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You say "Dubai," I say "Hell no!"

By Michael Di Domenico
web posted December 21, 2009

The health care bills making their way through both sides of our Congress are like an onion; each new layer stinks and makes me want to cry a little more than the last.  As we take a closer look at the gem our House of Representatives passed, it becomes clear what a Bernie Madoff-style financial fraud it is.

The American public is being led to believe that this is a ten-year program and if you mean the number of years the "bill for services rendered" will last, then you'd be right on with ten years.  However, if you're wondering, as most would, how long the aforementioned "services rendered" portion would last, then the number is more like six or seven years.  We're being made to believe that our omnipotent overseers have found the financial wormhole that allows them to defy economic logic, but we know better. 

We know that the American public will be taxed for this for about three to four years before Day 1 of the actual program.  We also know that the final four years of this deal have not been paid for, so the $1.2 trillion price tag being bandied about cannot be trusted.  If the $1.2 trillion number is accurate as a representation of say, sixty percent of the program and assuming the generous usage of the same costs in years seven through ten as during the early years of the program, then that $1.2 trillion becomes $2 trillion just that quickly($1.2 trillion/x = 6 yrs./10yrs. –Solve for "x" for those wondering about the math).  But it's more than that because this bill would compel each and every one of us to buy certain products.  Constitutionality aside, the Cato Institute recently found that those forced expenditures will bring the true cost to between $2.5 trillion and $6 trillion.

Let's make believe for one horrifying moment that the House of Representatives bill becomes law.  How would these next few years play out?  For one, the increased taxes and costs would filter through the insurance companies to their clients like prune juice.  In the roughest economy they've likely ever seen, as families struggle to hang on, they'll be forced to lug this bale of lead straw on their already-aching backs.  That weight will undoubtedly force many to veer, over those years, right into the waiting arms of the federal embrace.  And when the scales tip with more Americans in, than out, of the federal system, will the rights of privately-insured Americans still be protected?  Nothing about the current political trajectory says they should feel secure in the slightest.

And that brings us to the cautionary tale of Dubai.  As many of you may know, Dubai recently told the world they wouldn't be able to service $60 billion of debt.  How did they get in that mess?  Were they attacked?  Did they have their means of production destroyed by a natural disaster?

You already know that it wasn't any of those reasons.  No.  Dubai was involved in a building spree.  The only problem was that the emirate acted as though they were taught personal finance by Michael Jackson.  And come to think of it, Jackson did spend an awful lot of time there.  Can't you just picture, the gloved-one imploring the Sheikh to build "the world's biggest giraffe island" or some other dopey idea.

Kidding aside, the ideas they did come up with could've been right out of the recesses of Michael Jackson's grey matter.  Manmade islands in the shape of a palm tree and more in the shape of the globe are fantastic to look at, no doubt.  But the structures on many of these islands are so ornate, that no realistic number of tourists or investors will ever be able to support the costs needed to build and maintain them.

For many in the emirate, the Burj Dubai, a 160-story monolith, may come to symbolize the era of greed and financial mismanagement that brought Dubai to the brink.  Building with eyes bigger than their wallet has exposed the sophomoric understanding of economics many of our own leaders exhibit.  We all learned when we played monopoly as kids that you couldn't just build hotel after hotel in the hope that some sucker would land on your garish, Baltic Avenue-tenement and cover your ludicrous nut.  Apparently, they don't play monopoly at Harvard.   See, the Burj Dubai is just opening their doors now.  Sure, they accomplished the goal, but at what cost?  With decreasing property prices and the worldwide credit crunch, common sense will tell you how much this financial boondoggle will hurt.

As an aside, I'm currently looking out my window at the same exact mistake as the Burj Dubai.  A company wanted to build this huge resort condo across the street from me.  They're now years behind schedule and at this moment, have built exactly one of the three structures planned.  It's beautiful and huge and, oh by the way, empty.    

There seem to be earsplitting warning sirens going off around the world.  The same sort of "buy now, pay later" approach has been par for the course in all corners of the American government.  California will collapse at some point, not because it can't be turned around, but because there seems to be no will to do so.  In 2009, California actually got right up to the date it would have to declare what Dubai declared before they finally cut enough programs to survive.  Even with that, the state continues $20 billion in the "red" for 2010, now compelling all constituents to pay an extra 10% of their earnings as an "interest-free loan" to the state.  Schadenfreude will set in for many Americans if the California taxpayer is the first debtor the state stiffs.  Of course, that internal chuckle will be wiped off all our figurative faces because, just as Abu Dhabi bailed out the Paris Hilton-like spending habits of their brattiest child, so too will we be forced to care for our fattest brother; too big to fail and all of that, you know?

This is why the best time to stop problems is before they've even started.  Wasn't there anyone around the Burj Dubai planning table who postulated questions like, "Do we really need all of this?  Can't we stop at two times as big as the Empire State Building?  What if the market turns down?"  And the Burj Dubai was a four-year project.  At the outset, the horizon seemed limitless, especially from 160 floors up.  Build some buildings.  Make some money.  What could possibly go wrong?

America's own $2 to $6 trillion, three-to-four-year plan is working its way through the halls of Congress right now.  This is the time to stop it.  Like the Burj Dubai, a pile of money needs to be laid out up front so that those economic geniuses who brought the mega-successful "Cash for Clunkers" program can build the shiniest health care system on the Earth.  "It'll be the envy of the world.  Just trust us.  Only good changes happen in four years." 

A lot can happen in one year, let alone three or four.  Will we arrive at that fateful opening day in 2012 with a horrible, sinking feeling?  Will it be the panacea promised?  Of course it won't.  We were told "Cash for Clunkers" would last for months.  It was broke after its first weekend and that program is an eminently simpler to run than health care.

Americans know better now.  As 2012 approaches, our "Burj Dubai" moment will be in the offing.  The health care system will be rolled out to much fanfare and the usual fawning press coverage, but that sinking feeling will be gnawing away at all of us.  For, behind the fluff will be the reality that while new and shiny and expensive, the health care system shares another trait with the world's tallest building; it's empty inside. 

By then it will be too late for many Americans.  The skyrocketing costs of private health insurance, brought on by our benevolent government, will leave people with just one option.  And once part of the system, there will be no escape hatch, which puts me in mind of the motto of another edifice, of sorts: the Roach Motel, where they boasted that roaches check in, but they don't check out. ESR

© 2009 Bald Eagle Press


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