Goodbye Dubai
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I don't see any of this in Dubai.
And by "service", this also includes hosting the regional offices of most multinational companies supporting all the regional industries, from oil to banking.
And unless they all move to Bahrain, which won't happen, Dubain will continue to generate "value".
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Just how really informed are you guys? Copy/paste news reports just shows how you can read things. Read and not grasp.
What's wrong with debt restructuring talks? Are those the only talks in the world going on right now? What do you call Obama's Asian tour? Buy our debt please so we can spend our selves out of debt?
What's wrong with debt restructuring talks? Are those the only talks in the world going on right now? What do you call Obama's Asian tour? Buy our debt please so we can spend our selves out of debt?
Who are the rating agencies again? The rating agencies who gave us the AAA ratings that preceded the recent financial meltdown.
The ratings that preceded Enron, Worldcom and the dot com.
The ratings that preceded Enron, Worldcom and the dot com.
How much?59-billion....... a drop in the ocean compared to the trillions borrowed, yes borrowed by the US. The UK could not borrow so they came up with a money printing solution instead. Ingenious.But restructuring debt is now called a default. And who's got the right credibility to make that call?
But as always, informed journalism will prevail.
No mention that no one is buying US debt anymore, unemployment topping 10%,
No mention that no one is buying US debt anymore, unemployment topping 10%,
Obama begging Asian support for US debt. But that is not getting enough attention as it should. It is no news that the US can't borrow itself out of debt, but Bloomberg will really shed true light on that reality. Even Sri Lanka is buying gold instead of the worthless greenback. The sovereign fund behind Dubai, what is their capitalization again, and wouldn't the US love some of it? Just get Bloomberg on the story to scare scare everyone and in the process halve ones assets.
If Bloomberg were truly independent they can focus on what really matters, reporting on just how bad the US economy really is and its ramifications that still lie ahead.Argentina had rocks not a sovereign wealth fund behind them.
If the sovereign wealth fund was the savior of Dubai, why would Dubai be attempting to default on their debt as opposed to having their sovereign wealth fund pay off the debt?
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So what's the big deal? (Sir Donald)
This event is referred to as a "black swan" event. It can rapidly get out of hand (as can be seen by the worldwide market reaction to the event). It is serious.
Having said that, I agree with the analyst at the end of the article who mentioned Abu Dhabi stepping in. They have the cash to do so; the question is why haven't they done so yet?
Many think it is because they want to "punish" or "embarrass" Dubai. I don't. I think there are very interesting meetings going on this weekend between Dubai and Abu Dhabi to work out exactly how many of Dubai's assets are going to be handed over to Abu Dhabi in exchange for a bailout.
Dubai Ports and Emirates are two excellent assets that I am sure Abu Dhabi would love to get their hands on. Dubai is being squeezed between "the world" (to pay it's bond debt) and Abu Dhabi (to hand over it's financial "crown jewels").
In either case it is a disaster for Dubai and an embarrassment for Sheik Mo. I hope I never have to read about his incredible "vision" and "wise leadership" in the Gulf News for a very, very long time.
November 27, 2009
Dubai in deep water as ripples from debt crisis spread
Patrick Hosking and David Robertson
Work has been halted on the artificial islands
Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.
Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.
Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.
Although the scale of Dubai’s debts is comparatively modest at $80 billion (£48 billion), the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small.
The FTSE 100 plunged by 171 points to 5,194 — its biggest one-day fall in eight months in one of the most jittery days in the financial markets since the depths of the banking crisis.
The Treasury, the Bank of England and the Financial Services Authority were monitoring events closely and are demanding figures from UK banks on their loan exposures to Dubai.
According to a senior government official, Dubai’s crisis is regarded as modest and manageable for Britain, but there were growing fears that Abu Dhabi, the oil-rich neighbouring emirate that has in the past given rescue loans, would leave Dubai to its fate.
Dubai World, the state-owned corporation that began the panic on Wednesday by demanding a standstill on its interest payments, worsened the mood when it postponed a teleconference for its bond holders, saying the phone lines were overwhelmed.
Gerard Lyons, chief economist with Standard Chartered, said: “The market reaction shows how vulnerable some economies are to the aftermath of the debt binge. This highlights how fragile confidence is.”
The Eid al-Adha religious holiday in the Middle East, and the closure of financial markets in the United States for Thanksgiving, exacerbated the sense of uncertainty in markets that were open for business.
