Inflation confusion in the Arab World

If you ever wanted to know what a financial shock treatment in your life is, get through an inflation period while barely hanging on.

The irony of the matter is those ininflationary times, which one of its indicators is surplus money here and there, and not so much there. It is times like these that start you thinking
” maybe I should have taken that lousy boring economic class after all!”

You read in the papers that commodity prices are sky high, gas prices all over the world are soaring like an eagle, and real estate prices in one part of the world are rising 30-50% per annum and vice versa in other parts. You ask the barber about inflation and from what he gathers; it’s a sign of the times.

Lets take Saudi Arabia and the Gulf area as an example only because I live there, you take your normal way to your friends house which is off a famous street in Jeddah and all you see are phantoms, ferrari’s, lambo’s, mercedes benzes and bimmers are like flies. You think to yourself, how could this be? And people are complaining about the price of rice and bread? Well many answers to that question;

1- We are changing in the Middle East in the financial markets drastically over the last five years. It is a positive economic movement sparked by the new financial laws that actually are saving the banks monies by placing many a rigid credit and credibility screening across the kingdom. To name a good example, SAMA, this is like your credit history in the states.

2- The split banking infrastucture of conventional & Islamic banking products that enable everyone, regardless of how religious he or she is to get a car loan, ridiculousley over priced house loan, or money to reinvest.

3- Collection agencies are more powerful than before.

4- Competition amongst Saudi Banks and the rollout of older wiser international financial institutions coming to share the corporate lending pie. Ofcourse that being said, the local banks are now trying harder than ever to attract residents at the retail level for their more cut throat lending rates.

5- New leasing programs make it easier than ever to drive your dream car, or close to dream car based upon your budget and maximum lending stretch.

6- The fact that more corporations are expanding through IPOs and easier than ever laons from banks, employment which still has its negatives, is at a thriving level as the fight for quality and sometimes rubbish talent continues between companies. Please do not forget that it is almost impossible to get foreign aid due to saudi-I-zation of jobs at all levels, even the ones they suck at!
7- Last but not least the picture is not so rosy on the macro level however on a micro level it seems to balance out, especially in advanced cities like the 3 major cities; Riyadh, Jeddah, Khobar.

You see, people will always buy new cars, buy clothes, new perfumes and accessories all in the name of important to have. They tend to fudge it not budget. They tend to fall for the massive marketing campaigns of " buy this car for $10 a month" forgetting how many months.

People will always look at what if scenarios, if I delay payment of this and that i can get that. They will always forget the small stuff till they shop for home or eat out.

Here they will fret over spilt milk, why has my bowl of rice increased a dollar? and why is my shopping cart bill increasing every month? then they compain and whine for a few weeks, but when payday comes and its time to make up my mind on that new BMW that is only a 100 times out of my league, but hey! there is that smart invention called leasing!

Sign me up will ya, you only live once. So yes you will see many, many luxomania mobiles driving around town, ask the driver for the car registration and you will know what I'm talking about. I guess that's why police men know the rich from the wanna-be's.

My insight is that of an individual consumer and proffesional business & financial investor, maybe that’s what’s causing my confusion?