Dubai’s “potential reliance” will be “most significant” in coming years, Moody’s Investors Service said in a report today. Government-controlled companies owe at least $47 billion, more than Dubai’s gross domestic product, and they will continue to accumulate debt at a faster pace than the economy grows, the New York-based rating firm said.

“These companies that are based in Dubai have become larger than Dubai itself,” said Giyas Gokkent, chief economist at National Bank of Abu Dhabi, the U.A.E.’s second-largest commercial bank by assets. “If anything were to go wrong with any of these companies, Dubai does not have the wherewithal to deal with it.”

State-owned Dubai World paid about $5.1 billion for almost 10 percent of Kirk Kerkorian’s MGM Mirage last year; the price has tumbled since to $16.80 from $84. DP World, the government- run company that bought Peninsula and Oriental Steam Navigation Co. for $6.8 billion in 2006, has slumped 55 percent this year on the Dubai International Financial Exchange.

Ruler Sheikh Mohammed bin Rashid al-Maktoum has borrowed to replace Dubai’s dwindling revenue from oil, investing to boost earnings from tourism and finance. State-owned carrier Emirates has increased its fleet to the largest in the Middle East, in a bid to double tourists per year to 15 million by 2015. Dubai Holding LLC, which groups assets belonging to Sheikh Mohammed, owns hotel chain Jumeirah Group.

Abu Dhabi Oil

Abu Dhabi, by contrast, owns more than 90 percent of the U.A.E.’s oil reserves, almost 8 percent of the world’s total. The Abu Dhabi Investment Authority, its sovereign wealth fund, is the world’s largest with assets of between $250 billion and $875 billion, according to the International Monetary Fund.

ADIA’s Head of Media Relations Erik Portanger declined to comment on Moody’s report.

Dubai’s approach is backfiring as investors avoid the most indebted companies on concern the global credit crunch will increase defaults, while real-estate and company assets slump.

Deutsche Bank has fallen nearly 70 percent since Dubai government-owned DIFC Investments bought a 2.2 percent stake for about $1.8 billion in May 2007. Standard Chartered has declined 15 percent since state-owned Istithmar PJSC acquired a 2.7 percent stake for about $1 billion in October 2006.

The cost of insuring Dubai Holding’s bonds has increased nearly four-fold since May, according to traders of credit default swaps. Credit-default swaps on Dubai Holding Commercial Operations traded at 679.3 basis points on Oct. 10, up from 172.99 at the beginning of May, CMA Datavision prices show.

The company’s $500 million of 10-year notes due 2017 fell 2.2 percent today, raising the yield to a record 13.1 percent, Bloomberg data shows.

Dubai Model

While Dubai’s economic model “has proved successful to date, cumulative liabilities are currently rising faster than investments are able to generate returns,” Moody’s senior vice president in Dubai, Philipp Lotter, said in the report. This “necessitates a clear understanding of wider implicit federal support when rating key government-backed corporation.”

Just got a call from a private source, but 99% credible.

Eight days ago (news was held up while source was in the field), the National Guard Armory in Pocatello, Idaho was seized by the U.S. regular Army and stripped of all weaponry. Everything from long range cannon to small arms.

These guys are the 148th Field Artillery Battalion They stripped it of all weaponry and ammo.
The CO asked “Why?” and was told “There’s gonna be a party this winter and you’re not invited!”

He was led to believe that this was a national happening, not just that armory.

I’ve called 5 other NG bases, but (for some odd reason) have received NO answer.

Any of you that have the ability (or strings) get on the phone and see if there’s verification from any of your sources.

[ Edited Sat Oct 11 2008, 06:02PM ]

http://jesusnotchristian.com/