Global Markets In Turmoil After Debt Bombshell

[Abrak]

It leaves little doubt that the UAE families will back their own (family) interests first and see to the other hundreds/thousands of creditors later or not at all.

LaoPo

LaoPo,

I suspect (although I am only guessing) that this really just a petty domestic dispute. Imagine a playboy kid (Dubai) having fun and buying toys on the basis of the blank cheque he considers his rich Daddy. I again suspect based on the fact that some 30% of Abu Dhabi loan exposure is to Dubai, that it is likely to turn out that 75% of all Dubai borrowings were made through Abu Dhabi.

So rich Daddy knows he is going to end up footing the bill one way or another. He is really just making it clear that the party time is over.

[LaoPo]

It leaves little doubt that the UAE families will back their own (family) interests first and see to the other hundreds/thousands of creditors later or not at all.

LaoPo

LaoPo,

I suspect (although I am only guessing) that this really just a petty domestic dispute. Imagine a playboy kid (Dubai) having fun and buying toys on the basis of the blank cheque he considers his rich Daddy. I again suspect based on the fact that some 30% of Abu Dhabi loan exposure is to Dubai, that it is likely to turn out that 75% of all Dubai borrowings were made through Abu Dhabi.

So rich Daddy knows he is going to end up footing the bill one way or another. He is really just making it clear that the party time is over.

Yes and no. I agree with you that big brother Abu Dhabi said: time's up...WE decide now what's gong to happen.

The problem lies in the fact that "Dubai" bought itself into major projects worldwide and owes thousands of companies money. You have to search and look into the structures of all those Dubai companies to find and see where they've invested (loaned and cheap) money.

Many governments are scared to death how much money these adventures are going to cost them, relying as they were on the Dubai/UAE governments, guaranteeing the projects!

Abu Dhabi will now decide which projects are to be sold and which ones to be kept.

BUT, there will be many governments, people and companies left alone, in the cold; we just have to wait which ones those are going to be.

It will be nasty.

What's more: the dream is over and a lot of eventual prospect buyers will think many times before investing in this Dubai bubble, again.

Meaning: WHO on earth will decide upon the prices of the present -empty- properties ? The Dubainese, the project developers, real estate agents (Before January 1, 2010 most of them have to leave the country since their working permits will end!).

The cake was too big...too absurd to be true.

Who's going to live in the thousands and thousands of houses and villas which are either empty or unfinished ? Who will buy them ?

Less than 20% in Dubai (and UAE) is of Emirati origin...meaning that the rest of the more than 80% is foreign expat/guest worker.

Go figure.

LaoPo

[Terminator]

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

It leaves little doubt that the UAE families will back their own (family) interests first and see to the other hundreds/thousands of creditors later or not at all.

LaoPo

LaoPo,

I suspect (although I am only guessing) that this really just a petty domestic dispute. Imagine a playboy kid (Dubai) having fun and buying toys on the basis of the blank cheque he considers his rich Daddy. I again suspect based on the fact that some 30% of Abu Dhabi loan exposure is to Dubai, that it is likely to turn out that 75% of all Dubai borrowings were made through Abu Dhabi.

So rich Daddy knows he is going to end up footing the bill one way or another. He is really just making it clear that the party time is over.

Yes and no. I agree with you that big brother Abu Dhabi said: time's up...WE decide now what's gong to happen.

The problem lies in the fact that "Dubai" bought itself into major projects worldwide and owes thousands of companies money. You have to search and look into the structures of all those Dubai companies to find and see where they've invested (loaned and cheap) money.

Many governments are scared to death how much money these adventures are going to cost them, relying as they were on the Dubai/UAE governments, guaranteeing the projects!

Abu Dhabi will now decide which projects are to be sold and which ones to be kept.

BUT, there will be many governments, people and companies left alone, in the cold; we just have to wait which ones those are going to be.

It will be nasty.

What's more: the dream is over and a lot of eventual prospect buyers will think many times before investing in this Dubai bubble, again.

Meaning: WHO on earth will decide upon the prices of the present -empty- properties ? The Dubainese, the project developers, real estate agents (Before January 1, 2010 most of them have to leave the country since their working permits will end!).

The cake was too big...too absurd to be true.

Who's going to live in the thousands and thousands of houses and villas which are either empty or unfinished ? Who will buy them ?

Less than 20% in Dubai (and UAE) is of Emirati origin...meaning that the rest of the more than 80% is foreign expat/guest worker.

Go figure.

LaoPo

[PattayaParent]

This is the whole problem in Dubai, once the expats leave and they are leaving by droves, their GDP will drop enormously! I was in Dubai/Doha two weeks ago, and Dubai is turning into a ghost town, Barastie's usually packed on Thursday nights was half empty! Also things are not going to well in Doha either!

Have all the Russians and Chinese left or are their numbers down?

