In her classic account of World War I, the famous American historian Barbara Tuchman, recreates the funeral of Edward VII of England from a solemn and epoch-making perspective, which also marks the end of the pre-war era. Tuchman writes that nine kings attended the funeral, and its grandeur caused countless amazements.

But when it ended, an English aristocrat pondered: "All the old buoys in our river of life have been washed away".

The fireworks are in full bloom at a time when the global economy is collapsing

Last month, a very different event was held in Dubai, United Arab Emirates, from the funeral of King Edward VII, but if Tuchman had been there, she would have been taking notes. It was touted as a one-of-a-kind event, costing $20 million and featuring stars such as Charlize Theron, Lindsay Lohan, Michael Jordan, Robert De Niro and many more. The fireworks set off that day were so spectacular that you can only really appreciate them from the sky (from space, to be exact). This is the opening of the $1.5 billion Atlantis Resort, located on a huge man-made island shaped like palm trees. The promoters of the event explained that the ceremony was to show the world that Dubai is a land where dreams can come true and that it is a place of ultimate indulgence. But among many of the guests in attendance, the atmosphere was like a funeral. While the fireworks are in full bloom, the global economy is also collapsing. Many of Dubai's over-borrowed industries are crumbling, and no one knows exactly what their future holds. The old buoys seem to have been washed away.

"Tragedy is brewing," said a senior executive at Dubai's largest real estate developer, staring at his champagne, "and many will be hurt and many dreams will be shattered." He wasn't just referring to the rich and speculators. Foreign workers brought in from Dubai in the past have begun to lose their jobs and return to their hometowns. The skyscraper is not yet finished, and can only stand in the sun. "Have you seen all the boats lined up along the shoreline?" said the estate executive, "and they're loaded with what no one wants anymore and stuck there with cement." ”

A magnet for global hot money

While the phrase "Dubai is good, globalization is strong" is a bit exaggerated, it's hard not to think of the other half when you think of one half of it. The UAE city-state is generating more global trade than anywhere else in the world. It's like a giant magnet for hot money looking for the fastest, highest profits and moving quickly when the profits are gone. Much of the hot money comes from nearby Arab oil producers, most notably the Emirate of Abu Dhabi, which is close to Dubai, which produces 90% of the UAE's crude oil. But there are hundreds of billions of dollars flowing in from Iran, India, China, Russia, Europe, the United States, and virtually every corner of the world.

For at least the last 10 years, real estate speculation has been the most popular thing here. Prices of homes and apartments rose by 43% in the first quarter of this year alone, and many of them are off-plan properties that have yet to be built. Collateral funds are readily available, and speculators can easily make a profit over the course of weeks, sometimes days, even before they have started their monthly payments. Everyone wants to be a part of this game. "Employees are no longer focused on their work," complained the president of a regional trucking company, "and they are all thinking of a down payment of 10 percent to buy a house." "In June of this year, 42 million square feet of office space were under construction in Dubai, more than any other city in the world, and even more than harm. What was a desert 20 years ago is now a concrete forest. Dubai's famous Hard Rock Cafe was built in 1997 on a vacant lot, and now it is surrounded by skyscrapers, and now there is a heated debate about whether to tear down the restaurant and build another high-rise building, as if the Hard Rock Cafe has become a cultural relic.

Prosperity in the era of high oil prices

But Dubai isn't just a place to host global capital. Dubai is also an important global investor. In 2006, DP World acquired the management of six major U.S. container ports, but subsequent exclusion by the U.S. Congress led to the collapse of the deal politically. Today, the NASDAQ is included in many of Dubai's assets

43% of the shares of OMX and 20.6% of the shares of the London Stock Exchange. Dubai is also wholly owned by the British Travelodge Budget Hotel Group, the famous German manufacturer of industrial packaging containers and equipment Mauser, and the Barney's boutique and Loehmann's clothing outlet in New York. By early 2005, the "gift of liquidity" or windfall profits from the rapid rise in oil prices seemed likely to continue, and Dubai's boom had accelerated. Many of Dubai's top fiscal officials have privately warned that a bubble is forming and therefore seek to ensure that Dubai's assets are as broadly diversified as possible. But as oil prices continue to climb, more and more fresh money is pouring into Dubai's unfettered economy, and Dubai's public is beginning to worry less about the global economic hit. No one was prepared for the plunge in oil prices over the past four months, which have now fallen to less than a third of this summer's prices. Standard Chartered economist Mary Nichola said Dubai's economy was ultimately still a bit "insulated" rather than "isolated".

The bitterness of the bubble bursting

Today's world economy is too interconnected, and the ripple effects of the current economic crisis are spreading, which also exposes those unpleasant aspects of the Dubai dream. The abrupt layoffs that have begun are affecting not only Dubai, but also the streets of Manila in the Philippines, Mombasa in Kenya and Nantpuram in Tiruven, India, who have sent their workers to the bay. When the holiday season is over, thousands of workers will leave silently. These foreign workers' job offers could have been revoked at any time, so there were few complaints, but bitterness was unavoidable. At the same time, in some areas of Dubai, off-plan prices have fallen almost in general, mortgage borrowings have been completely frozen, and many major projects have been suspended or cancelled. Rumours abound that Dubai may sell a significant stake in Emirates Airlines, an airline that is crucial in keeping Dubai connected to the outside world. In a business culture based on insider dealing, official denials of this rumor are almost completely unconvincing.

Long before the word "globalisation" was coined, Dubai's famous gold souk became a trading hub. But uncertainty and worry grew to the point where even the gold market was in turmoil. Feroz Mochant, a shopkeeper in the gold market, said: "It's not just the price of gold that is falling, everything is unpredictable. As if to add to the unease, last month Dubai's waterfront was suddenly flooded with dung. Often, wastewater from many high-rise buildings in Dubai is trucked to the sewage treatment plant. But many truck drivers, frustrated with the long hauls, began to pour manure into stormwater drains, causing it to flow directly into the sea.

