Every private banker and real estate broker I meet assures me that a soft landing is certain and Dubai property’s meteoric ascent will continue, as if we did not live through two 60% drawdowns in 2009 and 2014.
My macro crystal ball told me different, so I was uber-bearish on US Treasury bonds when the yield on the bellwether 10-year note crossed 3.5%. I even wrote successive posts about the coming bond bloodbath. Sadly, this bloodbath is now happening and the yield on the 10-year US Treasury note is 4.18%. It is headed higher. A lot higher.
I am horrified at the sheer number of leveraged HNW lambs who have been fleeced/slaughtered in the bond market by fiduciary Bankerjis who were supposedly sworn to protect their assets.
One GCC multi-millionaire with a 100 million+ bond portfolio I met for lunch asked me my opinion on the Pakistan 2049 Eurobond which his private banker had seen fit to buy for him because the bank’s leveraged loan is obscenely profitable for such a long duration asset. I do not even know if Pakistan will avoid default in the next 12 months, let alone exist in the next 26 years. The same gentlemen also had a $3 million mutual fund position in the retail class, just so that the bankers could get retrocession as the institutional class shares leave no room for greasy bankster fingers in the cookie jar. Shame!
Another close friend – who is my mentor in writing, and the history of Dubai – was loaded up with millions in Democratic Socialist Republic of Sri Lanka bonds and a German bank sold him hellishly complex, illiquid credit linked notes for which there is no bid. He is in his late 70’s. An identical portfolio of these garbage notes was sold to a 74-year-old investor who once tearfully called me for help. He was so distraught that I was literally afraid for his health and life.
So, I was thrilled to read that the DFSA fined a Swiss bank $3 million for ignoring clear evidence of money laundering and layering via multiple accounts. It is an open secret that some of the biggest hawala financiers from Africa and South Asia are abusing the global private banking system to launder their cash and evade taxes. Do the rich of developing nations not realize that they are literally condemning millions of poor kids to malnutrition and death when they starve their countries of desperately needed capital in their quest to buy mansions in Bling Blingistan?
Why has the private banking profession in the Gulf become so devoid of ethics, a moral compass or even basic human decency? Will the wannabe J Al Gatsbys go to any length to sacrifice their clients in their manic quest for payouts, paydirts and Porsches. There was even a firm in Dubai called Morgan Gatsby and a broker solicited me from that firm who had never heard about old John Pierpont Morgan or F. Scott Fitzgerald. Irony is not a strong point of Gulf financiers since we all have developing nations maids to do our irony.
