Global Markets In Turmoil After Debt Bombshell

[pkrv]

........ there are laws in place which forbid to publish negative news about the UAE ....

LaoPo

You aren't allowed to question the bubble.

The United Arab Emirates has a recently enacted media law which makes negative economic reporting a crime.

Drafted in early 2009 as a response to market turmoil, this must be a pretty difficult law to follow right now.

From: http://www.businessinsider.com/why-dubai-w...n-the-bubble-10

LaoPo

Well if that didn't do it nothing will - do these guys have a brain?

[LaoPo]

Well if that didn't do it nothing will - do these guys have a brain?

Who knows better than themselves ?

This is an interesting article, way BEFORE the bubble exploded:

United Arab Emirates: Dubai expatriate allure fading

18 August 2009

Subject: Questions over Dubai's continued attractiveness to Western expatriates.

Significance: Dubai's reputation as an open, Western-friendly Arab country has suffered setbacks over the past few months as the negative impact of the financial crisis has been compounded by a series of new legal measures and changing social norms. This could have a significant impact on Dubai's ability to attract foreigners from the West. Go to conclusion

Analysis: Dubai has built a reputation for being an innovative global centre for tourism and business. However, its ability to maintain this is in doubt with the advent of the financial crisis and rising unemployment among its native population, coupled with heavy debt burdens due to bailouts by its more conservative neighbours, Abu Dhabi and Saudi Arabia. The cost-benefit analysis that goes into expatriates' decisions to relocate to Dubai is shifting as the benefits become fewer and the costs -- in terms of giving up rights and lifestyle -- increase.

*Shifting economic climate. Although a recent survey ranked the United Arab Emirates (UAE) as an ideal financial location for expatriates based on monthly disposable income, other factors challenge this finding:

Another survey this spring ranked Dubai as the most expensive Arab city for expatriates.

*New rules against sharing houses (known as villas) are ostensibly designed to prevent cohabitation of unmarried couples. However, they also impose penalties of 50,000 dirhams (13,000 dollars) for villa-sharing, making it even harder for single expatriates to afford to stay without a job or with a salary reduction.

*A national income tax or value-added tax is currently being considered for introduction in the next few years.

*Population drop. Several research reports and banks have predicted a drastic fall in the population of 10-20% over the next two years as expatriates are laid off and as recruitment and job creation levels drop:

*Jobless people in Dubai lose their work visas and must leave the country.

*The lack of employment mobility hinders economic growth and deters expatriates from staying. Transferring to a new job entails obtaining a 'No Objection Letter' from the current employer, and usually leaving the country in order to transfer the visa to a new employer.

Despite increasing worries regarding job security, the majority of expatriates have said they are likely to remain until the worldwide situation improves. This means that there could be an even greater exodus when things do improve.

*Western exodus. Westerners (who have often brought families as well) are more likely to buy property and spend their disposable income in the country than their Asian expatriate counterparts. Their departure will in turn further depress the property sector, reduce consumer spending, and create further job losses, eg among Western teachers. Anecdotal evidence from airline reservation agents suggests a surge in one-way tickets, meaning many people who leave for the summer holidays will not be returning.

*Social crackdown. Dubai has received an influx of bailout money from more conservative societies such as Abu Dhabi and Saudi Arabia, and it is possible that the money came with strings attached. A code of conduct has been introduced governing public behaviour, including clothing, queuing, displays of affection and alcohol consumption (see UNITED ARAB EMIRATES: Disaffected threaten Dubai model - May 8, 2008). It restricts music and dancing, prohibits insults and rude gestures, and threatens imprisonment and deportation for violations. Introduction of the code followed several high-publicity cases involving drunken UK expatriates misbehaving.

*'Emiratisation'. In the private sector, new rules govern the hiring and firing of Emiratis. Businesses are required to ensure that Emiratis comprise 5-25% of their employees. When they make an employee redundant and both an expatriate and an Emirati are employed, the expatriate must always be laid off first.

*Censorship. A new Dubai media law would make it a crime to damage the country's "reputation or economy":

The law appears to protect journalists from imprisonment and guarantees the anonymity of sources, but is accused of being vague, and imposes hefty fines that most journalists would be unlikely to be able to afford.

Blogs are subject to the new law, and Dubai bloggers report that they have come under fire for writing posts critical of the government or society.

