THE DUBAI PALM JUMERIAH
THE DUBAI TOWER
DUBAI NIGHT SKYLINE
Posted on 11/27/2009 5:29:06 PM PST by SeekAndFind
World financial markets are quaking in the wake of a request by Dubai World, a principal investment vehicle for the Emirate of Dubai, to suspend debt service amounting to billions of dollars in the next 6 months. The company owes a total of $59 billion. Islam, of course, opposes interest payments on borrowed money, so much of the debt is so-called Islamic debt, in which different labels are applied, but the concept of paying for the use of money remains. Dubai's fabulous skyline has been built on a vast pool of debt, and property there was often pre-sold and re-sold in the classic bubble profile.
What has many worried is that Dubai's financial disclosure laws lack transparency. Many observers assumed that oil-rich Abu Dhabi (Dubai has no oil itself) would automatically bail out its fellow UAE member Dubai, but that assumption is being questioned. In recent years, as Dubai, long a free port with one of the most open-cultures found in the Arab world, has prospered and grabbed world attention; Abu Dhabi may have chafed a little at the glory coming Dubai's way.
The two emirates sport rival global airlines: Emirates, based at Dubai Airport and Etihad, based at nearby Abu Dhabi. Emirates is bigger, more widely advertised and publicized, and holds the record book for ordering the most modern long range aircraft, including a huge fleet of A380 super jumbos. Emirates reported a substantial profit in the last quarter, something that has many others in the airline business scratching their heads. Critics have long charged that Emirates enjoys hidden subsidies, something the airline adamantly demands.
A devastating real estate bust in Dubai is at the root of much of the current financial crisis, but the suspension of debt service calls into question the optimistic growth forecasts underlying Emirates Airlines' aggressive equipment orders. Nearly all airliners are purchased with concessionary financial terms underwritten by governments. So Emirates is unlikely to face any lending pressure for aircraft anytime soon. Borrowing for other purposes may become more difficult, however, especially if Dubai's tourist boom fades in the wake of property troubles.
Alexander Smith of Reuters suggests that Emirates may be forced into a merger with smaller (but still formidably large) Ethihad. A third airline, Qatar Airways, also runs an intercontinental hub in the UAE. One must wonder how many competing hubs will remain when all the debt is untangled. The three Emirati airlines together account for a substantial portion of the next generation aircraft orders (A380, B787, A350). If they all have trouble, so does the airliner manufacturing industry, already full of trouble.
WTH!?!?!?!
That freaking palm-tree shaped island has got "delusion" and "bubble" written all over it.
We also went from Alan Shepherd’s flight in 1961 in a primitive on man capsule to a moon landing in 1969 using complicated docking maneuvers with two spacecraft. Today, we are retiring the shuttle fleet (first flight of shuttle in 1981) yet won’t have its replacement Orion until 2015 at the earliest with a 2020 return to the moon planned using Orion. 2020 is 11 years from now. It was only 8 years from Mercury to the Apollo moon landing.
It appears the America of the 1960’s could both dream and execute. The America of today struggles with both the dream and the execution.
to post 9.
there is too much unoccupied
real estate
>> That freaking palm-tree shaped island has got “delusion” and “bubble” written all over it.
ROFL. So true.
they don’t make cars like they used to, do they?
Wall Street braces for Dubai debt fallout, jobs data
Agence France-Presse
First Posted 08:18:00 11/28/2009
NEW YORK – (UPDATE) Wall Street braced for repercussions of the Dubai debt crisis
to unfold and for looming key economic data, after winding down a turbulent holiday-shortened week.
The Dow Jones Industrial Average edged down 0.9 percent on the week to 10,309.92, snapping a three-week streak of gains for blue chips.
The technology-heavy Nasdaq composite tumbled 3.5 percent to 2,138.44 and the broad-market Standard & Poor’s 500 index was flat, slipping 0.01 percent to 1,091.49.
Closed Thursday for the Thanksgiving Day holiday, Wall Street reopened for an abbreviated session in the midst of a global market rout triggered by news that Dubai is seeking a debt moratorium.
The Middle Eastern city state announced late Wednesday that its state flagship conglomerate, Dubai World, wanted a six-month standstill on 59 billion dollars in debt, sending markets into a panic over fears of a debt default.
The news wiped out the Wall Street gains made earlier in the week.
