DUBAI Signs of a new financial storm for September coming from Dubai and Saudi Arabia by Maurizio d'Orlando 06/01/2009 http://www.asianews.it/index.php?l=en&art=15402&size=A
Dubai calls on the Rothschild bank for help, perhaps out of desperation. In Saudi Arabia a Saad Group company defaults. US, European and Asian banks are struggling. The end of Ramadan in September might mark the start of an economic depression worse than that of the 1930s. Milan (AsiaNews) - Rothschild's Dubai office has been retained by Dubai's Department of Finance for advice on the US$ 10 billion financial support fund (FSF) the emirate raised on the bond markets. Nakheel, the property development arm of Dubai World, was the first to benefit, but is likely to be the last of its kind because funds will be handed out on the basis of two criteria: urgency and strategic importance. In fact government-related corporations deemed essential for the long-term development of Dubai's economy will be eligible for FSFs. They include firms involved in infrastructure, transportation (ex. the Metro and Maktoum airport projects), aviation, ports, shipping and tourism. Banking might be included and the Rothschild guidelines might be flexible with regard to real estate. This said Rothschild is not getting directly involved but will act through commercial banks in which it has equity or has connections with, like JP Morgan and other ones. Moreover, through the same commercial banks, Rothschild has a say, and a powerful one, over the Federal Reserve Bank of New York (FRBNY). By law the latter plays a key role in the Federal Open Market Committee (FOMC) and thus has a crucial role in making key decisions about interest rates and the US money supply. Through the FRBNY Rothschild is in a privileged position to influence US monetary policy and shaping US monetary supply, crucially important since the US dollar remains the main reserve currency in the world. Dubai's choice is also part of a ongoing dispute between the Saudis and the Emirates over the location of the single central bank of the Gulf States and what direction to give it. The United Arab Emirates (UAE), especially Abu Dhabi, has recently put the brakes on the whole thing, and in the short run no solution seems to be in sight. The Saudis are considered too close to the United States and thus indirectly to Israel. Gulf States, especially the UAE, favour a Euro-Asian axis that runs from China to Russia that includes Germany, a relationship best illustrated by Opel's sale to the Austro-Canadian Magna group, which stands in for the Russian state bank Sberbank. The Rothschild family has have been closely associated with the Zionist Movement. The 1917 Balfour Declaration was in fact addressed to Lord Rothschild in which the British government committed itself to the establishment in Palestine of a national home for the Jewish people. By choosing this banking group, Dubai is distancing itself from the other emirates, perhaps out of desperation. But the Saudis too are facing their own serious problems. The Saad Group, which is linked to The International Banking Corp (TIBC) and the Ahmad Hamad Algosaibi & Brothers Co, is in difficulty. Saudi Arabia's central bank has frozen all the accounts of Saad chairman, Saudi billionaire Maan al-Sanea, who owns 2.97 per cent of the HSBC Holdings Plc, Europe's largest bank based in London. Once known by its full name of Hong Kong & Shanghai Banking Corp., HSBC Holdings Plc is also one of Asia's main banks. The decision by Saudi Arabia's central bank comes after an Algosaibi-owned company defaulted on a billion dollar debt. Maan al-Sanea's Saad Investment Co. had also received a US$ 2.82 billion loan from a group of 26 European, US, Asian and Arab banks in 2007. Such troubles might be a sign of more bad things to come for the banks, especially those in Europe and to a lesser extent in Asia. Conversely, although US banks were hit by the subprime credit crisis in real estate, they are not that involved in emerging markets and eastern Europe. As in the spring of 2008 when the first signs of the coming September financial storm were visible, today's signs, albeit not front page news, might herald another major storm this fall. But this year's crisis could be worse than last year's because of the multiple points of origin. In addition to the weak situation of the US Federal Reserve, whose financial commitments in support of the US banking system are equal to the total US GDP, European banks could go in tilt because of their exposure to emerging markets whilst those of Asia (especially Japan's and China's) could suffer because of Asian economies' heavy reliance on now declining exports. As for Dubai real estate values in the city-emirate have dropped by 50 per cent since before the crisis[i]; insolvencies here and across the Gulf region are rising. At the same time two contradictory trends appear to be coming together. On the one hand, we see that "creata ex nihilo"[ii] e-money might lead to hyper-inflation; on the other, collapsing prices in real goods could lead to deflation and an economic depression worse than that of the 1930s. Indeed in Dubai many expect the next storm to hit at the end of Ramadan, 21 September. [i] According to AsiaNews's own sources, the drop in real estate values could actually be higher, of the order of 60 to 70 per