Dubai a whisker away from bankruptcy

United States
November 28, 2009 3:43am CST
I'm reading the Mail Online and frankly this bit of text gives me the chills. * The U.A.E., otherwise known as the Disney Land of the seriously wealthy called Dubai, is a whisker away from bankruptcy. It has built it's coastline and offshore manmade islands on credit turned debt. In ill hidden panic, Dubai is seeking loans from an oil soaked neighbor or two. * Compared to debts like the United States owes it isn't much, it is "mere" billions as apposed to trillions. Still, when you get into enough zeros, all you can say is "Holy Dollar!"* In today's global economy, one city state's troubles do not stay isolated. Misery loves company, and Dubai will have plenty of it if they cannot settle their mess. The UK is tightly tied into a financial tangle with them. * http://www.dailymail.co.uk/news/article-1231532/UK-banks-jobs-risk-Dubai-domino-effect.html
2 people like this
5 responses
• Philippines
29 Nov 09
honestly,I hope I can work to Dubai next year.even if it is facing serious financial distress now.I think the country has hidden wealth,and can really get back as long as they know how to utilize their financial resources.they should know how to maximize their oil profits as well as tourism earnings.
1 person likes this
• United States
30 Nov 09
The smog and the heat are repellents to me as far as going anywhere near Dubai personally. Heck, I've problems going to Phoenix. * If they could, however, manage to get solar power run desalination plants, that would be one heck of a money maker in this warming planet.
• Australia
29 Nov 09
The situation in Dubai is similar to that experienced by Argentina a decade or so ago. In Argentina I believe their currency was artificially floated too high, so exports suppered too much and the country became bankrupt. When they talk about a country becoming bankrupt, generally it called a sovereign default. What this means is that, if for instance an investment bank invested money into the building of giant hotel, and the company or the owner is unable to pay the loan back, then they default similar to home loan foreclosures in the US during the credit crunch. When this occurs, the legal property title of the hotel or company is transfered to the hands of the Investment bank which then owns the hotel or company. Now what has happened in Dubai is that many of the hotels and buildings that were under development and had so much foreign investment is owned by a state owned company, I forget the name, and so because there are so many investments, even if the title is transfered to the investment banks or the investors, there is too much supply and is essentially a property bubble and if they try to sell the buildings the return they get is less than what is owed to them. This is exactly whats happened in the sub-prime meltdown. As a consequence of this inability to get back the money they invested all the stock markets around the world are in free fall. Having said that, Dubai is a city within an Emirate that is quite oil rich, so they will probably be able to refinance the debt. This has been an exercise by the media to blow the story way out of proportion and rubbish Dubai's growth. I am predicting this story and the stock market falls to last a couple of weeks and it will be back to normal again.
1 person likes this
• United States
30 Nov 09
That is an excellent explanation and I sincerely hope that you are correct. The USA isn't far behind Dubai in the tumble. Personally, as an American, I would feel a little uncomfortable being governed by China. They are however flip flopping thanks to the Dubai mess too...
@artistry (4154)
• United States
28 Nov 09
...Hi CraftyCCorner, I heard this on the news last week, and the stock market tumble one day last week was said to be tied to the news that Dubai was in trouble. First I will say that there is a financial world crisis still going on. The U.S., as you say is in debt up to its ears, and if we have to help Pakistan out with its war, we are going to be in deeper you know what. I really think that like AIG for instance, which was so tangled up with so many companies and people, but in serious financial trouble and could not be allowed to crumble although it should have been, Dubai will be rescued by who ever has the money to assist. Some things can not be allowed to collapse or there would be world wide catastrophes of such immense proportions, it would shake the depths of the financial world. So before it all falls, monies will be wired, checks will be cleared and we will move on to the next crisis that will have to be taken care of. Just a thought. Take it easy.
1 person likes this
• United States
30 Nov 09
Doing my best. I do have deep concerns for the lowest level expat laborers who find themselves in a right mess too. * The whole global financial system is in bad need of a dust out. There is simply too much crap and muck hiding in too many corners.
@scheng1 (24807)
• Singapore
28 Nov 09
Actually not just UK, practically every country has dealings with Dubai. That's why the stock markets around the world go into a free fall. Fortunately the news break out later in the week, and US was on Thanksgiving holiday, and friday was a public holiday for Singapore. I think those investors buying the bonds cannot sleep at night now. What is so surprising about Dubai is that it's part of oil-rich Middle East. Hard to believe that oil-rich country also can go bankrupt. I doubt the recession is truly over. If this Dubai crisis is not resolved before the stock market opens next week, the world is going into double-dip recession.
1 person likes this
• United States
30 Nov 09
Dubai sits on a small amount of oil, but it will peter out by 2012, that is why the leadership was so hot to turn the place into Vegas on steroids. Other Emirates have rich oil sources, but each Emirate is considered an individual state and doesn't have to help out a neighbor in trouble even if he is part of the UAE.
@sukumar794 (5047)
• Thiruvananthapuram, India
28 Nov 09
very truthful facts being laid out here.It is awful to find nations vying with one another in bringing in comforts so highlighted.
1 person likes this
• United States
30 Nov 09
Comfort is one thing but some of the stuff they built isn't even attractive, it is so gaudy. There are darker elements to Dubai coming to light too, about how they treat the lowest strata of expat laborers, and what they do to those who have the misfortune to bounce a check!