“It’s not a default yet, it’s a small financial crisis, but what we’ve learned from history is that small financial crises can become bigger financial crises,” said Hugh Johnson of Johnson Illington Advisors.
“I wouldn’t be surprised to see this situation take more time to be resolved than you might expect – it does create so many questions,” he said, adding that the crisis comes “at a time when some would argue that the market is overvalued.”
David Kotok at Cumberland Advisors warned that the Dubai World debt crisis carries “contagion risk.”
“Insolvency cannot be permanently papered over by excess liquidity, not in the Middle East nor, for that matter, in America,” he said.
The Dow, which had closed Wednesday at its highest level since October 2008, shed only 1.48 percent Friday, although the movement could have been exaggerated amid thin volume as many traders took the day off.
“The real test will be on Monday,” said Peter Cardillo of Avalon Partners.
The week began with a roar as investors welcomed a series of economic reports, which “continue to point in the right direction, although most are weakly pointing in the right direction,” said Gregori Volokhine of Meeschaert New York.
“As long as the recovery outlook holds, the market will continue to rise or be supported,” he said. “One cannot think about a correction when one has the notion that things are going to get better.”
Among the positive data, the market in particular appreciated a fall in the weekly number of initial unemployment insurance claims, to below 500,000 for the first time since September 2008.
Analysts said the Dubai crisis would likely be the main topic in the marketplace, as earnings season has ended.
Investors will have a full economic calendar to digest, including the ISM manufacturing index and construction spending on Tuesday, and the Federal Reserve’s Beige Book on the economic outlook on Wednesday.
The key monthly unemployment rate and payrolls data caps the week Friday.
Most analysts expect the November jobs data to show the unemployment rate held steady at 10.2 percent, a 26-year high hit in October, with the economy shedding 114,000 jobs, down from 190,000, amid recovery from recession.
The labor report comes as the year-end holiday shopping season shifts into high gear and traders are expected to pore over the numbers for clues on the direction of consumer spending, which drives two-thirds of US economic activity.
“We do not expect an imminent recovery in employment, but the rebound in business profits suggests that labor market deterioration is in its final stages, barring a relapse in financial conditions,” said Joseph Brusuelas of Moody’s Economy.com.
Bonds gained for the week. The yield on the 10-year Treasury bond fell to 3.211 percent from 3.356 percent a week earlier and that on the 30-year bond dipped to 4.209 percent from 4.295 percent. Bond yields and prices move in opposite directions.
Come on man,
Why is the world going to beat a path to Duubai to spend way too much money to buy a condo on some assclowns dream of paradise?
Bunch of man made islands that appear from space to be trees or earth?
I like my airpark. I like Florida.
Fools.
Related
http://ftalphaville.ft.com/blog/2009/11/26/85571/csi-dubai/
http://www.washingtontimes.com/news/2009/nov/28/dubai-debt-crisis-rocks-markets-in-us-asia/
Just have a squint at the planning that went into this one. Here’s the latest from Sheikh Ahmed bin Saeed Al-Maktoum. “Our intervention in Dubai World was carefully planned and reflects its specific financial position,” declared the chairman of the grandly titled Supreme Fiscal Committee. “The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react.”
Sadly, the Sheikh did not spell out all the careful planning that went on. First, work out when the 10-day Eid religious festival falls this year. Then, just before you close the markets for the duration, slip out a request from a state-backed company reeling under $60bn (£36.4bn) of loans for a six-month debt standstill. Getting the whole farrago to coincide with America’s Thanksgiving holiday was, it must be said, genius.
At the same conference, Sheikh Mohammed declared: “I want to tell those people who nag about Dubai and Abu Dhabi to shut up.
Jamie Stewart: Europe should not count on an oil-backed Dubai bail out
http://www.independent.co.uk/opinion/commentators/johann-hari/the-dark-side-of-dubai-1664368.html
Is this a photoshop or do these buildings actually exist, are complete and occupied? I don’t think the Dubai tower is actually finished yet is it?
And are the World Map Islands complete? I don’t think it’s completely sold out either. I’ve heard that the cost of all this construction is enormous.
The programs I’ve seen on some of this make it seem that some of this is a giant, very costly house of cards.
New ones post if you like
Perhaps Dubai’s problems are much bigger than assumed…
European banks most exposed to UAE debt [UPDATED]
http://ftalphaville.ft.com/blog/2009/11/27/85801/european-banks-most-exposed-to-uae-debt/
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