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Slippery Sands

Marla Singer's picture




 

In the annals of bailout history, commitments don't get a lot more slippery than this.

U.A.E. Minister of Economy Sultan bin Saeed al-Mansouri said further federal government support for Dubai should be “studied” properly. “Each issue has to be studied in a proper manner, evaluated and based on that an answer will be provided at the federal level or the local level,” al-Mansouri told reporters in Abu Dhabi today when asked whether the federal government will extend more financial support to Dubai.

Well, at least the "case-by-case basis" statement made by Abu Dhabi earlier in the month is being applied consistently.  Less consistent, of course, have been Dubai's mercurial positions with respect to their creditor intentions.  There will be a standstill.  There won't.  Debt will default.  It won't.  Restructuring is out of the question.  It will be orderly.  The uninitiated might view this kind of committed commitment to the noncommittal as a sign of inexperience or confusion.  This would be to badly misunderstand the nature and of opacity in Dubai.  After all, this is the city that managed to run up a $7.5 billion accounts payable account with the likes of Mitsubishi Heavy Industries, with some of the past due amounts going back years even as foreign developers are forced to flee the jurisdiction rather than face prosecution by Dubai courts and jail time over defaults often brought on, ironically, by the government of Dubai's refusal to pay them.  How long might one expect developers to stay around pursuing their claims against the government in such circumstances, one wonders.  It will be seen that the surreal is most often the product of exacting design in Dubai.

This appearance of chaos would also, it seems, be the product of intelligent design. Most likely, and decidedly hidden behind the scenes, a delicate dance of brinkmanship is being played out between the forces of public panic, in the form of Dubai's ability to threaten very public and very messy defaults and the disclosures of actual financial condition that tend to accompany such things, thereby throttling the credit ratings of the entire region for some time to come, and increasingly scarce (and expensive) bailout capital, in the form of whatever lies behind the deeply opaque balance sheets of Abu Dabhi's sovereign wealth fund.

One can easily picture Dubai officials poised in the antechamber to the press briefing room and its microphone bristling podium, reaching for the door handle, looking over their shoulder at the cluster of increasingly worried looking Abu Dabhi officials.  "We'll do it.  The press is right there.  We'll freeze it all!"  Ok.  Ok.  Come back.  Sit down.  Let's reason this out together.  No need to be dramatic.  Crisis averted.  For now.  Bloomberg reports:

Dubai World will present a standstill offer to banks in early January as the state-owned company aims to restructure $22 billion of debt, said three bankers who attended a presentation on the matter yesterday.

Another day in the debt desert paradise.

 

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Wed, 12/23/2009 - 16:23 | 172966 The Rock
The Rock's picture

Standstill here, standstill there, here-a-stand, there-a-stand, everywhere a s(t)and-s(t)and...

Wed, 12/23/2009 - 16:24 | 172967 AN0NYM0US
AN0NYM0US's picture

This appearance of chaos would also, it seems, be the product of intelligent design.

Every time one fills up the tank with gas one falls prey to their brinksmanship - these guys are the best.

 

Wed, 12/23/2009 - 16:24 | 172969 Cursive
Cursive's picture

Just one of many promises that will partially kept or not kept at all.  Think of this as a preview to the American Kabuki theater that is the Social Security Trust Fund.  Scene 1 of the first act opens with Medicare laying prostrate at the feet of Wen Jiabao...

Wed, 12/23/2009 - 16:45 | 172994 geopol
geopol's picture

I have to say it...That was one funny post....Kabuki theater Ya Trust Fund= CONTENT FREE VAULT..

 

Wed, 12/23/2009 - 16:43 | 172993 RockyRacoon
RockyRacoon's picture

After choking down our own economic "statistics" over the past years, it would be foolish to say that Dubai has a monopoly on sleight-of-hand economics!

Wed, 12/23/2009 - 17:06 | 173022 MsCreant
MsCreant's picture

If I was underwater on a house, I'd ask my creditors to "standstill" until the value of my house came back, too.

Yeah creditor, just "standstill" there, bend over, that's it...wouldn't want to do this in a disorderly way...could hurt...

It's slippery because it has KY and motion lotion all over it.

Is that what they mean by injecting liquidity?

Wed, 12/23/2009 - 17:13 | 173036 Assetman
Assetman's picture

You are sounding more and more like Chumbawumba every day. ;)

Wed, 12/23/2009 - 17:40 | 173075 MsCreant
MsCreant's picture

Funny what occurs to the imagination when one is angry. You and I don't get to rewrite the rules like this. When my son was a toddler, he rewrote his rules all the time. When you grow up, you stop because you learn no one will play with you if you keep doing it. These folks have too many resources around them, are too entitled, and appear to have never had anyone tell them NO.

I am not Chumbawamba. But I am, dear one, a MsCreant, by design. I do not have to be good. That, I stongly suspect, is the doorway to the road to freedom.

You are always a gentleman, Assetman. That is mostly good (I'd give you my business in a heartbeat). But that may not always be good. If you decide one day not to be good, hell will break loose in the US of A and something WILL CHANGE.

I think I just said something pretty important, ranting as I have. I wonder if you will receive, if not the full impact, at least my meaning?

Think I'll stop typing before I spoil it.

Wed, 12/23/2009 - 22:56 | 173384 jwthomps
jwthomps's picture

MsC, Quite good.

Thu, 12/24/2009 - 01:25 | 173492 Assetman
Assetman's picture

Yes, MsCreant, that was quite good and to the point.  And a very important point you made at that.