[ilyushin]

First Published 2009-05-28

Economic Crisis as Catalyst

Will the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth? Asks Rami G. Khouri.

DUBAI -- The first place you feel the impact of the global economic recession in Dubai is in taxi rides and car journeys that take much less time than they used to, due to reduced traffic congestion. This and other superficial measures of economic conditions offer insights into the current state of affairs in the UAE and the Gulf region, but the more interesting issues remain largely unexplored in public. These longer term issues determining the fate of the Arab world in the decades ahead are concerned less with material conditions -- how crowded are the malls, how much have real estate prices declined -- and more with whether the Arab world as a whole will use the current crisis to make some fundamental changes in how it manages its human and mineral wealth.

The most interesting discussions here in the Gulf region these days are not about the present situation, but rather about the past and the future. The most frequent question one hears discussed here in private is: Can Dubai realistically continue to grow on the basis of the same strategy that fuelled its meteoric expansion in the past two decades? The most common answer is, “yes and no”.

Yes, Dubai can continue to play the role of a regional service center that thrives off delivering quality services to the wider Gulf region, in areas like consulting, transport, advertising, distribution, and media services. It can even maintain a buoyant tourism and leisure travel industry that attracts sun-starved visitors from abroad and shopping maniacs from the Middle East and parts of Africa.

No, it cannot maintain the rate of construction expansion that fuelled its real estate sector in recent decades, mostly on the basis of speculative buying rather than purchases of properties that buyers actually wanted to live or work in.

How much the authorities in the Arab world have learned from the current economic crisis is really the big issue that must be addressed, and in private at least it is being discussed in Dubai and other Gulf emirates. The full consequences of the global economic crisis have not been felt in the Arab world, due to a lag of around 6-9 months in absorbing the impact of global trends. This is partly due to the low level of Arab integration with the global economy -- though the Arab world has taken a big hit in the drop in value of its investments abroad. Most credible estimates of the losses suffered by Arab sovereign wealth funds in the past year suggest that these funds’ value has declined from around $1.6 trillion to $1.2 trillion, due to the drop in the value of financial investments abroad.

A new report from the International Labor Organization (ILO) regional office in Beirut (by Christina Behrendt, Tariq Haq and Noura Kamel) suggests that hard days remain ahead, as the Arab world’s economic growth rate is expected to decline from 6 to 4 percent this year (other reports suggest that a 2-3% growth rate is more likely). Many countries will suffer from the combined impact of rising unemployment, lower remittances and investments, high inflation and soaring national debt, the ILO predicts.

Because the wealth surpluses of recent decades in the Arab region have not been channeled into building up strong industrial, infrastructural and human skills bases, our region remains very vulnerable to shocks in the real estate and financial markets. Declining living standards and rising inequality will become even more problematic for the region in the years ahead, the ILO says, especially because of the broad lack of well-developed social security policies.

This and many other recent reports on the Arab economy suggest that the current crisis should be grasped as an opportunity, in the ILO’s words, for “regional investment and socio-economic reform, which countries in the region should use to establish mechanisms to promote employment, encourage pro-poor growth, strengthen social protection mechanisms, promote gender equality and non-discrimination, and focus on human development and decent work.”

This is an ambitious agenda for any country in any period, and a particularly difficult one for the Arab world today. The loss of $400 billion or more by Arab sovereign wealth funds, and perhaps three or four times that amount due to other consequences of the current crisis, may be partly recuperated when the global economy resumes sustained growth. When that happens, though, will the Arab world also resume its old economic management policies that have made sustained vulnerability and widening disparities the hallmarks of the modern Arab economy? Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

[think_too_mut]

How many A-380s have Emirates taken delivery so far? Five?

They have to receive 50 (fifty) more.

It may turn into flying them brand new into Mojave Desert, airplane graveyard.

Edited November 30, 2009 by think_too_mut

[lannarebirth]

While its true the world is awash in cash seeking a home, it is also true that the world is awash in debt. Not a bad thing in and of itself if prudent returns and LTV are required.

That portion of global assets, both public and private, that is debt, appears to be climbing. Governments and Central Banks like to make out that it is only a liquidity matter and that if proper (im) moves are made to re-establish lending all will be well again. They may be right but its a huge gamble. Debt keeps getting printed and growth projections needed to service the debt keep getting raised. Soon you move from a liquidity to a solvency issue. That's a whole lot uglier.

I am portrayed as bearish here, which I am not. You would have to be stupid though to see that risk premiums for certain classes of investment are getting thrown out the window. Sure, it could all move higher, but the time that debt needs servicing is growing nigh.

Edited November 30, 2009 by lannarebirth

[Orion76]

Nothing wrong with being bearish near the top of a bear market rally

[LaoPo]

November 30, 2009

Arab Emirates Move to Limit Crisis in Dubai

By VIKAS BAJAJ and GRAHAM BOWLEY

Trying to prevent a run on its banks, and financial turmoil that some fear could spread globally, the United Arab Emirates helped calm financial markets Monday with its pledge to lend money to banks operating in Dubai, an action that came amid concerns about excessive borrowing around the world.

