We joke quite a bit about debtors' prisons in times like these. Particularly when debt gets out of hand and everyone seems to be drinking from the same well. But how sure are we really that we'd like to head backwards into that anachronism? Megan McArdle touches on the issue as she reviews last week's article in The Independent on the Dark Side of Dubai.
"Before I came here, I didn't know anything about Dubai law. I assumed if all these big companies come here, it must be pretty like Canada's or any other liberal democracy's," she says. Nobody told her there is no concept of bankruptcy. If you get into debt and you can't pay, you go to prison.
"When we realised that, I sat Daniel down and told him: listen, we need to get out of here. He knew he was guaranteed a pay-off when he resigned, so we said - right, let's take the pay-off, clear the debt, and go." So Daniel resigned - but he was given a lower pay-off than his contract suggested. The debt remained. As soon as you quit your job in Dubai, your employer has to inform your bank. If you have any outstanding debts that aren't covered by your savings, then all your accounts are frozen, and you are forbidden to leave the country.
Play with the bull (market)....
Why Bankruptcy Matters [Asymmetrical Information]