I think the difference between you and I is not one of senitment, necessarily, but of one how we choose to pick our battles-- and how we are preparing for them.  Make no mistake, I can go from gentlemanly to a rat bastard when it's best to move that direction.  And just because I sound nice, doesn't mean I'm not going to the shooting range every Tuesday to hone my skills-- or enlarging the garden for the next growing season. 

And on point of prepardness, you are admittedly way ahead of the game.  I can tell you there will indeed come a point where not being good is the modus operandi... but I'm not terribly confident a good deal of the American public will be enlightened or informed enough to reach critical mass.  As it stands today, there is still much work to be done in shining the light on those who are not that well informed-- even it that means turning off their American Idol...

On the other hand, critical mass as we know it, may well be thrust upon us sooner than we expect.  I sure hope not-- but for every Plan A, there's a Plan B.

 

Thu, 12/24/2009 - 04:49 | 173546 Hephasteus
Hephasteus's picture

It will. We are just way ahead of the curve. Eventually people will start putting 2 and 2 together and as this ponzi sheme starts working for less and less people they'll wake up. Massive loss of faith is on deck. Think about even city government. They don't understand loss because it never happens. I could go out tomorrow burn 2 fire stations to the ground. Blow up 6 cop cars and they would replace them within a few months. Loss has to come in MASSIVE UNTENABLE porportions to even get them to flinch. The takers have too big of a pool to work from. But they are making too many side deals and with too much favortism and it's coming out and biting them in the ass.

Look at Dubai they wil pick and choose who wins and who loses. Look at china do you think they are clamoring for "Most favored trade partner". The ponzi is running out. There's not any people left to bring their offerings to the kings and their kingdoms.

Thu, 12/24/2009 - 10:28 | 173621 Cognitive Dissonance
Cognitive Dissonance's picture

American Idol might be turned off for New Yorkers. Read the article, particularly Senator Kerry pleading with the two sides to come to an agreement before the TV screen goes dark and there is not January football, apple pie and American Idol. God forbid the bread and circuses comes to an end on FOX 5. In New York no less.

http://www.dailyfinance.com/story/company-news/are-you-ready-for-no-football-time-warner-cable-vs-fox-in-tv-s/19292585/?icid=main|htmlws-main-n|dl2|link5|http%3A%2F%2Fwww.dailyfinance.com%2Fstory%2Fcompany-news%2Fare-you-ready-for-no-football-time-warner-cable-vs-fox-in-tv-s%2F19292585%2F

Thu, 12/24/2009 - 02:27 | 173509 Rick64
Rick64's picture

pretty funny and to the point

Wed, 12/23/2009 - 17:16 | 173043 bugs_
bugs_'s picture

Yeah we need to study that properly.

 

Wed, 12/23/2009 - 17:30 | 173063 Anonymous
Anonymous's picture

These guys are sharing the timing of their announcements with all of their friends and bankers and gaming both sides of this up & down...........

Wed, 12/23/2009 - 17:38 | 173069 cougar_w
cougar_w's picture

Dubai is a sand trap, as is the entire region. They applied the right make-up and fooled Western investors into thinking they knew who they were dealing with. But it's the longest running gag in the world; every reliquary in Christian Europe contains a tooth of the Virgin Mary brought back from the Near East, she must have had 3,000 teeth.

These guys have been happily ripping off the infidels since 1100AD and they aren't about to quit.

Thu, 12/24/2009 - 13:35 | 173744 Fish Gone Bad
Fish Gone Bad's picture

3000 teeth.  Reminds me of the South Park episode where the dentist asks Mrs Cartman if her son Eric is an alligator. 

Wed, 12/23/2009 - 17:40 | 173074 xamax
xamax's picture

There's no question Dubai will be bailouted. Abu Dhabi plays a cat & mouse game to see if "the man of the year" (read Bernanke) will finally move to send a 80+billion cheque to Dubai. And ,as usual, he will.

Sick world !

Wed, 12/23/2009 - 17:42 | 173079 carbonmutant
carbonmutant's picture

How much time are debtors given in the UAE before they are incarcerated?

Wed, 12/23/2009 - 17:46 | 173081 Anonymous
Anonymous's picture

nothing matters
nothing matters
nothing matters
nothing matters
nothing matters

Wed, 12/23/2009 - 18:01 | 173099 The Rock
The Rock's picture

IMF turns down $2bn loan to Ukraine?  Chestnuts roasting on an open fire...

Wed, 12/23/2009 - 19:26 | 173191 trav777
trav777's picture

why bail them out?

They will bail out their favored interests but tell the Western conglomerates to go fuck just like Aramco subtracted the "am" with the heavy hand of the Saudi government.

This type of shit used to be arbitrated by ships and guns.  Nations did not shit on other nations' creditors or else they got armed invasion. 

Wed, 12/23/2009 - 23:45 | 173428 spekulatn
spekulatn's picture

+1000

Wed, 12/23/2009 - 23:49 | 173432 Salah
Salah's picture

The UAE just raised all government employee salaries 70%; w-o-t-s is after the Dubai debacle, they will rejoin the GCC common currency effort that was 'officially' launched in Kuwait, 12/15.

Link to the pay raise story:

http://www.thenational.ae/apps/pbcs.dll/article?AID=/20091221/NATIONAL/7...

 

 

 

Thu, 12/24/2009 - 02:33 | 173512 Anonymous
Anonymous's picture

Turning off American Idle? What kind of perveted, warped, demented fool are you?

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