WAKE UP! Dubai is in a big mess!

A Gulf Over Debt Bailout Lies Between Two Divided Arab Emirates

By ANDREW CRITCHLOW

Will oil-rich Abu Dhabi bail out neighbor Dubai, currently groaning under $70 billion of debt racked up by its government-owned companies? Don't count on it.
Abu Dhabi's decision last week to pump $4.4 billion into its own banks while offering no support to lenders in Dubai or other members of the United Arab Emirates may simply be brinkmanship among the sheiks. But the possibility Abu Dhabi will refuse to come to Dubai's aid, once seen as almost unthinkable, can no longer be ruled out.

That raises the prospect of a deeper debt crisis in Dubai. And it could even mean a fragmentation of the federation, now in its 38th year, if Abu Dhabi refuses to pump billions of dollars into the economies of poorer emirates like Dubai to prevent either a corporate default or severe downturn. The cost of insuring Dubai debt has rocketed to around 10 percentage points for five-year debt -- higher even than for Iceland.

Construction of new buildings in Dubai, United Arab Emirates. The global financial crisis has taken its toll in Dubai with construction slowing and many projects in the planning stage being canceled.

Dubai's economy is contracting after a 40% slump in property prices, leaving the emirate struggling to refinance $15 billion of debt this year, according to credit-rating company Moody's.

Without Abu Dhabi's help, it has little chance of doing so. Moody's says it is likely to downgrade a raft of state-owned companies "if a trend of selective treatment within the federation becomes discernible." And bankers say they won't extend new lines of credit to Dubai without cast-iron financial guarantees from Abu Dhabi.
Abu Dhabi is driving a hard bargain. Its demands may include the surrender of Dubai's autonomy and the loss of control over crown jewels such as Emirates Airline and Nakheel, builder of the emirate's palm-shaped islands.

That may be too much for Dubai's ruling Maktoum family to stomach -- partly because the rulers of the two sheikdoms are cousins. Also, Dubai contends it was a principle of the 1971 agreement to form the federation that Abu Dhabi would use its oil wealth to support the other emirates.

Abu Dhabi has its own economic worries, thanks to falling oil prices, which account for the majority of the emirate's export earnings. Its reserves have been depleted by the losses suffered on its foreign investments, such as the $7.5 billion Abu Dhabi pumped into Citigroup in 2007 just before its shares collapsed.
But neither Abu Dhabi nor Dubai can afford to allow this standoff to drag on. Default by a major Dubai-owned company would trigger a crisis of confidence that could cost the emirate its status as the pre-eminent center for business in the region.

Worse, it could pull on the fabric that binds the emirates together, destabilizing the entire region.

Write to Andrew Critchlow at andrew.critchlow@dowjones.com
FEBRUARY 17, 2009
Don't Count on a Dubai Bailout - WSJ.com

[irishxpat]

i know 2 banks doing well in the present climate
blood bank and sperm bank

[xdude]

Dubai is going the Iceland way.. I hope it does not as got too much stakes involved..
but it would be foolish to keep ignoring the signs n trying to comfort oneself abt it being bailed out by AD..
but the way things r currently wth dubai not being able to refinance its debt, we might suddenly get a rude shock one day..

[Andy Capp]

But non of the big semi government entities have to refinance any major debt until end of 2010. so there's no problem there, just yet.

Also Joey, just cos you're leaving/left doesn't mean that you have to disparage the country, it strikes me that you're acting like a petulant child that's had it's favourite toy taken off them....

I'm sure we could find many thousands of articles saying how deep the us is in the ****, but we don't. Scaremongering like you are doing is not big or clever.

[bigdave]

Joey your my bro, but andy is right. You are acting fecking retarded.
Did you know the state you are moving to is going to have over 40 billion in debt this time next year? Did you know that they are suspending tax returns in cali just so they can give money to schools????? Did you know that almost every house that has a mortgage in cali is worth 50% less than what they owe on there mortgage? 4 bank systems have failed in california.. Dude cali is 100 fold worse off then Dubai and it will only get worse for them. But we arent ****ting on cali, we are giving you a seeya later sendoff, nice to know ya, be safe and prosper..

so grow up broski.. I dont know what made you hate Dubai so bad, but life goes on bro..

here take a look at the 10 pages of links to news from cali about there problems
DrudgeReportArchives.com 2009

And be careful over there. They dont even have money to house hardened criminals. They have to release 10's of thousands of murders, drug dealers, rapist, ect because they cant afford to house them. so cover your butthole and watch your wallet.

[SFarrell]

Originally Posted by Andy Capp

But non of the big semi government entities have to refinance any major debt until end of 2010. so there's no problem there, just yet.

Also Joey, just cos you're leaving/left doesn't mean that you have to disparage the country, it strikes me that you're acting like a petulant child that's had it's favourite toy taken off them....

I'm sure we could find many thousands of articles saying how deep the us is in the ****, but we don't. Scaremongering like you are doing is not big or clever.

Andy,

Totally agree with your comments. This is the second time Joey has posted something of this nature since announcing his imminent departure. Child yes, very insecure yes. He is simply trying to make his decision to leave look more like it is the right choice and will be better off in the US or Canada.

There are still some people here prepared to stay and tough it out, And Joey your fooling yourself if you think you will be better off. "Out of the frying pan into the Pot" or should i say "wouldnt wanna be ya"

[Andy Capp]

I quite agree, and I'm so confident of this country I've just set up a new company with the sponsorship of a Sheik!!!

Watch this space, but soon you'll see the fruits of my endeavours on every street in Dubai....

[irishxpat]

Originally Posted by Andy Capp

I quite agree, and I'm so confident of this country I've just set up a new company with the sponsorship of a Sheik!!!

Watch this space, but soon you'll see the fruits of my endeavours on every street in Dubai....

oh yes i can see it now andy has a fruit shop on every corner get your lovely ripe melons here

Originally Posted by Andy Capp

I quite agree, and I'm so confident of this country I've just set up a new company with the sponsorship of a Sheik!!!

Sir Andy,

Just so that we're on the same page here - we're all talking about Dubai not Ajman, right sir?
-------------------

Failures in their home country seek Dubai as an alternative, statistic shows 73% of expats in the UAE are failures back in their home country...

let the record show; those are my personal stats

Let's make a bet, I say Dubai is totally finished - if I'm wrong well then I'm the biggest fool who's ever registered to this forum, if I'm right, then all of yous take a number and wait in line (including you bro "bigdave") and kiss my a-s-s

cheeriossssss SIRRRRRRRRRRRRRRRRRRRRs!
-Joseph

[irishxpat]

Originally Posted by JoeyDee

Sir Andy,

Just so that we're on the same page here - we're all talking about Dubai not Ajman, right sir?
-------------------

Failures in their home country seek Dubai as an alternative, statistic shows 73% of expats in the UAE are failures back in their home country...

let the record show; those are my personal stats

Let's make a bet, I say Dubai is totally finished - if I'm wrong well then I'm the biggest fool who's ever registered to this forum, if I'm right, then all of yous take a number and wait in line (including you bro "bigdave") and kiss my a-s-s

cheeriossssss SIRRRRRRRRRRRRRRRRRRRRs!


-Joseph

pulls up chair for the ensuing battle ps life is what you make of it its better to have tried and failed than to have never tried at all