This is what happens when a you try and create an "economy" by just hype and borrowing!! Lets see how many want to run back to dubai the " dreamland"


Dubai Debt Delay Rattles Confidence in Gulf Borrowers (Update2)


Nov. 26 (Bloomberg) -- Dubai is shaking investor confidence across the Persian Gulf after its proposal to delay debt payments risked triggering the biggest sovereign default since Argentina in 2001.
The cost of protecting government notes from Abu Dhabi to Bahrain rose, extending the steepest increase since February as Dubai World, with $59 billion of liabilities, sought a “standstill” agreement from creditors. Bonds of its property unit, Nakheel PJSC, mature Dec. 14. Dubai contracts climbed 124 basis points to 564, the most since they began trading in January, adding to 122 yesterday, CMA Datavision prices showed.
“There is nothing investors dislike more than this kind of event,” said Norval Loftus, the head of convertible bonds and Islamic debt at Matrix Group Ltd. in London, which manages $2.5 billion of assets including Dubai credits. “The worst-case scenario will of course be involuntary restructuring on the Nakheel security that brings into question the entire nature of the sovereign support for various borrowers in the region.”
Moody’s Investors Service and Standard & Poor’s cut the ratings on state companies yesterday, saying they may consider state-controlled Dubai World’s plan to delay debt payments a default. The sheikhdom, ruled by Sheikh Mohammed Bin Rashid Al Maktoum, borrowed $80 billion in a four-year construction boom that reduced its reliance on falling oil supplies and created the region’s tourism and financial hub.
‘Further Defaults’
“Dubai is the most indicative of the huge global liquidity boom and now in the aftermath there will be further defaults to come in emerging markets and globally,” said Nick Chamie, head of emerging-market research at Toronto-based RBC Capital Markets.
Stocks, bonds and currencies fell across developing countries. The MSCI Emerging Markets Index of stocks dropped 1.1 percent, led by declines in China and Russia. South Africa’s rand weakened 1.3 percent against the dollar and the Turkish lira slumped 1.1 percent. Hungary’s forint lost 1.2 percent per euro. Credit-default swaps on Russia increased to 206.5 basis points from 192.
Gulf region default swaps jumped, with contracts linked to Bahrain rising 32.5 basis points today to 227, the biggest increase since Feb. 18. Contracts linked to Abu Dhabi added the most since February yesterday, climbing 36 basis points to 136.5 and were another 27 basis point higher at 164 at 10:10 a.m. in London, according to London-based CMA. Qatar default swaps advanced 23 basis points to 115, adding to yesterday’s 11 basis- point increase.
Saudi Debts
Saudi Arabia contracts climbed the most since February, adding 20 basis points to 110.3. The British Bankers’ Association asked the U.K. government to intervene with Saudi authorities over debts of at least $20 billion owed to as many as 100 banks by Saad Group and Ahmad Hamad Algosaibi & Brothers Co., two family holding companies based in the oil city of Al- Khobar, according to a letter dated Nov. 20.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point is 0.01 percentage point and is equivalent to $1,000 a year on a contract protecting $10 million of debt.
Dubai’s contracts, which increase as perceptions of credit quality deteriorate, are the fifth most expensive worldwide, exceeding Iceland’s and Latvia’s.
Argentina Default
Default swaps on Dubai World unit DP World Ltd., the Middle East’s biggest port operator, jumped by a record 181 basis points to 540.5 yesterday and were priced at 539.5 today, according to CMA data. “DP World and its debt are not included in the restructuring process for Dubai World,” the government said in a statement to Nasdaq Dubai today.
The price of Nakheel’s bonds fell to 74 cents on the dollar from 85 yesterday and 107 a week ago, according to Goldman Sachs Group Inc. prices on Bloomberg.
