Wikinvest Wire

The Dubai debt comes due

Friday, November 27, 2009

Who would have ever thought that debt in Dubai would someday be a problem?

In a story that sounds all too much like that of a U.S. real estate agent who, after a couple of good years in the middle of the decade decided to get levered up to the maximum banks would allow rather than paying down their debt only to watch things come crashing down around them a few years later, the debt is coming due in Dubai.

The price of crude oil in the Persian Gulf or the price of condos in Las Vegas - it's all kind of the same thing when you have a global banking system on steroids.

After what we've all been through over the last year or so, you'd think that someone would have already stepped in by now with $80 or $90 billion to make this nasty little problem go away.

It's a good thing that most everyone in the U.S. is either out shopping or sitting at home with a turkey hangover or maybe there would be a bit more selling today.

Monday is another question - it seems pretty far away right now.

Here's my favorite Dubai story from the last year or so - this February report about sagging property prices that everyone would rather just pretend wasn't happening.

And of course these cool pictures from this item in January gave the clear impression that the regional economy was still booming.
Click to enlarge
A more comprehensive set of boom town photos can be found in this post from late 2006 and, of course, a few months later, the rotating skyscraper was discussed here.

They aren't still going to build the rotating skyscraper. Are they?

Of all the things that have appeared here about Dubai, perhaps this item from about a year ago was the most precient - New strategy - long ammo, short Dubai.


Anonymous said...

Why it's almost like having the entire world on fiat, floating exchange, bank created currency isn't working.

fish said...


At the end of the day gold was only down about $16.....bets on Monday? More selling or flight to non dollar quality?

Anonymous said...

Never fear, the central banks will simply confiscate more resources, and lend them out. This will again lower the standard of living, but central banks don't care about such mundane matters.

Tim said...

fish - no idea about Monday, but gold is certainly due for at least a little correction - maybe Friday was it...

News said...

IF gold correction lasted only one day that there is something fundamentally different in this market. Otherwise I've seen this gold movie before. Sharp drop of about 5%, followed by about 3.5% rebound, then followed by continued correction of about 10% that will last at least a week.

If this is a longer correction, then we are going back to $950-$1000 level.

Anonymous said...

IMO, I don't think there is anything that is going to reverse the fiat slide (aside from central banks jacking up rates to 20%). We've seen the last (only) sustained dollar rally we are going to see last year.

Hope I'm wrong as I'd like to buy more gold at $900.

I also believe that US taxpayers will bail out dubai via AIG default swaps.

Anonymous said...

Interest rates will go higher eventually, and may touch 20%. But, it will be due to CBs voluntarily jacking up rates. e.g. what are interest rates in Zimbabwe now?

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