On air: Should Dubai be helped out of its financial crisis?

Dubai, or to be exact the state-owned Dubai World, wants to delay repaying some of its debt. This comes after story after story has detailed how projects there have not been hitting targets. If you’re a golf fan you’ll be aware the final tournament of ‘The Road To Dubai’ was played on a course where some building weren’t completed. And of course there are examples on a far greater scale.

Now, you only have to look at the markets for evidence of how worried the money men are about this. So what to do?

Should Dubai’s banks and neighbours help it with debt freezes and loans? Or should this exercise in rapid debt-supported expansion be punished for its extravagance? Is it time a message was sent that this level of risk taking is not acceptable even within the free market?

33 Responses to “On air: Should Dubai be helped out of its financial crisis?”

  1. 1 Roy, Washington DC
    November 27, 2009 at 15:42

    This worldwide culture of bailouts and extravagant spending has got to stop. We’ve seen it here in the USA with the banking and auto industries, it has happened in other countries as well, and now the UAE?

    Enough is enough. In a free market economy, if you do risky things with your money, you risk losing it. Don’t like that? Don’t go on such wild spending sprees.

  2. November 27, 2009 at 15:59

    Whether or not they should is between the debtor and the entity that made the loan (and their stake holders). Only the loaning agency can look over their books and decide whether or not an extension is going to benefit or disadvantage their organization. Recent history shows that allowing for extensions just prolongs the inevitable. It may be that the assets that are in question have no value or are unmanageable by loaning agency. They should have thought of that possibility before making the loan.

  3. November 27, 2009 at 16:11

    It seems that Dubai has had too much money that it wants too much from it. It’s an emirate whose main asset is oil which is subject to fluctuations due to economic booms and crises. It seems that it never had it so good when the oil barrel reached $150 only to slump to the third of its value at some time.

    It’s likely that its current crisis will have repercussions on its investment within and abroad. In Morocco, many Emirati projects concerning tourism were cancelled in the past months due to the global economic downturn.

    If Dubai current economic crisis is likely to be contagious, it’s better to administer it the best medicine before it can hit other sectors related to it. The major victims will be the immigrant workers, mainly from India and other Asian countries. The crisis will add up to their miseries back home. The Dubai’s financial crisis needn’t be a replica of the credit crunch even on a small scale if it is going to draw other financial sectors to the hole it is in now.

  4. 5 JanB
    November 27, 2009 at 16:43

    No, of course not. Dubai is in debt because it built too many luxury resorts and other fun but not vital prestige projects. Besides, they still have plenty of oil to pay off their debts.

  5. 6 Peter Gizzi UK
    November 27, 2009 at 16:50

    Certainly not! Having said that it will be “us the lower paid” who suffer yet again because of “the rich” squandering our money.

  6. 7 Tom K in Mpls
    November 27, 2009 at 17:16

    It looks like they would have had the financial crisis the rest of the world had on their own. No sympathy here. If you do something stupid such as incurring unreasonable debt, expect trouble. It takes more than vision to succeed, common sense, or luck, is even more important.

  7. 8 Hari Vidhadharan
    November 27, 2009 at 17:30

    Dubai has no oil at all.it seems the rulers of Dubai were jealous of their more wealthy neighbours, especially Abu Dhabi and started a construction spree to lure everybody to them. They were never on firm ground and have now fallen. It is poetic justice that they now stand before their oil rich neighbour to bail them out of the crisis.

  8. 9 T
    November 27, 2009 at 17:42

    Help me out of mine. And then I might consider it.

  9. November 27, 2009 at 18:00

    Everyone saw it coming. Why didn’t anyone ring the alarm bell?
    Saudis are engaged in a war. Iran is under threat. The attitude of the ordinary Arab is “tone down the pomp and glitter.”
    The region wants democracy and civil rights not an artificial paradise on water.
    Those plush houses are worthless unless you are on a multi-billion dollar contract in the region.

  10. November 27, 2009 at 18:11

    Lebanon was a playground of the world,until the civil war in 1975-1990.It did recover somewhat,in terms of tourism until the 2006 war.Which tells me that recovery is possible.Dubai is not in armed conflict and although I am not well versed in high finance,I’m sure that Dubai will recover,even if they have to sell their soul to Abu-Dahabi.But I would be sure that the UAE will not let them go under.We do not have to look far for financial crisis,it’s not that long since western governments were falling over each other to bail out institutions.What’s good for the goose?

