As much as I'm a strong and powerful American supporter, I do still believe that Capitalism is not the best economic plan for longevity. I've made the example about Monopoly and how at first, you really enjoy buying up all the land you can with all the money you get tossed at you. But as the game goes on and it's clear that someone has the strong hold on a monopoly and starts building like crazy making you pay every time you pass by it, it starts to lose the fun factor.
So when the news came out that Dubai is dead broke... I can't help but be the bearer of bad news and say that this is a preview of tomorrow's Wall Street carnage. Yup, Dubai is pretty much broke as a joke...
Dubai's Request For Debt 'Standstill' Shakes World MarketsBut if this comes to you as a surprise, I really don't know what to tell you. Dubai has been broke for a while now, they've just been in denial. A couple of weeks back their was a report that more people were leaving the hell out of the place abandoning their Ferrari's in the airport parking lot as they fled from collectors. Their is the ability to have a debtors prison sure scares people. I wonder if you could get a sweet deal on one of those abandoned cars. I always wanted a gold/silver plated exotic car and right now I'm sure you can get a great deal on one.
DUBAI, United Arab Emirates — Just a year after the global downturn derailed Dubai's explosive growth, the city is now so swamped in debt that it's asking for a six-month reprieve on paying its bills – causing a drop on world markets Thursday and raising questions about Dubai's reputation as a magnet for international investment.
The fallout came swiftly and was felt globally after Wednesday statement that Dubai's main development engine, Dubai World, would ask creditors for a "standstill" on paying back its $60 billion debt until at least May. The company's real estate arm, Nakheel – whose projects include the palm-shaped island in the Gulf – shoulders the bulk of money due to banks, investment houses and outside development contractors.
In total, the state-backed networks nicknamed Dubai Inc. are $80 billion in the red and the emirate needed a bailout earlier this year from its oil-rich neighbor Abu Dhabi, the capital of the United Arab Emirates.
Markets took the news badly – with the Dubai woes and the continued fall of the U.S. dollar giving investors twin worries. Dubai's move raised concerns about debt across the Gulf Region. Prices to insure debt from Abu Dhabi, Qatar, Saudi Arabia and Bahrain all rose by double-digit percentages Thursday, according to data from CMA DataVision.
In Europe, the FTSE 100, Germany's DAX and the CAC-40 in France opened sharply lower. Earlier in Asia, the Shanghai index sank 119.19 points, or 3.6 percent, in the biggest one-day fall since Aug. 31. Hong Kong's Hang Seng shed 1.8 percent to 22,210.41.
Wall Street was closed for the Thanksgiving holiday and most markets in the Middle East were silent because of a major Islamic feast.
"Dubai's standstill announcement ... was vague and it remains difficult to discern whether the call for a standstill will be voluntary," said a statement from the Eurasia Group, a Washington-based research group that assesses political and financial risk for foreign investors interested in Dubai.
"If it is not, Dubai World will be going into default and that will have more serious negative repercussions for Dubai's sovereign debt, Dubai World and market confidence in the UAE in general," the statement added.
Dubai became the Gulf's biggest credit crunch victim a year ago. But its ruler, Sheik Mohammed bin Rashid Al-Maktoum, had continually dismissed concerns over the city-state's liquidity and claims it overreached during the good times.
When asked about the debt, he confidently assured reporters in a rare meeting two months ago that "we are all right" and "we are not worried," leaving details of a recovery plan – if such a plan exists – to everyone's guess.
Then, earlier this month, he told Dubai's critics to "shut up."
After months of denial that the economic downturn even touched the glitzy city-state, the Dubai government earlier this year showed signs of trying to deal with the financial fallout that has halted dozens of projects and touched off an exodus of expatriate workers.
After an expensive adventure in doing things the Western way, it's "going back to basics" for Dubai, Shakeel added.
But there's a difference between abandoned Ferrari's and the whole city/state going belly-up. Although it sure seemed inevitable. I guess the business model of building Jurassic park in real life doesn't seem so sound. I mean, they had an indoor ski resort... And world shaped islands. Wait, let's see how that 'The World' project is coming along. You know, all those islands that were carefully designed off the coast of Dubai so that they would be in the shape of the contine--
Ha! yeah.. needs a little work..
The World project is one of the dumbest things ever attempted by man. You dump rocks and sand in water long enough to build islands.. not only that, but islands that look like the world. It's like that one beer ad where they toss rocks into the ocean so they have an island to party on. I mean, who doesn't want their own island to buck the rules of... drinking in public? Hmm, I'm not sure what laws they would need to make their own exclusive island for.
I'm going to talk about the bigger fish that will fry because of this, but there's just so much ground to cover. I mean, first of all, this is going to suck for those migrant slav-workers, there. It really is just a Slave run Vegas near the ocean with a lot of tall buildings. And tall buildings for nothing.
It really is pretty sad that the only thing that Dubai gets deadlines for is its massive skyscrapers and financial debts. It's not like it's a haven for slavery, corruption, blatant human rights violations, or a massive sex trade or anything. Whenever I say that I would rather visit pretty much anywhere else in the world besides Dubai people never understand why.
Besides screwing over the slave market that has been going on there for the luxuriant rich, Dubai was a place for companies to put their money into hoping for some return. In fact, this is going to kill the shit loads of companies that bailed out Dubai not too long ago by investing in them. We'll finally ge to see which banks are holding all that debt that Dubai World will "pay back when it gets around to it", from what I've heard this weeks lucky winner is HSBC. How about other companies who loaned Dubai money and have zero chance of seeing it back:
The US public will be “outraged” by Citibank’s $8 billion loan to Dubai just six weeks after the bank was bailed out, US House of Representatives domestic policy subcommittee chair-man has said. Dennis Kucinich commented on the Dubai loan and other US banking investments as a congressional panel released a report that strongly questioned Citibank’s actions. The report, shown to 7DAYS, cites the Dubai loan as the largest of the “questionable transactions” by banks after the US government bailed them out. It notes that the loan to Dubai’s public sector came on December 14, just six weeks after the US government gave Citibank a $25 billion bail-out.
