Crisis in Dubai

Discussion in 'Politics, Religion, Social Issues' started by Ugg, Nov 26, 2009.

  1. Ugg macrumors 68000

    Ugg

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    #1
    Grauniad

    It's not surprising really, Dubai's "success" always sounded too good to be true.

    I wonder how this is going to affect investment in the Middle East. For months now, the lack of transparency in the UAE has crippled all who have done business there, now any western businesses who are owed money from Dubai or its residents are probably screwed.

    They were definitely the lucky ones.
     
  2. takao macrumors 68040

    takao

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    #2
    hardly surprising if one knows that all those fancy new buildings were built using loans

    and last year within 1 month dubai real estate market dumped prices 40%+ across the board and hasn't recovered yet
     
  3. jav6454 macrumors P6

    jav6454

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    #3
    Dubai is one place that exploded to fast on the dreams of one person. Such fast pace required lots of investment that I bet oil could not support. End result, loans are now stacking.

    Could the Dubai tower be owed?
     
  4. Eraserhead macrumors G4

    Eraserhead

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    #4
    Maybe this'll start another crisis.

    Lets hope other developing economies have a more solid foundation.
     
  5. Ugg thread starter macrumors 68000

    Ugg

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    #5

    Dubai had a fair amount of success in marketing itself to the west, and its almost total lack of transparency perversely only helped support the bubble. Dubai was also becoming a popular middle eastern playground. It'll be fascinating to see who ends up getting paid. The western banks or the ME investors.

    Unless I'm mistaken, Dubai has no bankruptcy laws. You can't leave the country permanently if you owe money in Dubai. That's why all those luxury autos were abandoned at the airport. Westerners bought into the dream and then watched it go sour without any hope of recourse.

    There have been lots of stories about architects, construction firms, engineering firms going without pay for years already. My guess is that this means the end of Dubai as it was known during the late 90s and early 00s. Nobody will want to touch the place with a ten foot pole as long as there's no transparency. I doubt that the Dubai tower will be seized, but I also wonder if it will be finished.

    Dubai did the right thing by diversifying since they have no oil but I don't know if they're ever going to find their way out of this hole.
     
  6. Ugg thread starter macrumors 68000

    Ugg

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    #6
    I think Dubai is fairly unique. The only thing it had going for it was its real estate boom and tourism. Both of course are very fickle.

    I can't think of any other country that was tied so irrevocably to any one industry.
     
  7. takao macrumors 68040

    takao

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    i doubt it ... i always loved to watch tv reports about it 2-3years ago and see what they would built and go on raving about "how tourism will come etc." and i remember always thinking "and what are they going to do there?"

    name a country less interesting for tourists in the middle east in terms of historical sights etc. ? it's like Norway trying to get more tourists on their beaches and competing with italy and spain

    edit: according to some news site Dubai jsut got another loan from abu dhabi months ago for 10-15 billions if they hadn't they might not have made it in terms of liquidity
     
  8. Queso macrumors G4

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    #8
    Dubai has been bankrupt for some time. Every company I know has been relocating staff to Bahrain or Abu Dhabi just to keep the money coming in. The unlucky ones are tied into lease agreements for Dubai office space that is sitting empty. What a waste of cash.

    The perfect example of an artificial property bubble.
     
  9. erickkoch macrumors 6502a

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    #9
    I don't understand why the big deal. They're in the hole about $60 billion. In the grand scheme of things, that's no big deal. Yet the markets are spooked. There must be more to this.
     
  10. Eraserhead macrumors G4

    Eraserhead

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    #10
    Dubai was supposed to be the Singapore of the Middle East, but actually it seems it was just a house built on sand.
     
  11. Peterkro macrumors 68020

    Peterkro

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    #11
    Capitalism? Ooh look the Emperor has no clothes.
     
  12. Blue Velvet Moderator emeritus

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    #12

    It seems that some UK banks are disproportionally exposed to this debt, banks which are still on life-support from the UK government. Markets dislike uncertainty and I guess that the fear is that, like a loose thread on a garment, it could cause more to unravel.

    Noteworthy that the usual crowd aren't in here, trying to tell us that it's all the fault of people who couldn't afford to take out house loans. So much for the masters of the universe. Getting increasingly tired of hearing of their greed and incompetence.