A computer crash at the London Stock Exchange, which by coincidence is 21 per cent owned by the Dubai Government, left dealers unable to trade for three and a half hours.
Shares in HSBC slumped by 5 per cent, wiping £6.2 billion from its value. According to the United Arab Emirates Banks Association, HSBC has £11 billion of loans outstanding to the UAE, of which Dubai is one of seven emirates. HSBC declined to comment.
More than £2.6 billion was slashed from the value of Barclays, while Lloyds and Royal Bank of Scotland, both partly owned by the taxpayer, saw their values fall by £1.7 billion and £1.5 billion respectively.
One analyst said that the fears were overdone because Abu Dhabi would eventually come to the rescue to save the UAE from embarrassment. Dubai World has liabilities of £36 billion, about three quarters of Dubai’s total state debt. Its subsidiary Nakheel built The Palm Islands development, but the property bubble in the emirate burst a year ago, leaving buildings unfinished, debts unpaid and paper fortunes erased.
Having said that, I agree with the analyst at the end of the article who mentioned Abu Dhabi stepping in. They have the cash to do so; the question is why haven't they done so yet?
Many think it is because they want to "punish" or "embarrass" Dubai. I don't. I think there are very interesting meetings going on this weekend between Dubai and Abu Dhabi to work out exactly how many of Dubai's assets are going to be handed over to Abu Dhabi in exchange for a bailout.
Dubai Ports and Emirates are two excellent assets that I am sure Abu Dhabi would love to get their hands on. Dubai is being squeezed between "the world" (to pay it's bond debt) and Abu Dhabi (to hand over it's financial "crown jewels").
In either case it is a disaster for Dubai and an embarrassment for Sheik Mo. I hope I never have to read about his incredible "vision" and "wise leadership" in the Gulf News for a very, very long time.
November 27, 2009
Dubai in deep water as ripples from debt crisis spread
Patrick Hosking and David Robertson
Work has been halted on the artificial islands
Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.
Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.
Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.
Although the scale of Dubai’s debts is comparatively modest at $80 billion (£48 billion), the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small.
The FTSE 100 plunged by 171 points to 5,194 — its biggest one-day fall in eight months in one of the most jittery days in the financial markets since the depths of the banking crisis.
The Treasury, the Bank of England and the Financial Services Authority were monitoring events closely and are demanding figures from UK banks on their loan exposures to Dubai.
According to a senior government official, Dubai’s crisis is regarded as modest and manageable for Britain, but there were growing fears that Abu Dhabi, the oil-rich neighbouring emirate that has in the past given rescue loans, would leave Dubai to its fate.
Dubai World, the state-owned corporation that began the panic on Wednesday by demanding a standstill on its interest payments, worsened the mood when it postponed a teleconference for its bond holders, saying the phone lines were overwhelmed.
Gerard Lyons, chief economist with Standard Chartered, said: “The market reaction shows how vulnerable some economies are to the aftermath of the debt binge. This highlights how fragile confidence is.”
The Eid al-Adha religious holiday in the Middle East, and the closure of financial markets in the United States for Thanksgiving, exacerbated the sense of uncertainty in markets that were open for business.
A computer crash at the London Stock Exchange, which by coincidence is 21 per cent owned by the Dubai Government, left dealers unable to trade for three and a half hours.
Shares in HSBC slumped by 5 per cent, wiping £6.2 billion from its value. According to the United Arab Emirates Banks Association, HSBC has £11 billion of loans outstanding to the UAE, of which Dubai is one of seven emirates. HSBC declined to comment.
More than £2.6 billion was slashed from the value of Barclays, while Lloyds and Royal Bank of Scotland, both partly owned by the taxpayer, saw their values fall by £1.7 billion and £1.5 billion respectively.
One analyst said that the fears were overdone because Abu Dhabi would eventually come to the rescue to save the UAE from embarrassment. Dubai World has liabilities of £36 billion, about three quarters of Dubai’s total state debt. Its subsidiary Nakheel built The Palm Islands development, but the property bubble in the emirate burst a year ago, leaving buildings unfinished, debts unpaid and paper fortunes erased.
