Goverment of Dubai going Bankrupt? Who knew building islands shaped like palm trees not a great investment?
Posted by busterbuster on February 24, 2009
In a very under-reported story (at least here in London), apparently the Dubai government was under severe banruptcy risk and needed to raise $20billion to pay down debt. The government apparently placed bets on the rising property market, which has experienced a significant reversion in the past 8 months. It appears that the United Arab Emirates (UAE), of which Dubai is one of the total of seven states, has stepped in to prop up the government.
"But analysts said $20 billion was not enough to meet the economic challenges facing Dubai, which threw itself onto the global stage by building the world’s tallest tower, as well as islands shaped like palm fronds and the world map.
"The market was pricing in a Dubai bankruptcy, which was never the case," said Rami Sidani, head of investment for the Middle East and North Africa at Schroders Middle East. "Dubai is getting proper support from the federation, as it has a vital economic presence in the U.A.E. The U.A.E. has the reserves and oil surplus to be used in a rainy day, which is what we are going through today."
http://www.iht.com/articles/2009/02/23/business/uaebonds.4-435829.php
