BinCat

Absolutely!

Ethos83

Speaking of building and funding the expo, the other thing that keeps nagging at me is what happened to the debt from the previous boom? Over $100 billion USD if memory serves me correct.

Did AD actually pay it off? Or is it still there, hidden by censorship? Or in typical Dubai style are people pretending it doesn't exist and that maybe it'll go away if no one talks about it?

As regards the theory below wouldn't more property simply increase the supply so why would rents go up?

Irishbeekeeper

Well im not a finance guy, but the first part of your question might be answered here, a long read but highly informative : http://www.reuters.com/article/2013/...0DJ3WP20130508

and as to the second part, in my opinion, when (not if) the prices of property go up, which they will regardless of increase in supply, the rents will increase as well, as you and I know rent is always directly proportional to the value of property

my eco 101 teacher just died a little i think

Millhouse

Some of it was defaulted, some of it was repaid, some of it was restructured (i.e. deferred). The lesson any country should learn from this is a good hard default is much better than a long-drawn out bailout and death by austerity.

Greece vs. Dubai/Russia/Argentina/Iceland/Brazil

Banks have short memories. The IMF/EU doesn't.

Ethos83

Got it. Thanks.

According to Reuters DXB has close to $50 billion in debt due in the next few years.

One would think it's not the best time to be throwing a six month long lavish party that won't pay for itself?

Irishbeekeeper

See thats the thing, the bigger you are in business, the more you have to spend to prove to everyone else who do business with you that you are still huge and there are no worries whatsoever

It reminds me of this friend I have who was born filthy filthy rich and moved in the really upper class circles. He once gave me an example. He said :
'I have an iphone (3GS i think in those days), and I love iphones for their functionality and ease of use etc and always go for the latest models that come out because I get so much done all in one gadget etc etc
But when I have to go to one of my father's big uppity type parties, I am told to take the Nokia Vertu (extremely expensive phone only able to send and receive calls) with me just so my father's friends and business partners can notice me and my phone and my rolex etc and be at ease that their business transactions with my father are in no danger of falling through etc'

Money will attract more money my friend, way of the world

Millhouse

Who cares. They don't.

Ethos83

It's all about bolstering confidence. I suppose there's value in it.

On the other hand it's very much like wearing a mink coat with no knickers.

What a place.

the_red_sheep

Interseting article, I think the first two lines are very telling:

* Markets confident Dubai can meet 2014-2016 payments
* But it still hasn't explained clearly how it will do so

Markets/analysts/bankers are generally clueless and have a vested interested in not making themselves look stupid by admitting all their previous bluster was just that.

Dubai hasn’t explained how it’s going to dig itself out of a monumental financial hole – no shit!

I think it pretty safe to assume the debt to AD will be rolled over, but that in return Dubai will have to bend over again and either hand something iconic, or perhaps this time something actually meaningful, over to AD.

It’s likely that the debt to international banks will be partially paid off and partially rolled over, but at higher rates as they’ve proved again to be a risky investment. Another round of bonds is likely, but this again just delays the problem as its difficult to see a time when Dubai actually becomes financially profitable – Expo 2020 is not the answer to this, or indeed anything else. The potential IPO of local firms would be interesting as it would mean there books being opened up for full scrutiny, which one or two companies would it be is the question I guess.

shiva

Everyone knows abu dhabi has got dubais debt covered if needed so the markets are happy to let them restructure, refinance etc as and when they need. They were also rightly bold enough to say **** off we're defaulting to many creditors.

Most past debt payments have been made or restructured in time, the upcoming ones are covered fairly well or nobody is willing to create a shit storm over them so the powers that be are pretty well covered.


Regional instability has also massively helped dubai as its become the home for serious wads of cash from libya to syria.

The real key though is confidence, economic theories go out the window when everyone from landlords to investors ignores reality. The country also has an unreal situation based purely on the amount of wealth held by its inhabitants and i dont just mean locals. A lot of that money is effectively trapped here as pakistani, indian, iranian, egyptian etc millionaires and billionaires etc cant and wont realistically relocate elsewhere. There is enough straight cash floating around to sustain this place for decades.

