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Building Desert Sand Castles in the Sky
The scramble to identify entities with exposure to Dubai has begun. Almost as desperate as the rush by entities all over the world to reassure markets they have no exposure (or are minimizing it). (Credit Suisse, UniCredit and the Bank of China seem to be leading this race). Bloomberg is citing a JP Morgan report that Royal Bank of Scotland Group was Dubai World's biggest loan arranger over the last two years. Uh oh. We are certain this is totally unrelated news today on Bloomberg:
Royal Bank of Scotland Group Plc said it will issue 25.5 billion pounds of B shares and one dividend access share to the U.K. Treasury and State Aid Commitments.
We love Samsung's attitude (but wish they would have said something earlier):
Samsung C&T Corp., builder of the world’s tallest tower in Dubai, said it stopped work on a $350 million bridge in the city after a unit of Dubai World halted payments. Construction of the half-finished bridge, to the man-made Palm Jebel Ali island, was suspended earlier this month after Nakheel PJSC made no payments for about two months, Cho Keun Ho, a spokesman for the Seoul-based builder, said today.
RANSquawk is reporting that HSBC had $17 billion in loan exposure to UAE at the end of 2008 and foreign banks in general are up to their ears in some $47 billion of UAE debt.
This isn't to mention sovereigns like the Ukraine, Latvia and Greece. (How likely, exactly, is The Hun to loosen the monetary strings for Greece after the Cyprus stink? Zero Hedge says: "Not Very.")
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Rumor going around that Barclay's has some significant exposure to the Dubai situation -- Barclay's was down -8% at one point, haven't checked where they closed. Stay really, REALLY nimble, folks: all sorts of rumors out there tonight about hedge funds blowing-up, as well as back-door government intervention. Be very, VERY careful.
GEE THANKS ! i'm never normally careful when it comes to trading....better start
A disaster in the making. UAE has their leader's personal fortune as skin in the game. ISDA rules on CDS can go bye-bye. Not exactly easy to pry money from these guys when it's their own money. Messy unwind and more government bailouts to come. All that is needed is a second tier bank goes bust and "Creditanstalt" factors in. Need to find a pic of the Dubai bridge to no where and use it as an avatar
It really doesn't matter very much now does it. Tomorrow the Bank of England will buy all the assets HSBC and RBS want to proffer. After the several dozen or more billion into RBS, do you think we are going to stop now? As we speak, some unshaven goon somewhere is doing the 'sticksave muthafucas!!' dance.
RBS up 4%. Back on the 30 x SPX leverage long lol! The authorities could never have the Dow opening down 400 points. This looks like it has been nicely managed over a holiday period in the US & Middle East. Fleet of Bernanke helicopters dispatched to Dubai.
Where's all them Gold bugs at? Kind of quiet around here without all their racket.
Counting their 30% YTD gains prehaps, or maybe their 300% plus gains over the last 10 years perhaps. ;-)
... And keeping an eye on the spot price, ready to pounce if it becomes affordable.
This gold bug has been sleeping like a baby. My gold is all in lockdown at prices between $325 and $650. Mama told me there'd be days like this. As shit gets more and more unstable wild swings and volatility are to be expected. It's coming unglued and I know gold is the place to be. Why, when we hit $3,000 and above, I'll be disappointed if we don't see swings of $200 or $300 in a day.
Yeah, Mama told me there'd be days like this.......
When it's not always raining there'll be days like this
When there's no one complaining there'll be days like this
When everything falls into place like the flick of a switch
Well my mama told me there'll be days like this
When you don't need to worry there'll be days like this
When no one's in a hurry there'll be days like this
When you don't get betrayed by that old Judas kiss
Oh my mama told me there'll be days like this
When you don't need an answer there'll be days like this
When you don't meet a chancer there'll be days like this
When all the parts of the puzzle start to look like they fit
Then I must remember there'll be days like this
When everyone is up front and they're not playing tricks
When you don't have no freeloaders out to get their kicks
When it's nobody's business the way that you wanna live
I just have to remember there'll be days like this
When no one steps on my dreams there'll be days like this
When people understand what I mean there'll be days like this
When you ring out the changes of how everything is
Well my mama told me there'll be days like this
Oh my mama told me
There'll be days like this
Oh my mama told me
There'll be days like this
Oh my mama told me
There'll be days like this
Oh my mama told me
There'll be days like this
Van Morrison
ahh shit. you woke them up
Sorry, we've been busy renting trucks to get in on the sale.
We're ready.
Dec COMEX open interest: 53450. Current spot gold price: 1158.
Your pick? deliver or settle with cash.
Macy's open already, at 5am! Let's get the spending right up!