The move by the group’s central bank was an attempt to head off the kind of crisis of confidence that froze credit markets last year and brought the global economy to the brink of failure, threatening everyone from hedge fund billionaires to retirees who had their savings in supposedly safe investments.

Central bankers and government officials around the world were watching Monday’s stock markets closely for signs that fears are spreading or are being contained, and the early signs were positive. Asian markets in their first hours were up more than 2 percent on Monday morning.

Last week, investors fled the stocks of banks with outstanding loans to the tiny emirate and its investment arm, Dubai World. Now, analysts will be watching to see whether investors desert other highly indebted companies.

While Dubai is not big enough to set off financial repercussions outside the Middle East, the main fear is that investors could flee risky markets all at once in search of safer havens for their money. As in September 2008, when the failure of Lehman Brothers heightened worries about all financial institutions, they might pull back, regardless of the markets’ strength.

Those fears were allayed only after the United States announced a huge bank bailout and began guaranteeing a variety of borrowing that slowly helped credit markets begin functioning again. That many of these measures remain in place could help contain any problems from Dubai now.

But while the federation is following a similar strategy, albeit on a smaller scale, analysts expressed concern that the promise of added funds to support Dubai banks might not be enough to keep anxiety from jumping to other countries and institutions.

Indeed, an analysis from Goldman Sachs on Sunday said that the failure of federation authorities to provide a blanket guarantee for all of Dubai’s debt showed that governments worldwide were less willing to bail out overextended companies and their investors.

“This episode represents a timely reminder that emergency public funding support should not be taken for granted,” wrote Francesco Garzarelli, an analyst based in London for Goldman.

The extent to which the federation and its wealthiest member-state, Abu Dhabi, which has vast oil reserves, appear to guarantee Dubai’s debts could affect how investors view many other companies previously believed to have the implicit backing of their governments.

“There are plenty of people around in world capitals who are tired of bailouts,” said Simon Johnson, a former chief economist at the International Monetary Fund.

As a result, banks that made big loans to some heavily indebted governments and companies might start to incur more losses. The shares of HSBC and Standard Chartered, which lent heavily to Dubai, have fallen sharply in the last week, and Mr. Johnson said that the cost of insuring against defaults by big Irish banks has surged since the Dubai announcement.

A fear of contagion from Dubai would further destabilize European banks that were only starting to mend.

The Dubai crisis began last week, when the emirate said Dubai World would not be able to make on-time payments for some of its $59 billion in debt. The company invested in lavish real estate projects, including artificial islands in the shape of a palm tree and a globe, and spent heavily to acquire stakes in glittering properties like Barneys in New York and the MGM Mirage in Las Vegas.

Dubai was far from alone in taking on too much debt as companies and countries around the world did the same. Investors have already been alarmed by problems in countries in Eastern Europe, in Ireland and in Greece.

Dubai’s problems are also a reminder of the lasting effects of the global real estate bubble, which remains a danger in the United States, where several big banks are encumbered by souring commercial real estate loans.

There is a concern that governments have responded to the financial crisis by taking on unsustainable levels of debt that they may no longer be able to finance. Even in the United States, public debt is forecast to rise to around 80 percent, from about 40 percent, of gross domestic product, the economist Nouriel Roubini said.

“Dubai could be the beginning of a series of sovereign debt issues or crises,” said Mohamed A. El-Erian, chief executive of Pimco, the giant bond-trading firm. “What Dubai is going to do is make people think more intensely about the lagging implications of last year’s crisis. It’s going to be a wake-up call to the people who thought that the financial crisis was just a flesh wound.”

Many analysts expect federation authorities to release further details as soon as Monday on how they plan to restructure the debt of Dubai and Dubai World to keep markets calm.

Analysts will be watching crucial indicators of stability or alarm. The most apparent will be if money is pulled from other investments to the safe havens. Analysts will be monitoring the amount of interest that investors demand to lend money to emerging market countries. It has already risen sharply since the Dubai crisis erupted on Wednesday.

A major worry, investors say, is that the global debt crisis in private debt could metastasize into a debt crisis for governments that are running mounting deficits to pay for bailouts and stimulus packages — especially in Eastern Europe but also in Britain.

In fact, a warning sign has already started flashing: the cost of insuring debt issued by Greece, a member of the euro bloc, is now as much as insuring Turkey’s debt, an investment that was once considered much riskier.

One consequence of the global financial crisis is that Greece has been forced to take on shorter-term external debt. Debt securities due within a year have risen to $24 billion in the second quarter of 2009, from $14.5 billion at the end of 2007, according to figures from international economists.

Many countries may face tests in the weeks and months to come as they try to roll over their existing debts. These countries will not be able to raise money easily or cheaply. This could put pressure on stronger members of the European Union to bail out weaker members, or at least help them restructure their debts and nurse them back to health.