UBS AG, Switzerland’s largest bank, said it expects the U.A.E. will prevent a default by Nakheel. Dubai is one of seven sheikhdoms in the U.A.E. that includes Abu Dhabi, which holds 8 percent of the world’s oil reserves and bought $5 billion of bonds sold by Dubai yesterday through state-controlled banks.
Unlike Argentina, which stopped payments on $95 billion of debt eight years ago after yields on benchmark bonds more than doubled in four months to more than 40 percent, Dubai’s announcement yesterday “was a surprise,” said Alia Moubayed, a London-based economist at Barclays Plc.
Standstill Agreement
The government raised $1.93 billion last month in its first sale of Islamic bonds, attracting more than $6.3 billion of orders. The dollar-denominated securities due 2014, which are governed by Shariah laws barring investors from profiting from the exchange of money, dropped to 8.1 percent today to 89.5 cents, lifting the yield to 9.1 percent from 6.2 percent on Nov. 24, according to ING Groep NV prices on Bloomberg.
“The uncertainty and unpredictability around upcoming debt repayments implied by” yesterday’s announcement “will add to pressure on Dubai spreads, which may lead to a re-pricing of Dubai and U.A.E. risk,” Moubayed wrote in a report yesterday.
Dubai World will ask creditors for a “standstill” agreement as it negotiates to extend maturities, including $3.52 billion of Islamic bonds due Dec. 14 from Nakheel, Dubai’s Department of Finance said in an e-mailed statement yesterday.
Sheikh Mohammed removed the chairman of Dubai World from the board of Dubai’s main holding company, the Investment Corporation of Dubai, last week. Dubai World had $59.3 billion in liabilities and $99.6 billion in total assets at the end of 2008, subsidiary Nakheel Development Ltd. said in an August statement. Dubai owes $4.3 billion next month and $4.9 billion in the first quarter of 2010 through government and corporate debt, Deutsche Bank AG data show.
‘Brink of Failure’
“Nakheel is now standing on the brink of failure given the astonishing amount of cash Dubai would have to inject on it in order to see the enterprise survive,” said Luis Costa, emerging-market debt strategist at Commerzbank AG in London. “Events like this are a perfect storm.”
Dubai World’s more than 70 creditors face the prospect of writedowns on as much as $60 billion of debt if they haven’t unloaded their holdings and the state-owned company fails to win additional support from Abu Dhabi.
The biggest creditors are Abu Dhabi Commercial Bank and Emirate NBD PJSC. Other lenders include Credit Suisse Group AG, HSBC Holdings Plc, Barclays, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, according to a person familiar with the situation.
“Our exposure is immaterial,” said Credit Suisse spokesman Marc Dosch. HSBC and Lloyds declined to comment when contacted by Bloomberg. Spokesmen at RBS and Barclays were not immediately available to comment.
Rating Downgrades
Emaar Properties PJSC, U.A.E.’s biggest developer, was cut by four levels to Ba2, two steps below investment grade, by Moody’s. Jebel Ali Free Zone, an operator of business parks, and DIFC Investments were also lowered to speculative-grade by Moody’s yesterday. DP World and Dubai Electricity & Water Authority were downgraded two levels to Baa2, the second rank above junk. Moody’s and S&P said they may cut ratings further.
The debt “restructuring may be considered a default under our default criteria,” S&P said in a statement.
Borrowing from Abu Dhabi state banks accounted for half the $10 billion Dubai ruler Sheikh Mohammed said he planned to raise by yearend. He said Nov. 9 the program will be “well received,” and those who doubt the unity of Dubai and Abu Dhabi should “shut up.”
Sheikh Mohammed turned to Abu Dhabi’s central bank on Feb. 23 to raise $10 billion by selling debt. The emirate’s credit default swaps dropped 178 basis points that day, after trading for a record 976 basis points.
“It’s very important to resolve this in a way that will minimize contagion across the region,” Matrix Group’s Loftus said.

