shareswizard of 10years and still going strong

Dubai's Debt Woes Signal New Era for Creditors
Published: Friday, 27 Nov 2009 9:19 AM ET
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By: Patrick AllenCNBC Senior News Editor
The fact that Dubai has been struggling under huge debts is not a surprise to anyone who has followed the Emirate’s economy over the last 10 years.

A huge property-led boom saw money pile into infrastructure and construction projects like the Palm Jumeirah or the soon-to-be-completed 810 meter Burj Dubai tower that will dwarf any building on earth.
Building the world’s tallest building has always been viewed by investors as a sign that a local economy is about to head south. Dubai World, the most indebted of Dubai’s state-sponsored companies, owes $60 billion of which $22 billion must be refinanced by 2011.
Dubai World and Dubai’s authorities have been able to raise this kind of money in the first place due to implicit support of its oil rich neighbor Abu Dhabi.
Dubai has very few energy resources and raises little money via income tax due to its competitive tax policies. The state has consistently run deficits and the Emirate's growth has therefore been funded via the money markets.
Dubai is one of 7 Emirates that make up the United Arab Emirates. Abu Dhabi, with huge energy reserves and a sovereign wealth fund thought to be worth $630 billion, is the richest of them.
Its banks are major creditors of Dubai and its companies, but news that they are no longer willing to keep buying or refinancing Dubai’s major company’s debt shocked global markets.
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This week two of Dubai’s biggest companies, Dubai World and Nakheel asked creditors for a debt standstill that has spooked investors across the world.
Bad News for Creditors
After an Abu Dhabi-led bailout of Dubai in February of $10 billion, some investors where convinced that more money would keep flowing.
It is not a matter of whether Abu Dhabi can bailout Dubai but a question of the terms under which they will be willing to do so and what impact this will have on other creditors.
Global banking giants like HSBC , Standard Chartered
all have significant exposure to the UAE, of which some will be exposed directly to Dubai.
Analysts at Commerzbank in London believe these companies and others are now facing losses of up to 50 percent on their investments. Luis Costa from the EMEA debt team believes Abu Dhabi will come to the rescue, but only on terms that suit it and its lenders.
“Help will probably be selective. It does not necessarily mean principals will be fully paid here. As a matter of fact, given the levels of haircut in other recent emerging markets restructuring deals, a 40-50 percent destruction of principal (haircut) would not be absurd at all,” Costa said.
So bad news for creditors; and expect those from outside the UAE to get the worst of any restructuring of debt.
Luis Costa has warned in the past that 2010 and 2011 will be classic years of 'global debt restructuring' at various levels like corporate, quasi-sovereign and sovereign credits.
How Dubai and its rich neighbor Abu Dhabi handle this restructuring could give the bond markets a clear signal of how other highly indebted countries, firms and state-backed firms, go about doing the same thing over the next 2 years.
© 2009 CNBC.com

WHY NEVER LISTEN TO NEWS?LOOK AT ABOVE...WHY DID THE DEFAULT ONLY HAPPEN NOW?EVERYTHING LINKED TO TECHNICALS..LOOK AT THE VIX...15mth low and hit round number 20..

as same as subprime...IDIOTS TELL ME THAT SUBPRIME STARTED IN 2007,SOME EVEN TELL ME LEHMANN STARTED THE SUBPRIME.
WHAHAHAHA i hate to talk to ignorant idiots,dont know and yet act smart
proof--wikipedia--

