Where have more than half of the real estate projects been abandoned? You'd be surprise, but we're not even talking about the United States. We're talking about oil-rich Dubai.
Guess how Dubai got into such financial trouble? Yep, excess borrowing and over development. Does that sound familiar? Dubai is in such a bind that it had to borrow $10 billion from The United Arab Emirates. The loan will help Dubai to meet its financial obligations and continue its development program.
However, things are getting worse for Dubai on a daily basis. Sounds familiar? Dubai raised $3.4 billion of refinancing from its government owned Borse.
Dubai is trying not to go the way of Iceland, but last week its credit default swaps were rising to levels similar to those in Iceland. To support Dubai, The United Arab Emirates has made Dh 120 billion available to banks in all seven emirates and also agreed to rescue two mortgage companies, Amlak and Tamweel.
Abu Dhabi earlier this month injected Dh 16 billion in its own banking system rather than supporting all financial institutions in the UAE.
What is so fascinating about this story is that it demonstrates that the worldwide financial crisis is leaving no one unscathed.
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Reader Comments (Page 1 of 1)
2-23-2009 @ 12:32PM
Carney said...
Couldn't happen to a nice bunch of jerks. OPEC has looted hundreds of billions each year from the productive, humane sectors of the world and burned it on egregious luxury - racehorses, concubines, drugs, personal passenger jets, palaces, etc.
Not to mention vicious extremism, with tens of thousands of madrassas all over the world brainwashing poor village boys and turning them into fanatical jihadis.
The only problem with this downturn, which ironically was caused in no small degree by high oil prices, is that the cycle will probably roll back around again.
Especially since OPEC has announced massive production cuts designed to spike the price of oil again.
They did it tenfold from 1999 to 2008 until the economy could no longer stand the strain, and they're trying to do it again.
We need to stop them by getting off the oil rollercoaster. This field's urgency attracts a lot of cranks and distracting rent-seekers, but the solution is surprisingly simple and effective, hit upon by among others former NASA rocket scientist and nuclear engineer Robert Zubrin:
Congress should pass a law mandating that all new cars sold in America (sold, not just made, so as to include the imports) be flex fueled, able to run as easily on any alcohol fuel as on gasoline.
That's only a $100 per car expense for automakers, but within 3 years we'd see 50 million alcohol compatible cars on the road in America and as many more elsewhere, creating a market big enough for gas stations to begin offering alcohol just as many do diesel. Thus gasoline would have to compete with alcohol worldwide, creating a $50 per barrel cap on gas prices, and putting a permanent crimp on OPEC's party and terrorism budget.
The poor babies.
2-23-2009 @ 1:30PM
Sheldon L said...
Dubai is not "oil rich"...