    Wouldn't have hurt to disseminate that message a little more widely than just to the Beltway crowd.
     
  13. Peterkro macrumors 68020

    Peterkro

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  14. SactoGuy18 macrumors 68020

    SactoGuy18

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    #14
    The big problem here is that the European and Asian banks that helped finance Dubai World's expansion are WAY more leveraged than any US-based bank. As such, if Dubai World defaults you could see a LOT of liquidity headed towards--the United States of America.
     
  15. jav6454 macrumors P6

    jav6454

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    Yet, they placed their entire country under one whole industry. (One that houses two)

    Tourism and Real Estate. Both of which are very economically tied to how the global economy does. However, because of the greed of the OPEC, the world is now under a heavy recession. Remember when Oil went down to $37 per barrel? OPEC decided to cut quotas to make the price rise to $70 again, they made it and the world will not recover until we get cheap oil.

    A global recession is something that hits hard on the only industries this country lives on.
     
  16. GfPQqmcRKUvP macrumors 68040

    GfPQqmcRKUvP

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    #16
    :rolleyes:


    Let's not get carried away here; Norway is a beautiful country.
     
  17. DoNoHarm macrumors 65816

    DoNoHarm

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    you can't blame people for trying selling a product that people want (oil), using legal and widely available tools to develop their country (loans from foreign banks), and trying to diversify their economy (with tourism). Instead of blaming tiny Dubai for a global crisis, please take a closer look at Detroit's crappy guzzlers and New York's financial sector.
     
  18. Desertrat macrumors newbie

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    #18
  19. Ugg thread starter macrumors 68000

    Ugg

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    #19
    OPEC's greed has been fed by America's greed when it comes to oil consumption. It's a two way street.

    The fjords, yes, but nobody is going to open an umbrella on a rocky Norwegian beach instead of a sandy Mediterranean one.

    Dubai has no oil to speak of and most of Dubai's debts are to other UAE members, and ME countries, not western banks.

    Although Dubai did seem to have some success in marketing itself as an alternative vacation spot, its only selling point was excess and sun and sand.

    Dubai is by no means responsible for the global crisis, but Dubai World went overboard to such a degree it's not even funny. With every major project they announced I couldn't help but feel that Dubai was the newest emperor with no clothes. Well, the emperor has finally been exposed for what he is.
     
  20. jav6454 macrumors P6

    jav6454

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    I thought Dubai had oil, but in small amounts. Point being that the emperor went on this rampant construction spree to have a tourism industry when oil ran out.

    In any case, the emperor had it coming, he never really controlled his spending spree nor did he plan for something like this.
     
  21. toontra macrumors 6502

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    #21
    Watching the Dubai race I was struck by the obscenity of the F1 facility there. I can hardly think of a more wasteful development in terms of natural resources, and, just to cap it all, the race is held at night requiring artificial lighting on a monumental scale.

    I guess the environment can go hang as long as the money merry-go-round is producing. It's probably a good thing if the music stops on this one.
     
  22. Queso macrumors G4

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    #22
    Why is everyone blaming the Japanese Monarch? It's not his fault ;)
     
  23. takao macrumors 68040

    takao

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    #23
    i can think of something more wastefull: skiiing inside a building built in the desert... which is also possible in dubai ;)


    about tourism getting hit hard:it's the expensive end of tourism which gets that treatment... the long distance flying and the super expensive hotel resorts have a hard time
    i knwo a lot of people who made holidays in island or the UK the last year

    and of courseNorway is a beautiful country i justwill never go there for a "sitting on the beach" holiday
     
  24. takao macrumors 68040

    takao

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    #24
    american banks also financed Dubai .. in total numbers the US was the 4th biggest lender ... more than japan

    of the total UAE debt 50 billion is from the UK though
    a newspaper here cited the following Banks as "especially in danger":

    Standard Chartered
    Barclays
    HSBC
    Royal Bank of Scotland
    Citigroup
    BNPParibas
     
  25. Eraserhead macrumors G4

    Eraserhead

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    #25
    Standard Chartered may be technically British, but 90% of its business is outside the UK. I hope our government isn't stupid enough to bail them out.
     

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