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Some pretty good analysis in this article
Emirate has a lot of explaining to do
By Roula Khalaf, Middle East Editor, Financial Times
It came in a short statement about the restructuring of Dubai World, one of the emirate’s biggest and best-known companies, with the big news buried near the end. But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come. For months, all indications in Dubai were that the heavily indebted city-state, symbol of the rise of the region as an economic powerhouse as much as of the excesses of the pre-financial crunch days, would meet the obligations of the companies in which it has stakes, and that Nakheel’s $4bn debt due in December would be repaid. Only a few weeks ago, bankers in the region were so upbeat some had suggested that Dubai might not even need to raise more funds to pay debts due this year. It helped of course that the emirate was showing signs of recovery, with fewer expatriates packing their bags than expected, retail sales on the rise and the real estate sector beginning to stabilise. The government itself looked confident too, raising $2bn in Islamic bonds last month.
As always, though, the problem in Dubai is that no one had all the facts, and perhaps some in the financial community had made all the wrong assumptions. The whole affair, one analyst told me on Thursday, was “typical of the way things work in Dubai – top down and in a vacuum – and that makes it very difficult for investors”. True, top officials had indicated repeatedly that Dubai would not default on its debt – and Nakheel, the Palm real estate developer, was assumed to be too important for Dubai’s image. But officials did not explicitly say that the repayments would be made on time. Moreover, the recent prospectus to test market appetite for government bonds said the government was “not legally obliged” to meet the obligations of related entities – what is commonly referred to as Dubai Inc – but might at its sole discretion decide to extend such support. Most of the funds raised in the past year – including from Abu Dhabi banks on Wednesday – were by the government itself, rather than individual companies.
So what was Sheikh Mohammed bin Rashid, Dubai’s ruler, up to on Wednesday? Was he indicating, as some suggest, that the government would allow Dubai’s bad companies to suffer in order to save the good ones? Was he simply trying to force the hand of the Dubai World bondholders to buy some time and leave open the option of repaying the debt next month if he had to? Perhaps Dubai is convinced that as the government of the emirate raises fresh funds and restructures companies related to it, the emirate is consolidating its creditworthiness. Farouk Soussa of Standard & Poor’s says that lending to the government now arguably becomes less risky because it is putting the funds to better use. But he also says this is cancelled out by the lack of transparency.
Whatever the Dubai ruler’s intention, the way Dubai has gone about its financial business has hugely damaged its standing. Bankers and investors are furious, feeling they were led on the wrong path. Analysts, meanwhile, have been scrambling to reconsider the assessments they had recently made about Dubai. The assumption that Abu Dhabi would always stand by Dubai and its flagship companies is now suddenly seen as unsustainable. Was this perhaps Abu Dhabi’s way of taking its revenge on Dubai for the excesses of the boom years? I doubt it. The rivalry between the two emirates is less important than the implications of Dubai unravelling. The cost of insuring Abu Dhabi debt went up on the Dubai announcement.
It has to be remembered that many of Abu Dhabi’s companies are exposed to Dubai, having been some of the most enthusiastic investors. Whatever Dubai is up to, assuming there is some big strategy, it should have explained itself before raising the prospect of default – and it needs to do a lot more explaining now.
By Roula Khalaf, Middle East Editor, Financial Times
It came in a short statement about the restructuring of Dubai World, one of the emirate’s biggest and best-known companies, with the big news buried near the end. But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come. For months, all indications in Dubai were that the heavily indebted city-state, symbol of the rise of the region as an economic powerhouse as much as of the excesses of the pre-financial crunch days, would meet the obligations of the companies in which it has stakes, and that Nakheel’s $4bn debt due in December would be repaid. Only a few weeks ago, bankers in the region were so upbeat some had suggested that Dubai might not even need to raise more funds to pay debts due this year. It helped of course that the emirate was showing signs of recovery, with fewer expatriates packing their bags than expected, retail sales on the rise and the real estate sector beginning to stabilise. The government itself looked confident too, raising $2bn in Islamic bonds last month.
As always, though, the problem in Dubai is that no one had all the facts, and perhaps some in the financial community had made all the wrong assumptions. The whole affair, one analyst told me on Thursday, was “typical of the way things work in Dubai – top down and in a vacuum – and that makes it very difficult for investors”. True, top officials had indicated repeatedly that Dubai would not default on its debt – and Nakheel, the Palm real estate developer, was assumed to be too important for Dubai’s image. But officials did not explicitly say that the repayments would be made on time. Moreover, the recent prospectus to test market appetite for government bonds said the government was “not legally obliged” to meet the obligations of related entities – what is commonly referred to as Dubai Inc – but might at its sole discretion decide to extend such support. Most of the funds raised in the past year – including from Abu Dhabi banks on Wednesday – were by the government itself, rather than individual companies.