*Photo sharing site Flikr and VOIP services such as Skype are blocked in the UAE, even in the Internet and Media Free Zones. The authorities are considering blocking Facebook and social networking sites on the grounds of purported indecency.

*New residency requirements. Salary requirements for expatriates who want to bring their families with them have become even more stringent, and new rules about visa transfers and job changes are being considered:

Expatriate residents must now earn a minimum monthly salary of 10,000 dirhams in order to bring their family with them, compared with 6,000 previously.

Residency applicants also now have to submit fingerprints that will be connected to a database to confirm that only those with "good conduct" and no criminal record are given visas.

From October, expatriates will have to pass a local culture test to obtain a UAE residency visa.

*Legal opacity. Residents find it hard to understand the nascent legal system. There is no central repository of laws available to the public. Instead residents must rely on press reports, which are neither legally binding nor necessarily accurate. Unclear laws and arbitrary enforcement put foreigners at risk of jail or deportation for minor infractions and do not provide adequate safeguards.

*Debt-reconciliation systems such as bankruptcy protection are urgently needed:

Dubai has no bankruptcy laws or US-style Chapter 11 protection, meaning that business owners are personally responsible for any debt obligations.

*Individuals similarly lack protection and face being sent to debtors prison and having their accounts frozen before being deported.

Expatriates and foreign-owned companies frequently run up substantial debt and flee the country.

Conclusion: Dubai's long-term ability to attract Westerners, that helped fuel its astronomical growth, is under scrutiny in light of a changing balance between Western-style freedoms and Emiratisation. This shift seems to coincide with the financial crisis and an influx of money from more conservative societies. However, changing norms probably will continue to have a detrimental impact on Dubai's attractiveness to Westerners when the financial crisis is over.

From: Zawya, but originally published in Oxford Analytica: http://www.oxan.com/ who, according to the website are also based in Dubai...I wonder.....

LaoPo

[Naam]

United Arab Emirates: Dubai expatriate allure fading

those who don't like local laws should leave. that applies to any country. as simple as that.

[LaoPo]

United Arab Emirates: Dubai expatriate allure fading

those who don't like local laws should leave. that applies to any country. as simple as that.

*Legal opacity. Residents find it hard to understand the nascent legal system. There is no central repository of laws available to the public. Instead residents must rely on press reports, which are neither legally binding nor necessarily accurate. Unclear laws and arbitrary enforcement put foreigners at risk of jail or deportation for minor infractions and do not provide adequate safeguards.

and:

However, changing norms probably will continue to have a detrimental impact on Dubai's attractiveness to Westerners when the financial crisis is over.

It is the increase in local norms, values and vague and unclear laws under a dictatorial regime which put the westerners off.

Maybe that's exactly why they will follow your advise.

LaoPo

[pkrv]

In otherwords they make it up as they go along.

I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

[LaoPo]

In otherwords they make it up as they go along.

I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

Greedy people and developers; now that the bubble exploded they found out it's not a democracy.

The most appalling in the debacle was that the "Government" (read: Sheikh) of Dubai told it's creditors that they were not responsible for the debts of Dubai World and other entities; companies, founded by/under the same Sheikh.

In other words: the Sheikh told the creditors to p_ss off since his left pocket was not responsible for the right pocket although it is the same pair of trousers.....hmmm...do they wear trousers ?

I think his "brother" in Abu Dhabi told him that that wasn't the way to rebuild confidence in Dubai and it's companies and decided to step in and help Dubai (already 3 times this year).

LaoPo

[Naam]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

[LaoPo]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Congratulations Naam!

But you're a bond (tuk-tuk ) specialist and you knew the tuk-tuk/bond prices in the UAE were exceptionally low (into their low 40's on the dollar) and your experience and know-how told you that it was most likely that Abu Dhabi was about rescuing Dubai.

But, you didn't know it would happen so soon BUT......................good for you!

LaoPo

[Naam]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Congratulations Naam!

But you're a bond (tuk-tuk ) specialist and you knew the tuk-tuk/bond prices in the UAE were exceptionally low (into their low 40's on the dollar) and your experience and know-how told you that it was most likely that Abu Dhabi was about rescuing Dubai. But, you didn't know it would happen so soon BUT......................good for you!

