Dubai World Asks For More Time To Pay Debts - DFWstangs Forums
 
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post #1 of 11 (permalink) Old 11-30-2009, 10:23 AM Thread Starter
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Dubai World Asks For More Time To Pay Debts

While a government defaulting on its debts is pretty scary, at some point it was inevitable. Luckily, they've got the UAE to back them up. What happens when we don't?

http://business.theatlantic.com/2009...the_desert.php

Quote:
Originally Posted by The Atlantic
While you were all stuffing yourself with turkey and gorging on sweet potato souffle, Dubai World, the Dubai government's investment arm, asked investors for some extra time to make its debt payments. In normal times, this would be a big problem for Dubai. But these are not normal times, and the world is suffering from the mother of all debt hangovers. A big sovereign default--for this is essentially what this is--raises questions about who might be next.


Paul Krugman sums up the possibilities:


"First, there's the view that this is the beginning of many sovereign defaults, and that we're now seeing the end of the ability of governments to use deficit spending to fight the slump. That's the view being suggested, if I understand correctly, by the Roubini people and in a softer version by Gillian Tett.

Alternatively, you can see this as basically just another commercial real estate bust. Either you view Dubai World as nothing special, despite sovereign ownership, as Willem Buiter does; or you think of the emirate as a whole as, in effect, a highly leveraged CRE investor facing the same problems as many others in the same situation.

Finally, you can see Dubai as sui generis. And really, there has been nothing else quite like it.

At the moment, I'm leaning to a combination of two and three. For what it's worth (not much), US bond prices are up right now, suggesting that the Dubai thing hasn't raised expectations of default."

I agree with Professor Krugman--it's hard to see this presaging a sovereign debt default by, say, the United States. On the other hand, emerging markets are subjects to runs on their currencies, and debt, and I'm not so sanguine that we won't see effects there. We might get a split in sovereign debt prices, with developing world debt being shunned by investors who have suddenly remembered what a risk premium is, while US debt and that of other developed countries becomes more valuable. A positive movement in US bond prices agrees with that theory.

Which is not to say that this won't hurt us. The global economy is not really robust enough to stand up to repeated blows. Presumably that's why stock indices are off on worries about what follows.

Give me a dollar.
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post #2 of 11 (permalink) Old 11-30-2009, 10:25 AM
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With the current administration, God knows.

1/19/09, the last day of Free America.
Pericles "Freedom is the sure possession of those alone who have the courage to defend it. "

"[T]he people alone have an incontestable, unalienable, and indefeasible right to institute government and to reform, alter, or totally change the same when their protection, safety, prosperity, and happiness require it." --Samuel Adams


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post #3 of 11 (permalink) Old 11-30-2009, 10:27 AM
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No worries the Chinese will help them out! Maybe uncle obama can put together a nice stimulus package for them haha. full of fucking pork chops and bacon

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post #4 of 11 (permalink) Old 11-30-2009, 10:32 AM
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That place is insane. The build the most elaborate crap then start crying about money trouble. First the "bailout" they need due to the world seeking alternate fuels and now this?
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post #5 of 11 (permalink) Old 11-30-2009, 10:38 AM Thread Starter
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Quote:
Originally Posted by Lason View Post
That place is insane. The build the most elaborate crap then start crying about money trouble. First the "bailout" they need due to the world seeking alternate fuels and now this?
If you think this is bad, you should be reading The Economist. They're predicting some strong stuff, but hey, they predicted the credit crisis we're in now in November of '06.

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post #6 of 11 (permalink) Old 11-30-2009, 10:41 AM
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Reading the Economist is like drinking from a fire hose. I used to take it to the shitter here at work. Taking a dump was like a college lecture.
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post #7 of 11 (permalink) Old 11-30-2009, 10:50 AM
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Reading the Economist is like drinking from a fire hose. I used to take it to the shitter here at work. Taking a dump was like a college lecture.
In one end, out the other?

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post #8 of 11 (permalink) Old 11-30-2009, 05:19 PM
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Just the start.

My 401K is now a 400K (was 301K)
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post #9 of 11 (permalink) Old 11-30-2009, 05:29 PM
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Wait wait wait, you mean the guys who were building the largest building in the world and making their own islands now can't pay their debts. This is all a big suprise. People act like they had the investing habits of Warren Buffett or something. Why is anyone shocked? In one hundred years when oil costs $.10 a barrel because no one wants it, these idiots will be living in tents in the desert, still cutting each other's heads off.
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post #10 of 11 (permalink) Old 11-30-2009, 06:32 PM
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Quote:
Originally Posted by AL P View Post
Wait wait wait, you mean the guys who were building the largest building in the world and making their own islands now can't pay their debts. This is all a big suprise. People act like they had the investing habits of Warren Buffett or something. Why is anyone shocked? In one hundred years when oil costs $.10 a barrel because no one wants it, these idiots will be living in tents in the desert, still cutting each other's heads off.
Funny just 2 years ago, these where the same bunch of people stating how great and smart they where, and where so self reliant because they where investing in their own coutry for future growth. That is great and wonderful, but when you build a tourist trap, and take all the money away from the tourist ie: their local economy taking a shit. You probably didn't think your plan fully through!!!!!

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post #11 of 11 (permalink) Old 11-30-2009, 06:34 PM
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Quote:
Originally Posted by Yale View Post
While a government defaulting on its debts is pretty scary, at some point it was inevitable. Luckily, they've got the UAE to back them up. What happens when we don't?

http://business.theatlantic.com/2009...the_desert.php
my nieghbor is asking for more time too but i bet he doesnt get it.

RON PAUL '08
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