So what was Sheikh Mohammed bin Rashid, Dubai’s ruler, up to on Wednesday? Was he indicating, as some suggest, that the government would allow Dubai’s bad companies to suffer in order to save the good ones? Was he simply trying to force the hand of the Dubai World bondholders to buy some time and leave open the option of repaying the debt next month if he had to? Perhaps Dubai is convinced that as the government of the emirate raises fresh funds and restructures companies related to it, the emirate is consolidating its creditworthiness. Farouk Soussa of Standard & Poor’s says that lending to the government now arguably becomes less risky because it is putting the funds to better use. But he also says this is cancelled out by the lack of transparency.
Whatever the Dubai ruler’s intention, the way Dubai has gone about its financial business has hugely damaged its standing. Bankers and investors are furious, feeling they were led on the wrong path. Analysts, meanwhile, have been scrambling to reconsider the assessments they had recently made about Dubai. The assumption that Abu Dhabi would always stand by Dubai and its flagship companies is now suddenly seen as unsustainable. Was this perhaps Abu Dhabi’s way of taking its revenge on Dubai for the excesses of the boom years? I doubt it. The rivalry between the two emirates is less important than the implications of Dubai unravelling. The cost of insuring Abu Dhabi debt went up on the Dubai announcement.
It has to be remembered that many of Abu Dhabi’s companies are exposed to Dubai, having been some of the most enthusiastic investors. Whatever Dubai is up to, assuming there is some big strategy, it should have explained itself before raising the prospect of default – and it needs to do a lot more explaining now.
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Some very interesting reading however I cant help but think some of the authors have never been out here and have no idea of the culture/mentality that exists.
Expect AUH to help out but not indefinately, there are a a lot of locals who think they got themselves onto this mess so they should sort it out.
They will never see recovery to previous levels and for sure there has to be major restructuring in all areas (EK included), this cannot start until the face saving crap disappears and those at the helm accept what a serious problem they have created.......hmmm that could be the biggest problem of all
lets hope no more visions appear in the meantime!
Expect AUH to help out but not indefinately, there are a a lot of locals who think they got themselves onto this mess so they should sort it out.
They will never see recovery to previous levels and for sure there has to be major restructuring in all areas (EK included), this cannot start until the face saving crap disappears and those at the helm accept what a serious problem they have created.......hmmm that could be the biggest problem of all
lets hope no more visions appear in the meantime!
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This is in essence a notice of sovereign debt default (as the companies linked to the bond repayments are government and not private companies). If the U.S. suddenly told China they would not honor their pledge (a.k.a. "bond") to pay the Chinese back when their bonds came due, it would result in the end of the U.S. to ever borrow a dime again from any country. This would result in the end of the U.S. to exist as a country.
First the DW debt is not Sovereign debt - there was never any explicit contract to support it, the markets simply assumed that it would be covered.
And as for this idea that even if you do default of sovereign debt it is the end of existence of the country, well many countries over the years have defaulted but they are still here and still borrowing.
Yes this is serious but please keep a a bit of proportion - I would remind you that even though the cost of CDS has risen it still is far below the rate it reached in January - and the world did not end then.
Thats it - I'm off down the beach
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Last week several of the old crew of local advisors to Mo were sacked and the top guy from Deloitte's brought in to oversee the financial reorganization of DW - perhaps they coming to the conclusion that Nakheel cannot be saved and as they are responsible for most of the debt it might be better to let them fold and concentrate the new money that has been raised on boosting the balance sheets on the the rest of Dubai Inc.
Bankruptcy was a the best thing for GM - it might be what is needed for Nakheel.
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Oh do stop getting hysterical
First the DW debt is not Sovereign debt - there was never any explicit contract to support it, the markets simply assumed that it would be covered.
First the DW debt is not Sovereign debt - there was never any explicit contract to support it, the markets simply assumed that it would be covered.
You are technically correct but incorrect in your interpretation. DW is a government owned company. So if DW default on their bond obligations, while technically it will not be called a "sovereign default", investors will treat it as such given the relation DW has with the Dubai government. The outcome will be the same for the government of Dubai (increased borrowing costs going forward).
And as for this idea that even if you do default of sovereign debt it is the end of existence of the country, well many countries over the years have defaulted but they are still here and still borrowing.