2004-2007: Many financial institutions issued large amounts of debt and invested in mortgage-backed securities (MBS), believing that house prices would continue to rise and that households would keep up on mortgage payments.[59]
2004: U.S. homeownership rate peaks with an all time high of 69.2 percent.[60]
Following example of Countrywide Financial, the largest U.S. mortgage lender, many lenders adopt automated loan approvals that critics argued were not subjected to appropriate review and documentation according to good mortgage underwriting standards.[61] In 2007, 40% of all subprime loans resulted from automated underwriting.[62][63]Mortgage fraud by borrowers increases.[64]
HUD ratcheted up Fannie Mae and Freddie Mac affordable-housing goals for next four years, from 50 percent to 56 percent, stating they lagged behind the private market; they purchased $175 billion in 2004—44 percent of the market; from 2004 to 2006, they purchased $434 billion in securities backed by subprime loans[18]
October:SEC effectively suspends net capital rule for five firms—Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley. Freed from government imposed limits on the debt they can assume, they levered up 20, 30 and even 40 to 1, buying massive amounts of mortgage-backed securities and other risky investments.[65]
2005:
January: Federal Reserve Governor Edward Gramlich raises concerns over subprime lending practices, says mortgage brokers might not have incentives for careful underwriting and that that portion of the subprime industry was veering close to a breakdown, that it's possible that it is a bubble but that the housing market did not qualify for specific monetary policy treatment at this point[66].
February: The Office of Thrift Supervision implements new rules that allow savings and loans with over $1 billion in assets to meet their CRA obligations without investing in local communities, cutting availability of subprime loans.[67]
Fall 2005: Booming housing market halts abruptly; from the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide drop 3.3 percent. [68]
2006:
May: The subprime lender Ameriquest announces it will cut 3,800 Jobs, close its 229 retail branches and rely instead on the Web[69]
May: Merit Financial Inc, based in Kirkland, Washington, files for bankruptcy and closes its doors, firing all but 80 of its 410 employees; Merit’s marketplace decline about 40% and sales are not bringing in enough revenue to support overhead.[54]
August: U.S. Home Construction Index is down over 40% as of mid-August 2006 compared to a year earlier.[70]
[edit] 2007
See also: Financial crisis of 2007–2009, List of writedowns due to subprime crisis, and List of bankrupt or acquired banks during the subprime mortgage crisis
Home sales continue to fall. The plunge in existing-home sales is the steepest since 1989. In Q1/2007, S&P/Case-Shiller house price index records first year-over-year decline in nationwide house prices since 1991.[71] The subprime mortgage industry collapses, and a surge of foreclosure activity (twice as bad as 2006)[72] and rising interest rates threaten to depress prices further as problems in the subprime markets spread to the near-prime and prime mortgage markets.[73]
January 3: Ownit Mortgage Solutions Inc. files for Chapter 11. Records show that Ownit Mortgage Solutions owed Merrill Lynch around $93 million at the time of filing.[54]
February 5: Mortgage Lenders Network USA Inc., the country's 15th largest subprime lender with $3.3 billion in loans funded in third quarter 2006, files for Chapter 11.[54]
February–March: Subprime industry collapse; several subprime lenders declaring bankruptcy, announcing significant losses, or putting themselves up for sale.[74] These include Accredited Home Lenders Holding, New Century Financial, DR Horton and Countrywide Financial [75]
March: The value of USA subprime mortgages was estimated at $1.3 trillion as of March 2007.[76]
March 6: In a speech before the Independent Community Bankers of America's Annual Convention and Techworld, Honolulu, Hawaii, Ben Bernanke, quoting Alan Greenspan, warns that the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, were a source of "systemic risk" and suggest legislation to head off a possible crisis[77]
April 2: New Century Financial, largest U.S. subprime lender, files for chapter 11 bankruptcy.[78]
April 3: According to CNN Money, business sources report lenders made $640 billion in subprime loans in 2006, nearly twice the level 3 years earlier; subprime loans amounted to about 20 percent of the nation's mortgage lending and about 17 percent of home purchases; financial firms and hedge funds likely own more than $1 trillion in securities backed by subprime mortgage; about 13 percent of subprime loans are now delinquent, more than five times the delinquency rate for home loans to borrowers with top credit; more than 2 percent of subprime loans had foreclosure proceedings start in the fourth quarter.[78]
April 18: Freddie Mac fined $3.8 million by the Federal Election Commission as a result of illegal campaign contributions, much of it to members of the United States House Committee on Financial Services which oversees Freddie Mac.[79]
June 7: Bear Stearns & Co informs investors in two of its funds, the High-Grade Structured Credit Strategies Enhanced Leverage Fund and the High-Grade Structured Credit Fund that it was halting redemptions.[80]
June 20: Merrill Lynch seized $800 million in assets from two Bear Stearns hedge funds that were involved in securities backed by subprime loans.[81].
June 25: FDIC Chair Shelia Bair cautioned against the more flexible risk management standards of the Basel II international accord and lowering bank capital requirements generally: "There are strong reasons for believing that banks left to their own devices would maintain less capital -- not more -- than would be prudent. The fact is, banks do benefit from implicit and explicit government safety nets...In short, regulators can't leave capital decisions totally to the banks."[82]
