Dubai has announced that it cannot pay $60,000,000,000 (billion) in loans, for real estate projects including the Palm Islands, Dubai World, Burj Dubai (world's largest building), Istithmar World Capital, and loans that may involve CityGroup of New York and many others. Stock markets throughout the world are concerned about this. It creates yet more pressure on an economic system that is already struggling to recover from billions of losses of the Wall Street/Banking debacle. Dubai's urgent need for "delayed" payment means only one thing. They are out of cash. That is one thing Dubai has in common with millions of people impacted by this recession.
We predicted in our articles last year that Dubai would face issues like this. On site investigations and interviews with well placed businessmen in Dubai convinced us that Dubai is a place built upon debt, dreams, with an under current of cultural control and a dose of "Promise them the wealth of our oil, but take from them the wealth of the west".
Our visits in Dubai indicated high level corruption, greed, Sheiks on the take, bribery, overpriced projects, investors who had lost millions and yet could not even sell Dubai assets, a government that made it illegal to publicize real estate problems. The U.S. connections in Dubai range from CityBankGroup, Governor Rick Perry, former U.S.President George W. Bush, and even sports and entertainment leaders.
Dubai is like a Ponzi scheme. You are either in and promoting,
or you are desperate to get out but no one is listening. We have personally spoken to investors who bought in Dubai, and now are desperately looking a huge discounts to "liquidate".
But the government repeated limits the ability of "free speech" so it is difficult to speak out openly, this often limits ability to market "troubled" assets.
We noticed, that when we made attempts in Dubai to encourage wealthy people with oil money to invest in U.S. investments, the government there offered no help. Other Americans in Dubai have reported that the government shut down their web sites, monitored emails and worked against efforts to meet with the wealthiest of Dubai, to show them investment opportunities in other nations. So the system is such that the government, business and communications structure works against money "leaving" Dubai, and demands that foreign companies "invest" and pay local agents hefty fees to "have suitable dealings" in Dubai. In some cultures this would be considered illegal and corrupt. In Dubai, it is just the way things are done.
The "city-nation" has problems with ethics, transparency and open-business dealings.Thus it is not unusual to find investors in Dubai who have lost 50% or more. Bonds, shares and even investments of Sovereign Funds, are being discounted by world markets. The city is filled with half empty office buildings, and half finished projects that have no real financial feasibility based upon fundamental economics. Their idea is "Throw enough oil money at it from our uncles in Abu Dhabi and we can do anything." The question is, have their rich Uncles "had enough" of dreams yet, and will they demand fundamental economics in the future. If so, the Dubai may have a difficult and long term recovery.
We are amazed at the millions that the Western world has poured into the sands of Dubai, and into to sheiks in white robes, who have issues with integrity and if the current...