Abu Dhabi will bail Dubai out. $80bn of debt on $270bn GDP is a lot better than $80bn over $47bn. Chill.
Lots and lots of British contractors got a big exposure to Dubai.
you should have left it at 'British'.
all our finest buy to lose officianado's ponied up in Dubai.
True, but not only Brits then: http://dubaifocus.reidin.com/ In fact they are second after Indians.
10+
never mind the dodgy loans, who is holding the CDS exposure and does it still cash in even if Abu Dhabi step in? (they have a pile of loans too)
No doubt all this explains those 2 am spikes in the UDX that were cancelled.
No doubt all this explains those 2 am spikes in the UDX that were cancelled.
We have no real exposure to Dubai,unless ,that is,things are going Higher.. :)
Methinks a whole pile of SWF managers who said "hey, let's get second and third derivative exposure to oil" are going to get crucified. More collapse of the global credit economy - does it cascade into non-delivery on crude? Asset managers around the world are going to finally learn that you want goods, not paper, when the music stops.
new corporate headquarters for global companies. Biught up for nothing.
its not the amount of debt which is important here but the multiplier on CDS contracts.... 10, 30, 50, 100; who knows; i would short insurers and big financials ..... the damage could be measured in trillions (once again) ...
Yeap and it opens up the possibilty of further sovereign default in other countries. Plus the banks are still carrying a bunch of toxic assets on their balances sheets, which have not been marked down, especially in Europe. This will add more to their bad assets column.
Me thinks that some of the squiders were heavy into sovereign CDS BUT--being the savvy squids that they are --with agents in governments around the world --have ALREADY hedged that off to the next AIG, the hapless shills who may actually have to try and collect on this pile of crap--query:is it a default? Rule of law tain't a big deal in the Emerites. Try and collect.
well, when CDS contracts are written "restructuring" qualifies as a default event; so i presume this is a default per se; BUT; IF the contracts have some sort of a purpose anomaly built in them (reasons for that can vary) this might not trigger CDS contracts. However i presume hedgies, banks and SWFs are loading up on sovereign contracts which can, and is, a two way road; i) IMF may intervene on a global scale after the first nation presumably Dubai; but it may as well be Ukraine, Greece or Latvia) defaults ii) IMF doesn't do shit and let nations fall. I don't know what will happen, and hence i will not place any bets on any scenario. Also, if i would have to speak in terms of probability; i would presume that IF sovereign default a la Island occurs global and national government institutions will try to prevent any re-run of the 2008 bloodbath. Again, i can not, and will not play this (i cashed out day before yesterday when the rumors started in the first place); this is just a little mind-play. Black Swan; sure, why not; 2008 re-run; i dont think so...
100+
smart money shoved their sovereign crap bonds/ CDS onto an unsuspecting fool's books already.
Anybody who has been in gold for awhile knows that corrections are usually fast and furious. 20% and 30% corrections are the norm. Whether this is the start of one I don't know but if it is I will be buying again.
Does the U.S. print money evertime they have a problem?
Black Swans - the unpredicatable obvious in hindsight.
I'm sorry, but anyone who couldn't see Dubai was headed for a fall should get out of finance and maybe work with their hands, in a sandpit perhaps with no sharp objects.
On the other hand, there will be those who took a bet on Abu Dhabi acting as backstop and will take in the ear. Well, they went into it with their eyes open.
Abu Dhabi appears to be keeping quiet, perhaps they have learned from their friends at Barclays about the best way to get assets cheap.
Ha! ANZ flat out denied any involvement with Dubai World. Given their past record, they into it somewhere; denial before the inevitable truth. Meanwhile the CBA "....hmmm, weelllll, yesss - we have exposure". All quiet from Westpac and NAB. They're still trying to figure out the damage.
Dubai "crisis" = bear trap head fake. Anyone with a brain has seen Dubai for quite a while as some gross example of UAE hubris - insane real estate development plans spawned from the huge amount of cash courtesy of an serendipitous subterranean pool of fossil fuels. You had to be nuts to lend on it, relying solely on the notion that oil money could pay its way regardless of tomfoolery. (Dang it - next time gotta remember to read that fine print on assumed/implied vs actual sovereign debt guarantees) And $60 billion is, relatively speaking, lunch money. Bernanke is still printing. Dollar strength, gold setback, both temporary phenomena.
But all IMHO. We'll see how the day plays out. S&P ends the day where it started. And by Monday if not before MSM will be hailing the historic Return of the American Consumer on Black Friday, all to create the impression of recovery.
As long as people can spend money they haven't got, we are fine. New highs await.
Did you see the Best Buy consumer line interviews this monrning on CNBC. The one guy said you better get the deals now cause with this economy you might be laid off by Christmas and have no money. Lets all bail this fucker out, infact lets let him run the treasury with those money managment skills.