This was bound to happen at some point. 80 Billion dollar in debt!

Dubai always liked to boast about building the Tallest tower in the world, The Most expensive hotel in the world, The biggest airport in the world...Biggest this and biggest that....

Ladies and Gentlemen, I present you..The Biggest Debt and The Deepest hole in the world!

cheers

seenappa.

well people wanna talk about decoupling. Dubai goes and the world market goes.

http://ca.news.finance.yahoo.com/s/27112009/2/biz-finance-dubai-woes-hit-world-stocks-asia-most.html

LONDON - World stocks tumbled Friday amid fears that the fallout from Dubai's problems repaying $60 billion in debt would derail the global financial and economic recovery.

Sentiment among investors has been hit hard by Wednesday's news that Dubai World, a government investment company, has asked creditors if it can postpone its forthcoming payments until May.

That has stoked fears of a potential default and contagion around the global financial system, particularly in emerging markets.

Asian stocks were particularly badly hit as they played catch-up following big losses in Europe in the previous session - the main indexes in Hong Kong and South Korea slumped nearly 5 per cent. Hong Kong's Hang Seng ended 1,075.91 points, or 4.8 per cent, lower at 21,134.50, while South Korea's benchmark plummeted 4.7 per cent to 1,524.50.

In Europe, the FTSE 100 index of leading British shares was down 16.13 points, or 0.3 per cent, at 5,178, while Germany's DAX fell 19.45 points, or 0.4 per cent, to 5,594.72. The CAC-40 in France was 23.27 points, or 0.6 per cent, lower at 3,655.976.

On Thursday, Europe's main indexes slid over 3 per cent, with banks, especially those thought to have exposure to Dubai such as Barclays PLC, HSBC PLC and Standard Chartered PLC, particularly badly hit.

Wall Street, which was closed Thursday for the Thanksgiving Holiday, is set for a heavy bout of selling - Dow futures were down 106 points, or 2 per cent, at 10,236 while the broader Standard & Poor's 500 futures slid 27.4 points, or 2.5 per cent, at 1,081.50.

"Market cynics have been looking for a correction in the equity market, which has blazed the trail in the past seven months," said David Buik, markets analyst at BGC Partners.

"However they have been unable to find sufficient reasons to nail their flag to the mast, by taking profits, whilst alternative asset classes were unattractive options - well they certainly found an excuse yesterday with the Dubai debt debacle," he added.

Across all markets, there is a growing awareness that investors may use the upcoming year-end to lock-in whatever profits have been made over the last 12 months.

Investors were also keeping a close eye on associated developments in the currency markets as the dollar slid to a new 14-year low of 84.81 yen. However, the dollar climbed back off its lows to 86.33 yen amid mounting expectations that the Bank of Japan may intervene in the markets by buying dollars or selling yen after Japan's finance minister Hirohisa Fujii said he was "extremely nervous" about the movements in the yen and that the "market had moved too far in one direction."

"The concern is now that the Bank of Japan will intervene to prop up the dollar as it heads towards its all-time lows," said Michael Hewson, an analyst at CMC Markets. Japan's central bank has done so before, he noted.

On Thursday, the Swiss National Bank reportedly intervened to buy dollars to prevent the export-sapping appreciation of the Swiss franc. That seems to have worked - for now, at least - as the dollar has moved back above parity, trading 0.9 per cent higher at 1.0118 Swiss francs.

The British pound has also been battered amid fears about the exposure of Britain's banks to the region. The pound was down 0.8 per cent at $1.6380.

One currency losing its shine somewhat was the euro, which fell 0.8 per cent to $1.49 - in times of uncertainty the dollar is considered to be more of a safe haven currency.

Elsewhere in Asia, Japan's Nikkei 225 stock average fell 301.72 points, or 3.2 per cent, to 9,081.52 while Australia's index dropped 2.9 per cent. China's main Shanghai stock measure was off 2.4 per cent.

Oil, meanwhile, tracked developments in stock markets and benchmark crude for January delivery fell $4.17 to $73.79 a barrel in electronic trading on the New York Mercantile Exchange.


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AP Business Writer Jeremiah Marquez in Hong Kong contributed

if you see THE Star article, Dubai's economy is just USD 60 Billion when compared with USD 55 Trillion world economy and hence no one outside Dubai even bothers.
From the end of last year, most offices and many desi's transferred to Abu Dhabi which now pays much more than what Dubai paid in its hey days and rents in Abu Dhabi is more than what it is in Dubai.
Many feel sorry for Dubai as to who will ever come and use its facilities now but I feel that once the world markets recover (if at all), then it will be business as usual for Dubai.
There are still plenty of places in the ME (like Qatar, Kuwait, Bahrain etc..) where Desi's can still be employed and make lots of money (more than what is offered for professional immigrants in Canada) and after India becoming an attractive place, less professionals are intending to stay in NA , more so Dubai.
When God closes one door , he will open another. So just stay cool (unless you have invested in Dubai and are expecting a return immediately).

Peace by a PD

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I am a Gents and not a Ladies.

