Dubai.... we are being played for fools.... war in the middle east?

[TwixVoy]

Well today it was announced that Dubai is, in my opinion, for all intents and purposes defaulting on its massive 50+ billion in debt. Now it is clear why the price of gold has been hitting new highs recently and the dollar falling to new lows, as well as the flight to treasuries (paying about "0" interest) occurring last week and early this week. It is also apparent that this default announcement, in my opinion, was orchestrated to fall on Thanksgiving when the US markets are closed and will only be open half a day on Friday. Of course, there was a trading glitch in England that halted trading in one or more of the heavily exposed bank stocks for three hours. Yeah, a "trading glitch", in my opinion, if you believe that one I have some nice Madoff funds to sell you. It is obvious, in my opinion, that there is insider action occurring here in terms of this event at the governmental level and personal level, and in my opinion, manipulation of the world markets.

This could be the catalyst that starts another shit storm. George Soros has been saying all this year he expects the Western governments to start a major war in the middle east to try to spur economic activity. Wouldn't surprise me one bit. Note our friends the Saudis are involved in this Dubai mess as well.



http://www.bloomberg.com/apps/news?pid=20601087&sid=aRsjlClzl500

"Dubai World’s assets range from stakes in Las Vegas casino company MGM Mirage to London-traded bank Standard Chartered Plc and luxury retailer Barneys New York through asset-management firm Istithmar PJSC. The Dubai government’s attempt to reschedule debt triggered declines in stocks worldwide that had been rebounding from the worst financial crisis since the Great Depression.

Dubai World’s assets range from stakes in Las Vegas casino company MGM Mirage to London-traded bank Standard Chartered Plc and luxury retailer Barneys New York through asset-management firm Istithmar PJSC. The Dubai government’s attempt to reschedule debt triggered declines in stocks worldwide that had been rebounding from the worst financial crisis since the Great Depression.

Saudi Arabia default swaps climbed the most since February, adding 18 basis points to 108. The British Bankers’ Association asked the U.K. government to intervene with Saudi authorities over debts of at least $20 billion owed to as many as 100 banks by Saad Group and Ahmad Hamad Algosaibi & Brothers Co., two family holding companies based in the oil city of Al-Khobar, according to a letter dated Nov. 20."

[Turbineguy]

1. 50 Billion?

We did not go to war over Madoff.

[TwixVoy]

2. You don't seem to understand just how deep Saudi and Dubai pockets are

This is just the initial default. If the Saudis and Dubai are not playing ball anymore (defaulting on their debts... and they have a LOT of US Dollars) this number is going to explode by the end of the year.

This is something no one saw coming. This has the potential to seriously screw with the US markets. These people have their hands in the cookie jar of MANY US banks, oil companies, and other investments.

Just a little excerpt from the convenience of this on Thanksgiving day.... I suggest you check out bloomberg.com A LOT of articles coming up every few minutes about how serious this is going to be.

"Today’s closing level of the Vstoxx compares with 20.48 for the Chicago Board Options Exchange Volatility Index yesterday. The VIX, also known as the “fear gauge,” measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index. It reached a low for the year on Nov. 24 amid speculation the worst of the global economic crisis is over. U.S. markets are closed today for the Thanksgiving Holiday."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoJLeSDaGA1o&pos=2

[truedelphi]

8. Is this really something that no one saw coming? I don't mean it as snark.

But over the last fifteen years, we have seen our entire Congress default on Common Sense when they put Glass Steagall on the scrap heap. Even though they were warned that this would bring about orur economic collapse in ten years. (It took that full ten, but still...)

The Big Money People do not play fair. Why should they? I mean, morally they should, but since the entire economic engine of the USA is driven by ownership of Congress through 7,000 lobbyists, such that the Main Street's carefully-worked-for dollars are being handed over to Wall Street, why should not the guys in Dubai play as scandallously unfair as our Money People?

[TwixVoy]

10. Yes it is something no one saw coming

if you read financial articles every day like I do you would know that Dubai has been saying for MONTHS all is well and there will be no default. Now this surprise announcement on Thanksgiving day....

[truedelphi]

11. Thanks for such a detailed explanation. n/t

[TwixVoy]

13. Check bloomberg.com

The entire front page is loaded with stories about this coming up every few minutes.

Here is an article from Yahoo finance about the impact it is having on world wide markets and currencies that are currently trading today. Apparently the Japanese government is promising to take action once this starts to screw with the currency market. We'll see how much the world governments can control the fall out....

http://finance.yahoo.com/news/Dubai-debt-fears-hit-world-apf-3624614071.html?x=0&sec=topStories&pos=2&asset=&ccode=

[truedelphi]

25. We will definitely check it out. n/t

[girl gone mad]

30. No one saw it coming?

Complete nonsense. Like Iceland, it was just a question of time.

http://www.zerohedge.com/article/what-dubai-says-about-capitalism-not-much

[havocmom]

9. Didn't Bin Laden say he would destroy the US economy?

And he ain't too fond of the House of Saud from what I hear. Crashing economies is probably a sound he would love to have lived to hear.