Yes this is serious but please keep a a bit of proportion - I would remind you that even though the cost of CDS has risen it still is far below the rate it reached in January - and the world did not end then.
Part of that risk capital has been coming back into Dubai. The reason why is because the government gave every indication that all was well here and there is nothing to worry about. So, based upon the government telling me all is well, I as an investor (lets say I have a hedge fund) agree to invest in Dubai businesses owned by the government. Meanwhile, the government knows things are terrible but, due to lack of transparency, they choose not to tell the market participants.
Suddenly they decide to pull the rug out from under these participants by way of announcing their intent to default on their debt obligations (timed perfectly to coincide with Eid and the U.S. Thanksgiving holidays when markets are closed).
If I am a hedge fund looking to invest my capital, I look at what happened in Dubai and start wondering what might be going on in other "risky" areas that are also telling us "all is well". I know it is too late for my Dubai investments (the intended default has already been announced so now I would be hiring legal firms to foreclose on various worldwide assets DW has in an attempt to get some of my money back on their eventual sale) but I start thinking......whats going on in Ukraine; whats going on in Argentina, whats going on in Latvia, etc, etc. Then I start thinking maybe all is not well in the world. So I start pulling my risk back, sell my risky assets, pay off my dollar borrowings (that I got at 0% interest through the USD carry trade) and put the whole thing back into U.S. short term treasuries.
Net result:
1) Stock prices worldwide collapse (may have started today; still too early to tell).
2) Credit default swaps on all "emerging markets" skyrocket, sending cost of borrowing for these countries to the moon.
3) Unlike Dubai who has a sugar-daddy that can bail them out (Abu Dhabi), who bails out the Ukraine, Latvia, Argentina, Pakistan, etc. The IMF steps in but how many holes in the dike will they be able to plug......how many holes in the dike will there be?
The net result could be a worldwide collapse in this recover (the dreaded "double dip") with stock prices retesting the Mar/2009 lows. If that doesn't hold, watch out below. This is the problem with Black Swan events; it is impossible to estimate how far their effects will translate all the way down the investment line. That is why this has the potential to be such a serious event.
In any case, this DW bond default will have huge long term repercussions for Dubai. They are now known as fiscal "dead-beats" who cannot be trusted to pay their debts. This was well know among the construction industry (ask the companies who are still waiting payment for their dredging services to build the Palm Islands), but now it is known to the Investment community.
No FDI (foreign direct investment) and DIFC becomes a ghost town. The entire Dubai plan was to diversify out of oil (as there is next to none left) and into tourism, banking, commerce, etc. Who in their right mind would put their MENA operations in Dubai when it is known they cannot be trusted? Not me and my hedge fund or business; I'd look to Bahrain or Qatar, or even Abu Dhabi. Certainly not Dubai.
End of story.......
-Dubai declines substantially with no growth for decades due to lack of FDI,
-built up real estate inventory (apartments, villas, malls) sits empty for years/decades (think ghost town).
Emirates as an airline will still do ok because it really has nothing to do with Dubai other than being based there. It has 1 huge advantage that other airlines do not have and that is GEOGRAPHY. The business model works because it is not dependent upon Dubai doing well for the airline to do well. However, it will be interesting to see what this government default does to affect the credit rating of Emirates. If the airline is painted with the same brush as other Dubai government entities; watch the funding costs to pay for all those shiny aircraft to skyrocket. Of course, this in the end would reduce the profitability of the airline as a consequence.
Last edited by Dune; 27th Nov 2009 at 07:00. Reason: typo
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Asking for extension is Technically a default. It logically follows then, Technically the US is bankrupt.
In addition, there has never been a request for an extension of repayment as per above.
However, you are correct that technically the U.S. is bankrupt....depending upon how you define "bankrupt":
-if it is assets - liabilities......bankrupt.
-if it is defaulting on a repayment.......not bankrupt as there has never been a default.
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Jet 2
Jet 2.
credit ratings have dropped massively as a consequence of this move. And this + the distrust in any Gulf company will impact EK big big time.
The puppets of Dubai stuffed the western banks this week(and there's gone be many who will bite the dust, some experts already see some parallels with the 08 banking crisis).
The thrust of the western financial world in Dubai is shocked after yesterday's revelation and it will take lots of time to correct this. In the mean time what has Dubai on offer? Right : just 1 airline and a few hotels and a government which scares away tourists and business. That's it! Good luck them. Quite different than your comparison with the US and GM I would think.
