Invariably, the answer to a question in a headline is “no”, and this time is no exception. But I couldn’t suppress a tiny pang of guilt when I saw the startling news emerging in the Gulf, and the even more startling market reaction to it.

Two years ago I chaired an FT Gulf property investment conference at the handsome Park Hyatt hotel in Dubai. It was an enjoyable and well-attended event. The mood was bullish. Most presentations were positive and several rather dramatically so.

The chairman did not demur. How could I? It was my first visit to the city, and you could not fail to be impressed by the rapid growth of the place. In November 2007 prospects for Dubai still looked good.

Now comes the shock of a “standstill” on debt repayments, with unknown consequences. Yet another example of a market getting over-extended and ultimately out of control? Perhaps. But also, possibly, another case of the herd mentality preventing more sceptical voices from being taken seriously.

All of us - investors, borrowers, financiers, analysts, journalists - really must take this lesson of 2008/9 on board. Bubbles always arise, we should seek to burst them before they grow too big, and if something looks too good to be true then it probably is. Things that cannot go on for ever have to end sometime.

November 27, 2009 4:26pm in Management | Comment