Dubai has recovered remarkably well so far and expo 2020 will push it into another massive bubble put nobody will care as the pop is too far off for most to see. Foresight and consequence are not cultural traits held by most here so the idea of a boom and bust let alone the past evidence of one is simply not a fact most can see.

its madness but I actually quite like that madness, so much of economics is based on abstract concepts, unreality, fantasy and sheer market confidence that they somehow make it work here.

Who needs reality when your own substituted fantasy works fairly well anyway.

There are elements here that the UK desperately needs to adopt, I'm pretty certain the UK would be in a better place if they had a little confidence.

One of things ive noticed most about going home the last couple of years is how ****ing gloomy and negative every single bastard is. The austerity, depression, doom and ****ing gloom is now largely due to everyone convincing themselves that that is the ways things are and will be from now on.

A little confidence would boost every sector but god forbid your average brit could see a bright side or some hope.

shiva

as for abu dhabi, they will roll the debt for as long as it suits them.

Its about tribal politics not global economics, a flash building here or there is not what its about and those would not have been asked for but are the expected tributes to be paid by grateful tribe members to their beneficent leaders.

The real deals are not financial but an understanding that certain things will happen or be done, the right words of support uttered at the right times.

Certain issues will be raised or not raised in the majlis, the right allegiances will be made or broken.

I put a post here, years ago that sums some of it up.

This is all still relevant and an ongoing political struggle of Machiavellian proportions.

I had a long chat over a lot of beers with a local guy about this at the F1 who was one of Sheikh Kalifas retinue.
The intricacies of the centuries old tribal battles and alliances are all still alive and well but now they trade ministries and departments rather than bullets over the dunes for camels.


the previous post from a while ago.
http://britishexpats.com/forum/showthread.php?t=576426

on a role now.
Here is an interpretation and opinion on Abu Dhabi's intricate internal power structure

"Right up to the announcement of Zayed's death, even those locals and veteran expatriates who considered themselves among the best informed had got it all wrong. Indeed, with the exception of just one publication, almost all had predicted the succession of Zayed's astute, dynamic and highly visible third-eldest son, Muhammad. Only one year previously, Muhammad had been appointed by his father to the all-new position of deputy crown prince, a move interpreted by some as deliberately smoothing the way for the succession. However, in accordance with primogeniture, the eldest of Zayed's sons and Abu Dhabi's crown prince since 1966, Khalifa, was quietly proclaimed the new ruler.

Khalifa got no full brothers. A bloc of six of Zayed's other sons are, however, full brothers, and most significantly their mother, Shaikha Fatima bint Mubarak al-Qitbi, was Zayed's favored wife and continues to be regarded as the UAE's "First Lady." Predictably, as something approaching a cohesive political bloc in an otherwise highly fragmented dynasty, they have collectively grown in power as they have grown older.
Partly due to their Western education, they are thought to have much in common with emerging technocratic elements in the Council of Ministers and the Federal National Council. Crucially, they have between them gained important control over foreign affairs and parts of the military, domestic intelligence, information services, and other institutions closely connected to national security.
The eldest of these Bani Fatima is the crown prince Muhammad.

To contain the power of the Bani Fatima President Sheikh Khalifa got support from a more splintered fraction that often are referred to as the Bani Muhammad bin Khalifa, they where the main powerbrokers during the late Emirs reign and with him basically built the UAE from scratch.
Indeed, of the late Khalifa's six grandsons, all assumed important positions of power during the early years of Zayed's administration. The eldest of these, Hamdan, was one of the most vociferous supporters of Zayed's cause in 1966 and was at one point even considered as a potential crown prince should anything happen to Zayed's sons. He was the first chairman of Abu Dhabi's new Public Works Department and then became the UAE's deputy prime minister for much of the 1970s and the early 1980s. The second eldest grandson, Mubarak, served as Abu Dhabi's chief of police during the critical first few years of Zayed's rule and was later rewarded with control over the Ministry of the Interior. Tahnun, the third of the Bani Muhammad bin Khalifa, has for some years been a member of the Supreme Petroleum Council and a former director of the Abu Dhabi National oil Company (ADNOC), in addition to holding the deputy chairmanship of the Abu Dhabi Executive Council (Abu Dhabi's emirate-level cabinet). Perhaps most significantly, Tahnun remains the governor of Abu Dhabi's eastern region, which includes the enormous responsibility of governing the emirate's second largest city, Al-Ayn.
Notable among the other grandsons have been Saif, who was chairman of the Abu Dhabi Planning Department and the UAE's minister of health for much of the 1970s, and Surur who was the original chairman of Abu Dhabi's Department of Justice, the chamberlain of the Presidential Court for a long period, the chairman of the Abu Dhabi Department of Water and Electricity, and at one point also the chairman of the UAE Central Bank.