I ll join you on the beach. Could be the only thing to do in a few months time while we are on unemployment insurance. Hang on...I guess not.
credit ratings have dropped massively as a consequence of this move. And this + the distrust in any Gulf company will impact EK big big time.
The puppets of Dubai stuffed the western banks this week(and there's gone be many who will bite the dust, some experts already see some parallels with the 08 banking crisis).
The thrust of the western financial world in Dubai is shocked after yesterday's revelation and it will take lots of time to correct this. In the mean time what has Dubai on offer? Right : just 1 airline and a few hotels and a government which scares away tourists and business. That's it! Good luck them. Quite different than your comparison with the US and GM I would think.
I ll join you on the beach. Could be the only thing to do in a few months time while we are on unemployment insurance. Hang on...I guess not.
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Darn
Those gunning toting fundamentalists will need to find some other Haven to do their Laundry.
Dubai was and Ponzi scheme no 2 ways about it.
Darn back to January 2008 where all my stocks went down the tube!!!
Sorry guys will now need to move back to coach for a while
Those gunning toting fundamentalists will need to find some other Haven to do their Laundry.
Dubai was and Ponzi scheme no 2 ways about it.
Darn back to January 2008 where all my stocks went down the tube!!!
Sorry guys will now need to move back to coach for a while
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If you look at the business section "briefs" from the wire services you will find that they are almost all about the issue and the resulting ripple effect throughout the Gulf - some of them quite shrill.
Looks like someone forgot to cull that section.
Pay no attention to the man behind the curtain....
Looks like someone forgot to cull that section.
Pay no attention to the man behind the curtain....
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Indeed. Just one line, our boss making the headlines trying to calm things...
Well we know the saying and I guess there is enough of it to stick their heads in and that is exactly what they are doing right now. Pathetic.
Especially their attitude towards this is very worying if you ask me.
Well we know the saying and I guess there is enough of it to stick their heads in and that is exactly what they are doing right now. Pathetic.
Especially their attitude towards this is very worying if you ask me.
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Goodbye Dubai
THE OKEY-COKEY song
Traditional Party Song
You put a million in
You take a trillion out
In out, in out
You sheik it all about
You look to Abu Dahbi
And you turn around
That's what it's all about
Oh, Abu Abu Dhabi
Oh, Abu Abu Dhabi
Oh, Abu Abu Dhabi
Knees bend, arms stretch
BAIL US OUT !!!!
Lid
Traditional Party Song
You put a million in
You take a trillion out
In out, in out
You sheik it all about
You look to Abu Dahbi
And you turn around
That's what it's all about
Oh, Abu Abu Dhabi
Oh, Abu Abu Dhabi
Oh, Abu Abu Dhabi
Knees bend, arms stretch
BAIL US OUT !!!!
Lid
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Oh, Abu Abu Dhabi
Knees bend, arms stretch
BAIL US OUT !!!!
Knees bend, arms stretch
BAIL US OUT !!!!
Question remains: why didn't they? Pretty sure there has been a lot of talking going on between Dubai and Abu Dhabi. Abu Dhabi is damaging its own investments big time?
Credit ratings of Abu Dhabi went down. Guess there are more people in the financial world waiting for a clear explanation. For the moment we only see smoke.
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Dewa, Muncipality
In all of these discourses has anybody given a thought to
1)The cost of untilities in UAE.
2)The fallout on the Locals.
3) Subsequently the cost of doing business in the Dubai.
4) The worst case scenario effect on traffic originating from DXB i.e. EKs breakeven feed.
As we know Dubai was the magnet for locals from other emirates except probably AUH. These guys are paid fancy wages for doing effall. In the next phase of this default, there will be, revenue generation to offset the cost of credit. Cost controls are the first and easy steps to follow.
It will start with deferred wages and then revised wages, which reflects on the retail sector of the economy, another major area of employment.
Next area of revenue generation is Utilities. To start with the utilities in DXB are imported or locally generated - not natural- i.e Gas from Qatar, Water desalinated and Electric generation from oil & gas again imported from Doha or AUH.
These costs will increase, as the supplier will be reducing the credit period and also the quantum of credit. This will lead to higher costs to the Utility producers which get transferred to the local populace, add to this the need to generate higher revenue - yield- rates just ballon.
