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Relayer
27th November 2009, 13:36
Relayer: Ahh....the $40-$50 billion has worked its way up to $80-$110 billion. Like I said earlier...more of this story to come.



The Essence Of Dubai’s Request For Debt Payment Delay
Posted: Nov 27 2009 By: Jim Sinclair Post Edited: November 27, 2009 at 2:10 pm

Filed under: General Editorial

Dear CIGAs,

What is the essence of the Dubai request for debt payment delay (a technical default)?

1. Will an implied Dubai Federal Guarantee of the debt of state owned corporations be honored in Dubai and elsewhere?

2. How many more financial problems are there out there hidden in plain view in the West as well as the Middle East?

3. Will the Middle East see to the bailouts of its own problems or is there a stampede of camel trains into the desert, devoid of cell phones and Mercedes?

4. Will this event cause other developing market country debt to default in a domino effect?

In terms of gold this event is further proof that paper and promises are NOT the stuff money is made of anymore.

Those that will come out of the woodwork to call a top in the gold price have little experience in what a top looks like in gold. Let me assure you the action of today contained zero evidence of a top.

The USA has become a giant FDIC and will have to finance in strange ways (QE) to meet its obligation prior to June of 2011.

Other than transitory technical factors there is nothing whatsoever positive in a collapse anywhere for the US dollar. When the snow falls here on the east coast of the USA the dollar will come under more pressure and fall much further.

The major immediate financial problem, hidden in plain view, is that 2009 financial entity earnings are CASHLESS. They are more than 75% due to the permission of FASB (Financial Audit Standard Board) who sold their souls to the financial sector to again mark up toxic paper to values self determine by the financial institution. The profits of their trading is toxic paper mark up accounting.

The inviting conclusion is the over the top greed in plain view by financial institutions is their own knowledge of the cashless nature of their earning and the fact that the junk is marked up now as much as one can do without either starting a riot or doing time. Therefore the earning prosperity is behind them, nothing is fixed and that makes this year the last opportunity for a long time to cash in for themselves.

Dubai has reminded us that there has been NO cure to the systemic financial problems of the West and those like Dubai that not only tried to mimic the West, but overdo them in a garish manner.

You can be sure that the US Fed and the ECB are chasing the sheiks into the desert today like Lawrence of Arabia in an attempt to get them to pay up and support their own problem. That means more international QE, as the Fed is not in the mood to tank a $12 trillion dollar bailout operation over an $80 to $110 billion dollar failure of a stupid and garish real estate project in Dubai. This concept would contain the domino effect, putting it off until later in 2011.

Conclusion:

The dollar will not reverse out of the bear market it is in, nor will gold top here and now. In fact the bear market in the US dollar and the bull market in gold is not only alive and well but in terms of price, young.

Enjoy your weekend and stop looking at the markets!

Dubai Debt May Be Higher Than $80 Billion, UBS Says
By Anthony DiPaola and Chris Bourke

Nov. 27 (Bloomberg) — Dubai, the Persian Gulf emirate whose state-run companies are seeking to defer debt payments, may owe more than the $80 billion to $90 billion in liabilities assumed by investors, UBS AG analysts said.

“Perhaps Dubai’s debt includes sizeable off-balance sheet liabilities that imply a total debt burden well above the $80 billion to $90 billion markets have estimated so far,” Dubai- based real estate analyst Saud Masud wrote in a note. “This could imply that the debt issued by Dubai in recent weeks is insufficient to meet upcoming redemptions.”

Dubai, which has said it will raise as much as $20 billion selling bonds to repay borrowings, said on Nov. 25 that state- run Dubai World, with $59 billion of liabilities, would ask creditors for a “standstill” agreement as it negotiates to extend debt maturities.

The request to delay debt repayment “came as a major shock” to investors, Masud and fellow UBS London-based analyst Reinhard Cluse told clients on a conference call today. Dubai World property unit Nakheel PJSC has $3.52 billion of Islamic bonds due Dec. 14. Dubai World may seek to negotiate all its liabilities as it reorganizes the business, Masud said.

