Dubai roils word markets (equity and CDS) by asking for a 6 month break from debt service

BTW,
Hang Seng just opened up and are down 3%

La Dee Dah. Talk about a real estate bubble. Those man-made wonder projects in Dubai were the most assinine real estate projects in world history, perhaps.

and some people thought that Dubai would beat NYC and become the financial capital of the world. SURE it will... Why would anyone want to invest in Dubai? They are a terrorist supporting anti Semite country.

who said the carry trade was not an important topic to discuss! its all fun, until the music stops. i talked to some brokers the other day about the homeowner tax credit extension, and asked their thoughts. Mainly suburb brokers as I was at an event outside the city. They all said it was great, so I asked why?

The main response, "because people are buying again and finally we can do some deals"

This is the society we have become. Addicted to stimulus, liquidity, fiscal and monetary free lunches. And no one ever considers the damage that may come and the unintended consequences that may come in the years down the road when all these free deals are taken away and have to be paid for. really frightens me how short sighted this country is and how pain averse we have become. Anything that will get a politician re-elected or a banker a bigger bonus or a lender more deals or a real estate agent more commissions, will be voted for even if it is simply a bad idea.

Why not just give every American a 5,000 check to pay off debt? Why stop here?

Ok UD it's bad to give the middle and lower class a measely tax break to buy a home but great financial policy to give the uber rich top 1% millions Of $$ in tax breaks.......

the point he's making is that it is all the same and all wrong.

that measely homebuyer tax credit will do two things:

a) bring demand forward
b) envourage and incentivize some to buy when they may not have otherwise

The goal was simple and clear: support housing prices

CC had the point right. Is all BS and I think there will be a price to pay for all of it down the road. But who cares now, party on!

dubai's an odd lot, and has minimal counterparty complication a la lehman. out of nowhere? real estate bubble on a sandbar? it's been obvious to anyone who reads the papers that something of this sort was inevitable.
pos carry, you should go back to building muni ladders

well its really not such a large amount of money in the grand scheme of things...i just wonder if this will kick off a selloff given year end and where we came from over the past 8-9 months

im sure dubai govt comes out and guarantees the debt at some point, and clears all these fears. noone wants another crisis

Minimal counterparty complications huh? Wow. You are dumber than I thought. $80 Billion in loans has no risk to the market? Can't believe I have to defend my position here.

I do love your zinger at the end though. Like making money wile brokers like you waste away is something to be ashamed of.

U.D.
The Dubai story may be bigger than your numbers suggest. The market has not really treated focused on the risk of sovereign debt.

this is the first of many commercial RE developers to be forced into bankruptcy becuase they cant refi thier maturing debt. clearly we see that banks are not willing or able to renegotiate. new leg down in RE starts now

riversider - yea Im trying to figure out how deep it may go, OR, if it will have ripple effects to other areas, as usually happens with these sorts of things.

UD, I agree with everything you have written here but my guess is there's too much money being printed now for there to be a significant retracement (in the forseable future).

I would think that most of the benefit of housing credit just causes an increase the value of loans on the banks' books by like amount. It's all about the banks. We seem to live in an age when the banks are robbing us.

I brought up lehman because I think it's more about contagion than anything else.

well the improvement in bids for rmbs/cmbs has been do to the search for yield, as the fed engineered bank recap environment is forcing assets to the long end of the curve and to anything that involves risk to get a better yield. Wrote about that a few times. Look at MMFA, and the decline of some 600bln in the past 7-8 months to about 3.25trln or so, down from about 3.9Trln

stocks have been a proxy for everything during this improvement. So I dont think the housing credit is directly related to improvement in bids for rmbs.

So lets see, 1.8trln in writedowns, or destruction of wealth in shadow system, and fed printed what, like 1.6Trln or so? Interesting when viewed in those terms. Credit destruction has been unprecedented and fed printing is barely keeping up, and of course that money is being hoarded in excess reserves, not being lent out and multiplied.

This will hurt the media industry. Pretty much ALL media companies Nick Disney Sesame MTV all have huge licensing deals with Dubai World. Some of these are in the $100 million per year area

that's a big revenue gap to make up in a soft market

U.D. I'm highly skeptical of the recovery in spreads. With the Fed buying MBS and TALF supporting CMBS & ABS, the recovery in spreads was based on gov't taking on credit risk. Interesting story this week about PIMCO taking advantage and dumping MBS. It all seems so artificial.

FLMAO. Petri... pls let the grown ups have their discussion. We are talking about the airline industry melting and you bring in the story about the peanut manufacturers.

thru the magic of counterparty risk as linked thru CDS, this has ALL the signs of global crisis 2.0 in 2yrs. What'd I say last year, any fool that didn't see the entire financial system kick the can for one yr is a FOOL. What if what if, on this go around, US gov't, Britain, Germany, Japan say FU to the banks as they come back for life-equity injection 2.0, especially Goldman et all about the pay "huge" bonuses? LMAO. Me thinks even Geitner wont' be able to stand in front of this go around. Looks like the last time, they pulled a fast one on the public, hopefully not this go around....

totally agree, based on govt guaranteeing everything...no big firm will be allowed to go down. thats a nice comfort to take risk on. gross is loading up on treasuries i think, and the guy does know a thing or two

W67: what are you investing your cash in?

This is not good for NY RE developers. Abu Dhabi will face enormous pressure from various govts to bail out Dubai. When the smoke clears, how anxious do you think Abu Dhabi will be to invest elsewhere? All NY developers were probably licking their chops when Extell secured an investment from Abu Dhabi for their BF Goodrich building earlier this month. I hope the check cleared. That well has to be very dry in the coming weeks, or even months.

