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Quantifying External UAE And Dubai Loss Exposure
Bank of America has provided an extended analysis of foreign exposure to Dubai World and Dubai sovereign. As BofAML points out "the basics of the discussion are threefold in our view: who owes how much to whom, when do they pay, and what happens if they do not? As there are no official debt data on both emirates and federal level, we used the outstanding loan and bond information on the SDC debt database and Bloomberg to estimate Dubai and UAE’s debt burden. We estimate that UAE’s total debt amounts to US$184bn as on end 2009, US$88bn of which belongs to Dubai. Abu Dhabi accounts for US$90bn and the other emirates hold the remaining US$5.6bn. Note that the debt service will be higher as our numbers only include the principal payments." The expectation is that Abu Dhabi will bail out Dubai as moral hazard becomes a sovereign issue. We don't think this is too likely: we believe the "saviour" will likely emerge from a bank that has access to the Fed's or the BOE's money printing machine either directly or indirectly as the Bernanke cartel does not care if his policy to bail any and all risk exposure remains domestic or finally has that much deserved and anticipated world tour.
Here are the facts:
Upcoming scheduled debt redemptions are a major concern for UAE and for Dubai in particular - "Dubai faces almost US$50bn of debt amortization in the next three years: US$12bn in 2010, US$19bn in 2011 and US$18bn in 2012. We estimate the total debt for Dubai World as US$26.5bn, 80% of which needs to be paid back in the next three years. The restructuring is likely to make the new issuances for UAE much harder in the short-term and the implicit Abu Dhabi support is no longer taken for granted. Hence, we expect a further pressure on the banking sector."
At the direct exposure level, and as Zero Hedge pointed out yesterday, the two issuers most at risk seem to be HSBC and STANLN. Bank of America, which has an Overweight 30% rating on both firms, believes the HSBC troubles are overblown. We have not checked, but we are fairly confident BofA did not think HSBC had much subprime exposure in 2007 either. Yet the CEO-less Merrill savior is less sanguine on Standard Chartered: "At Standard Chartered, our Equity colleagues estimate that wholesale lending in the UAE accounts for c.50% (or USD7bn) of this issuer’s exposure to wholesale lending in Middle East & South Asia. This equates to 4% of loans or almost 30% of total equity." Yes, that's 30% of total equity, and that's a downside estimate. The next question is who has exposure to Standard Chartered, and who has exposure to those so exposed, and so on. Hopefully AIG is not at the end of the sequence. What is certain is that Goldman has already likely bought an asston(ne) of CDS against whoever the most responsible and risky counterparty is in this exponentially leveraged risk chain.
Below is BAC's estimate of Dubai World and Nakheel loan holders:
And here are the individual loans made to Dubai World. Now is the time to open that 401(k) and make sure that none of these names should be familiar to you.
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Tyler... you guys (gals) never cease to amaze me.
Very timely and informative piece, even if from BofA.
"The expectation is that Abu Dhabi will bail out Dubai as moral hazard becomes a sovereign issue. We don't think this is too likely: we believe the "saviour" will likely emerge from a bank that has access to the Fed's or the BOE's money printing machine either directly or indirectly as the Bernanke cartel does not care if his policy to bail any and all risk exposure remains domestic or finally has that much deserved and anticipated world tour."
Rep. Grayson, if you are reading, the possibility of this should be a question at the Dec. 3rd confirmation hearing on Bernanke.
As I opined earlier today, given that Citi and Goldman have about $2.5 billion in booked exposure, how soon before Bernanke and Geithner start declaring Dubai TBTF?
"Bank of America has provided an extended analysis of foreign exposure to Dubai World and Dubai sovereign."
Does anyone know of BOA's commercial short interest in Gold?
After lehman imploded thier gold operations got shifted to JP Morgan Chase.
great, finally details about German banks involvement
no problem, Ben is working the printing press as we speak.
Chart 7, NPLs (Non-Performing Loans), maybe as reported but way too low for a commercial and residential real estate crash.
"Dubai house prices might drop as much as 70 percent from their peak last year. They’ve already fallen by more than 50 percent, making the emirate the worst-hit market in the global real estate slump. Around half of the investors in the 40,000 unfinished homes may default by the end of next year"
http://www.bloomberg.com/apps/news?pid=20601109&sid=aX1vnWP7gBVM
Good time to buy!
Dubai waterfront properties are nice winter getaways for us on the East Coast.
Latvia looks even better, and I prefer blondes,
http://www.globalpropertyguide.com/investment-analysis/House-price-falls...
