Dubai Expats, Unable to Pay Debts, Flee to Avoid Punishment

I came across a story today that is indicative of what caused the credit-crunch. 3000 cars have been abandoned at Dubai's airport, as newly unemployed expats flee the country to avoid the severe punishments they would face for defaulting on loans under Dubai's Sharia law system.

Indicative of the credit-crunch because many of the cars were flashy SUV's, saloons and even a "few Mercs" that the "skips" (skips is what the Dubai authorities are calling them) could never have afforded back home.

But swept up in the Dubai boom craze they recklessly splashed out, and now the boom is over they are being forced to face the consequences, or flee to avoid them as the case may be. This is a microcosm of the cause of the credit-crunch, reckless borrowing and lending leading to an inevitably high default rate.

The Times ran the story from a Dubai reporter on Feb 5, but I have only just come across it on Overseas Property Mall.

The title of the story in the Times made me chuckle, "Driven Down by Debt, Dubai Expats Give New meaning to the Term Long Stay Car Park.

I have to say pretty much the story as a whole made me chuckle a little, especially the bit about some of the cars being left with apology notes on windscreens, and others with maxed out credit-cards in the glove compartment. I know it's not funny for Dubai banks, or for those doing the fleeing.

But if I'm honest I almost laughed out loud and I don't know why, probably because amidst the Dubai boom when everyone was shouting invest in Dubai, I predicted a crash in the Dubai property market. I don't know what will happen to the cars, but I forecast a massive upturn in used car sales in Dubai.

Today Jones Lang La Salle research predicted a Dubai recovery in 2011