Quote:

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Originally posted by tamilkuravan

if you see THE Star article, Dubai's economy is just USD 60 Billion when compared with USD 55 Trillion world economy and hence no one outside Dubai even bothers.
From the end of last year, most offices and many desi's transferred to Abu Dhabi which now pays much more than what Dubai paid in its hey days and rents in Abu Dhabi is more than what it is in Dubai.
Many feel sorry for Dubai as to who will ever come and use its facilities now but I feel that once the world markets recover (if at all), then it will be business as usual for Dubai.
There are still plenty of places in the ME (like Qatar, Kuwait, Bahrain etc..) where Desi's can still be employed and make lots of money (more than what is offered for professional immigrants in Canada) and after India becoming an attractive place, less professionals are intending to stay in NA , more so Dubai.
When God closes one door , he will open another. So just stay cool (unless you have invested in Dubai and are expecting a return immediately).

Peace by a PD

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s'apen TK.
your title Who cares?
Like if that was true, the world markets would not have taken a dive.
But anyway, that's just a one day phenomenon or perhaps 2 days. Next week the markets will recover from that shock. If another shock happens the markets will crash from this particular shock the markets will recover unless the banks in Europe who lent the money get so booched over and above what they are already booched that they get so super booched that it takes the world down with it. So it will be the lending institutions who will take the world down not specifically Dubai, that will be a factor though.
And if they really want to find a scapegoat maybe Dubai is it.
But the reat is cool TK.
Ek door bund hota hai do dusra khulta hai.
and when the world economy recovers it will be dhanda as usual in Dubai.
Man, there are always temp setbacks. Nothing is forever.

Golden Opportunity for India.

Thanks to RealONe for the info.

India should become a friendly big brother/financier to Dubai and bail it out.

This way Indian investments will be protected. Dubai has nearly 43% of Desis working there. This way we will protect their employment. We should force Dubai to go in for Desi style democracy(government by votes) and we will have CPI or CPI(M) ruling Dubai.

Kerala and Dubai can make a pact that way no visas will be required to travel between India and Dubai. May be A.K.Antony can become the PM of Dubai.

We should also make a pact with Dubai in regards to Terrorists and hence people like Dawood Ibrahim and others will be arrested and returned back to India.

We will have a a presence in ME and hence look over shoulders into Saudi Arabia which is supposedly does not like India.

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http://www.expressbuzz.com/edition/story.aspx?Title=The+sponge+of+terror&artid=tQQVoyPuCao=&SectionID=d16Fdk4iJhE=&MainSectionID=HuSUEmcGnyc=&SectionName=aVlZZy44Xq0bJKAA84nwcg==&SEO=

The sponge of terror


Aditya SinhaFirst Published : 28 Nov 2009 12:35:00 AM ISTLast Updated : 28 Nov 2009 01:37:59 AM IST

Another 26/11 would bring immense public pressure on the government to retaliate, which would be matched by American pressure to remain unprovoked.


US pressure has worked earlier, notably after the 2001 attack on Parliament when India mobilised its military along the Pakistan border in 2002’s Operation Parakram. It annoyed the US no end because Pakistan moved 60,000 troops to the border, allowing so many al-Qaeda and Taliban types to slip into Pakistan and escape post-9/11 US military action in Afghanistan. The CIA learned that India was planning a brigade-level commando raid into PoK; the US, along with Britain and Germany, in June publicly withdrew all but essential diplomatic staff, delivering a veiled threat to India. The government started looking for a way out and declared Operation Parakram over after the successful J&K elections in August 2002.

Then there was last year’s siege of Mumbai.

The then foreign minister, Pranab Mukherjee, made some angry noises prompting former US Secretary of State Condoleezza Rice to read the riot act to Pakistan; Islamabad retaliated with extortion when “unnamed military officials” said that any confrontation with India would hamper Pakistan army operations on the Afghan border. The CIA again noted two Indian Air Force violations of Pakistan airspace, as well as IAF preparations to hit terrorist camps in PoK, so the US vise on India was tightened.

The pressure to not retaliate was enough, perhaps, for the prime minister to require a multiple-bypass heart operation, but he had already told Parliament that war was not a solution, letting Pakistan off the hook.

You cannot help but wonder what happens after the next terrorist strike. With a pro- America prime minister who does not directly face the electorate and who gets visibly thrilled by grandiose American pronouncements about India-on-the-global-stage (notice no one making such lofty declarations ever makes promises about India becoming a permanent member of the United Nations Security Council), there are no prizes for guessing whose pressure will be more effective. India is likely to remain, in the words of Ashley J Tellis of the Carnegie Endowment for International Peace, at a US Senate hearing earlier this year, a “sponge that protects us all”. To quote Tellis: “India’s very proximity to Pakistan... has resulted in New Delhi absorbing most of the blows unleashed by those terrorist groups that treat it as a common enemy along with Israel, the US, and the West more generally”.