So strung out was Latvia this year that the country barely recovered from a speculative attack on its currency, the lat, though it is a member of the European Union. As it teetered, economists fretted about a coming “lat bath,” like the Thai “baht bath” devaluation that set off the 1997 Asian crisis.

The International Monetary Fund, World Bank and European Union stepped in to prop up the weakest countries, however, and fears of true sovereign defaults in Europe’s most vulnerable countries receded before last week’s turmoil. These institutions’ guarantees, however, do not extend to state-backed companies.

Hungary, Bulgaria and the Baltic states of Latvia, Lithuania and Estonia carry foreign debt that exceeds 100 percent of their gross domestic products, Ivan Tchakarov, chief economist for Russia and the former Soviet states at Nomura bank, said in a telephone interview from London.

But the problems, if any, are likely to be limited to Europe. The tremors would not immediately spread to the United States, beyond the effects of the strengthening of the dollar, and potentially a weakening of commodity prices as investors bet on a slowdown in emerging markets.

However, in the long run, a global credit crisis set off by Dubai would make the cost of financing the trillions of dollars in American debt much more expensive, Mr. Roubini said. “Even the U.S. — over time — cannot run forever unsustainable fiscal deficit,” he said. “The total financing needs of the U.S. will range in the $1.5 trillion to $1.7 trillion a year for the next decade,” he said. “That is a huge amount of public debt to issue and or roll over.”

Andrew E. Kramer contributed reporting.

From: The New York Times

http://www.nytimes.com/2009/11/30/business...agion.html?_r=1

LaoPo

[Abrak]

Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

This is a lot more difficult than it sounds. Large oil reserves and production lead to current account surpluses and your currency appreciating. I think it is called 'Dutch disease' not that I ever remember the Dutch having any oil. Essentially what happens is that you find oil start producing and exporting, large surplus, currency appreciates and destroys the competitiveness of your manufacturing base which then dies.

Abu Dhabi is quite smart here because it takes all its forex and ploughs it into long term investments usually overseas

I think Thailand with their US$150bn of reserves should refinance and takeover the place. Anyway I am sure they would really appreciate the offer.

[LaoPo]

...an interesting read:

November 30, 2009

Crisis Puts Focus on Dubai’s Complex Relationship With Abu Dhabi

This article is by Robert F. Worth, Heather Timmons and Landon Thomas Jr.

DUBAI, United Arab Emirates — It was the most subtle of gestures, but looking back, many in Dubai now see it as a sign of their salvation.

At the grand opening of the Dubai Air Show this month, the crown prince of Abu Dhabi, Sheik Muhammad bin Zayed al-Nahyan, placed his hand over the hand of Dubai’s ruler, Sheik Mohammed bin Rashid al-Maktoum. That was widely viewed among people here as a sign that Abu Dhabi, by far the largest and richest member-state of the United Arab Emirates federation, would take care of Dubai.

The question now is whether that means Abu Dhabi will use its wealth to bail out Dubai, the deeply indebted city-state that shook world markets when it announced that its chief investment arm would not be able to pay its debts on time.

Dubai is famous as the brash, secular upstart of the emirates, and Abu Dhabi is known as the religious and conservative big brother. Tensions between the two are legion, but when reporters questioned Sheik Mohammed about tensions last week, he told them to “shut up.”

Nevertheless, the debt crisis of the last few days has fed speculation that Abu Dhabi would impose conditions for any bailout, including a stake in prominent Dubai enterprises like Emirates Airlines. Emirati officials have denied those rumors.

The United Arab Emirates’ central bank issued a statement on Sunday saying that it would stand behind foreign and domestic banks operating in the emirates. It did not mention Dubai World, the investment arm of the Dubai government, which is $59 billion in debt.

Analysts say the statement will not be enough to allay fears that the Dubai government could default on part of its sovereign debt.

Still, as fear from Dubai’s debt crisis circled the globe, an unaccustomed quiet settled here at the center of the storm — and it was more than just the hush of the Id al-Adha holiday.

Expatriate bankers and other professionals here are simmering in anxiety, as the world talks about Dubai like a bad seed of the global economy.

“A lot of people are pretty freaked out,” said one American businessman with long experience in the region, who spoke on condition he not be identified for fear of repercussions. “They’re all watching CNN and going: ‘Is Dubai going to default?’ ”

Many in Dubai have a shockingly different perspective.

“Dubai is a victim of media distortion,” wrote one reader to a Web forum of one of the emirates’ most popular newspapers. “All the Western countries have ganged up on Dubai. Why? Because it has succeeded.”

Another reader wrote, “This is all because of jealousy from the Western world,” adding that “Dubai has been at the forefront of development in the Arab world.”

Many citizens in Dubai on Sunday seemed inclined to dismiss all talk of tension among the emirates, insisting that they are not worried about their country’s future.