Yeah....that was my WTF moment, too.
I was sure you were exaggerating, but here's the video:
http://www.cnbc.com/id/15840232?video=1343562831&play=1
Incredible.
FTSE into the green - panic over. Brown says its all going to be okay so it must be true.
Can open.... Worms, EVERYWHERE!
Hmmmmm, who was it that nailed it by asking isn't it a little strange gold expires 4 days after the holiday, are the "authorities" expecting something this weekend?????????????
with the dollar and the yen moving higher, this could be the beginning of the massive pop in the global asset bubble.
-The scramble to identify entities with exposure to Dubai has begun-
Soon they're going to find out food and water don't have anything to do with this..
TWENTY fkng handles off the low...STRAIGHT UP...praise the meddlers - for it is right to give them thanks and praise.
No need to worry - the meddlers will just pump more taxpayers funds into the system.
Move along - Nothing to see here!
Allah’s getting a lot of voice mails from Islamic investors.
It seems as though those Implicit guarantees were actually Implied guarantees.
does anyone think this might be connected to Dubai asking for Their Gold to be returned to them by London. In the past year I recall hearing several countries request the return of their gold from London. But I have not heard about anyone getting their gold back, yet. I won't even get into the gold plated Tungsten 400oz bars, another "swept under the rug" item. Dubai is one of the countries waiting for their gold to be returned---could this be a kind of Collateralized Ransom? IOW, we'll pay you After we get Our Gold back, and have it assayed. I think every 400oz Bar will eventually have to be re-melted simply because there can be no assurance now of what you're actually getting when you Demand Delivery. Anhow, this is from about 6 months ago, when Dubai told London to return their gold, link & Paste below:
May 26, 2009
DMCC officials said that the gold held under DGS ETFs at the HSBC vaults in London will be bought to Dubai soon.
Dubai Moving Its Gold Out Of Londonhttp://www.youtube.com/watch?v=SuObQg49UwA
It is going to be very interesting to see what happens when DGS tries to move its gold from HSBC in London to Dubai. HSBC is the custodian of both DGS and GLD, which raises a major question mark about whether the gold is really there.
The growing demand for physical gold together with the tons of gold flowing out of London to Dubai will result in a major default somewhere on an obligation to deliver gold. After that, paper gold (futures, GLD, etc) will collapse, and physical gold will soar.
Just to add a bit, consider what you would do if you were in Dubai's shoes? Dubai has waited for months now. Their Vault is built and in operation. They are still waiting for London to Deliver their Gold. Would you pay the West/TPTB a debt while you still have Not received a Delivery of your gold, now months after asking for it? Or possibly hold it until you got yours. And knowing all the problems now surfacing for any entity asking for Delivery. I'll just paste a few examples. And keep in mind, the Media would never mention this possibility. I think Dubai is making a point to London that is not being reported on:
Nov 7, 2009
London Vaults also being emptied
Like Comex warehouses, London gold vaults are being emptied. Hong Kong is pulling all its physical gold holdings from depositories in the UK and moving their US$63 million worth of gold home to newly built vaults near the city's airport. Dubai is also planning to withdraw its gold from London. Meanwhile, private investors and Swiss ETFs continue to move gold out of London.
On top of investor demand prying gold out London and COMEX vaults, Germany and Switzerland are reportedly demanding the return of their custodial gold from the US. In the face of this onslaught of demand, the US/UK gold markets are crumbling
1) Delays and complications in the delivery process have become increasingly commonplace. It is taking weeks and possibly even months, and sometimes dozen of inquiries, for investors to get the gold they already own out of the warehouse.
8) Rob Kirby is reporting some VERY SERIOUS developments in the gold market, which, although I have no way to verify them, seem creditable in light of everything else that I KNOW is going):
A) During the week of October 5, some large allocated physical transactions that were settled in London under VERY strange circumstances. Banks like JPMorgan and Deutsche Bank (who sold endless amounts of gold futures at prices of 950 to 1025) and then tried to make “side deals” with the folks they sold the futures to – offering them spot + 25 % (around 1,275 per ounce) to settle in fiat – after their counter parties demanded substantial tonnage of physical gold bullion.
B) A number of large interests have demanded audits of gold stored in London.
C) In an Asian depository, they've found "Good Delivery" bricks that had been gutted and filled with tungsten.
The gold market is an accident waiting to happen
Basically, the gold market operates on a fractional reserve basis. On average there are several claims of ownership on each gold bar conforming to London Good Delivery (LGD) standard on the "pool" of gold which acts as liquidity for the massive OTC gold trade based in London.
http://www.bi-me.com/main.php?id=41780&t=1&c=36&cg=4&mset=1011