cent. [ii] Such an almost blasphemous expression refers to money created by accounting decisions and practices made by existing computerised banking methods and which do not reflect actual available goods. Head of Dubai's finance department pulled from job By ADAM SCHRECK DUBAI, United Arab Emirates http://www.businessweek.com/ap/financialnews/D9897P800.htm Dubai has pulled its finance chief from his post, sidelining a key member of the Mideast business hub's economic crisis management team as it struggles to put its finances in order. The official state news agency WAM announced the surprise removal of Finance Department Director-General Nasser al-Shaikh in a brief statement Monday night. No reason was given for the change, which was attributed to a decree issued by Dubai ruler Sheik Mohammed bin Rashid Al Maktoum. Al-Shaikh could not be reached, and government officials did not immediately comment on his removal Tuesday. He will now serve as assistant director for external affairs to the ruler's court. Al-Shaikh, who also chairs Dubai-based mortgage provider Amlak Finance and property developer Deyaar Development Co., had gained respect among many in Dubai's business community for his understanding of the looming financial challenges facing the Persian Gulf city-state. As head of the finance department, he played a role in drafting the sheikdom's 2009 budget, which called for a 42 percent increase in public spending to help offset a sudden slump in the local economy after years of double-digit growth. The stimulus package was meant to help Dubai navigate through the global financial crisis, which brought to a rapid end a years-long property boom fueled by easy credit and high levels of government-linked debt. Al-Shaikh also helped engineer a $20 billion bond issue plan Dubai launched earlier this year to help it pay off some of the $80 billion in debt owed by the state and its vast network of government-linked companies. The first $10 billion of bonds to be issued were bought by the Emirates' central bank -- a move widely seen as a federal government bailout. Dubai is one of seven semiautonomous emirates comprising the United Arab Emirates. Last month, al-Shaikh announced that the finance department had hired British investment bank Rothschild to help the government manage and distribute the bond funds through an "independent and rigorous process of qualification and oversight." WAM reported that al-Shaikh has been replaced by Abdul Rahman al-Saleh. Al-Saleh was previously executive director of corporate affairs at Dubai Customs. Battle with sheikh's adviser led to fall of Dubai finance minister By Simeon Kerr in Dubai Published: May 20 2009 http://www.ft.com/cms/s/0/d317831a-44d5-11de-82d6-00144feabdc0.html?nclick_check=1 The shock removal of Dubai's de facto finance minister this week came as the result of an internal battle between him and a senior adviser to Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, officials indicated yesterday. The vacuum of information surrounding the departure of Nasser al-Shaikh, Dubai's department of finance chief, has set the Dubai rumour mill alight. But senior Dubai officials yesterday said he had fallen foul of a senior adviser to Sheikh Mohammed as Mr Shaikh gained a higher profile through his efforts to combat the effects of the global economic crisis. Mr Shaikh, along with Omar bin Sulaiman, Dubai International Financial Centre governor, has recently led efforts to stem the crisis that has engulfed the emirate as its real estate market crashed and the global recession slowed other core elements of the economy, from trade to tourism. They had been leading the disbursement of the $10bn United Arab Emirates central bank bail-out loan, half of which has already gone to meet delayed contracting invoices, with the rest going to a special fund to be set up over the next months by Rothschild to extend funding to other cash-strapped entities. Mr Shaikh, who had said Dubai was expected to raise the second half of its $20bn (?.7bn, £13bn) bond programme later this year, helped rebuild trust with the banking community after other officials last year played down the impact of the crisis, even as house prices slumped and redundancies increased. Philipp Lotter, a Moody's credit analyst, said the agency would seek "confirmation that [Mr Shaikh's replacement] re-mains committed to the government's supportive policy towards its related entities, as this is an important pillar of our ratings in Dubai". Bankers, who are playing an increasingly important role in the economic future of Dubai as it seeks to refinanceits $75bn-plus debt pile, also reacted with concern over the credibility of the department of finance. Abdulrahman al-Salem, the new finance director, told Arab channel Al-Arabiya's business website yesterday he was fully aware of the challenges facing Dubai, and how to address them, saying he would work with government departments to find solutions. --~--~---------~--~----~------------~-------~--~----~ Nor can Goodness and Evil be equal. Repel (evil) with what is better; then the enmity between him and you will become as if it were your friend and intimate! Visit: sultan.org Subscribe: [email protected] Post to group: [email protected] -~----------~----~----~----~------~----~------~--~---
<<inline: dubai_-_financial_crisis.jpg>>
<<inline: bw_255x54.gif>>
