Dubai Fund Asks for Stay on Debt Payments.

[elleng]

The government of Dubai, in a blunt acknowledgment of the severity of its financial position, said on Wednesday that it had asked its banks for a six-month stay on its schedule of debt repayments.

The terse statement came in the middle of negotiations between creditors and Dubai World, the corporate arm of Dubai, which has led many of its most ambitious real estate projects, but is now struggling under the burden of $59 billion in liabilities.

For the banks that financed the debt-fueled ascent of Dubai — analysts’ estimates put its total debt at about $80 billion — the move by Dubai to obtain a standstill highlights a truth that many in the region had been trying to make clear to bankers. It is that Abu Dhabi, the oil-rich governing emirate of the United Arab Emirates, will not unconditionally bail out its more profligate neighbor. Instead, a genuine restructuring of Dubai’s debt, with pain being shared equally between Dubai and its bankers, needs to take place.

The news came as a shock to the markets as well as Dubai’s bankers. The bonds of Dubai World’s property developer, Nakheel, dropped sharply and the cost of insuring against a Dubai government default soared.

http://www.nytimes.com/2009/11/26/business/global/26dubai.html?hp

[Hawkowl]

1. Very important

This could very well tip our US based banks into free fall the way the demise of Bear Sterns did last year. The world's economy right now is nothing but an interlinked house of cards and this could be the one card that starts the collapse again.

[elleng]

2. Thought so.

Dubai Debt Worry Stirs Cautious Investors.

Debt problems in Dubai weighed on stocks, helped lift bonds and stirred currency trades on Thursday, as the dollar hit a 14-year low against the yen and gold climbed to a new record high.

Markets were also set to trade on the day without much input from the United States, where it was the Thanksgiving holiday.

Dubai said on Wednesday it was asking creditors of Dubai World and property group Nakheel to agree a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth.

The announcement raised concern about the once-booming Gulf region's financial health and added to general nervousness in financial markets about the real state of the world economy at a time when investors are also seeking to lock in 2009 profits.

"Investors will now have to re-appraise the quality of sovereign support for state-owned entities in the region," Royal Bank of Scotland said in a note.




http://www.nytimes.com/reuters/2009/11/26/business/business-us-markets-global.html

[mbperrin]

8. Banks that make life ending decisions deserve to have their lives

ended.

Much simpler and cheaper to build something new after the old wreck is bulldozed away.

I was opposed to the TARP, and I will be even more opposed to any extensions or multiples of same.

Accountability. Let the liar capitalists who built on sand (literally) choke on it.

And no, I won't miss them. Haven't had a bank account or loan in more than 35 years, much less a credit card. Feels good.

[Dennis Donovan]

3. Nakheel is regretting buying the QE2...

http://business.maktoob.com/20090000394278/QE2_s_final_destination_still_undecided/Article.htm

[corpseratemedia]

4. .

but dubai was a shining example of a free-market paradise!:sarcasm:

[Diclotican]

6. corpseratemedia

corpseratemedia

Dubai was seen as one of the shining example of what free marked Paradise could do for a country... And was also shown as a shining example of what Europe should do with its wealth. let the private own and work it to make best profit.. Off course becouse they would known best how to make a business be good...

Now, the same persons are not even telling about Dubai, and what it meant for the world. In fact they often look at you and say "dubai who"? if you point to them this days...

Dubai is maybe a prime example for what you DOSENT want for a country?

Diclotican

[corpseratemedia]

7. I am in agreement with you!

I was being sarcastic - see my emoticon


There are areas in the US, Florida, Nevada,etc. that also had this stupendous growth (thanks to our deregulated bank/lending policy), only to now have the highest areas of foreclosures and unemployment.


Dubai is exactly the direction we should NOT be heading towards again. Because it will lead to another global economic collapse.

[Diclotican]

9. corpseratemedia

corpseratemedia

I would have understand the sarcastic emoticon without the tag any day...

I would say a strict bank system is the best way to not end up in the miserable system you in the US is discovering now.. In the early 1990s Norway also had our "economical crisis" where the banks had to be bailed out, and the economy was kaput and Norway had more than 300.000 without work.. In a population of 4.2-4.3 million that was many without work.. And the government had to rebuild, and made a whole new bank-law to clean up what was wrong.. And even had to take over most of the biggest banks, to clean up all the bad loans, and to restructure the whole banking system.. After 4-6-8 year the bank system was far more healthy, and could the shares could be sold out to the public again. After we, had paid the banks a lot of tax money to make them survive.. But at least the banks who survived was clean, and the government was pretty clear of how important it was to have a clean bank system... The 1970s and 1980s had been one large party for many, and many had lend to over their pipe in the belif that they never needed to loan the money back.. Just make another loan and party as it was no day tomorow... In 1987-89 the economy was little slow, but anyone belived it to be just a bump in the road.. And then the 1990s was there, with the economy in a downturn nobody know how bad could bee

Today Norway is one of the very few country who have no debt to the rest of the world, and who also have a good economy, compared to many other economy.. Yes we hare hit hard by the economy downturn as every single other country. But compared to most we are still in the black, and have a surplus of couple of billions on the books.. And we have a very strict bank law, who many told was to strict to make us "economical viable" in the new economy - but in the end I guess most people is happy about the strict bank laws..

Dubai should have been shown to the world as a proof that the government absolutely have a finger in the economical too. Dubai had more than 330 BILLION NKR in debt as today, and is asking their lenders to freeze the loans to a later date. That is a lot of money for a country who only asset is water and beatches... And a lot of camels in the desert.. The oil is more or less empty as this stage.. Yes they do have the "Palm-iceland" and the highest tower in the world.. But who cares about that if the economy is in the shitters...? i WOULD NOT care about how fancy the buildings they have, if I cant get a decent wage or doesn't have a work at all...

And one friend of my, who had been in Dubai once told me that Norway should do as they did, build this fancy buildings, and use our oil wealth as we had it.. Haven't been talking to her for a while, but if I bump into her, I would point that out. Because "booring" Norway is still economical viable - and Dubai is broke...

Diclotican

[muriel_volestrangler]

5. Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar

European stocks fell the most in three weeks and bonds jumped after Dubai’s attempt to reschedule its debt rattled investors seeking higher returns in emerging markets. The dollar dropped to a 14-year low against the yen.

Europe’s Dow Jones Stoxx 600 Index retreated 1.9 percent at 12:02 p.m. in London. The Shanghai Composite Index slumped 3.6 percent, its biggest drop since August. Credit-default swaps tied to debt sold by Dubai rose as much as 131 basis points to 571 according to CMA DataVision. U.S. markets are closed today for the Thanksgiving holiday.

Dubai World, the government investment company burdened by $59 billion of liabilities, roiled markets around the world yesterday by seeking to delay repayment on much of its debt. The dollar’s slump to a 14-year low against the yen prompted Finance Minister Hirohisa Fuji to say Japan’s government is watching currencies “very closely,” while traders said the Swiss central bank sold the franc after it climbed to the highest value against the euro since June 24.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aa1.kUapFe1E&pos=1

[tomm2thumbs]

10. but that island they built sure is purty

must be expensive to keep up though

[thelordofhell]

11. Like the hillbilly lottery winner who tricked out his double-wide

Dubai was just a nonsense money dump.