The damned liars and deceivers: Goldman, Buffett, Greenspan, Bernanke, Geithner, Beshel ... were deceiving entire world for decades.
Fire Fed Bernanke- Pending sales of previously owned U.S. homes rose unexpectedly to their highest level in 3-1/2 years in October, a survey showed on Tuesday, suggesting the housing market recovery was gaining steam.
I hope this article about Dubai will shed some light into the situation. Suffice it to say Dubai and Abu Dhabi at the end of the day are part of seven emirates that comprise the United Arab Emirates; in essence everything in question ultimately belongs to the sovereign wealth of the UAE... they are not going to let one compartment of their ship sink and idly stand aside! The whole Dubai default scenerio was known as early as April 09 when S&P put six of the seven emirates on negative watch and wanted to downgrade to junk status! read on if interested!
Ho hum! The Dubai story right now is a non-event. Why the heck did the following news recently go unnoticed! "Banks in the Gulf have already been hit by the default of some Kuwaiti investment firms on debt estimated at around 10 billion dollars. They also had exposure to defaults on $22-billion in debt by the Saudi Saad and Al-Gossaibi business groups."
If history is any indication for the region, this is not the first time that the United Arab Emirates was in trouble. In Aug. 1982 we had the crash of the Souk al-Manakh, in Kuwait, which started specializing in the trade of highly speculative “unregulated non-Kuwaiti companies,” such as those incorporated in the United Arab Emirates among others. More than $90 billion in debts was outstanding when the wildly speculative market collapsed. Much more than the Dubai story today!
Heck at its peak, its market capitalization was the third highest in the world, behind only the U.S. and Japan, and ahead of the U.K. and France. Souk Al-Manakh's 1982 stock market crash of Kuwait's unofficial stock market with all its market capitalization ended up being a non market event over here! http://www.time.com/time/magazine/article/0,9171,926384,00.html
Let's dig a little deeper as to why this Dubia vis a vis Abu Dhabi financial crises is a non issue. Guess what. The French.. yes the French are opening a French military base in Abu Dhabi, UAE. Guess what? The Emirate nation is going to have to pay for 60 Rafale jets in a deal worth 8-11 billion to France. The UAE is scared shitless that Iran will try to soon take over that country... heck before the Gulf War Iran just one day claimed sovereignty over two large unihabited Kuwaiti island; Bubayan and Failaka becuase they feared that Kuwait was going to hand the islands over to Iraq to help by building a military base.
So all the GCC council states (Kuwait, Saudi Arabia, UAE, Bahrain, etc.) are worried about Iran. So to protect itself from Iran, the UAE is going to have to broker the deal with France to pay for the jets. Do you think that UAE is going to leave the country in such a perilous situation with Dubai that France will say WTF and we can't trust you to buy our planes on loan because you default! Heck no! UAE is smarter than that! They will get their house and finances in order to be able to defend themselves with those planes and buy them! They ain't waiting around for that I am a nutjob to attack them. You have to look at the political backdrop and the geopolitical implications to understand why the UAE has to come clean on the Dubai fiasco.
News publications out of the Middle East recently had the following headline: UAE central bank says it is closely watching events, will ensure no harm comes to national economy. So it is a big positive and will be seen as calming fears for Monday's open. Yes and the ruler of the UAE told the international press two month ago to STFU as the situtation was under control. Heck its wealthier and more conservative emirate state of Abu Dhabi will just bail them out. After all the UAE consists of seven emirates of which Dubai and Abu Dhabi are the two most recognized.
Futhermore the UAE's state motto is "God, Nation, President" so whatever the current ruler of UAE say goes as I am sure he does not want to see egg on his face and will just instruct Abu Dhabi to bail out Dubai. If you ask me, it is all a smoke screen created by the UAE to bring attention to them. There has been a family imbroglio if you will among the GCC (Gulf Cooperation Council) states that include Saudi Arabia, Kuwait, UAE, etc. with a common currency for 2010.
Well the UAE is pissed that the central bank for the common currency was announced to be in Riyadh, Saudi Arabia and not the UAE and they are just saber rattling because the GCC would have to also be involved in bailing out Dubai as it is part of their charter to help each other out. Further historical perspective on this Dubai fiasco; nothing new. They knew as early as January 2009 that Dubai could not handle it! From The Council on Foreign Relations (CFR) paper appropriately titled! "GCC Sovereign Funds Reversal of Fortune"
Dubai in particular currently faces a financing squeeze. Its government and ruling family-sponsored firms have $80 billion in debts. Investment vehicles like Istithmar Global and DIC have invested abroad—but their external investments are illiquid and likelyhave suffered significant losses recently. Furthermore, these vehicles were funded from the proceeds of Dubai’s other investments, including the domestic property market, where prices are falling. Moreover, Dubai has relied on a roughly $20 billion annual increase in its external debt to cover an ongoing current account deficit: Abu Dhabi didn’t quite take on as much. There is little doubt that “Dubai Inc”—defined as entities owned by the government and ruling family—has more external liabilities than external assets, and far more short-term external debts than liquid external assets.
The financial health of many Emirati companies consequently hinges on their ability to draw on Abu Dhabi’s external assets—as the liquid external assets of Dubai, Inc. are likely to be too small to cover Dubai’s 2009 financing need. The UAE central bank has guaranteed the external liabilities of all Emirati banks, a decision that effectively allows banks in Dubai to draw on the resources of Abu Dhabi. The UAE central bank has provided funds to the domestic banking system to address its liquidity shortage – though high penalties deferred some banks from availing themselves of the funds.