[northernlights]

22. what makes you so sure he isn't holed up in a cave somewhere

listening...and laughing the last laugh. This was his goal all along, and Georgie-Porgie played right into his hands.

[havocmom]

24. He may be alive and laughing

But if reports on his health years ago were accurate, it is just as likely he is pushing up daisies.

My personal belief system allows that, dead or alive, he could still be aware and laughing in his soul.

[FarCenter]

3. Will Abu Dhabi take over Dubai?

Dubai is part of the United Arab Emirates.

http://en.wikipedia.org/wiki/United_Arab_Emirates
"The name Pirate Coast was also used in reference to the area's emirates in the 18th to early 20th century."

[TwixVoy]

5. Remember the UAE is setup like the United States in a way

Dubai is essentially its own "state".

[clear eye]

4. To the U.S., $20B is drop in the bucket

Not sure how this would impinge the dollar. DW could be forced to sell off assets in an involuntary restructuring. Don't see how this is a danger.

What is causing the dollar to plummet is the realization that has finally sunk in that China is truly going to divest itself of dollars, albeit gradually. This has been coming for a very long time, and only willful blindness has prevented investors from acknowledging it earlier.

In hard economic times, we always have to be wary of gov't using war to substitute for sustainable economic growth. It's a tragic fact of life.

Dubai could be a scapegoat, but it's not a major cause.

On edit: Significant dollar devaluation was part of the U.S. gov't's calculus in deciding to bail out the top financial firms. It is how they expect our country to eventually repay the debt. It will also cause tremendous suffering for older (50yo+) citizens w/ savings and/or fixed incomes. China was incredibly patient before finally concluding that the U.S. was not investing in its own economy enough to expand it and reduce its debt. Our top financial decision makers knew that China would have to divest. Note that they are not making a diplomatic flap about it.

[TwixVoy]

6. It's too bad so many people at DU don't understand how connected

It's too bad so many people at DU don't understand how connected all these players are. This is going to cause a fall out ANYWHERE they have invested cash OUTSIDE OF THE $50 BILLION INITIALLY DEFAULTED ON. They have a LOT of money in our bank stocks, and this is also going to cause chaos in the credit default swap markets. (you know, those things you heard about that caused chaos in our markets last year)

Here is an article from 2007. Guess who injected tons of cash to save Citi? Or have you forgotten because like most Americans you never paid attention? Now that cash is suddenly screwed. Our markets are CLOSED today so we are not seeing the impact yet.

"http://www.reuters.com/article/bankingFinancial/idUSSP7190720071127

NEW YORK/DUBAI (Reuters) - Citigroup Inc (C.N) is selling up to 4.9 percent of itself for $7.5 billion to the Gulf Arab emirate of Abu Dhabi, giving the largest U.S. bank fresh capital as it wrestles with the subprime mortgage crisis and the resignation of its chief executive.

The capital injection will shore up Citi's balance sheet, which has been hurt by some $6.8 billion of writedowns and losses in the third quarter, and the potential for another $11 billion in the fourth quarter."

It has already hit LOTS of banks in Europe whose markets are NOT closed today. Remember that a "trading glitch" stopped these banks from falling even more than they did.

"Dubai World’s lenders include Credit Suisse Group AG, HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc, according to a person familiar with the situation. Credit Suisse fell 5.4 percent in Zurich, HSBC slid 4.8 percent, Lloyds sank 5.8 percent and RBS retreated 7.8 percent in London, where a trading glitch earlier halted trading in many stocks for more than three hours.

http://www.bloomberg.com/apps/news?pid=20601087&sid=abuSEhKNZBBg&pos=1"

[truedelphi]

12. People here currently point to the recovery that many

Financial investments are getting from The BailOut maneuvers of Bernanke and Geithner.

The fact that this is all just a bubble doesn't bother them.

[clear eye]

32. I hope you're not connecting me w/ belief in an ongoing recovery.

If you are trying to discredit my claim that the DW crisis is of great importance to individual banks but of much less importance to the world economy by saying that I hold such a belief, you are making a straw man argument. I have said a number of times that what's happening now is no recovery, and I would hope you wouldn't invent a position for me simply in order to make your argument look stronger.

On edit: I still say the greatest danger of what's happening w/ DW is to the value of many executives' stock options. If the stock values fall too quickly, the executives wouldn't have the time to cash out, and the price drops may be falsely taken by the gen'l public to indicate inadequate bank reserves and overall unsoundness and cause bank runs. That would be dangerous so action had to be taken to slow the fall of the stock prices.

[truedelphi]

34. Hey there Cleareye - nope, I certainly didn't think of you when posting that.

Rather, my remarks were inspired by those on GD who know little about economics and will just tell us who have our worries and concerns that Obama is smart enough to keep the economy up and running.

They are proud of the fact that they don't know anything much about the economy.

[clear eye]

17. Why would they be allowed to default?

The can be forced in an involuntary restructuring to sell assets and pay their obligations (or at least most of them). This will cause some of the stocks in which they have a major holding to devalue, so it is a concern for those cos. involved (including some banks as you pointed out). I still don't see where this is a major cause of the woes we are experiencing.

