The Dubai Money Issue
Last week, it was announced that there was a potential debt default risk by Dubai World to the tune of $60 billion. It sent stock markets around the world into a frenzy as worries about their request to restructure their debt in the face of the current economy meant they were in a little bit of trouble.
Let’s face this fact. The folks in the UAE (United Arab Emirates) have been building things like money was going out of style. They’ve built some beautiful hotels, built some fabulous skyscrapers, and keep building. They’re also using the equivalent of slave labor to do all of this, and ruining their water, but since that has nothing to do with finances I’ll stop there for now. This oil rich country has been going out of its way to turn itself into Monte Carlo while trying to hold onto some of its Muslim mores, all the while sitting at the edge of a desert and not planning logically for its own future.
So, I wasn’t close to being surprised when I read that they wanted to renegotiate their debt. I’m not surprised that they’re finally being allowed to restructure $26 billion of their debt. I wasn’t even really all that surprised when stock markets around the world reacted so badly to the news.
What I’m still amazed at, however, is that there’s so many people not paying attention to things and not expecting things like this to possibly happen. To quote myself, what don’t the experts know that we know? These are the same people who kept ignoring what Bernard Madoff was doing when it had to be known by these folks that what he was claiming was impossible.
Of course, Dubai, which owns Dubai World (another bad idea; haven’t they learned from other bad examples of government owned businesses?), is trying to tout their financial strength while Dubai stocks fell another 5.6% in Gulf markets. Oh yeah; the president of the country is also the ruler; maybe they should have been taking finance lessons from Saudi Arabia. They say their economy is showing signs of growth in the 4th quarter; isn’t this the same kind of straw grasping we keep doing as it regards home sales over here? And if they’re so confident, why are they still looking for other ways to restructure their debt, including talking to representatives from Abu Dhabi (which is also a part of the UAE, of which Sheikh Khalifa bin Zayed al-Nahayan is also the leader of, because they have more oil and are in better control of their finances.
Yes, we’re missing something here. Dubai might be in trouble right now, but the UAE’s total debt is pretty high also, around $184 billion, and Abu Dhabi’s debt is hanging around $90 billion. The best part about all of this; the U.S. has little danger of being impacted, with a low investment. For once, the top finance guys in this country didn’t look at something pretty and start throwing our money at it.
Maybe they are learning some lessons after all. By the way, I said I wouldn’t talk about Dubai and slavery; I didn’t say I wouldn’t show a video of it: