Global financial crisis
The news that sovereign state is applying for a Creditors Voluntary Arrangement is as predictable as it is shocking.
Dubai's economy has gone belly-up and it's main investment arm (which is the Government by any other name) has suddenly decided that it can't afford to repay the debts it has incurred.
It is not about lack of income coming into the organisation, as the oil price is continuing to support the planned investments, but is is everything to do with the inability (or unwillingness) of tenants to pay the landlords any rental income.
In simple terms, you are using your excess salary to fund the purchase of new buy-to-lets whilst the value of the existing properties crashes and the rental income doesn't cover the mortgage. Oh, and by the way the value of the properties is less than the outstanding mortgage.
It's around this time that the IMF usually in and instruct the country on how to recover, but somehow I think that Dubai may be too proud to allow this to happen. Yet.
But it bodes ill for other investments that they have made across the world which may need to be realised quickly and may drag down other companies.
Allied to the surreptitious loans to the Scottish Banks and a pattern of covert financial disaster becomes apparent. Dear God, what have the Governments brought us to?
Dubai's economy has gone belly-up and it's main investment arm (which is the Government by any other name) has suddenly decided that it can't afford to repay the debts it has incurred.
It is not about lack of income coming into the organisation, as the oil price is continuing to support the planned investments, but is is everything to do with the inability (or unwillingness) of tenants to pay the landlords any rental income.
In simple terms, you are using your excess salary to fund the purchase of new buy-to-lets whilst the value of the existing properties crashes and the rental income doesn't cover the mortgage. Oh, and by the way the value of the properties is less than the outstanding mortgage.
It's around this time that the IMF usually in and instruct the country on how to recover, but somehow I think that Dubai may be too proud to allow this to happen. Yet.
But it bodes ill for other investments that they have made across the world which may need to be realised quickly and may drag down other companies.
Allied to the surreptitious loans to the Scottish Banks and a pattern of covert financial disaster becomes apparent. Dear God, what have the Governments brought us to?
4 comments:
My God, what have the governments led us to is right!
http://www.endtimestube.com/play.php?vid=136
Watch this video to see how it all connects. God Bless and hope to see you on the other side.
Prescient as always, despite your fever. This hole in the sand (and the others we haven't yet heard about) was the tail-end of the Western financial crisis. No investor confidence + unserviced debt + falling commodity prices = major cash-flow problems for countries who actually only really export oil.
Now it's yanking us all down like that big sandy hole with teeth in it that Luke Skywalker got thrown into in the Star Wars film.
Bet there's a few more sandy tax-havens that will collapse on the back of this. The law of unintended consequences will ensure that this prolongs and deepends the recession. And for us, this means less wealth, less borrowing, less business and more government cuts. Happy Holidays.
The Gods are not mocked. Nemesis has repaid the hubris of calling that monster of a hotel Atlantis.
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