Still horribly overpriced.
If it is ever found that additional monies were obtained, via the FR, to backstop losses from Dubai World or the Dubai sovereign debt, there is going to be F*CKING riot in DC. We are approaching the "fever pitch" moment when you may have been able to duck the limelight heretofore, but not anymore. Oh, yes, and I know money is fungible, but there's a date stamp as of yesterday.
No friend, you are approaching a fever pitch moment. You wish they would riot. No one knows sh!t or thinks any of this is important. I was just with some rather savy friends, a collapse peak oil kind of crew, and none of this is even on their radar.
Furthermore, they think I am being too pessimistic focusing on the economy. They are a group who talk about Overshoot, Easter Island, the 11th hour, and Humans as a Petri dish experiment, for Christ's sake! I'm too pessimistic and too focused on the economy.
I suppose there is an arguement that we are watching the destruction almost atom by atom in a sense, morbidly fascinated, spellbound. But my point is we are really alone.
Don't get me wrong, I am pissed too. But the way we track this stuff, we're freaks. They don't know and don't try to put all the pieces together. The US public will need to see and feel massive hurt before there is uprising.
I mentioned the idea of uprising to my Aunt yesterday. As pissed as she is about the economy, all she could talk about was voting them out. When I suggested it might call for worse than that, she stopped dead. I could tell she had never considered the possibility until that moment. Then, meekly, she said, "Gosh, I hope not."
Just a suggestion - upgrade your "savy" (sic) friends. Or try improving your powers of persuasion. Also, try googling Sept. 12th.
Did not mean to attack. I do think we are isolated in our views. And if you think my powers of persuasion are lacking, I will own that and ponder how to do better.
I think my friends (some Ph.D. Geologists/Chemists in the pack) are quite overwhelmed with resource depletion. Money matters only in-so-far as there will not be investment to find and extract new reserves. They know generally the economy is bad. They don't comprehend the depth of the fraud, they just have a general idea, "Yeah, they are a bunch of crooks, what's new?" When I try to go into it with them, it sounds to them like I am focused on too many details that don't matter. If this crew is hard to reach...I think fever pitch will be hard to attain too.
You are right on MSC. A prerequisite to "fever pitch" is engagement. And the truth is most people aren't that interested in engaging in these issues.
Ignorance is bliss (for most).
Cheers, hope u had a nice thanksgiving.
MsCreant,
It may be too late to get your attention again, I would only offer this last observation. Much of your frustration may lie in your projecting your emotions or personality on others. Think of it in terms of how people relate to the death of a loved one. Everyone has a different grieving process. Your friends aren't as knowledgeable or as interested as you are about the Ponzi world we are inhabiting? They are the sleeping giant, fuel for the eventual fire of rage that is to come. Germany should have never directed the U-boats to attack American freighters. The rest is history.
You are mistaken, and Ms. C. is most correct in this matter.
Got your message. My friends are indeed sleeping giants. Scary fun creative folk. I would not want them to want revenge on me...
MsCreant, Consider that Irving Fisher, the greatest American economist, could not figure out the Great Depression until 1933, by then he was broke. The rest of the economists haven't figured it out yet. What we are witnessing will define a generation, few people understand these types of events at the time they happen. I just hope it doesn't lead to wars.
"“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness, the other to total extinction. Let us pray we have the wisdom to choose correctly.” - Woody Allen, quoted in the FT today.
Hi heatbarrier,
Nice handle. I have a theory, without much of a way to test it, regarding who gets it. I am not the sharpest tack in the pack, but I have been reading voraciously on these and related issues since about 2004-5. I keep calling it basically right for me and my family based on piggy backing others great thinking. So why are some of us all over this (with minor debates in house [inflation/deflation]) and others hear it and can't get it?
My suspicion-- we all have had trauma or at least severe hardships in our lives. My second suspicion is that not only have we had these kinds of experiences, but we have "overcome them" in some way. We have (could be mistaken or not) a sense that if we get enough information, that we might have mastry over this situation, just like we have had mastery in the past.
If you have trauma/hardship in the background, you know that "peachy now" does not mean "peachy always." You know TS can HTF.
Just a guess. I actually have students who get this stuff much better than colleagues. My students are not as privileged as my colleagues.
Random thoughts. I wonder about Fisher's background.
I find that the biggest obstacle is an emotionally caused blindness. Many people cannot willfully face unpleasant realities, they do so only when circumstance forces them. This is emotional in nature so "intelligence" makes no difference. I agree that past survival of threatening situations teaches some of us to keep our eyes open and our minds focused even if we don't like what is being processed.