[TwixVoy]

18. Allowed?

You are aware this is a sovereign state, right? Who is going to stop them?

They can not be forced in to anything. If they are broke they are broke. Even if they weren't broke, they have indicated already they will NOT be paying up. As a sovereign state that is their prerogative.

[FarCenter]

20. We could redirect those 30,000 troops to the UAE

It has a heck of a lot more oil than Afghanistan.

And it is on the Persian Gulf, so they can be supported for less than $1,000,000 / year each.

[clear eye]

21. I may be wrong, but I think the int'l banking community may have a say

in the sense that they can make things pretty miserable for a country that has enormous assets but won't pay its debt. I think that is why the WSJ is reporting that DW is restructuring. http://online.wsj.com/article/SB10001424052748704498804574559852723374072.html?mod=googlenews_wsj

The panic (and it was probably institutional investors, not insiders) was more likely related to the fear that if DW is forced to dump a whole bunch of stock in certain banks, the value of those stocks will plummet, not that it will tank the dollar or the overall economy. Even the banks won't lose their reserves in such a circumstance. So what you saw in the interrupted trading was an effort to work out a more gradual DW sell-off to avoid panicked selling by other large investors. You were right in concluding that this was almost certainly a planned interruption.

[phasma ex machina]

23. Guess who injected tons of cash to save Citi?

Thanks for the reminder.

[TwixVoy]

7. It is another perfect storm

You are right about China. I have been posting about the situation with China for over 2 years on DU. The problem is our friends in the Middle East hold a hell of a lot of dollars just like China, and if they are going to start defaulting on their obligations in dollars (which is certainly looks like) it will have a major impact on us.

[AllentownJake]

29. Credit Default Swaps

Who knows how many are out there on Dubai's debt.

[Ghost Dog]

14. Do you have a good link to where George Soros says

he expects the Western governments to start a major war in the middle east to try to spur economic activity?

This is also my expectation. But Soros is very well-connected and in-the-know.

[WhaTHellsgoingonhere]

15. Thanks TwixVoy

I hope you continue to update this thread as I have bookmarked it.

[Turbineguy]

26. Yes, thanks +1

[WhaTHellsgoingonhere]

16. NYT: Stock markets in Europe and Asia tumbled Thursday

Stock markets in Europe and Asia tumbled Thursday as investors fretted over the debt problems at Dubai World

http://www.nytimes.com/2009/11/27/business/27markets.html?src=twt&twt=nytimes


Dubai Fund Asks for Stay on Debt Payments

http://www.nytimes.com/2009/11/26/business/global/26dubai.html?em


Krugman: November 24, 2009, 9:05 am
Money, mouth

All the serious people agree that the United States faces a debt time bomb. Never mind those low, low interest rates — big trouble is just over the horizon.

http://krugman.blogs.nytimes.com/2009/11/24/money-mouth/?src=twt&twt=NytimesKrugman
http://www.nytimes.com/2009/11/23/business/23rates.html?hp

[snagglepuss]

19. .

[DemReadingDU]

27. any updates? n/t

[bluesmail]

28. I also was wondering what lurks beneath the surface of ~Thanksgiving~.

I instinctively knew it couldn't be an attack. THAT would take Overt Guts. But then, a financial bomb? Maybe. Maybe Not. Time will tell. Time.

[Greyhound]

31. You are right, this is another shock to the system and the repercussions

could be significant, but in the end there's really nothing we can do to stop this collapse.

Our administration has committed us to leaping in front of the runaway train and it will crush us.

Sometimes (frequently in my experience), ignorance is indeed bliss.

[tjwash]

33. Good old Ronald Reagan

Back in 82, there was a bill put on his desk that would have made public, all investment in the US stock market from foreign countries. The senile old bastard immediately vetoed it, thus allowing countries like the Kuwait, and Saudi to make major purchases in the US economy, with no public knowledge what so ever. To this day, Kuwait owns large shares of BOFA, and CITIgroup to name just a couple, not to mention close to a hundred billion in US treasury bonds.

Fuck Dubai...they are just paper pushers; the Switzerland of the M.E. They do nothing but launder all the money through the region (**cough**missing billions from Iraq**cough**). If we want to see where the real problems are, they need to take a look at the countries surrounding them.

[Hubert Flottz]

35. So...

Do you think it would be too much to ask of the American taxpayer, to pick up the tab for that ski slope in the desert? I mean our "friends" have gotten the price of gasoline down to about three bucks a gallon instead of four bucks. The BushCo pipeline of cash flowing out of the USA back to the middle east for eight years was not enough...those poor folks over there need a REAL break. Let's bail them out one time. Hell it's almost Christmas! Their CEOs gotta eat too.

[alcibiades_mystery]

36. LOL.. sophomoric analysis

Painful and uninformed.

:rofl:

Seriously, you'd get a B- on a response paper if you turned that into PoliSci 150: Global Issues.

$50 billion is "massive" debt? So sad, your little world. :rofl: