"There are some things that money just cannot buy". Without doubt the proverbial statement of ethical intent and moral stance. However, in the real world we all do know that while this state may hold true in an emotional sense, in practical terms it does get watered down a great deal. Eventually everything ends up in a commercial sense, and money becomes the driving force for everything, so much so people might say, 'well money sure does not make you happy but sure can make you comfortable".

I see it a bit differently, for whatever it is worth. Let me blog this one with a temperance of a dinning table chat.

Banks: Yes the news of Abu Dhabi Commerical Banks loss has ofcourse seen a mixed reaction; 'a tip of the iceberg of problems and where is and who is the Titanic?' or, as I would, 'glad they have been prudent and taken the provisions they need to.' Slice it as you see fit, but the truth is our banker friends, and their Board of Directors inherit a bad disease from the US banks, bonuses tied to performance. I believe that banks managements have been in the greed trap for too long. They lend more, they book more profits and hence have more bonus! Presto! I even heard one CEO actually took a detailed interest in the pricing of loans and would even calculate what would be the effect of his bonus!

I do not mean that ADCB is in the same boat of bonus driven incentives to senior management, but there is some truth that banks need to re-examine the role of senior management the value added effort they bring and adjust their bonus packages to a risk based model. If you gamble the bank for your bonus then perhaps you should pay rather than receive!

As far as results are concerned, common sense will dictate that you cannot go through an economic melt down the world over and not expect to have bank profits be impaired. The fact that for ten years banks have reported double digit increase year on year in their profits was not sustainable was ignored by all. This is crunch time and prudence means provisions and provisions means an impact on the profitability. In time these provisions are the safety net that banks need. I am also of the opinion that a general provisioning standard in the good days always helps the bank prepare for these bad days.

S&P and Dubai.

The news that S&P and a major Dubai company are having a quarrel is not surprising and clearing this is more than a lovers spat. Indeed its not the first and not the last that engulfs the likes of S&P. While I think that the Dubai side of the fence has to be a little more tolerant of analysts who do not necessarily agree with its point of view, I suspect the arrogance of rating agencies is a bit too much to bear. Someone from a Qatar investment company however, commented that this a major blow for investors and all. I just thought what silly thing to say, S&P is not the only rating agency and as good or bad as they may be, depends which side of the fence you are on. But there is no doubt that S&P cannot be seen as being above criticism too. Perhaps after getting the debt market wrong, (over rated debt obligations in 2007), their failure to see the Icelandic Bank failure (2008) they are being extra cautious at Dubai's expense. However, if I was dealing with them from the Dubai company side I would actually be more forthcoming than would be expected and disarm them as much as I can.


General market conditions:

At times like this opinions are many and often expressed of the market, the debt, the real estate market and indeed which will be the next boom town. Yes hotels have shown 2009 was a year where revenues per room were lower, airlines have reported a slow down, real estate prices will remain flat, and yes the cheaper room and air ticket may mean more tourists. What does this portend for us all.

Simply put this is a year to lick your wounds, and do that carefully. Its a year to put perspective back into the kitchen and to know you cannot always cook a dinner for 100 people every night because every night cannot be a party. I was asked what was the key message for business for 2010? I would say restructure, examine your cost base, consolidate your winners, shed your losers and most important listen to the heartbeat of the economy. Yes the IMF just revised their October forecast a shade down, and that is fine, and indeed banks will not be our best friends for a while to come, which all implies as you conserve energy you will heal.

I am the perennial optimist, not because  I hope, but because in the ensuing chaos there is always an opportunity. When severe storms pass through even then some unseen seeds are carried to the desert dunes, where, when it rains, the  desert too blooms. So as we see the storms scatter things around remember there are some seeds being sown for the next crop of prosperity. Yes the banks will survive, they are destined to in this part of the world, and S&P and the Dubai company will sulk and then speak again, and eventually house prices will all be fine. The important question is, have you learned any lessons?