Today, many of these grandsons remain influential, and many of their own sons have formed the latest generation of the loyal Bani Muhammad bin Khalifa. In particular, Hamdan's son Khalifa is the chairman of Abu Dhabi's Department of Economy, while his other sons include Hamad, a successful businessman with the nickname "The Rainbow Shaikh' given his fleet of multicolored cars, and Sultan, chairman of Protocol and the Presidential Guest House. Mubarak's eldest surviving son, Nuhayyan, is minister of education and the president of Zayed University, with his other son, Hamdan, serving as the chairman of Abu Dhabi's Civil Aviation Department (and at one point being the chairman of Gulf Air). Similarly prominent are Tahnun's sons, who between them hold positions on the Abu Dhabi Executive Council, the chairmanship of the powerful General Industry Corporation (essentially a government parastatal),

Despite their ongoing influence however, they and their sons are nowhere nearly as powerful as they were in Zayed's early years. For example, Hamdan bin Muhammad's position of deputy prime minister has been lost to Hamdan bin Zayed, while Surur bin Muhammad's chairmanship of the UAE Central Bank has also been lost (remarkable, given that many believed Surur could have become Khalifa's new crown prince following Zayed's death77). Similarly the Bani Muhammad bin Khalifa have lost the directorship of ADNOC, the chamberlainship of the Presidential Court, and indeed almost all of the ministerial portfolios that they held during the 1970s and 1980s. Clearly, they have been squeezed, mainly by the rising Bani Fatima, and, although there has been some intermarriage between the two blocs, they remain a completely distinct faction. Crucially, of Zayed's sons, they have always been closer to Khalifa, as he is, of course, not a part of the Bani Fatima and therefore regarded as the best potential balancing force. In addition, Khalifa's mother, Shaikha Hussa, was a sister of the Bani Muhammad bin Khalifa, and most of Khalifa's daughters have been married into this branch, further reinforcing any future Khalifa-Bani Muhammad bin Khalifa link.



So as you can imagine HH Sheik Khalifa is by no means a figurehead, it´s just that there are two main blocks of power so his powers are limited in certain areas."
taken from here http://www.theroyalforums.com/forums...a-16781-2.html


Bani Fatima loyals
Sheikh Muhammad. crown prince and very much the architect behind the modernisation of Abu Dhabi. He´s still very much considered the military leader of UAE.

Sheikh Hamdan, deputy prime minister.

Sheikh Hazza, heads the security and intelligence services. Not a man to cross..

Sheikh Tahnoun, heads the presidents private department.

Sheikh Mansour, minister of presidential affairs (The Royal chamberlain really)

Sheikh Abdullah, minister of foreign affairs

jam25mack

http://www.panarabiaenquirer.com/wor...po-2020-judge/

Maxima

That is the main assumption on which everything is being planned.

In a way it is an ideal situation for them; if all if well, then all is well. If things go bad, I wil maintain my way of life, but refuse to pay my debts and those off-plans will not be built.

shiva

pretty much, although i suspect even if you told people it would happen in 2014 they still wouldn't care

Ethos83

Well, thank you Shiva.

An interesting read. For a moment there I thought I'd stumbled into a history textbook about politics in medieval kingdoms.

It shows that 99% of expats have no idea how the UAE is really run.