“The Nakheel sukuk is the largest that has ever been issued,” Cluse said on the conference call. “Markets will take some time to digest this blow.”

more........http://www.breitbart.com/article.php?id=CNG.172a2f217acbdb6e4e9b446773ee0f1 c.a1&show_article=1

Cash2Riches
27th November 2009, 13:47
Mr Gold himself, Jim Sinclair is a genious when it comes to the PM's market, listen closely to what he has to say.

main1event
27th November 2009, 16:20
In terms of gold this event is further proof that paper and promises are NOT the stuff money is made of anymore.

That quote should have been listed as #1 IMO. Thats what this is all about. If we were on a Gold standard this would never have happened. Allowing leverage to the tune of 100:1 via derivatives and other speculative instruments is a sure way to bankruptcy.

I think derivatives are fine for speculators but not for our top most institutions.

Relayer
29th November 2009, 14:47
Dubai's threat to U.S. banks

Although there's little direct exposure to Dubai World's default risk, U.S. financial institutions could take major indirect hits.

By Les Christie, CNNMoney.com staff writer
Last Updated: November 27, 2009: 10:56 PM ET

NEW YORK (CNNMoney.com) -- The news that the sovereign wealth fund of Dubai requested a postponement of billions of dollars of debt this week could pose a big problem for U.S. banks.

The state-run investment company, Dubai World, owes about $60 billion. It rang up much of that in a building boom that included the world's tallest skyscraper and the Palm Islands in the Persian Gulf, settlements shaped like palm trees.

According to CMA DataVision, which tracks credit markets, there's a 35.82% probability that Dubai will default on that debt.

New York-based Citigroup (C, Fortune 500) has the most exposure to default risk at Dubai World, which a J.P. Morgan (JPM, Fortune 500) equity research note estimated at $1.9 billion. Citigroup declined to comment.

While other major banks in the United States are believed to have little direct exposure, the ripple effect could be more crippling, according to Richard Bove, a bank analyst with Rochdale Securities.

"There could be huge indirect exposure," he said. "One has to assume that U.S. banks will be hurt."

J.P. Morgan declined to comment, while Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) were unavailable for immediate comment. Morgan Stanley (MS, Fortune 500) said a Dubai World default "would have have no material impact on its earnings."

Bove said the underlying problem is that there is a lot of uncertainty floating around. For example, there's little information available about counterparty derivatives, guarantees that transfer default risk from lenders to other financial institutions. And it's unknown how much of Dubai World's debt guarantee is held by U.S. banks.

And while UK banks, such as Standard Chartered, HSBC (HBC), Royal Bank of Scotland (RBS) and Barclays (BCS) are much more exposed to Dubai World, with a total of more than $30 billion in default risk according to J.P. Morgan's note, U.S. banks have extensive dealings with UK institutions. Those include trading and guaranteeing debt, which could translate into losses for U.S. banks.

There's also U.S. banks' interactions with their German counterparts. Dubai has loaned a lot of money to Eastern European nations, as has Germany. Any losses from defaults there could expose U.S. banks to some risk.

Finally, there's the impact of already reeling commercial real estate markets worldwide.

"Dubai may have to unload some very prestigious properties at distressed prices, and this will drive the price of all commercial real estate lower," said Bove. "That would clearly be a problem for American banks."

Bove also posited that the problems at Dubai World could add weight to the growing sentiment that is already strong in the U.S. Congress about beefing up regulation.

"Congress is demanding that anyone connected to the U.S. financial system has to be regulated," he said.
Rattling bank stocks

Bank stocks are particularly vulnerable to a market turndown triggered by the Dubai crisis, said Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors. He said the run-up this year has led to an overvalued stock market.

"We had been looking for something to trigger a correction," he said. "This could be that catalyst."

It would add to a market already made volatile, especially with the approach of the end of the tax season for mutual funds, which has put a lot of money in motion. The impact could fall heaviest on the financial sector.

Sorrentino added that the risk of default will put a damper on all commercial credit markets. Institutions may have to set aside more reserve funds to cover default risk, leaving less cash to lend out, and, in general, take a more cautious underwriting approach.

If lending does decrease, that could cut into bank profits.

SeekrBrnEvryMin
29th November 2009, 14:54
It only took the assassination of Archduke Ferdinand and his wife, Sophie, to spark WWI.

I wonder about this...