Sunday, November 29, 2009
The Collapse of America by excessive debt and hyperinflation
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Climate crunch: David Bellamy on global warming fraud
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'Dubai won’t be allowed to collapse'
Two weeks before the world took fright at debt-laden Dubai’s growing financial problems, it was
clear the UAE’s flashiest, most populous emirate
was depressed. The Gulf state was dotted with vacant or half-empty apartments. Imploring signs ran down the front of some of the smartest, tallest new residential buildings: “To Let. Ring xxxx”.
At least 20% of the available office space was reportedly vacant. Many restaurants were deserted. Shop attendants at the year-old Dubai Mall, a giant temple of commerce in the prestigious new $20 billion downtown Burj Dubai project, agreed in whispers that “there are fewer shoppers than 2008, much fewer”.
Whispers because the local press and public are forced to play down the crisis.
A publicist with one of Dubai’s largest companies added sotto voce that malls across the emirate were “markedly more empty”. The Dubai Mall was a case in point. People with big shopping bags were thin across its 1,000 shops.
Not so in one of this mall’s most famous and rivetting features, the Aquarium & Underwater Zoo. Visitors continue to throng this at 50 dirhams per head, gawping at its “more than 33,000 aquatic creatures” through “the world’s largest aquarium window”.
To an economist, the aquarium’s proud boast of high visitor numbers might say more about the state of Dubai than Dubai’s state. Aquarium staffers say the numbers are proof that “people still want to have fun, particularly for 50 dirhams, though they may not feel like big-time shopping.”
So is Dubai going bust or simply changing its USP? Far from bust, insist long-time immigrant residents. Rohit Gupta, who owns and runs a shipping company, says his new neighbours — “Muslims from the UK” — may symbolize the basic reason Dubai will not be allowed to collapse under a mountain of debt some say is more than 100% of its GDP. “Dubai offers Muslims a place to do business, be themselves and relative freedom. This is not about to become another Iceland.”
Those who cannily bought homes in the 818-metre Burj, the world’s tallest tower, say Dubai’s premium real estate remains “blue-chip and gilt-edged”. Emaar, in which the Dubai government has a 32% stake, is the emirate’s largest developer, is poised to float its stocks in India and claims it has a healthy balance sheet. That’s unlike Nakheel, which is building the Palm resorts on land reclaimed from sea and has set off the financial panic.
Emaar claims it is still on target to launch the Burj in January and there are no money worries to sidetrack this confidence-building boost to Dubai’s image worldwide.
An Indian who bought an apartment in the Burj at 2200 dirhams per square foot soon after it was launched in 2004 says “I can still get more than 3,500 dirhams per square foot if I want to sell. But I don’t and I won’t.”
Gupta, who has worked out of Dubai for eight years, says this was “my second-best year, business-wise. It’s only the gamblers who have suffered”.
Rightly so, perhaps, for a Muslim state that frowns on games of chance.
clear the UAE’s flashiest, most populous emirate
At least 20% of the available office space was reportedly vacant. Many restaurants were deserted. Shop attendants at the year-old Dubai Mall, a giant temple of commerce in the prestigious new $20 billion downtown Burj Dubai project, agreed in whispers that “there are fewer shoppers than 2008, much fewer”.
Whispers because the local press and public are forced to play down the crisis.
A publicist with one of Dubai’s largest companies added sotto voce that malls across the emirate were “markedly more empty”. The Dubai Mall was a case in point. People with big shopping bags were thin across its 1,000 shops.
Not so in one of this mall’s most famous and rivetting features, the Aquarium & Underwater Zoo. Visitors continue to throng this at 50 dirhams per head, gawping at its “more than 33,000 aquatic creatures” through “the world’s largest aquarium window”.
To an economist, the aquarium’s proud boast of high visitor numbers might say more about the state of Dubai than Dubai’s state. Aquarium staffers say the numbers are proof that “people still want to have fun, particularly for 50 dirhams, though they may not feel like big-time shopping.”
