Dubai Musings (by Boston Wealth)
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
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Dubai Musings (by Boston Wealth)