFTs?
Non-fungible tokens (NFTs) are tokens that represent ownership of unique items. They allow the tokenisation of things such as art, collectibles and even real estate.
An NFT can have only one official owner at one time. And since they're minted and secured on the Ethereum blockchain, no one can modify the record of ownership, not even copy-paste it into a new one.
This means NFTs are not interchangeable and cannot be exchanged with other items. In contrast, fungible items, such as fiat currencies, can be exchanged because their value defines them rather than their unique properties.
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
The Book of Collateral Damage
Sinan Antoon
(Yale University Press)
A Long Way Home by Peter Carey
Faber & Faber
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The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
A new relationship with the old country
Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates
The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:
ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.
ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.
ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.
ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.
IN WITNESS WHEREOF the undersigned have signed this Treaty.
DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.
Signed
Geoffrey Arthur Sheikh Zayed
Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
