ooooooooops...
Posted on 11/20/2008 4:58:42 PM PST by nickcarraway
The seaside emirate of Dubai shifted into crisis mode this week as its breakneck building boom stalled, its lending bonanza evaporated and the government pondered wider steps to rescue banks.
Dubai -- self-styled bling capital of the Middle East, nightclub hotspot for the teetotalling Gulf and home to the world's tallest building and biggest mall -- has gone pear-shaped.
"It's gotten pretty ugly out there," analysts at Nomura Investment Banking wrote in a note this week, describing Dubai's property market as "a full-scale frenzy in which speculation went largely unchecked until it was very late."
The result may be a new business model for the emirate, one based less on debt and speculation.
Dubai's response is now being hammered out by a committee of business and government leaders charged with steering the emirate through the crisis and perhaps throwing its high-debt business model out the window.
Big developers have started firing staff and paring projects, banks like Emirates NBD ENBD.DU have blocked consumer credit to employees of companies at risk, and at least one major mortgage company has stopped lending altogether.
"Lenders blinded by rising oil prices and borrowers spellbound by easy returns have helped build a mountain of private sector debt in parts of the region that has generated an illusion of excess and abundance," Nomura said.
Now, investors fear that individuals and corporations alike will have trouble paying back Dubai's non-bank foreign currency debt estimated at just under $70 billion, according to estimates by ratings agency Fitch.
Shares in the region have lost around $1 trillion since the beginning of the year as investors fled. The UAE finance ministry said last month it would inject 70 billion dirhams ($19 billion) into the banking system, and is already looking at doing more to keep interbank liquidity flowing.
(Excerpt) Read more at reuters.com ...
From a place where its people essentially produce nothing.
All of its wealth comes from oil - or in other words, from places that do produce something.
Couldn’t happen to a better set of looters.
Boo Frikkin’ Hoo!
Uh oh! Somebody better tell the young lady from Texas (refer to the other article on Dubai) who plans on making $1,000,000 in commissions in the next year!
ooooooooops...
they had better get used to it.
It was only a matter of time, I was out there a few times during the past four years and I disliked the place immensely, every sort of dead beat, whore monger and crook that couldn’t make a go of life in the real world was splurging money like they were Gordon Gecko on expense account. Now I live a fairly moderate lifestyle yet I’ve still taken a serious knock in the past eighteen months so I simply cannot believe that it’s still party time with those guys in Dubai.
I predict it will be like one of those ghost Gold Rush towns in a decade from now.
Cry me a river.
There.
Fixed it for ya.
A few months ago I was talking with a friend and I said that all of those buildings will make fantastic ruins someday.
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