Dubai’s successful but hideous entrepot model depends on the confidence capital markets, and as a rule markets don’t react to nasty shocks with a shake of the head and a song and dance routine. It’s as if plague has descended on every stock exchange in the world; investors are fleeing for safety. Overnight, shares in Asia collapsed between 3 and 5 percent, and the FTSE, Dax and Cac40 have opened around one percent down. Prepare for another black day.
Will this blip develop into crisis? As the FT’s leader points out, Dubai’s fellow emirate Abu Dhabi can cover its neighbour’s stated debt. That it hasn’t implies that either the Sheikh of Dubai has had too much sun or the debt is larger than alleged. It is too early to turn panic into pandemonium by heralding the coming of the double of dip.
How far are British banks exposed? Gordon Brown has been terribly keen to define British identity, and under his leadership we now have an answer: our pre-eminent national trait is a flair for investing in duds. J.P. Morgan report that HSBC’s liabilities are £17bn and RBS’s stands at £200m, and who knows how far Barclays (who described Dubai debt as a ‘good buy’ last week) are exposed. If the UAE decides against rescuing its brash junior member, will further demands be made on the UK taxpayer? Between you and me, I suspect we will get a share in the Beckhams' grotesque bungalow.
Yes, taxpayers: it's time to drop your trousers and grab your ankles again. Because the banks have now been given their "moral hazard pass" by this wonderful government, and we're about to keep banks in lucre.
Fucking again.
6 comments:
RBS 200m? These are the rough UK Bank exposures:
HSBC - 10bn GBP
Barclays - 2.2bn GBP
RBS - 1.5bn GBP
Lloyds - 1bn GBP
Oh and UK investors account for about 25% of investors in Dubai Palm. This one may take more than a little K-Y...
How anyone could have ever thought that Dubai was something other than a crazy investment bubble in the first place is beyond me.
IT'S A FUCKING DESERT!!!!!
God forbid that any fucking banks should be allowed to fail.
Any other industry and these fucktards would stand around scratching their bollocks.
If they are shit at running their business let them die.
CR.
Relax. Other sides spin this time
HSBC Dubai total loan exposure is 1.1% of its loan book, RBS 0.5% and Barclays 0.2%.
Thats just not worth the lube.
You don't think the banks will spin this into more rent-seeking then?
Hah!
"Thats just not worth the lube."
It may be a tiny percentage of their loan book, but it's still £2.5bn of our money (RBS and Lloyds, "our" banks), that's £416.00 for every man, woman and child in the UK.
I think every taxpayer in the country should be classed as a shareholder in the nationally owned banks. That would make their AGMs interesting.
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