“Only a few decades ago, this country was nothing, just a desert,” said Thani al-Falaasi, a 31-year-old Emirati businessman who was shopping with a friend on Sunday night in the Dubai Mall. Referring to Dubai’s leader, Sheik Mohammed, he said: “He built it up. Even if there is a crisis, he can solve it. We have great confidence in him.”

That is not the view from elsewhere in the emirates. Like Dubai’s bankers and bondholders, the government of the United Arab Emirates was surprised by Dubai’s announcement on Wednesday that it would need to freeze repayments on the debt of its chief investment arm, Dubai World.

Abu Dhabi, which has more oil than Dubai and no cash problems, could wipe out Dubai World’s $59 billion in debt easily, analysts say.

But that seems unlikely. Despite the announcement by the emirates’ central bank on Sunday that it would make more money available to local and foreign banks in Dubai, analysts say such imprecise promises — the bank did not say how much, or that it would back all the debt of Dubai or Dubai World — may not be enough to placate investors.

Many have been left wondering, again, if the Emirate’s debts are worse than most of the world suspects. Analysts estimate Dubai’s total debt at around $80 billion, but some here say it could well be closer to $120 billion, or more.

Authorities might have hoped that the timing of the announcement — just before the Emirate (and the broader Middle East) was about to shut down for Id al-Adha — would minimize its damages. Instead, it did the opposite. Some Emiratis were also upset by the handling of the announcement.

Dubai’s rags to riches, and possibly back to rags, tale “has all the elements of a Greek tragedy,” said Jan Randolph, head of sovereign risk at Global Insight, a London research company, with “hubris and pathos” in equal measure.

The operative question is whether Abu Dhabi and the United Arab Emirates federation will rescue Dubai from the consequences of its profligacy.

If it does not, the secondary effects could spread to Greece, Britain and some Baltic states, all heavily indebted nations, or to India and the Philippines, where foreign workers in Dubai send back millions to support family each year, or to any corner of the market for credit that individuals, companies and countries all rely on.

Inside Dubai, the crisis has brought to the fore fears and resentments that the legion of foreign workers who make up 90 percent of Dubai’s population have long held toward the small minority of Emiratis who own the place.

Expatriates here have complained for years that Dubai is too secretive about its debt and finances and that its rapid growth came at the expense of accountability.

“It breeds further distrust,” said John McGaw, a senior adviser to Golden Oryx, a Dubai business development company. “A lot of people have been disappointed with the way they have been treated over the past 12 to 18 months.”

Robert F. Worth reported from Dubai, Heather Timmons from Delhi, India, and Landon Thomas Jr. from London.

From: The New York Times

http://www.nytimes.com/2009/11/30/business....html?ref=world

LaoPo

[lannarebirth]

Nothing wrong with being bearish near the top of a bear market rally

I'm not bullish or bearish ever in that way. Though I make my crust from the market I work from the POV that it can move in any direction but I do look for clues which is next. I'm more bearish generally and not about the Dubai thing, that would appear to be pretty small and self contained.

I just hate debt and i see too much of it about. Ironically I am in the debt business and it is picking up. Very different kinds of borrowers these days. Everyone still thinks someone will come along and bail them out on something they overpaid for. Just musing, as apparently my charts were getting too hard to read.

[AlexLah]

I guess not many remember this story?

http://www.7days.ae/storydetails.php?id=75...+over+Citi+loan

[LaoPo]

Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

This is a lot more difficult than it sounds. Large oil reserves and production lead to current account surpluses and your currency appreciating. I think it is called 'Dutch disease' not that I ever remember the Dutch having any oil. Essentially what happens is that you find oil start producing and exporting, large surplus, currency appreciates and destroys the competitiveness of your manufacturing base which then dies.

Abu Dhabi is quite smart here because it takes all its forex and ploughs it into long term investments usually overseas

I think Thailand with their US$150bn of reserves should refinance and takeover the place. Anyway I am sure they would really appreciate the offer.

1. I would like to know the source of the article by Rami G. Khouri* in Ilyushin's post?

Khouri (I looked him up) is not a dumb journalist but his question is rather dumb when he speaks about "...our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable growth that is based upon producing goods and services......"

Since when are the Arab countries known for their skills of producing goods and services not to speak if they could ever compete with the real producing countries ?

And, what does he mean if he speaks about "free the minds and spirits of our youth" ?

Does he mean the (Arab) youth is Westernized ? Anybody ?

2. Thailand might have reserves but they could never take over Dubai nor do they have enough qualified people to run the place; as if the Arabs would allow Asian expats to run the place...

* http://www.agenceglobal.com/author.asp?type=2&id=7

Rami George Khouri is a Palestinian-Jordanian and US citizen whose family resides in Beirut, Amman, and Nazareth.

He is the Director of the Issam Fares Institute of Public Policy and International Affairs at the American University of Beirut as well as editor-at-large of the Beirut-based Daily Star newspaper. He is an internationally syndicated political columnist and author.