LaoPo

Lao Po,

this trade was not done on the basis that i am an experienced bond investor but based on my knowledge of the area where i worked and lived for years. the Nakheel bond which matured day before yesterday was issued as an investment based on islamic principles although the bond description (237 pages!) tells a completely different story.

i didn't have the guts to buy this bond (which would have more than doubled the investment in only two trading days) but i expected at least a limited good will intervention from Abu Dhabi to save the face of cousin Dubai. that's why i went for the conventional bond from Dubai Holding which i thought will considerably rally like all other Dubai debt even if there are much less positive news for the investors of Nakheel. the gamble paid off, the potential loss was minimal as a full default was already priced in. if Nakheel had defaulted i would have sold with a loss of perhaps 3 max 5%, i.e. the risk/reward ratio was very favourable.

disclaimer: i don't do this kinf of gambling very often but i'm presently so flush with cash (at ZERO percent yield ) that i just couldn't resist to make some pocket money for Christmas.

[pkrv]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Hi Naam my congratulations too - You do however admit to virtually day trading in bonds. Would I be correct to assume that those market professionals with this as a part of their portfolio would have come to the same conclusions, stripped out the profit, and the bonds (and I don't know) are back where they started?

[pkrv]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Hi Naam my congratulations too - You do however admit to virtually day trading in bonds. Would I be correct to assume that those market professionals with this as a part of their portfolio would have come to the same conclusions, stripped out the profit, and the bonds (and I don't know) are back where they started?

Out of interest why does it say

Illiquid at the Düsseldorf Stock Exchange, turnover accident

http://translate.google.co.uk/translate?hl...l%3Den%26sa%3DG

[Naam]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Hi Naam my congratulations too -

1. You do however admit to virtually day trading in bonds.

2. Would I be correct to assume that those market professionals with this as a part of their portfolio would have come to the same conclusions, stripped out the profit, and the bonds (and I don't know) are back where they started?

1. no Pkrv, i'am not a daytrader. in normal (not crisis) times daily and even weekly bond movements up/down are nearly always less than the bid/ask spread and the fees. mar-sep 2009 was an exceptional period which provided excellent short term opportunities to achieve high capital gains especially with financials. but the party is over since nearly three months.

2. sorry, but i don't understand your question.

[Naam]

Illiquid at the Düsseldorf Stock Exchange, turnover accident

at german flyshit exchanges you can only trade flyshit sized amounts or zero especially as far as "exotic" bonds are concerned. 99% of my buying/selling is my bank/market maker, my bank/other bank, my bank/broker and also client/client (in the same bank).

[pkrv]

In otherwords they make it up as they go along. I mean who in their right mind would buy into this well I suppose masochists could get a kick out of it

some masochist bought Dubai Holding ISIN XS0285303821 on Thursday, Dec 10 (London afternoon) for 44.15 and sold it Tuesday, Dec 15 (London morning) for 61.65. that same masochist is now crying bitterly because he bought one day to early and missed the low of 43.25 on Friday, Dec 11 and the high on Monday Dec 14 of 64 because he sold one day too late. he can't get over it even though the trading profit of €UR 86,375 (banks charge fees) will cover all his expenses of 2010 and partly 2011. that masochist is married to my wife.

Hi Naam my congratulations too -

1. You do however admit to virtually day trading in bonds.

2. Would I be correct to assume that those market professionals with this as a part of their portfolio would have come to the same conclusions, stripped out the profit, and the bonds (and I don't know) are back where they started?

1. no Pkrv, i'am not a daytrader. in normal (not crisis) times daily and even weekly bond movements up/down are nearly always less than the bid/ask spread and the fees. mar-sep 2009 was an exceptional period which provided excellent short term opportunities to achieve high capital gains especially with financials. but the party is over since nearly three months.

2. sorry, but i don't understand your question.

Thanks naam you answered the question (2) in that the party is long over - Thanks for the updates to the exchanges. I suppose there is an outstanding thought in my own mind that is I wonder if the vulture funds will have any interest - I somehow think not - The situation is too entrenched in nepotism I think?

[trogers]

the muslim and aYrab haters can go back to their dark corners and keep on masturbating.

No. They will be camping outside developers' offices to book the latest piles of sand surrounded by serene blue waters...

Hold the bookings a few months and double their money.

[Abrak]

BTW Dubai is a great place for a holiday at the moment. You can book everything at a days notice at great rates.

Flight tomorrow Emirates BKK-DXB non-stop new A380 return Bt53k (business).

Thai Airways non-stop return Bt30k (business).

New 5 star hotel rooms US$200/per night (decent ones).

I guess if you book in advance (not over the New Year) it gets cheaper.