Dubai debt `standstill' raises alarms about image

DUBAI, United Arab Emirates – Just a year after the global downturn derailed Dubai's explosive growth, the city is now so swamped in debt that it's asking for a six-month reprieve on paying its bills — causing a drop on world markets Thursday and raising questions about Dubai's reputation as a magnet for international investment.

The fallout came swiftly after Wednesday statement that Dubai's main development engine, Dubai World, would ask creditors for a "standstill" on paying back its $60 billion debt until at least May. The company's real estate arm, Nakheel — whose projects include the palm-shaped island in the Gulf — shoulders the bulk of money due to banks, investment houses and outside development contractors.

Yahoo

So it seems the M.E. was not immune to the global turn down.

Other sources:
BBC

Bloomberg

Sky News

This is in M.E.issues because I believe we will start seeing more of this in the M.E., that is other countries defaulting on debt.

[edit on 11/26/2009 by mrmonsoon]

WhooHoo!! The Recession is Over!!!! uhh,

That should be the recession is over and the depression is just starting. I'm sure after the Mid East starts faltering China won't be far behind.

I knew this for some time now.

Dubai asked for help from the Rothschilds a while back.

link

I didn't see it around the forums then, maybe I should have posted it.

[edit on 26-11-2009 by Grey Magic]

reply to post by Hastobemoretolife


Watch the news and the skies closely these days.

The plug on our behinds is about to be completely removed from the drain of society, and we are going to be caught in the whirlpool.

There is NO money left! Only a few isolated groups have a currency that has a true backing through gold or silver. Even then that means little when all this crap we take for granted flushes away.

We are running on economic steam, and what then? What is happening in Dubai is just yet another set of symptoms of the larger societal brain tumor that our world leaders are contributing to. You can fill a cancer patient with every chemical under the sun, and it won't do any good if the tumor is still there after treatment.

Recovery?

Paging Dr. Frankenstein, we have the U.S. economy in O.R. #3, you're gonna need those insulated gloves...

reply to post by GideonHM


I agree. The Christmas season is going to be the deciding factor on the true state of the economy. If the numbers are dismal then everything is going to crash. Which means we will find out in February where we all stand.

Oh well there is only a little time left to prepare after Christmas I believe the cat will be out of the bag.

reply to post by Hastobemoretolife

I'm sure after the Mid East starts faltering China won't be far behind.

You're right! From Breitbart News

We have two major factors weighing on equities and other risk markets: Dubai's call for a moratorium on its debt repayment to May and more stringent capital adequacy requirements for Chinese banks

I've been saying for some time that "China is Japan on steroids" and is overdue for a banking failure.

This should add some nervousness to world markets, strengthen the dollar make US and European debt look safer!

Originally posted by plumranch
reply to post by Hastobemoretolife

 

I've been saying for some time that "China is Japan on steroids" and is overdue for a banking failure.

This should add some nervousness to world markets, strengthen the dollar make US and European debt look safer!

China indeed has some banking problem and a little political uncertainty, but this dubai fiasco might actually make china more appealing. China has become the world factory, unlike United States derivative product (selling debts all over the world) that's real product. Unless the world stop consuming or other countries can produce goods more efficiently than china, china will always have that buoyancy, as long as there's no political chaos of course.

reply to post by Jazzyguy

China has become the world factory, unlike United States derivative product (selling debts all over the world) that's real product. Unless the world stop consuming or other countries can produce goods more efficiently than china, china will always have that buoyancy, as long as there's no political chaos of course.

Any indication of China banking problems can cause great concern because Chinese internal failing debt is between 15 to 40% of China's GDP. China (like Japan) has delivered loans based on the "good ole boy", it's who you know and your politics not your business plan.

The Japanese economy failed in the 90's and hasn't recovered. China is Japan on steroids. When and how badly will China fail?

China is in political chaos now. They are trying to balance a communist economic system with capitalism and people are mad about the pay and everything else. China has major problems, but due to the communist regime and the controlled flow of information we don't hear about it.

Also China has over valued their currency by a good amount. Also because of the economic climate around the globe another day like what happened in September 2008 and many foreign manufactures could close up shop. They are trying to move to a consumer driven economy just like we have, but they have to give more freedom to the people. The people don't have a lot of cash many factory managers are ecstatic when they have enough money to buy a bicycle.

China has major problems they are trying to deal with.

reply to post by Hastobemoretolife

China has major problems they are trying to deal with.

Agreed.

Most import probably is the shaky internal debt, the inefficient centralized government, and unstable political system involving a poor agricultural interior with revolutionary tendencies vs. the relatively well off industrial coastal cities.
China is doing a dangerous balancing act all complicated by the incredibly large recent stimulus program!

Originally posted by plumranch
Any indication of China banking problems can cause great concern because Chinese internal failing debt is between 15 to 40% of China's GDP.

Not that great of a concern although I don't know the exact percentage. Some says the communists sweep it under the rug, others say the risk is overblown. Nevertheless, I believe the damage to the world economy will be limited. It's china's internal problem, people just don't buy chinese debt.

The Japanese economy failed in the 90's and hasn't recovered. China is Japan on steroids. When and how badly will China fail?

Don't know. The difference is China grows up along with other developing nations in general and manufactures a broader spectrum of goods, Japan didn't. China is luckier that way, it doesn't completely rely on the west for exports. But china just like japan in the 80s, also has an asset bubble tendency. This one though I believe is more dangerous than china's banking problem.

reply to post by Jazzyguy

But china just like japan in the 80s, also has an asset bubble tendency. This one though I believe is more dangerous than china's banking problem.

The Chinese are hiding a lot of the bad internal debt. They say 15% but it is more like 25% GDP or much higher. If that goes bad because of downturn, well, that is significant.

China's asset bubble

They're borrowing to grow even more China does add a few wrinkles of its own to that scenario. Since the Chinese economy is still very bad at allocating capital, corporate borrowing to build new plants itself becomes part of the asset bubble. I'll start my sketch of China's coming train wreck with the problems in that sector. In the second quarter, China's gross domestic product grew by an extraordinary 11.3%. That's a significant speed-up from 9.9% growth in 2005, 10.1% growth in 2004 and 10% growth in 2003.

Banking crisis, Asset bubble? About the same thing, same result. The banks are going to have one heck of a problem when the Asset bubble bursts!

So we agree there!

Originally posted by plumranch
Banking crisis, Asset bubble? About the same thing, same result. The banks are going to have one heck of a problem when the Asset bubble bursts!

So we agree there!

Definitely, the potential is definitely there.