Abu Dhabi has something like $800 billion in cash. They'll be fine. It's their broke ass cousin you need to worry about.

We're still in the environment where return OF money trumps return ON money.

pc: doesn't the US have 700 billion of debt it needs to resecuritize in the next couple of years?

Nyc10023 (1 day to go?).. Agree with riversider. Return of capital is paramount. I hear all these 'jusifications' for looking for yield like 'it would take 30yrs to double your money at that rate!!!!' to get lemmings into higher yielding crap. Let me tell you if you lose 50% of your capital in 1 yr (ala buying NYC re in the last 3 years), it's gonna take you 30 yrs to get back to par.

In the great depression imagine if you just held cash for 5 years then came out of the bunker, you be buying gatsby's assets for pennies on the dollar. This ain't timing the mkt, it's taking candy from the mouths of babes.
Oh shit tiger woods was in a car accident. He should stick with driving the stixs not the6 speed. Funny story the dude sold the carerra gt after one day cause he couldn't handle the car. FYI, my dream car at the moment. Oh yeah they are trading for 1/2 the original price. Flmao. 2 more yrs and itz mine!!!!!

I agree with UD and West67th. I have been bullish on the dollar for a while, and I have been somewhat early, but I tend to think that this will not be a two or three day event. I like what El-Erian had to say about this event, that at the very least it will force the market to reprice risk. However, if we start to see rumblings elsewhere (Latvia, Greece, etc.) than we could be looking at something a bit more dramatic which will cause the carry-trade to unwind and will lead to a major leg down for stocks.

Right now the hedge funds are spending a great deal of attention making money off of the gov't. There are so many efforts and programs that it's just too attractive(risk/reward). Times ran a story a week ago illustrating just this point. Nobody wants to really be long risky assets.

http://www.nytimes.com/2009/11/22/business/22loans.html?_r=1&ref=business
nvestment funds are buying billions of dollars’ worth of home loans, discounted from the loans’ original value. Then, in what might seem an act of charity, the funds are helping homeowners by reducing the size of the loans.

But as part of these deals, the mortgages are being refinanced through lenders that work with government agencies like the Federal Housing Administration. This enables the funds to pocket sizable profits by reselling new, government-insured loans to other federal agencies, which then bundle the mortgages into securities for sale to investors.

Apt23,

Debt, schmebt....right?

Apt23,

Debt, schmebt....right?

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6671257/Dubai-may-sell-QE2-to-tackle-debt-crisis.html

Dubai may sell QE2 to tackle debt crisis

Be careful of clawbacks when you start selling crap rigth bf bks. Who in their right mind would buy any of these assets now the threat of bk looms? That turkey is done, get the cranberry out.

Feel sorry for the lemmings buying re with the tax credit. What a classic pump and dump by your own govt. Flmao.

Let's get this straight. These Dubai scumbags have a debtor's prison system but now don't want to pay their own debts for 6 months?

I wonder if and how such an argument could or would be heard in a Dubai court of "law", because I would be appealing any and all debtor prisoners' cases right now.

Memito,

You should bring that up when they have their next elections. Oh yeah....

If you want to make sure Dubai pays back their debt, order them to hang an ISRAELI flag on every street corner until all their debt is paid off. Otherwise they will never pay back their debt.

Israel should just buy Dubai.

Positive,

Oops! Good point....

I would just love to hear the "judges" excuse...

It's funny: there's a whole big "thing" now in this country regarding "human trafficking" and forced sex work. A little known aspect of foreign aid during the Bush Administration was that to get aid, most countries were required to sign a "loyalty oath" which included "anti human trafficking" provisions, which actually meant taking steps to wipe out sex work in the country, even if it were legal (The Dominican Republic being one example). Now, there have been many articles debunking a lot of the "human trafficking" propaganda as largely unfounded, but one place where is has been known to go on for a very long time is Dubai. Yet no one from the US Gov't ever held THEIR feet to the fire over it. Makes you wonder.

nobody wants to buy Dubai and you know why? It was the most hyped BS since new Coke came out. The place SUCKS and the 70 billion in debt is only worth maybe 20 billion at best. Dubai was all hype

30yrs, that really sickens me about the sex slave trade in Dubai, and I appreciate you raising the subject. Most of the impoverished women who are forced into that kind of human trafficking are beaten and drugged, and are essentially slaves, and they often die while being held by their captors.

Many of the women who are profiled in the book "Half the Sky" were just such victims, which is the new book by Nicholas Kristoff and Sheryl Wu Dunn.

But that aaide, really the stupidity of RBS and UBS and whatever other banks have exposure to Dubai, to have lent on these ridiculous real estate projects in Dubai, is almost not to be believed. If we don't whittle the banks down to size by reinstating Glass-Steagall, then we are just as stupid as these bankers were. Stupider, actually.

Well, with the middle east on holiday until Tuesday, you'll just have to watch LIBOR and see how the world handles this until they get up and running.

Fun Game: Which New York real estate agents were pimping Dubai RE during the boom? How good an investment did they say it was?

I bet perfitz "invested" there, too...

It will be interesting to see how Dubai affects Citibank and HSBC, I'm sure they are among the most exposed of the banks.

Oh no. Not again mr geitner, did you lose another bank?

Maybe fasb will give this debt a pass as they can't opine on religious documents. Flmao. Hypocrites one and all when it comes to $$$$$$.

What sell off?

w67, is that from The Hunt For Red October?

licc... : )

Bingo!

Yo ericho. Howz it Did you bang carolst, yet? Funny hoW she can only come when you say you'll give her 6%.

Ha! Good movie . . .