"Healthy adjustments"?

A few days after the opening of Atlantis, Dubai announced the formation of an "Advisory Board" headed by Mohammed Alabar, President of Emal Real Estate, in an effort to restore market confidence. One of Emmaar's many projects is the world's tallest skyscraper being built in Downtown Dubai. It is worth noting that the share price of Emmaal has fallen by 80% this year, and the price of luxury apartments in the world's tallest skyscraper has also fallen by 40%.

"In Dubai, we are realists, and at the same time we are optimists," Alabar said at a forum at the Dubai International Financial Centre on Nov. 24. To dispel the doubts of his audience and the world, Alabar promised transparency, a rare concept in Dubai, and spoke about Dubai's debt problem, which has long been rumored to be astronomical. The Dubai government and its affiliates have $80 billion in debt, but $350 billion in assets, Alabar said. "So let me be blunt: the Dubai government can, and will, pay its debts as they fall due," he said. ”

Such semi-official figures have never been made public before, and the details of them remain undisclosed. As a result, neither the liquidity of these assets nor the basis of their assessments is clear, and it is difficult for analysts to judge how much reality Alabar's optimism has. Mustag Khan, an economist at Citigroup who produced a recent Gulf report, said: "The most important thing is not to focus on Dubai's assets and debt, but to move forward and adjust." ”

If there's any good news, Dubai's leaders quickly made some economic adjustments in the early stages of the economic crisis. In September and October, Dubai's central bank launched a $32.7 billion program to assist its country's financial institutions. Arabar announced last month that Dubai's two largest domestic residential lenders would be nationalised.

He pledged a joint response from Dubai's three largest developers. These three developers control 70% of the housing supply in Dubai's real estate market. Alabar said the current collapse in the housing market was a "healthy adjustment".

From deserts to concrete forests

Perhaps. Of course, many Dubai residents say they would prefer a respite. And there are many signs that the city needs to correct its own wrongs as well. Fifty years ago, it was little more than a dusty, remote village in a forgotten corner of the Arabian Peninsula with only a few thousand people. Forty years ago, the biggest business here was gold smuggling into India. 70 of the last century

At the beginning of the decade, when Britain withdrew from the Gulf region, the United Arab Emirates, consisting of seven emirates, became the United Arab Emirates. Abu Dhabi has the most wealth, as it has the most oil to date. But what Dubai has is an entrepreneurial spirit.

In the 70s, under Sheikh Rashid bin Saeed Al Maktoum and his son Sheikh Mohammed bin Rashid Al Maktoum, Dubai built a huge free port, even though Iran and Iraq were not far away at the war. Tens of millions of gallons of desalinated seawater flooded the evergreen golf course, changing the face of the area, and by the '90s, Dubai had built landmarks such as the Burj Al Arab. In parallel with becoming a maritime and air hub, Dubai has also begun to invest in new technologies to turn Dubai into a hub of communication with a special internet and media "city". From 1995 to

In just five years in 2000, Dubai's population grew by 25 per cent and now has a population of 1.6 million. The majority of these populations are foreigners, and they work at all levels of Dubai society, from servants to senior management. In 2007, there were only 864,000 full residents in the UAE, compared to 3.6 million foreign workers. Mustag Khan, an economist at Citigroup, said: "Infrastructure is developing rapidly, but the number of foreigners pouring into Dubai is outpacing the development of infrastructure. ”

The rich are not what they used to be

But even if Dubai does need a forced break, it is unlikely that it will survive this economic downturn unscathed. Abu Dhabi has been quietly funding Dubai's economic growth for years and has witnessed Dubai's reputation for innovation and passion. Now Abu Dhabi intends to increase its involvement. "It is unlikely that there will be an official statement, but it is possible for Abu Dhabi to provide strategic assistance [to Dubai]," Khan said. "But with that comes greater control. Abu Dhabi dominates the UAE's federal government, and last week, the UAE's federal constitution was amended to ban the UAE's prime minister (Sheikh Mohammed of Dubai) and his deputies and other federal ministers from engaging in "any professional or commercial work" and prohibiting them from engaging in any business transactions related to the federal and local governments. How this will be implemented is an open question – largely Mohammed Al Maktoum in Dubai – but the message is clear: Abu Dhabi is now in power.

At the same time, the UAE is also planning to have a holiday, first for Muslim holidays, then for Christmas. There may not be any new plans announced before the start of the new year, but fireworks keep going off. For example, the opening of the new Atlantis Hotel. It is a collaboration between South African developer Salkerzner Group and Dubai-based developer Nakir Company. Nakir has built the Palm Jumeirah Artificial Island and many more luxurious real estate projects by the beach in Dubai. A few days after the grand opening of the Atlantis, Nakir announced that it would lay off 500 people, equivalent to 15 percent of its workforce. A Lebanese businessman with extensive investment in Dubai commented: "It was a disaster that Nakir spent $20 million on fireworks and had no money to pay their own employees." ”

Even Dubai's wealthy are starting to feel strapped for cash. Last week, the owner of a Mediterranean-style villa on Palm Jumeirah's artificial island, opposite the Atlantis, slashed the price of the villa from $4.9 million to $3.6 million and later to $3.13 million, in addition to giving him a Bentley. Anthony Jerich, a real estate agent, said: "Our client has all his money in the stock market and he desperately needs money to run his business. But still not to buy the house. Maybe we could sell that Bentley separately, I don't know. ”

No, it's not the original Dubai at all.