  11. 12 Mike in Seattle
    November 27, 2009 at 18:23

    Look, I don’t care how messed up Wall Street was and still is, it doesn’t hold a candle to Dubai. The working conditions for immigrant labor are atrocious and the total lack of development for long term infrastructure irresponsible in the extreme. For goodness sake, I don’t hear about the US or the EU making their own islands!

    Look, it’s one thing to bail out an irresponsible financial institution, but a fantasy land of man made islands and seven star hotels? I wish them the best of luck.

  12. 13 Mike in Seattle
    November 27, 2009 at 18:33

    On second thought – yeah, let’s bail them out.

    Lets get the US and the EU together, and in exchange for loans to get them out of hot water, we lay down the condition that they actually improve the short and long term conditions of the 9 out of 10 immigrants in their country. After all, the Prime Minister is the majority stake holder, so this should be possible. Make them reform their courts, treat the genders equally and conform to other internationally accepted human rights laws.

    Dubai gets to have it’s stupidly expensive toys taken care of, and human rights will be brought to many who really need it. What do the rest of you guys think?

  13. 14 Elias
    November 27, 2009 at 18:50

    The old adage “The higher the rise the harder the fall”, is true in the case of Dubai. To get out of the financial mess they find themselves, for a start they should invite ouside interests in buying the huge buildings they built, perhaps neighbouring countries like Kuwait and Saude Arabia would buy some of them. To help them financially would be pouring money down a black hole.
    Again the poor suffers the excess of a corupt state.

  14. November 27, 2009 at 19:05

    The financial crisis should teach investors that they shouldn’t bite more than they can chew. The investors in Dubai want to get much richer through speculation and the exploitation of foreign workers who get no more than $10 a day and work in conditions of quasi slavery.

    However the current financial crisis should be an opportunity for them to have realistic economic projects and to employ foreign workers without economic abuse.

  15. 16 Rob In Vancouver
    November 27, 2009 at 19:12

    Why should there be one rule for one set of borrowers and another for others? If you can pay it pack, there’s no problem. If you can’t then be ready to go out of business. If I asked my bank for 6 months of non repayment I wouldn’t get far…

  16. November 27, 2009 at 19:25

    How can a system where mismanagers are rewarded by enormous sums of money survive, or even come into being?

    It is clear that the holes in the balloon are nog fixed yet, and we are running out of fuel to prop things up any longer. There are no real currencies anymore other than commodoties itself, when hyper inflative economies are going back to barter via ebay and the like.

  17. 18 archibald
    November 27, 2009 at 19:45

    Dubai should be converted into a luxury refugee camp, for all displaced peoples of the world. Let the rich who have bilked many countries of their precious investment capital, now take direct responsibility for their ridiculous venture and provide for those who truly deserve luxury as opposed to the handful of wealthy persons who would just ignore all others in the world except for their own. Wealth created it let them fix it.

  18. November 27, 2009 at 19:45

    These people buying and selling in Dubia deserve what they get
    They know the slave situations of the buiders that are paid a pitance have their passports taken away from them
    and live in a state that prohibits free speech

    i have NO respect or remorse for these people.

  19. 21 Vijay Pillai
    November 27, 2009 at 23:04

    Dubai must have known it risks for decades with oil running out and considering other wealthy nation like saudiarabia not investing so ambitiouly like Dubai, it was a gample of the arabs and foolish westerners fell intotheir trap buying and inveswting in their silly islands off dubai,building mega building all pompus dream of oil wealth nations of middle east when the work has been done by poor indians and they got not musn money to be paid even to these poor people. arabs should come down to earh eathing humble pie like poor indians.

  20. 22 claudine
    November 28, 2009 at 01:57

    It seems, more than everything else, speculation has mad Dubai what it is.
    Speculation that investment in Dubai will bring easy riches in the future.
    That made real estate there become very expensive with no real foundation for all that alleged value.
    If people are getting cautious about Dubai and start moving out then many might soon have less than what they paid for.