Rami was a visiting scholar at Stanford University in October 2006, and in November 2006, he was the co-recipient of the Pax Christi International Peace Award for his efforts to bring peace and reconciliation to the Middle East.

LaoPo

[Naam]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

[Naam]

And again you are relying on unreliable sources with heavenly biased and censored newspapers, anything negative about the Middle East and they will be shut down!

right you are! no news at all in the "Khaleej Times".

[Abrak]

2. Thailand might have reserves but they could never take over Dubai nor do they have enough qualified people to run the place; as if the Arabs would allow Asian expats to run the place...

Well you need not need too many people afterall 40 years ago Dubai had a population of under 60,000.

Actually I think it is a pretty good fit. It would rapidly become known as the Pattaya of the Middle East. Males out number females 4 to 1 there so there should be some great job opportunities. I think the Thais and the Dubainese would get on a treat, tourism would boom and expats wish to stay. And you never know someone might buy units at The River.

[sorensen]

Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

This is a lot more difficult than it sounds. Large oil reserves and production lead to current account surpluses and your currency appreciating. I think it is called 'Dutch disease' not that I ever remember the Dutch having any oil. Essentially what happens is that you find oil start producing and exporting, large surplus, currency appreciates and destroys the competitiveness of your manufacturing base which then dies.

Abu Dhabi is quite smart here because it takes all its forex and ploughs it into long term investments usually overseas

I think Thailand with their US$150bn of reserves should refinance and takeover the place. Anyway I am sure they would really appreciate the offer.

The Dutch Disease was caused by large gas discoveries in offshore Holland.

[LaoPo]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

How things can change...................so fast:

1. two weeks ago on November 16th:

Emirates In Talks With Boeing, Airbus For New Planes

DUBAI (Zawya Dow Jones)--Dubai-based Emirates Airline Monday said it is in talks with plane manufacturers Boeing Co. (BA) and Airbus for "tens" of new aircraft orders as the carrier, the Middle East's largest, sees signs of recovery in the aviation industry.

"We're having discussions with Boeing and Airbus," Emirates Airline Chairman Sheikh Ahmed bin Saeed Al Maktoum told reporters at a roundtable event on the sidelines of the Dubai Airshow. "Not only for firming up options but also for buying more."

from: http://online.wsj.com/article/BT-CO-20091116-706759.html The Wall Street Journal

2. Today, November 20th:

"Nevertheless, the debt crisis of the last few days has fed speculation that Abu Dhabi would impose conditions for any bailout, including a stake in prominent Dubai enterprises like Emirates Airlines. Emirati officials have denied those rumors."

From: http://www.nytimes.com/2009/11/30/business....html?ref=world The New York Times

The big question is: HOW did Dubai (Emirates Airlines) pay for all those planes and the planes still in the order books; cash ? credit ? both ?

And, did the esteemed Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum know on November 16th of the coming collapse, which news was spread on Wednesday, November 25th, just 9 days later by a few fellow Sheikhs ?

Hmmmmmmmm.... it's hot in Dubai but I wonder if the talks with Boeing and Airbus are still going on as planned.

LaoPo

[LaoPo]

Or will someone in the Arab world change course, and aim to really develop our vast human talent, free the minds and spirits of our youth, and move us towards a path of sustainable economic growth that is based on producing goods and services rather than mainly exporting energy and importing consumer goods?

This is a lot more difficult than it sounds. Large oil reserves and production lead to current account surpluses and your currency appreciating. I think it is called 'Dutch disease' not that I ever remember the Dutch having any oil. Essentially what happens is that you find oil start producing and exporting, large surplus, currency appreciates and destroys the competitiveness of your manufacturing base which then dies.

Abu Dhabi is quite smart here because it takes all its forex and ploughs it into long term investments usually overseas

I think Thailand with their US$150bn of reserves should refinance and takeover the place. Anyway I am sure they would really appreciate the offer.

The Dutch Disease was caused by large gas discoveries in offshore Holland.

Dutch Disease explained:

http://en.wikipedia.org/wiki/Dutch_disease

LaoPo

[LaoPo]

Emirates boss says Dubai business world in shock

(AFP) – 21 hours ago

LONDON — The president of Emirates Airlines said the Dubai business community was "shocked" by the debt crisis which has struck the city state, according to a newspaper interview published here on Sunday.

"We are all a bit shocked by what's happened and the global fall-out of the past 24 hours," Emirates Airline President Tim Clark told the Sunday Telegraph newspaper.

"But Dubai will navigate itself out of this, as will we. I am confident that the airline will not be affected by this."

Dubai's government said on Wednesday it would ask creditors of its Dubai World conglomerate, which has reported debts of 59 billion dollars (39.3 billion euros), for a debt moratorium of six months.

That sent global stock markets slumping on fears of a default and a possible return to the darkest days of the global financial crisis.

