Arab stock markets, infused with petrodollar megabillions, are starting to slide, according to Bloomberg.
Dubai, Egypt, Jordan, Kuwait and Saudi Arabia are all sliding after huge booms that left many shares overpriced.
Edward Chancellor, writing in the Wall Street Journal ($link), sees a number of ominous signs of an economic bubble about to burst. His conclusion:
Arab rulers have deliberately encouraged the boom in the hope that rising asset prices and a strong economy would distract their youthful populations from religious fundamentalism. This strategy could backfire. History teaches that when speculative bubbles burst and the public loses large sums, there is normally a political backlash. This was true of the U.S. in the 1930s, and to a lesser extent in the early 2000s, and of Japan in the 1990s. It's not hard to imagine Islamists capitalizing on a future bust with denunciations of stock—market gambling. Some of today's young Arab day—traders could well turn into tomorrow's al Qaeda recruits.
Ed Lasky 3 14 06