Dubai

Is Dubai collapsing??

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Troubled markets of the probability of non-support of the Government of Dubai for the UAE
Observers feel the reactions of world markets, and intensive media coverage of the Dubai Declaration deadline to pay dues to the largest debt of state-owned companies as if the economic model of the emirate failed completely.
Although the amount requested by the Dubai World, a grace period for repayment is not to long, about $ 3.5 billion, the global implications reminded people of the economic crisis that hit the world economy after the collapse of U.S. in the real estate sector.
This reflects the importance of being Dubai, not only for its ambition and exciting taken as a plausibly pillar of the development of real estate and tourism, trade and investment, but because they said it's a clear picture of the global financial system with Advantages and disadvantages.
Dubai World, owned by the Government of Dubai, one of the seven emirates forming the United Arab Emirates, has a debt of billions for some time and there was no problem.
And Dubai as a whole has funded a great deal of credit projects, bringing its debt to about gross domestic product.
Since the global economic crisis deepened last year, and the major subsidiary of Dubai suffer significant problems.
There are problems and bankruptcy losses in other major economies in the region much larger than the recent crisis in Dubai, for example the problems of a manufacturers, Al-gosaibi; approximately $ 22 billion in Saudi Arabia.
Dubai has funded many projects on credit
In the rest of the Gulf states, which have accumulated huge revenues from energy exports, governments do not disclose the ramifications of the global recession, and save a lot of companies or cover the losses in billions.
But Dubai is different, more exposure to international markets and the lack of oil to its development and adoption of economically on trade and services.
Subsidies



Apparently the main reason for disturbing the market, and concern the leaders of the West, that the company had not received government support of a government (or sovereign as it is called in the media of a Western economic).
Because Dubai is a model for the big global financial system, who suffered the scourge of inflation of the value of assets in an exaggerated manner, the explosion only reveal more flaws after it emerged that government interventions in the global economy is about to get him out of recession.
It was expected, in notes from the writings of Western analysts, that the acceleration of the Emirate of Abu Dhabi's biggest property in the UAE oil revenues to the rescue of Dubai to provide the money to pay the benefits of its debt.
But it is clear that Abu Dhabi would not interfere as they do other Gulf governments "cover" imperfections economy billions. As Dubai itself may not be willing to finance a distorted economic want to get rid of it.
There is nothing wrong to Dubai, as long as it deals with the global financial world in his own way, be left behind in the payment of debt payments, but be declared bankrupt and its loss-making non-restructuring.


It was not the rhetoric of some commentators and analysts on the lack of transparency in the Dubai Declaration, but referring to the desire of those in the know that the Abu Dhabi or the other would step in to rescue the company or not.

Value of the asset inflation bubble that everyone is suffering from exploding now
Bubble Dreams
The global concern is the continuing investments to obtain a benefit if it were in another place they would have already evaporated and no better than the wealth of oil revenues to maintain the profits of the benefits of debt.
Many dreams have evaporated in Dubai, in fact in recent years, particularly aggressive in real estate.
Many Westerners were buying luxury properties in Dubai in the hope of selling it after a few double the price and make millions in the blink of an eye.
All this led to inflate the bubble in the value of assets, and inflated with dreams and what these people escaped from the collapsed Dubai screaming that "the country has collapsed."

The truth is somewhere in between, there is no doubt that the emirate's economy benefited from the bubble has also benefited from many of the expatriate workers and investors and now suffering from exploding.
The most important forms of suffering is that Dubai built in the last two decades have made the reputation of the insurance on its debt and less expensive than anywhere else in the world.
There is no doubt that the recent crises will raise the cost and make it difficult for the emirate to provide funding markets for new projects.

Business model
Dubai has been able to achieve economic jump in the region thanks to the way of administration of the Emirate as a company with the President and Board of Directors.
And succeeded in the beginning to avoid bureaucracy and to facilitate the development plans are too ambitious financing a variety of credit and investments.
Dubai's rulers were able to maintain that way without any major problems within the European Union, which is the state or with their neighbors in other Gulf states.
Dubai has become a model and inspiration for many countries in the region, which became emulated in real estate and financial services and even trying to develop tourism.
Not only the fascination with the model such as the Gulf states, Qatar and Kuwait, but has spread to countries with well-established pattern of development of an extended, such as Egypt, Morocco and others.
Now, many argue that this model fails, without recognizing that this means the failure of the global financial system altogether.
However keen the world on its financial system and the continuation of his efforts to rescue and recovery, do not imagine that the most obvious sources will collapse even if it did not "support the sovereign."
Source: BBC by:Ahmed Mustafa

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