Now with the decrease in state benefits to the locals, will lead to further demands from the locals for jobs in pvt sector - a la Bahrain since 90s - here then you have a drop in productivity of the pvt enterprise as they have to make do with less skilled and motivated workforce.
All of the above will lead to a rethink, on the part of many corporates housed there to look at alternatives like DOHA or MUSCAT. Leading to further drop in premium traffic travelling in and out of DXB. Construction was the largest employer, with it coming to a standstill, all the indentured labout from the sub-cont stops leading to drop in high yield traffic.
In a depressed global economy, fuel will see a drop which also increases prospects for other sub-cont airlines to start ops atleast to SHJ or RAK. There are plenty of eqpt and crew avail at depressed prices. Further expansion into these markets will be more difficult now, as most of these routes were like a quid prop quo for the labour from the sub-cont getting employment in DXB, Infact with the likely drop in employment there will be greater pressure from the Govts. especially of India, to revise the bilaterals. Now the geography might be the very threat that was seen as an advantage.
EK has a dispropotionate dependence on connecting traffic, as mentioned above the base traffic will see steady drops.
And to top it all, quoting a the chairman of PIMCO on CNBC '' The continued drop in house prices will effect the ability of people to spend on the local economy',' as we all know noe DXB was a purely real estate economy.
Personnally, we all are likely to be affected. I have been unemployed for 2 months now and ME was one of the areas for jobs.
Its only human to feel Schadenfreude at the state of Dubai. There was this overt arrogance that we all have seen and experienced in that part of the world. I only hope all of this leads to a fair and just world for my children.
1)The cost of untilities in UAE.
2)The fallout on the Locals.
3) Subsequently the cost of doing business in the Dubai.
4) The worst case scenario effect on traffic originating from DXB i.e. EKs breakeven feed.
As we know Dubai was the magnet for locals from other emirates except probably AUH. These guys are paid fancy wages for doing effall. In the next phase of this default, there will be, revenue generation to offset the cost of credit. Cost controls are the first and easy steps to follow.
It will start with deferred wages and then revised wages, which reflects on the retail sector of the economy, another major area of employment.
Next area of revenue generation is Utilities. To start with the utilities in DXB are imported or locally generated - not natural- i.e Gas from Qatar, Water desalinated and Electric generation from oil & gas again imported from Doha or AUH.
These costs will increase, as the supplier will be reducing the credit period and also the quantum of credit. This will lead to higher costs to the Utility producers which get transferred to the local populace, add to this the need to generate higher revenue - yield- rates just ballon.
Now with the decrease in state benefits to the locals, will lead to further demands from the locals for jobs in pvt sector - a la Bahrain since 90s - here then you have a drop in productivity of the pvt enterprise as they have to make do with less skilled and motivated workforce.
All of the above will lead to a rethink, on the part of many corporates housed there to look at alternatives like DOHA or MUSCAT. Leading to further drop in premium traffic travelling in and out of DXB. Construction was the largest employer, with it coming to a standstill, all the indentured labout from the sub-cont stops leading to drop in high yield traffic.
In a depressed global economy, fuel will see a drop which also increases prospects for other sub-cont airlines to start ops atleast to SHJ or RAK. There are plenty of eqpt and crew avail at depressed prices. Further expansion into these markets will be more difficult now, as most of these routes were like a quid prop quo for the labour from the sub-cont getting employment in DXB, Infact with the likely drop in employment there will be greater pressure from the Govts. especially of India, to revise the bilaterals. Now the geography might be the very threat that was seen as an advantage.
EK has a dispropotionate dependence on connecting traffic, as mentioned above the base traffic will see steady drops.
And to top it all, quoting a the chairman of PIMCO on CNBC '' The continued drop in house prices will effect the ability of people to spend on the local economy',' as we all know noe DXB was a purely real estate economy.
Personnally, we all are likely to be affected. I have been unemployed for 2 months now and ME was one of the areas for jobs.
Its only human to feel Schadenfreude at the state of Dubai. There was this overt arrogance that we all have seen and experienced in that part of the world. I only hope all of this leads to a fair and just world for my children.
Last edited by jethrotull; 27th Nov 2009 at 12:49.
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Where has all the dough gone!
So please explain, where has all the oil renenues gone since the first barrel was sold.
I thought that by now,
50 yrs later, there would have been trillions in the bank!!
I thought that by now,
50 yrs later, there would have been trillions in the bank!!