In Russian there is an expression: The wise man learns from someone else’s mistakes, the smart man learns from his own, and the stupid one never learns. You’d think I’d be putting the Chinese government in the latter category – obviously the Chinese have not learned from Dubai’s mistakes, and they don’t seem to want to learn from their own – empty shopping malls and cities which, based on these Google Earth images, are scattered all over China.
So erecting a $1.3 billion “seven-star hotel,” when Beijing’s office vacancy rate was over 20% just a year ago (I doubt it has changed much, considering how much they’ve built in a year) would appear to be less than smart. Wrong! It is brilliant! The report also states, “The Saudi side was expected to foot the entire bill.” The “Saudi side” will bear the eventual losses. The construction of Burj Khalifa 2.0 is brilliant on so many levels: the Chinese government gets the “Saudi side” to finance its objective of growth and full employment at any cost, the Guinness Book of Records gets another entry with a Chinese name, the Chinese communist propaganda machine has another news story for us all to digest, and a few years from now Burj Khalifa 2.0 will be bleeding money and the Chinese government will bail out the “Saudi side” at 20 cents on the dollar. Brilliant! brilliant! brilliant!
I am the CEO at IMA, which is anything but your average investment firm. (Why? Get our company brochure here, or simply visit our website).
In a brief moment of senility, Forbes magazine called me “the new Benjamin Graham.”
I’ve written two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. (I’m working on a third - you can read a chapter from it, titled “The 6 Commandments of Value Investing” here).
And if you prefer listening, audio versions of my articles are published weekly at investor.fm.