Worries over a possible default by the conglomerate, Dubai World, became a real possibility when the city-state said that while the conglomerate was government-owned, it was "established as an independent company" and the Dubai government does not guaranteed Dubai World's debt.
That has to be one of the most ridiculous thing I have ever heard from anyone, and when you consider the amount of nonsense sprouted by everyone since the financial crisis hit the world, that’s saying something. For nearly a decade, Dubai has been crowing about the success of their city-state and Dubai World was used as an example. Saying that Dubai has nothing to do with Dubai World now is like saying Temasek Holdings has nothing to do with Singapore. Absolute total nonsense!
What’s worse is that no one has a clear idea of just how much debt there is. In hindsight, that should not be a surprise. For months officials from Dubai had been telling investors that Dubai ‘do not have a problem’, then they released the debt news on the eve of Thanksgiving and Haj holidays, so why should anyone expect Dubai to come clean now?
Dubai has about $80 billion in debt with Dubai World holding about $60 billion of them. However it seems that even Dubai's oil-rich neighbor, Abu Dhabi, has been unable to get a clear picture of the amount of debt Dubai truly has and they are unwilling to step in to foot any bills until they do.
For the sake of Dubai, the U.A.E, and the world, I wish Abu Dhabi the best of luck.
2 comments:
Is anything new when it comes to cleaning up hugh financial mess? Every government wants a piece of the pie when the economy is blooming, but nobody wants to be responsible for footing the tons of bills those apparent successes bring.
The sad thing is many companies don't do their homework but blindly follow the frenzies, thinking they'll make it big from the golden opportunities. Yup, they make it big alright - big problem.
The blind following is still continuing. Markets are recovering because people seem to assume that Abu Dhabi will step in pay the bills for Dubai but personally I have to wonder why would they do so if Dubai’s leaders are refusing to pay. Dubai’s leaders are even refusing to sell their assets to foot the bill, so I have to wonder if Abu Dhabi is willing to throw $80billion into this black hole
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