Posted on 11/26/2009 5:12:04 PM PST by Steelfish
November 27, 2009 Dubai in Deep Water As Ripples From Debt Crisis Spread
Patrick Hosking and David Robertson
Work has been halted on the artificial islands Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.
Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.
Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.
Although the scale of Dubai’s debts is comparatively modest at $80 billion (£48 billion), the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small.
The FTSE 100 plunged by 171 points to 5,194 — its biggest one-day fall in eight months in one of the most jittery days in the financial markets since the depths of the banking crisis.
The Treasury, the Bank of England and the Financial Services Authority were monitoring events closely and are demanding figures from UK banks on their loan exposures to Dubai.
According to a senior government official, Dubai’s crisis is regarded as modest and manageable for Britain, but there were growing fears that Abu Dhabi, the oil-rich neighbouring emirate that has in the past given rescue loans, would leave Dubai to its fate.
Dubai World, the state-owned corporation that began the panic on Wednesday by demanding a standstill on its interest payments, worsened the mood...
(Excerpt) Read more at business.timesonline.co.uk ...
Barry will send em a trillion dollars.
Gold markets were telling us something last week - wonder if this was part of that...
Well when you do business with those kinds of people what do they expect.
The dark side of Dubai
http://www.independent.co.uk/opinion/commentators/johann-hari/the-dark-side-of-dubai-1664368.html
US stock index futures are indicating a down open in the US of about 2.2 percent. Happy Thanksgiving all.
I think dubai world bailed out las vegas sands. LV sands may be going back in the crapper.
Dubai owes 80 billion; a miniscule amount.
This is about traders making bucks riding a good short & panic.
Like Rahm says “never let a good crisis go to waste”...
The Dow will go down 100 tomorrow. Abu Dabei will fork over 80 billion to bail out Dubai and life goes on.
I don’t doubt this announcement was a planned one meant to spook markets by shrewed market manipulators in the region so they can move in on depressed stocks.
Interesting but not surprising ...
...
Once the manic burst of building has stopped and the whirlwind has slowed, the secrets of Dubai are slowly seeping out. This is a city built from nothing in just a few wild decades on credit and ecocide, suppression and slavery. Dubai is a living metal metaphor for the neo-liberal globalised world that may be crashing – at last – into history.
I’m crying my eyes out over here. Couldn’t have happened to a nicer bunch of people. (sarcasm)
Just think if they had bought our ports when Bush wanted to sell them...
The DOW will finish positive (green) tomorrow. Hide and watch, wait and see. Nothing will shake the hands that control the markets these days. Nothing.
After reading that article I guess the “all caring”Hollywood celebs that invested in Dubai do not mind their properties being built by slave labor......
Well when you do business with those kinds of people what do they expect.
Yeah, those sand-devils over there don't know how to be normal human beings. The predominantly evil and despicable underpinnings of their society being Islam means that it was destined to fail. All they can do is leech off the world by selling oil and they have nothing better than that to carry them along as a society. If they didn't have that, they wouldn't even rate Homo Sapien status in the world, belonging to such an evil and despicable idealogy such as Islam...
I;ve heard repeated remarks on Free Republic that American markets don’t follow the Asian cycle, but THEY follow us. So, right now as I type, the Asian markets are all down. WHEN the USA was a leader, probably the other markets followed us. I’m not sure we’re the leader any more. Waiting to see what happens on Wall Street tomorrow...are we followers or leaders?
It all depends on who they owe the 80 billion to.
I’ve often wondered how long the extravagance of Dubai could go on. I bet you can get good deals now (or soon) one of those artificial island properties. I wonder if you can yet get killer deals on ski slope lift tickets.
That article is eye opening. I have heard rumors of what a scam it was, but wow...
Remember gold suppression is a public policy this made the dollar go up.
WHO KNEW?
http://www.economicpolicyjournal.com/2009/11/who-knew.html
http://ftalphaville.ft.com/blog/
I guess China is getting a little nervous.
http://market-ticker.org/archives/1666-Big-Trouble-In-Big-China.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aMLpLWLx8Y3Y&pos=5
Scummy people over there
But that didn’t bother investors
http://ftalphaville.ft.com/blog/2009/11/26/85506/im-a-celebrity-get-me-out-of-dubai/
Karma....
That's just the amount of loana coming due shortly that they are trying to extend, but Dubai in general is in real trouble for some of the same reasons the US is - real estate bubble, as they have overbuilt and overpaid in recent years. Also, their "green city" project, with neutral / net-zero carbon emissions, has been way too costly.
Dubai Struggles to Ease Debt Fears; Investors Rattled - Reuters via CNBC, 2009 November 26 Dubai's debt problems, a hangover from a property boom that produced the world's tallest building, have shaken trust among Western investors who turned to the Gulf region for help during the global financial crisis. The emirate said on Wednesday it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree a standstill on billions of dollars of debt as a first step towards restructuring. ..... Analysts downplayed the fallout for the wider region, however, pointing out that Dubai funded its growth through loans whereas its neighbors are mostly major oil and gas exporters. "I would not rush into talking about contagion. Anything from Abu Dhabi or Qatar is backed by serious money. Dubai is a lot more leveraged," said Youssef Affany, a relationship manager at Citi who specializes in the region. ..... Dubai struggled to ease fears of debt default on Thursday after its move to delay repayments at two flagship firms shook confidence in the Middle East as a centre for investment and a source of capital.
It's too bad, Dubai's Sheikh Mohammed was trying to diversify the economy away from oil in many other fields since late 1990s, but the economy became too overweighted with real estate sector.
Abu Dhabi is trying to make sure they are not in the same soup - Abu Dhabi Limits Building to Avoid Glut, Aldar Says - BL, 2009 November 25, by Zainab Fattah The Emirate has a shortage of 15,000 to 20,000 units and the government will let the “rope out on development in a measured way,” Bullough, whose company is the United Arab Emirates’ second-biggest developer, said in an interview. “There will be, in our view, a lag between supply and demand.” Abu Dhabi, the U.A.E.’s capital and holder of 8 percent of the world’s oil reserves, controls development from homes to offices and transportation links under “Plan 2030,” devised in 2007. The plan foresees the population growing to as much as 5 million by 2030 from an estimated 1.6 million in 2008. ..... Abu Dhabi is limiting construction to avoid the housing glut and price declines that battered the real estate market in neighboring Dubai, Aldar Properties PJSC Chief Executive Officer John Bullough said.
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