13/10/2008

The Dubai Crash !!!

``This is going to be a longer recession than the last four, over three decades, where the average duration was about 12 months,''

In the four corners of the world the recession has gripped many economies, we have the example of Iceland, whose per capita gross domestic product is the fifth highest in the world, however after a four-year spending spree, Icelanders are facing the collapse of the banking system, Iceland's foreign currency market has seized up after the three largest banks collapsed and the government abandoned an attempt to peg the exchange rate.Iceland's rugged, treeless terrain, a barren stretch of volcanic rock, geysers and moss, means the country imports most food, other than meat, fish and dairy products.Iceland's 320,000 inhabitants have enjoyed four years of economic growth in excess of 4 percent as banks and businesses expanded abroad, buying up companies from brokerages to West Ham United soccer club. Now, the three biggest banks, Kaupthing Bank hf, Landsbanki Island hf and Glitnir Bank hf have collapsed under the weight of about $61 billion in debts, 12 times the size of the economy....

Another recession gripped state is Dubai, it May Need Help from Abu Dhabi to Repay Debts,and the federal government of the United Arab Emirates to help pay for a surge in borrowing ...Government-controlled companies owe at least $47 billion in total, more than Dubai's gross domestic product, Dubai has borrowed to fund real estate projects including Burj Dubai, the world's tallest tower, and to buy stakes in Deutsche Bank AG, European Aeronautic Defence and Space Co. and Standard Chartered Plc, as it seeks to reduce dependence on its dwindling oil reserves.

Dubai World, a state-owned holding company, acquired almost 10 percent of Kirk Kerkorian's MGM Mirage last year for about $5.1 billion. MGM shares have since tumbled to $16.80 from $84 when the deal was agreed.Deutsche Bank shares have fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007.

Dubai controls its economy through state-owned companies that dominate each major industry. Dubai Holding LLC, which groups assets belonging to Dubai Ruler Sheikh Mohammed bin Rashid al-Maktoum, owns hotel chain Jumeirah Group and Dubai International Capital, which unsuccessfully bid for Liverpool Football Club earlier this year.

Abu Dhabi and Dubai are the two-largest emirates in the seven-member U.A.E.
Both these Nations have large assets in Europe and as a consequence of their financial shut down we may now see a snowball effect on some Economies such as... Britain. ...

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