Additional support is likely to be needed next year, which may lead to a further reduction in the assets managed by the Abu Dhabi Investment Authority. ADIA has shied away from investments in the Emirates and indeed investments in the region, viewing itself as a pure portfolio manager that seeks (not always successfully) the highest risk-adjusted return—not a fund that supports domestic or regional economic development. Other, smaller funds consequently seem to be more likely to manage any “Dubai” assets Abu Dhabi receives in exchange for financial support. These funds like Mubadala may also continue to attract funds to support their domestic economic development aims.
So hello, alarm bells where ringing back in January 2009. Here is what you take away from the article above: "it consequently needs more financing than implied by the amount of its maturing external debt and..." "There is little doubt that “Dubai Inc”—defined as entities owned by the government and ruling family—has more external liabilities than external assets, and far more short-term external debts than liquid external assets."
Wow so they only figure it out today! Where were the bankers back then giving them the loans; no one read the reports! I mean this report was put out by the Council on Foreign Relations ...why didn't any major alarm bells go off back then?! Folks! Ok.. let me put all my cards on the table for you tonight! We have been duped by Dubai! This is an old story being spun by a select few!
Here.. the real story! .. who knew that back in late April 2009, Standard & Poors put six of the Gulf (that would be UAE) emirate’s major government related entities on negative watch ahead of a possible downgrade to junk. Yes JUNK! The story continues: “That raises fresh doubts over Dubai’s ability to rasie funds on the international markets, raising the possibility it will need another bailout from Abu Dhabi!!!!”
The S&P action suggest Dubai’s economic problems.. blah blah blah.. real estate developer Nakheel and parent company Dubai World, … blah blah.. may have to restructure their debts amid plummeting revenues. …blah blah.. contractors have complained of delays in payment. Folks the world was warned back in April 2009 that Dubai would need to restructure their debts! So how is it all of a sudden newsworthy! Someone thought this Thanksgiving would be a good time to take da bears for a short ride!
Dubai is a minor aftershock! The real big story to bring the markets down in 2010 is going to be something else.. I mean Dubai is chump change.. to wit from the sovereign GCC countries:
* Abu Dhabi lost 183 billion yes billion so far or 40% of its investments.
* Qatar lost 27 billion or 40%
* Kuwait lost 94 billion or 35%
* Saudi Arabia lost 162 billion or 12%…
Add them up! $466 billion and our bailout was $250 billion and up to $700 billion ..so that region is already down almost twice us much as we are!!!! Now how much was our bailout.. look how much they lost.. where is the outrage and market meltdown over that.. we are now worried about postponing of some 50 billion by Dubai!… small potatoes compared to what the region has also lost..
You really have to understand the politics of the region! Has anyone stopped for a minute to see that this is a smoke screen diversion to take away what a deposed ruler of one of the emirates has been doing in New York as recently as last month! http://www.nypost.com/p/news/local/sheik_takes_ny_bus_in_royal_war_hmrILwZhRFNG25uDW83TiI
And yes the UAE is very afraid of being attacked by Iran! http://www.sheikhkhalidrak.com/blog/
as Iran has already unilaterally taken over some of the UAE's fresh strategic Straight of Hormuz islands
http://en.wikipedia.org/wiki/Greater_and_Lesser...
We know Abu Dhabi has to bailout Dubai.. so they buy the 60 French jets to defend against another attack from Iran...otherwise the French will not sell the jets if they can't work favorable terms with the UAE.. and they certainly won't send them a single jet if the UAE is seen in some kind of default!. The UAE, Kuwaitis, Saudis are scared shitless as to what Iran is going to do next!..heck as my article states.. Iran in the past just grabbed two Kuwaiti Islands! See a pattern developing by Iran.. grab Kuwait islands, grab UAE islands... etc..
Here is my take on Goldman Sachs connection to Dubai:
"Hello hello Llyod this is Hassan my friend!!! Remember me! Yes its me! I worked for your old boss.. this is Hassan Heikal calling you from Geneva!!! Yes yes I served in the corporate finance division at GS with some of your good friends!
Sorry.. ah yes! I am now with EFG-Hermes http://www.efg-hermes.com/English/AboutUs.aspx?...
http://www.google.com/hostednews/afp/article/AL...
... I thought I would give you a heads up!!
Yes yes .. I wanted to let you know b4 hand.. yes yes.. we are at the same time that Dubai is going to announce that the shit is going to hit the fan.. well yes.. we are issuing a research note late on Wednesday pointing out that Dubai's overall debt repayment schedule is expected to be 13 billion dollars in 2010 and 19.5 billion dollars in 2011. Thought I would give you a day or two head start to take advantage of the situation!!! Ah yes! I will visit you soon! Can you book that special tour you promised me of New York!
Oh before I go.. I need to also tell you that this week we upgraded Emaar Properties from "Neutral" to "Buy" with a target price of Dh7.2, representing a 74 per cent upside potential to the current market price of Dh4.13 today! But hey wait until the shit hits the fan in a few days with the Dubai news.. you should be able to have your boys scoop it up on the cheap once the news hits the fan!!
http://www.business24-7.ae/Articles/2009/11/Pag...
Someone in the know wanted to be able to buy Emaar Properties at a distressed price.. this is what all this is about! I mean look here: http://www.thenational.ae/article/20090521/BUSI...
Today, EFG-Hermes has 900 employees, zero debt, and more than $550m in cash.
Its largest shareholder is the Dubai Group, which is owned by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai.
Get it! The ruler of Dubai is the largest shareholder of the company that just upgraded Emaar Properties.. wouldn't it be in his best interest to see the share price go higher, now that today and the rest of the week, he will be able to buy it at a huge discount with the UAE markets opening down 8%!
Plan! Upgrade Emaar stock, announce need for debt restructure, watch UAE markets crash on Monday!
Buy Mortimer buy! Mortimer I say buy all the Emaar stock you can!!!!!.. in a few months reap the benefits of buying Emaar at bargain basement prices!!!
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