The report quotes Win Bischoof, then chairman of Citi, as saying the bank agreed to the Dubai loan because “we continue to place the Gulf region among our globally most significant markets”. The report also questions JP Morgan’s $1 billion investment in India and Bank of America’s $7 billion investment in China. “When the American people find that their tax dollars, which were supposed to be used to get us out of this financial crisis, are instead being used to ship jobs and investments overseas, there will be outrage,” Kucinich said. The report notes the loans were not illegal and that it is not known if they were directly funded by bail-out funds. A Citibank official was quoted at the time as saying the $8 billion came from the bank’s own funds and third party sources. The report was released as the committee prepares to question banking chiefs about their use of bail-out funds.
I guess the best investment magnets are the ones that have no actual value aside from being investment magnets. Much like the best magnets are really big strong ones that slam together so hard that they turn your fingers into mincemeat. So this turning into a piss poor investment really shouldn't shock anyone.
It really makes you wonder why the hell economists all over the world shocked by this? It was concluded last year when the shit hit the fan that Dubai was going to go even further tits up. At least now you can get an amazing deal on a partially finished 500 story desert igloo tower. I mean, what was even the point of that towering symbol of modern day Babylon? You can see all the waste of money from up here!
This just highlights how stupid it was to build all those super-skyscrapers. There is no density that required it. It's really a work of stupidity. I recall hearing all the Econ majors foaming at the mouth and jerking off to Dubai. I guess it was just a matter of not having enough free market. The market, it needs more freedom! Actually, what it needs are more bootstraps and strawmen. Ten years from now all those abandoned towers are going to make for some really awesome post-apocalyptic locations for movies made by the Chinese, or poor college kids.
It was a bourgeois wonderland. I mean, how could it not be with a full fucking indoor skiing. Why would you want to go skiing in a desert? I do not know. I guess they took the idea of the indoor water park from vegas and ran with it. Really though, it's not needed and it's just over abundance. I guess I can't feel bad for those people because they went to an oppressive, shit hole country hoping to get rich. Goodbye, modern day version of Babylon. I guess the only thing now is I have no place to see disgusting displays of opulence and wealth now.
I am Ozymandias, King of Kings. Look upon my Jurassic Park recreation, and despair.
I haven't even touched on the tip of the ice burg in terms of absurd pictures of wasteful spending. You can check this site out to see the amount of pointless shit they were making in this wonderland where they assumed you could just throw more money at and it'll start working.
You'll have to forgive me. I've reached this far into this piece and I have not shown any concern for Haliburtons new headquarters located in Dubai... What will become of that poor company?! Heaven forbid it now has to spend more money on relocating to somewhere that isn't going to become a ghost town. Karma seems to be a bitch.
Dubai is a nice allegory for everything that is wrong with the world. It's basically Titanic 2.0. You know how in Sim City you make a really dense city as quickly as possible with tons of skyscrapers and you add tons of worthless landmarks and take out a bunch of loans to pay for all of it? That game strategy was really bad and usually never worked out. You didn't have to make a modern day Sim City situation to find that out.
I leave you with a video and these words from an article I found to be amazingly written about this place. Whoever runs this is my new favorite person. But let this be a reminder of what Capitalism holds for America's future.
England is deserted, Australia and New Zealand have merged, and the man who bought Ireland has killed himself.
They were designed to make Dubai the envy of the world: a series of paradise islands inhabited by celebrities and the super-rich reclaimed from the azure waters of the Arabian Gulf and shaped like a map of the Earth. It was called The World.
As millions of tonnes of rock were dumped into the sea for the foundations, timely leaks suggested that Brad Pitt and Angelina Jolie were to buy Ethiopia, Sir Richard Branson was tipped to occupy England, while Rod Stewart would border him in Scotland.
Instead it has become the world’s most expensive shipping hazard, guarded by private security in fast boats and ringed by warning buoys to keep the curious away. A development that was meant to send Dubai’s star into the firmament of First World cities has been left to the mercy of the waves and the baking winds.
Mile after mile of breakwater built from boulders brought hundreds of miles by ship has been laid, but inside its man-made lagoon, work has completely stopped. The expected map of the world of 300 islands is instead a disjointed and desolate collection of sandy blots — a monumental folly just out of sight of Dubai’s shore.
Those who bought into what was the world’s most ambitious building project were not celebrities. Many were more ordinary investors who put down 70 per cent deposits, some of them Anglo-Indians. John O’Dolan, who fronted a consortium that bought Ireland in 2007 for $38 million (£27 million), committed suicide earlier this year. The others have little prospect of seeing a return. Now The World has stopped they can’t get off.
“The World has been cancelled. It doesn’t even look like the world. Basically there is one island that is maintained that is said to be owned by the Sheikh [Dubai’s ruler] and the rest looks like a pile of muck,” said one local property agent.
It is the starkest example of a financing crunch that faces the emirate but many other projects are also in jeopardy. In the United Arab Emirates (UAE), of which Dubai is a part, about $300 billion of building is on hold after prices began tumbling. Abu Dhabi, Dubai’s oil-rich neighbour, is helping to support it through the crisis, so far to the tune of about $10 billion. Another $10 billion is likely to follow soon, and more may follow.