So is Dubai going bust or simply changing its USP? Far from bust, insist long-time immigrant residents. Rohit Gupta, who owns and runs a shipping company, says his new neighbours — “Muslims from the UK” — may symbolize the basic reason Dubai will not be allowed to collapse under a mountain of debt some say is more than 100% of its GDP. “Dubai offers Muslims a place to do business, be themselves and relative freedom. This is not about to become another Iceland.”
Those who cannily bought homes in the 818-metre Burj, the world’s tallest tower, say Dubai’s premium real estate remains “blue-chip and gilt-edged”. Emaar, in which the Dubai government has a 32% stake, is the emirate’s largest developer, is poised to float its stocks in India and claims it has a healthy balance sheet. That’s unlike Nakheel, which is building the Palm resorts on land reclaimed from sea and has set off the financial panic.
Emaar claims it is still on target to launch the Burj in January and there are no money worries to sidetrack this confidence-building boost to Dubai’s image worldwide.
An Indian who bought an apartment in the Burj at 2200 dirhams per square foot soon after it was launched in 2004 says “I can still get more than 3,500 dirhams per square foot if I want to sell. But I don’t and I won’t.”
Gupta, who has worked out of Dubai for eight years, says this was “my second-best year, business-wise. It’s only the gamblers who have suffered”.
Rightly so, perhaps, for a Muslim state that frowns on games of chance.
Dubai Seeking Options Amidst Debt Collapse, Banks Await
Dubai is scrambling. Earlier this week, news broke that Dubai’s World Fund is on the brink of default on its massive debt, which sent bank stocks sinking as investors worried about potential exposure. Now, we learn that the ruler of the recently booming city state left town for an important meeting in a desert palace.
Where did he go? To Abu Dhabi, Dubai’s immediate neighbor in the United Arab Emirates, a country whose balance sheet is flush with cash (derived from the trade of oil). Details have not yet emerged regarding the content of the meeting, but the motive of this new relationship is clear. Abu Dhabi can be Dubai’s white knight if it chooses to do so, using its own reserves to rescue the Dubai World Fund from impending financial catastrophe.
Analysts across the globe are poring over data, and analyzing internal information as well. As the fund has nearly $60 Billion in Total Debt floating, the reach of this collapse could be great, though early statements note that the net exposure for each institution may not be. Speculators contend though that this could be another Lehman Brothers, where the cascading effect is far worse than the single event in itself.
Abu Dhabi’s action (or lack thereof) will set the tone for the coming weeks, as this news continues to effect global markets. Dubai, up until this week, had been regarded as a desert dream factory, an oasis in the Middle East. The country possessed booming wealth, and sported amenities like a seven star hotel, and indoor ski slopes. But, as the global recession depends, the reckless spender has been brought back down to earth. In this process, bank stocks have followed suit.
Earlier this month, Dubai’s ruler Sheik Mohammed bin Rushad Al-Maktown told media critics to “shut up,” and sought to assure international investors that all was well with Dubai’s finances. Dubai’s pockets are now empty, drained by collapsing real estate prices and overly ambitious development plans. Depleting confidence in Dubai carries serious risks for Abu Dhabi as well, said Hani Sabra of Eurasis Group, a US based research firm.
Banks across the globe are researching the extent of their relationship with Dubai this weekend, and more information should emerge on Monday. As it does, markets will surely respond – as global markets sunk on Thursday and Friday, bad information could put banks further into a tailspin and risk widespread panic.
Dubai's Collapse Leaves Overleveraged Foreigners Abandoning Homes and Mercedes to Get Out
This is an extraordinary article about the over-leveraged foreigners who came to Dubai for the good life and then are forced to rush out, leaving their homes and even their Mercedeses with the keys at the airport. The reason - they cannot pay their debts and Sharia, which prevails in Dubai, the penalty for inability to pay debts is severe.
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