Clark told the Sunday Telegraph that his airline did not intend to cancel any orders for new aircraft, adding that its finances would not be impacted by the current crisis.

"We have independent sukuks (Islamic bonds) and bonds which are maturing in 2010 and 2011," Clark told the weekly newspaper.

"I know people expect us to repay or refinance them on schedule and we will, most absolutely."

State-owned Emirates -- one of the world's fastest growing airlines -- is also one of the global aviation industry's biggest customers with 120 aircraft currently on order.

"If there is more turbulence then we will moderate our growth to account for this but we're not going to stop growing, this is a great business," Clark added.

From: AFP

LaoPo

[Naam]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

The big question is: HOW did Dubai (Emirates Airlines) pay for all those planes and the planes still in the order books; cash ? credit ? both ?

And, did the esteemed Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum know on November 16th of the coming collapse, which news was spread on Wednesday, November 25th, just 9 days later by a few fellow Sheikhs ?

LaoPo

your question sounds quite naïve to me Lao Po. do you think al-Maktoum has all the cash and debt of the individual Dubai corporations, whether they are profitable like Emirates or on the brink of bankruptcy like Nakheel, in one drawer?

[think_too_mut]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

No kidding?

Devastated place with 1/3 former number of inhabitants still in Dubai would have any interest to travel at all? Anyone want to travel there at all?

How many would watch if the airline be around in a year?

All those financial criminals have dispersed, real estate down 60%.

Real estate are trying to rent out not those palaces - but accommodation built for construction workers to live at during the boom.

And now, you still don't understand that 55 machines like A-380 will have far less, if any, payload to carry?

Edited November 30, 2009 by think_too_mut

[LaoPo]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

The big question is: HOW did Dubai (Emirates Airlines) pay for all those planes and the planes still in the order books; cash ? credit ? both ?

And, did the esteemed Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum know on November 16th of the coming collapse, which news was spread on Wednesday, November 25th, just 9 days later by a few fellow Sheikhs ?

LaoPo

your question sounds quite naïve to me Lao Po. do you think al-Maktoum has all the cash and debt of the individual Dubai corporations, whether they are profitable like Emirates or on the brink of bankruptcy like Nakheel, in one drawer?

Maybe naive indeed but I have yet to read and study the material I just received from a well known source (known to you) about the "who's who in the UAE"; that will take the rest of the day

All this worldwide talk about Nakheel, Dubai World, the UAE Central Bank, Individual Dubai (and Abu Dhabi) corporations...it really doesn't matter much since it's all related family of all those Sheikhs but for simple souls like myself very difficult to look through the dusted windows of those palaces in the desert of WHAT is going on and HOW MUCH debt there really is. And I think it's a lot more than the $ 60 Billion they're talking about now.

I just read another report about what the UAE Central Bank is going to do....pump more money into the debt ridden companies (read: Sheikh Mohammed bin Rashid Al Maktoum's playground in Dubai) or not. (Al Maktoum ?....hmmmm...isn't that name related to the chap from Emirates ?)

UAE Central Bank ? I don't think so; it's one phone cal from the highest ruler to the other (not so high anymore) ruler (Sheikh Mohammed Al Maktoum) telling him what he should do.

Complicated, since the latter is also Prime Minister of the UAE but a PM without cash is not so important anymore as his cousin in Abu Dhabi sitting on a couch, filled with cash

What a world

LaoPo

[Naam]

to me it seems the more conservative Abu Dhabi will put some reigns on the Dubai megalomanic farts. Abu Dhabi has the cash, Dubai needs it. but he who pays the piper calls the tune and that was about time!

[Abrak]

How many A-380s have Emirates taken delivery so far? Five? They have to receive 50 (fifty) more. It may turn into flying them brand new into Mojave Desert, airplane graveyard.

before you think-too-mut you should think a little bit and try to understand that the airline Emirates has nothing to do with the moratorium asked for the corporation "Dubai World" and its affiliates.

is dat too mut to aks?

Well an interesting question is why it wasnt included and whether it will join them.

At first glance the balance sheet looks ok. Dirham16bn of equity, Dirham30bn of liabilities. Probably pretty standard I would guess for an airline. Then you look a little further down and you find plane purchases authorized and contracted of Dirham100bn. I think this roughly US$30bn or so. Now that works out at US$150k for every UAE National in Dubai.

Now it is possible that if they had called a halt to the Emirates payments that would be viewed default on those purchases, which might have been costly.

[Naam]

Now that works out at US$150k for every UAE National in Dubai.

hmmm... i had no idea that citizens of any state have to pay for the aircrafts of the national airline. as far as i am concerned i never paid for Lufthansa except when flying with it.

[Abrak]

Now that works out at US$150k for every UAE National in Dubai.

hmmm... i had no idea that citizens of any state have to pay for the aircrafts of the national airline. as far as i am concerned i never paid for Lufthansa except when flying with it.