  21. 23 Nitesh
    November 28, 2009 at 07:48

    I disagree with Farrisen about about taking risk with money. I believe, USA did business with Dubai on oil and Dubai did their best to develop in short period of time, attracting more FDI and encouraging free market economy.

    Even USA took a lot of risk with their money. Now as China is developing rapidly it is giving threat to world economy but Dubai is not giving any threat but instead it is going wit the flow.

    Employentrate in Dubai is not that bad as it is in USA, for long USA are going to leave with their pride. They have to learn to go with the flow. If Dubai is helped with their financial then it will attract more FDI (Foreign DIrect Investment) both inwards and outwards and also do some wonders which USA can not do something like that. I say give help to Dubai.

    I have been living in USA all these years but I have not seen country like Dubai, ready to help its citizens and non citizens in financial, but beside that their hospitality is good not rude like USA.

  22. November 28, 2009 at 09:48

    bailout after extravagant spending is the order of the day in world economy ..we saw it in american banks repayment and now in dubai..big players are having a big say in economy as this examples of visionless extravagance shows ..and to clear off the debt we are debating for ..but what about the poor who have taken small time loans and default of repayment is not permitted even for few months leading them to suicide .last 10years 2lakhs agricultural farmers of india committed suicide as they could not repay the loans taken from bank and mind you that was just thousands ..now we are debating about waving off billions and that too due to extravagant ways of the policy makers be it in usa or dubai?and this same policy makers cry loud about abolishing subsidies to be scarpped in india and other third world countries?what a paradox?its time some regulatory system takes up the world economy or it will slump due to this visionless extravagance of economic powers with narrow mindedness?

  23. November 28, 2009 at 12:22

    UK’s current debt is 1 trillion 700 billion. This is a case or the pot calling the kettle black.

  24. 26 Zulfikar
    November 28, 2009 at 18:51

    It is all about the freemasonry; they have a project to collapse wealth of that country.

  25. 27 David in Victoria Harbour
    November 29, 2009 at 10:06

    We should if we can.( to set rules to avoid future crises )
    However, in my opinion, it is not possible that Dubai will receive help from super powers such as the PRC and the US.
    The future of Dubai is still dark and hopeless unless it can make us TRUST itself again.

  26. 28 richy
    November 29, 2009 at 16:13

    No it shouldn’t be rescued. Best solution is to simply allow it to rot back into sand to give a stern lesson to those with pomp and money who caused all this financial misery for others to be effected.

  27. 29 cm rajendra
    November 30, 2009 at 08:18

    Lot of greed, speculation, spiking the market from the rulers of dubai and they made them to investmnet expansives villas and resorts to only keep in mimd celebrtaee and other seni0rich customers.

  28. 30 Paul Lokaba
    November 30, 2009 at 09:30

    Dubai need to be helped otherwise it will affect the economy of the county and will increase the high rate of debtors. The oil rich will have no benefit to the county later after these crisis is ban.

  29. 31 Tom D Ford
    November 30, 2009 at 19:32

    In my opinion, some bottom feeder capitalist will come in and buy those unfinished projects for pennies on the dollar and finish them and make a financial killing. They always do.

  30. 32 Ibrahim in UK
    December 1, 2009 at 12:59

    Dubai’s success depends on foreign investment. The world is going through a recession and is not too keen on investing on (over-valued) projects in Dubai. If the Dubai debt crisis is likely to have a knock-on effect on the rest of the region, then Dubai’s oil-rich neighbours will most likely intervene and bail them out or buy some of their assets.
    As for debt-driven wealth, that is basis of most Western economies. Debt in the UK is nearing the 2 trillion mark, yet people own houses and cars and go on holidays giving the illusion of wealth. The average owed by each UK adult is about £30,000
    How sustainable is this?

  31. 33 Rashed Al Shamsi
    December 9, 2009 at 03:19

    I dont get it, why are you all after Dubai? The USA, UK andothers have much larger debts than Dubai and I dont see anyone predicting their collapse!
    We have full trust in our visionary leaders who will lead us out of this crisis. And regarding slave labor, the actual workers are happy to be here, and lets not forget, all countries have stains, the US with their treatment of Red Indias, Australia with aborigines. Dubai’s treatment of its workers is like a 5 star hotel service in comparison.

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