Fisher had humble origins but he became part of the establishment, Skull & Bones and all, but he is first rate as an economist, great thinker,
http://en.wikipedia.org/wiki/Irving_Fisher
I think this stuff is too difficult even for economists, let alone laymen. I started in capital markets with the derivatives revolution in the early 80s, know most of the modern instruments and techniques, but when it gets to dynamics of the global financial system there is no guide, the system is just too complex for current theories.
I think Fisher got it right and his analysis applies to the current situation. Richard Koo, Nomura, has picked up this thread, but although their diagnosis of the problem and dynamic is correct, neither one has a valid solution IMO.
Pay more attention to Michael Hudson and R.T. Naylor. Read Catherine Austin Fitts, Pam Martens and all the books published by Nomi Prins. Be expertly familiar with the tax structure and those pieces of legislation affecting it.
The situation has gone way beyond a "valid solution." We are witnessing the justifiable demise of predatory capitalism.
End of story.
I think the main barrier to belief-action is the idea that this crisis is not much different than any other in the past: "Don't worry, we're Americans. We always make it through. This isn't any different than '82 when I bought a house at 16% apr. You'll see! Cheer up, you doomsdayer you. Built a bunker yet? Hahahahahaha."
They'll even agree, with outcomes based on thinking in a vacuum: "Oh, we'll see some hard times. I do think we're headed for a lot of hurt - probably a depression. But ya have to stay positive! We'll get our manufacturing back with a weak dollar. Hey, the sun will still come up again - what are so you worried about?"
Main$tream media has most definitely coddled our population into thinking everything is A-ok. They actually believe the world is a safer place (try explaining that one to just about anyone living in a 3rd world country (and many parts of the US!)). They actually believe our government is still for the people, by the people. If it doesn't come out of Katie Couric's mouth it's probably a conspiracy theory.
My most recent subtle attempts (mostly unsuccessful) at shattering someone's reality involve describing how fractional reserve banking is essentially slavery since they don't actually work for the money lent to us. "(yawn) What's new? Didn't you know that already?" As if they already freaking knew! Liar!
My opinion is things will change when enough people don't know where their next meal will come from - and even if you're a junkie or mentally incapacitated it's still not that hard to find a meal. Maybe when regular shipments of food don't make it to the local grocery store and we see Geraldo interviewing disadvantaged, single mothers complaining that they have the means to purchase baby formula, "Thays juss nothin on the shelves."
Many elderly will die in hurricanes because they have already survived other ones. We have a story about who we are as Americans that shelters us from, as Lizzy said, engaging in these issues with any depth. "We don't need to think about it because we're Americans, and we are tough."
You make good points.
I learned about FRB about a year and a half ago. The world slid out from under me when I got it. As I go down this rabbit hole that seems to keep happening to me. Who needs LSD?
Nice try, but waaaay off target.
Irving Fisher was extremely limited, in comparison to our present times, in the means of knowledge acquisition. During the existence of the Web on the 'net, we now have the means of performing years worth of research in a matter of hours. We presently exist in the time of the "virtual library."
Those of us who have been paying attention have this figured out. Unfortunately we aren't great in number.
Anyone paying attention realizes that economicsts Michael Hudson and R.T. Naylor had this figured out decades ago.
See for yourself, this is a first rate economist,
http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf
Agreed, it can be disheartening because the well being of one's own family is at stake.
Ms. C, you are sooo completely on target -- no thinking person could or would possibly disagree with you.
Anyone --- and there be too many --- who hasn't yet grasped the bi-polar strategy of Team 1 played against Team 2, or Team Blue against Team Red --- just hasn't comprended the structures and patterns. They never ask the next question --- they assume that anything that follows anything else MUST be connected, and are too bewildered and confused to ever connect the most obvious of dots.
We are told explicitly by the McNoosy Media minions that, wonder of wonders, people will no longer be denied "health" insurance under their "public option." (I swear to God I've read the legislation from both the House and Senate and can't find anything remotely like that public option as it was first "framed.")
But if we are legally mandated -- under penalty of fines and/or jail time -- to buy private health insurance -- then how could they possible deny anyone their insurance without throwing the entire legislation into the courts? Obviously, a no brainer.
By the same token, nowhere in either piece of legislation do I find any mention of anything to counteract their denial of treatment!
The economy of scale profitability in health insurance derives from the customer base paying their premiums, while they deny them treatment for a variety of assorted ills.