Well according to Wikipedia it is basically owned by the Dubai Government. At which point their debt sort of becomes the country's debt. The R&A says it all belongs to 'The Shiek', so maybe its his problem. And lets face it it is one of their easiest assets to flog off to Abu Dhabi and I have no idea what cancellation fees are like.

The company is wholly-owned by the Government of Dubai directly under the Investment Corporation of Dubai.

[Naam]

And lets face it it is one of their easiest assets to flog off to Abu Dhabi and I have no idea what cancellation fees are like.

it is an open secret that Abu Dhabi is very much interested in at least a share of Emirates. but apart from that the airline is profitable (and so is Etihad) and getting out of any A380 contract is rather easy. EADS is and will be late with all deliveries and therefore in breach of contract.

[LaoPo]

A small background story:

"Dubai model" was the vision of one man

Fri Nov 27, 2009 3:00pm EST

By Andrew Hammond - Analysis

DUBAI (Reuters) - The "Dubai vision," which has suffered a crushing blow from the freewheeling Gulf emirate's sudden debt crisis, is the creation of one man who failed to apply the rules of open governance.

The city state's rapid growth revolved around the ruler Sheikh Mohammed bin Rashid al-Maktoum, who outlined his ideas in a book, "My Vision," where he suggested other Arab countries could replicate Dubai's success. Now the model -- always controversial among Gulf Arabs since it involved building shining cities in the desert at breakneck speed through the import of foreign residents, finance and labor -- is on the ropes.

Questions will surface over what went wrong.

Sheikh Mohammed bin Rashid al-Maktoum ©, Ruler of Dubai and United Arab Emirates' Vice President, attends the opening ceremony of Metro Dubai September 9, 2009.

This week Dubai said it wanted to delay payment on billions of dollars of its total $80 billion debt, sending global markets plummeting as investors feared defaults could hit the global economy just as it was recovering from the financial crisis.

"Where next for the ruling family in Dubai?" said British historian Christopher Davidson. "The massive loss of legitimacy that the ruler is now facing, the massive loss of legitimacy that his son and crown prince face after lying to the World Economic Forum last week -- where do these guys go from here?"

Sheikh Mohammed, whose face and words grace posters all over town, told the forum this month that the worst had passed for Dubai which was well-placed to pursue its development plans.

The news that investment vehicle Dubai World could not pay a $3.5 billion bond was released just before the Muslim Eid al-Adha holiday and UAE national day on December 2. Local media have almost entirely avoided comment on the debacle.

"Dubai could not be more transparent and open about the challenges it is facing due to the global economic downturn as it has been," the English-language Gulf News said. The Arabic daily al-Khaleej praised the UAE's investment climate.

There is uncertainty about what assets are owned personally by the ruling family, directly by the government or simply sponsored either by the ruler or the government.

ENVY OF THE REGION

Dubai was the envy of other Gulf states such as Saudi Arabia and Qatar, who sought to ape some of Dubai's ideas, such as business free zones, financial centers, advanced infrastructure and welcoming Western capital and expertise.

Aside from its more eye-catching projects seen by many as white elephants, such as palm-shaped man-made islands and the world's tallest tower, Dubai developed health services, universities, sports facilities and model urban communities.

Ayman Ali, a London-based Arabic press commentator, said the Dubai model, based on Hong Kong and Singapore, forgot it was dealing with a country and not a corporation in becoming a place where many in the Arab world dreamed of living.

"In the beginning it was aimed at getting rid of bureaucracy and red tape. It worked fine but if you are building a country you shouldn't go on running it like a company," he said.

Dubai ran to catch up with business transparency practices in Singapore and Hong Kong, and never even pretended to expand political participation beyond a small group around the ruler.

In an online interview this year that epitomized the progressive image Dubai has tried to present, Sheikh Mohammed rejected the suggestion he was a "Superman" who ran the freewheeling emirate alone.

"The 'Superman' phenomenon you are talking about does not exist in our organizations and institutions," he told the questioner -- before going on to discuss how his poetry and horse-racing fit into his 24-hour-a-day schedule.

Despite its financial troubles, many still regard Dubai as a pioneer among its neighbors.

"There was a lack of transparency, yes, but Dubai did something whose model was full liberalism. They made mistakes and lacked a lot of things but they are in transition," said Dubai-based Ibrahim Khayat, a Lebanese strategic business analyst. "Singapore has corruption too."

Martin Hvidt, a Danish Middle East Studies professor who focuses on Gulf economies, said the concentration of power in the hands of Sheikh Mohammed and a few advisors meant Dubai could take quick action to rectify mistakes.

"It's too early to write Dubai's obituary," he said.

(Additional reporting by Raissa Kasolowsky; Editing by Samia Nakhoul)

From: Reuters

http://www.reuters.com/article/wtUSInvesti...0091127?sp=true

LaoPo