Iceland, Dubai, Greece, who is next?

It is known that the stock market pretends to react to every ripple on the economic and financial oceans. The real reason for these up and downs are profit taking manoeuvres.

The Queen Elizabeth 2 in Dubai

The Queen Elizabeth 2 in Dubai

With the stock market being fooled yesterday into thinking that the European Union was actually going to throw money at Greece in an effort to avoid a financial crisis for the Euro, it becomes clearer that the hens are coming home to roost.
Iceland, Greece, Spain, the US? I decided to return to the Middle East for a moment and check on Dubai, since their financial distress signs in December and the less than surprising “helping hand” from father Abu Dhabi (Abu translates to Dad in Arabic) and for a couple of weeks it looked like a Rose Garden all over. Yet again it shows that financial bail outs don’t do anything to change the underlying faults of a system. Pretty much like here in the States where the giant financial institutions once again fell they have to pay talent beyond the limit of their worthiness.
Well check this one out. Dubai World is considering the sale of Queen Elizabeth 2, the 40-year-old Cunard Line vessel it bought for a reported $100 million in 2007 when no-one knew what to do with Old Lady QE2.

According to a report in Arabian Business, Dubai World’s investment arm, Istithmar, said it was considering “a number of options” that would best “maximize the value” of the ocean liner. Great, a drop on a hot desert plate and the world, well the investors world, is holding their collective breath on what else of the Middle Eastern Disney World Dream is going to be up for sale at pennies to the dollar. Of course that dollar is getting weaker as well, so that is a double whammy. Well we know that Cirque du Soleil’s future in the Middle East hangs on a thread as well.

Istithmar had planned to convert the ship into a luxury hotel off of Palm Jumeirah, the world’s largest man-made island. Recently, the company indicated that it might sail the ship to South Africa to serve as a floating hotel during the World Cup soccer tournament. But that pipe dream fell pretty much in its butt, like another Ocean liner in Vancouver for the Winter Olympics, and now the QE2 has been moored in Dubai since late 2008, when the ship sailed its farewell cruise for Cunard.

Dubai World, the debt-ridden company owned by the Dubai government, was slammed by the economic downturn and a little bit of overspending and has already laid off 10% of its staff. Dubai World’s debt is estimated to be about $59 billion. Reports in the Arabic Business Press indicate that Dubai World could sell both the QE2 and Cirque du Soleil. The company has not acknowledged either rumor and could not be reached for comment. But then again who’s buying?
Last week there was another mini disaster, on which clarity is not given yet. Turned out that there is an electrical problem in the world’s largest building, the Burj Dubai.. Yeah yeah, I know they changed the name recently to honor the generosity of Father Dhabi, but I don’t think they are too happy over there, knowing that their $10 billion emergency bail out is not bringing the expected results.

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  1. tommylee

    Like I said in another comment “Intelligence doesn't grow on trees” when petty crime will result in a much more punishment then a slap on the hand, “Money doesn't grow on trees either” and yet we collectively think and hope that living beyond our means will only result in a slap on the hand.

    It's a “merry go round” and fun while it lasted but you pay for the ride that will make you end up at the same place you got on the ride… only poorer!

    Well, we all love abbreviations and “PIGS” (Portugal, Iceland, Greece, Spain) may be the pain in Europe but it is “Pocket Isolated” but in the United States the abbreviation is going to be a jigsaw puzzle starting with a C and ending on an A but we don't know how many letters are going to be needed to fill the gap. If we go by the alphabet we'll need another 28 letters. The pain isn't over yet and if we don't start acting that this is an interrelated Global crisis we'll all see the famous last words while watching a movie: “The End”.

  2. Alex

    what? A jigsaw puzzle? Starting with C and ending on an A? 28 letters in the alphabet? Tommy, no more posting comments until you've had your morning coffee. Lol

  3. Hal_Burns

    Financial crisis world wide, is it possible? You can bet your last dollar on it, (if it still has any value). Bandaid fixes will on prolong the agony of what the future may hold.

  4. tommylee

    Alex, It's simple. Starting with a C for California and ending on an A for Alaska. If you count forward that is 28 letters further…. D, E, F, G etc. Until you get to A Again and thus that makes 28 letters. Let's hope we're not going to need two alphabets.

  5. publisher_sa

    Yes it is a global problem but for some areas much less than for other ones. Just like here in the States. It's much worse in California than it is in Texas or Minnesota. When I grew up and studied economics, Germany was the largest trading partner and economic power builder for the small country of the Netherlands. Without a postwar German industrial explosion Holland would have only prospered in the Hanse (port) cities that traded with the rest of the world. The rest of the country would have stayed poor (and actually did for a longer period of time). The US would have a much better recovery position economically if policies would focus on those areas it already has a deep relationship with. Largest US trading partner is Canada, far outranking China on no.2, which is closely followed by Mexico, Japan and Germany. The lesson here, just as in business, is that when the economy turns down you first circle the wagons around your existing relationships (keep the existing customer satisfied). Once that is accomplished you restart the recovery efforts. This is however a sorely missing link in today's government actions and businesses. The 10 major trading partners with the US represent 66% of US imports and 61.2% of US Exports. That is where you start rebuilding the economy, with your existing customer base.

  6. Alex

    …? Yeah, ok. I still don't get it, but that's not important. What is important is the global crisis that you mention. You're right that it is interrelated globally and it needs to be treated as such. The “merry-go-round” effect is true and the bandaid fixes only perpetuate and lengthen the ride. But the ride still ends. You guys should get into politics.

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