And if said treatment should be denied? Why they've included "tort reform" to deny legal redress. (Reform means to "make better" -- but better always seems to be for Goldman Sachs and friends.)
So both parties are working towards the same ends, even though one group appears to be agin it while the other group appears to be "for it" -- whatever it is, since seldom does anyone actually peruse their legislative nightmares.
(And already health insurance premiums and pharmaceutical prices have been skyrocketing!)
The same with that cap-and-trade, gamed to be most profitable for Goldman Sachs, JPMorgan Chase, Morgan Stanley and the oil cartel. One side appears to be against it, while the other side appears to be for it (all the while panhandling for more and more political donations), while the group it most profits will be the Financial-Intelligence Complex, and doing nothing whatsoever for real pollution.
Bi-polar strategy 101.....
Wow, sgt_doom. You should get your own blog where you share more of this incoherent rambling and random approbation with the world.
I have felt like the health care bill is absurd, given all of the other unfunded liabilities we have. No matter what they write in that thing, they can't fund it. They will steal what money they collect and do other stuff with it. Leave us a box of IOUs. Meidcare and Social Security tell us what will happen. Bastards. Also the bill distracts news attention from the economy.
I found your post informative.
"Don't get me wrong, I am pissed too. But the way we track this stuff, we're freaks. They don't know and don't try to put all the pieces together. The US public will need to see and feel massive hurt before there is uprising."
+100.
It took me a lot longer to understand that. This is something like an echo chamber - but you don't realize it until you go into the real world. Fortunately for me I don't have to do it that often.
Anyway, I think you nailed it. For us it's a slow, painful, slow-motion train wreck. For others, it's a surprise.
"For us it's a slow, painful, slow-motion train wreck. For others, it's a surprise."
There it is, very concise. I am too wordy. Thanks.
till 6 months ago i didnt know about internet. now i have a computer and found utube was the most effective wake up call. backburnernews did a wake the sheep vid, and wepollock seems to be the most intelligent THINKER out there. But all the fema coffin, 2012,miburu fearmongering nuts persuede many in the wrong direction.
Whats lacking among all of them is leadership and strenght of direction. What one might do to prevail is nebuelous.
letters,calls and demonstrations have achieved less than desired. We now know they wont listen or change.
A meeting of the wise true and honest is called for to formulate leadership and direction. The masses will turn from cows to lynch mob and the gun toten militias may preempt more intelligent moves. I am willing to give myself to this cause with out reservation simply because i care not to live a sham. harry koschorreck merehuman@live.com
and 1mealperday on utube. giving id for the fed shills can lock me up first. Oregon coast.
And where did this bailout loan go?
http://www.7days.ae/storydetails.php?id=75035&title=US+outrage+over+Citi...
Does this mean I can finally afford a condo on the Persian Gulf? Hey, I don't see CalPers on the list of soakees. Did I miss it, or did they inadvertently lose a chance to lose money?
The fed is buying any and all bad investments. Risk is old hat.
Now this is quite delicious:
"Standard Chartered is listed on the London Stock Exchange and the Hong Kong Stock Exchange and is a constituent of the FTSE 100 Index. Its largest shareholder is Temasek Holdings."
http://en.wikipedia.org/wiki/Standard_Chartered_Bank
One sovereign wealth fund failure deserves another.
Maybe this is how we rule the world. We print enough money to buy it all.
Brace yourself. Incoming. More volitility.
I see silver acting real odd...
such bullshit....halt...down...halt some more...down again.
Yea, I mean WTF. Congress should appropriate funds for the purchase of the whole shit-bang. It's just a matter of time before the Zionists push the settlements there... Go Goldman.
Good weekend to all.
Debt Matters
http://highfrequency.tumblr.com/
yeh the FED comes to the rescue and then guess what? put it on my tab. how much longer are we going to put up with this bullshit? how long? --
Greetings from Kuwait :)
Here's total panic! At the moment it's EID (annual pilgrimage) so all banks are closed till Monday.
A lot of my friends (engineers, architects, manager) from Dubai still wait for their money from Nakheel and Dubai World.
This is journalism as it's supposed to be.
(But,damn! One of those banks is managing my account..)
There is a condition worse than being blind.
It's imagining that you can see.
It's not peculiar to economists.
How about this.
Dubai debt problem is a charade for better terms with lenders and bond holders and a good re-entry point for their funds along with GS co-conspirators.
Nothing to loose. They can repay with future oil revenues and even in cash.. Maybe??
Watch for a reversal the next couple of weeks.
Your thoughts guys!