Sunday, November 29, 2009

Everybody, owes somebody, sometime...

The debtors of Dubai have been the main focus of the financial world over the last 72 hours or so, ever since that surprising announcement of Wednesday, that Dubai, perhaps one of the richest of nations in the world is having a case of the shorts.

The nation, which interestingly has little in the way of oil reserves, still is tied in with the oil money of the Middle East, serving as a financial centre and playground for the richest of the rich.

With luxury hotels, exotic man made islands with multi million dollar homes, regular visits by some of the worlds most recognized names and a lifestyle that Robin Leach would have found well worth a profile on his Lifestyles of the rich and famous show.

Dubai is probably the embodiment of excess, the poster for how the other half lives, perhaps the last place on earth one might think that financial problems would be a concern, but then again, considering the spectacular nature of all that wealth and how it is spent maybe it's not surprising that it may be ground zero for the next set of tumbling dominoes on the world financial scene.

By fortuitous timing, the announcement of Dubai's request of a six month holiday from debt repayment, for Dubai World's property unit Nakheel which was seeking a break on a $US3.5 billion bond that Nakheel was due to repay on December 14, came as the American Thanksgiving weekend was about to start. With the stock markets in America working on short schedules, the panic that seemed to grip the rest of the world's indexes on Thursday never made it to New York.

London, Asia and Europe all took hits on Thursday and Friday as nervous investors pulled some of their money out of play, especially any money that had been allocated for banking institutions who may be getting nervous about Dubai's inability to service it's huge debt load.

A lot of Dubai World's investment troubles involved real estate and the quick collapse of that sector in the last year's financial turmoil, the building cranes never seemed to stop in the Middle East city/state, providing a magnificent skyline, but fewer and fewer tenants it seems.
Money and its movement is the key industry of Dubai, where Dubai World has amassed 59 billion dollars on liabilities, on a total debt of 80 million.

The worry around the world is that Dubai's financial troubles may resonate around the world, setting up a contagion much like that which the world faced only a year ago with the financial implosion.

Many fear that the still on the cusp of recovering financial world, won't be able to withstand the stresses of another collapse, or of the sudden rush to liquidate commercial assets around the world.

By late Friday that early panic had seemed to have levelled off, some commentators advising that it wasn't going to be as large a concern as previously thought, others however fear that the other shoe may be about to drop. For the most part, many feel that some of Dubai's oil rich neighbours in the gulf will put together some form of rescue package, but not before they make officials in Dubai sweat things out a little bit.

Monday, when the New York stock exchange opens for its first full post Thanksgiving weekend session may be the next indicator as to how the world is about to react to the debtors of Dubai, and if that luxurious lifestyle featured at the top of this piece, is going to have much more of a shelf life!

Some of the International media coverage and analysis of the angst over any potential default of Dubai, offering up an opinion and interpretation for every corner of the financial system ...

November 29

Guardian UK-- Furious investors warn troubled Dubai it will 'never raise a penny again'
Guardian UK-- Recession and debt dissolve Dubai's mirage in the desert
Times on line-- Abu Dhabi rides in to rescue Dubai from debt crisis
Times on line-- How Dubai's dream sank in a sea of debt
Times on line-- Dubai owes British builders £250m amid debt crisis
Telegraph UK-- Abu Dhabi will not race to Dubai's rescue
Telegraph UK-- Dubai: an emirate in crisis
Telegraph UK-- Dubai: an emerging market wake-up call
The Independent-- Dubai Babylon: The glitz, the glamour – and now the gloom
New York Times-- Dubai World Refused Distress - Asset Sale - Report

November 28

The Guardian UK-- Dubai: Who says the bubble's burst?
The Independent-- Brown seeks to ease Dubai debt worries

November 27

Globe and Mail-- Dubai's debt a wild card
National Post-- Flaherty sees little impact in Canada over Dubai
USA Today-- Stocks slide on concerns about Dubai debt fallout
New York Times-- Dubai Debt Woes Raise Fear of Wider Problem
Guardian UK-- British banks quizzed by regulators on exposure to Dubai crisis
Guardian UK-- Sober ruler of Dubai whose vision is crumbling in the face of the storm
Times on line UK-- Dubai in deep water as ripples from debt crisis spread
Times on line UK-- West fears fire sale of Dubai assets that will spread across world
Telegraph UK-- Dubai is just a harbinger of things to come for sovereign debt
Telegraph UK-- Why we must consider Dubai's 'careful planning' a work of pure genius
Telegraph UK-- Dubai in crisis: the questions and answers
The Independent-- Dubai crisis will prompt investors to look critically at sovereign debt
Sydney Daily Telegraph-- Dubai debt decision 'serious misjudgement'
China Daily-- No holding of Dubai World bonds
Times of India-- Indian banks say Dubai crisis unlikely to affect them
November 26

Globe and Mail-- Dubai struggles to ease default fears
National Post-- Concern focused on Dubai World
New York Times-- Dubai Debt Delays Revive Fear Of Financial Crisis
Guardian UK-- Fears of double-dip recession grow as Dubai crashes
Times on line UK-- Footballers and film stars caught out as Dubai crash hits new low
The Telegraph UK-- Dubai default fears rock markets
Brisbane Times-- Dubai Government to seek repayment extension

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