None of us wants to be a “sponge”. When the next terrorist strike comes, many of us will want to see some “payback”, even if it is a token muscular gesture. So let us examine what may initially seem an absurd proposition: why not leave Pakistan alone (for these days it is the bigger “sponge” for terrorism, to the extent that Pakistan’s Inter Services Intelligence directorate is repeatedly hit), and why not start talking of hitting targets in Saudi Arabia? Naturally no one would ever touch the holy places and of course the government should never do anything to distress or incite Indian Muslims. Also, Saudi Arabia is not a weak country; it has powerful allies.

Yet in the post-9/11 cacophony Pakistan is repeatedly called the epicentre of terrorism while no one talks much about the House of Saud’s role in promoting Islamism whether for religious reasons or geopolitical ones.

(Actually, several people pointed out that Osama bin Laden was a Saudi of Yemeni descent, and Michael Moore’s film Fahrenheit 911 explored the nexus between Saudi oil wealth, the Bush dynasty and terrorism).

When one gentleman, the venerable Ram Jethmalani, pointed out at a conference last Saturday that Wahabism was responsible for terrorism, the Saudi ambassador to India, Faisal-al-Trad walked out in protest; Law Minister Veerappa Moily had to sweettalk him into returning, saying that Jethmalani’s was not the government’s view.

There is something to what Jethmalani says, however. We have heard ad nauseam about how for decades the Wahabis have been promoting through petro-dollars their literalist and austere interpretation of Islam.

It is now a historical fact that most of today’s Islamists were spawned in the mujahideen resistance to the USSR’s invasion of Afghanistan in December 1979; that resistance was funded evenly by the Saudis and the Americans.

What people seem to overlook is that Saudi intelligence deliberately encouraged the growth and the agenda of the ISI during the resistance against the Soviet Union, according to Steve Coll’s excellent Ghost Wars; that the Saudis were never interested in moderates in the resistance; and that after the US abandoned Afghanistan following the withdrawal of the USSR, the Saudis encouraged the ISI to back extremist Gulbuddin Hekmatyar over others. And as radical Islam grew, the Saudis hint that they had to turn a blind eye to it so that the monarchy could be protected; that, however, does not explain the Saudis’ wilful support to the ISI’s agenda of promoting radical Islam, an agenda that combined two Pakistani strategic objectives: keeping India off-balance in Kashmir and controlling Kabul.

When the Taliban swept into power, they fulfilled these objectives perfectly; the ISI became more powerful and the Saudis more supportive, to the extent of pressing the Taliban case with the Americans. Saudi Arabia, UAE and Pakistan were the only countries to recognise the Taliban government (the Taliban showed its gratitude by allowing Saudi and UAE royals to hunt for bustards in the southern Afghan desert), knowing fully well that the Taliban could not care about governance or the welfare of its citizens; and when it came to the reconstruction of post-Taliban Afghanistan, Saudi Arabia wouldn’t even pay its half of the bill for the Kabul-Kandahar road, leaving the US to pick up the tab (in contrast, several Indians have died building Afghan roads). The Saudis have always turned a blind eye to the Harkat- ul-Ansar, the Jaish-e-Mohammed and the Lashkar-e-Toiba; it is no secret that the Saudis dislike India. No wonder their immense wealth is directly responsible for the ISI’s growth, nurturing and evolution.

Saudi Arabia is the benefactor and sustainer of the ISI in the same way that the ISI is the benefactor and sustainer of the LeT and other lethal anti-India groups. Saudi Arabia finances the global growth of Islamist ideologies, from which spring extremism and terrorism. So while some may argue that to get at the root cause of terrorism in India, one has to get at the ISI, this column would go one step further: for getting at the root cause of the Frankenstein called ISI, one has to start talking about getting at Saudi Arabia.

And next time there’s an attack on India, we could respond to US pressure by pointing the finger at the House of Saud. Or we could continue being the sponge for terrorism.

editorchief@expressbuzz.com

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Sunny Leone a true Canadian DESI now back in India !.