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.
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.
It all depends on who they owe the 80 billion to.
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.