July 19: Dow Jones Industrial Average closes above 14,000 for the first time in its history.[83]
August: worldwide "credit crunch" as subprime mortgage backed securities are discovered in portfolios of banks and hedge funds around the world, from BNP Paribas to Bank of China. Many lenders stop offering home equity loans and "stated income" loans. Federal Reserve injects about $100 billion into the money supply for banks to borrow at a low rate.[citation needed]
August 6:American Home Mortgage Investment Corporation (AHMI) files Chapter 11 bankruptcy. The company expects to see up to a $60 million loss for the first quarter 2007[84].
August 7: Numerous quantitative long/short equity hedge funds suddenly begin experiencing unprecendented losses as a result of what is believed to be liquidations by some managers eager to access cash during the liquidity crisis. It highlights one of the first examples of the contagion effect of the subprime crisis spilling over into a radically different business area. [85].
August 8: Mortgage Guaranty Insurance Corporation (MGIC, Milwaukee, Wisconsin) announces it will discontinue its purchase of Radian Group [86] after suffering a billion-dollar loss[87] of its investment in Credit-Based Asset Servicing and Securitization (C-BASS, New York]).[88]
August 9: French investment bank BNP Paribas suspends three investment funds that invested in subprime mortgage debt[89], due to a "complete evaporation of liquidity" [90] in the market. The bank's announcement is the first of many credit-loss and write-down announcements by banks, mortgage lenders and other institutional investors, as subprime assets went bad, due to defaults by subprime mortgage payers.[91] This announcement compels the intervention of the European Central Bank, pumping 95 billion euros into the European banking market.[92][93]
August 10: Central banks coordinate efforts to increase liquidity for first time since the aftermath of the September 11, 2001 terrorist attacks. [94] The United States Federal Reserve (Fed) injects a combined 43 billion USD, the European Central Bank (ECB) 156 billion euros (214.6 billion USD), and the Bank of Japan 1 trillion Yen (8.4 billion USD). Smaller amounts come from the central banks of Australia, and Canada. [94]
August 14: Sentinel Management Group suspends redemptions for investors and sells off $312 million worth of assets; three days later Sentinel files for Chapter 11 bankruptcy protection. [95] US and European stock indices continue to fall. [96]
August 15: The stock of Countrywide Financial, which is the largest mortgage lender in the United States, falls around 13% on the New York Stock Exchange after Countrywide says foreclosures and mortgage delinquencies have risen to their highest levels since early 2002. [97]
August 16: Countrywide Financial Corporation, the biggest U.S. mortgage lender, narrowly avoids bankruptcy by taking out an emergency loan of $11 billion from a group of banks. [98]
August 17: the Federal Reserve cuts the discount rate by half a percent to 5.75% from 6.25% while leaving the federal funds rate unchanged in an attempt to stabilize financial markets. [99]
August 31: President Bush announces a limited bailout of U.S. homeowners unable to pay the rising costs of their debts.[100] Ameriquest, once the largest subprime lender in the U.S., goes out of business;[101]
September 1–3: Fed Economic Symposium in Jackson Hole, WY addressed the housing recession that jeopardizes U.S. growth. Several critics argue that the Fed should use regulation and interest rates to prevent asset-price bubbles, [102] blamed former Fed-chairman Alan Greenspan's low interest rate policies for stoking the U.S. housing boom and subsequent bust [103], and Yale University economist Robert Shiller warned of possible home price declines of fifty percent.[104]
September 4: The Libor rate rises to its highest level since December 1998, at 6.7975%, above the Bank of England's 5.75% base rate.[105][106]
September 6: the Federal Reserve adds $31.25 billion in temporary reserves (loans) to the US money markets which has to be repaid in two weeks. [107]
September 7: US Labor Department announces that non-farm payrolls fell by 4,000 in August 2007, the first month of negative job growth since August 2003, due in large part to problems in the housing and credit markets.[108]
September 17: Former Fed Chairman Alan Greenspan said "we had a bubble in housing" [109] and warns of "large double digit declines" in home values "larger than most people expect."
September 18: The Fed lowers interest rates by half a point (0.5%) in an attempt to limit damage to the economy from the housing and credit crises.[110]
September 28: Television finance personality Jim Cramer warns Americans on The Today Show, "don't you dare buy a home—you'll lose money," causing a furor among Realtors. [111]
September 30: Affected by the spiraling mortgage and credit crises, Internet banking pioneer NetBank goes bankrupt [112], and the Swiss bank UBS announces that it lost US$690 million in the third quarter.[113]
October 5: Merrill Lynch announces a US$5.5 billion loss as a consequence of the subprime crisis, which is revised to $8.4 billion on October 24, a sum that credit rating firm Standard & Poor's called "startling". [114]
October 10: Hope Now Alliance is created by the US Government and private industry to help some sub-prime borrowers. [115]
October 15–17: A consortium of U.S. banks backed by the U.S. government announces a "super fund" of $100 billion to purchase mortgage-backed securities whose mark-to-market value plummeted in the subprime collapse.[116] Both Fed chairman Ben Bernanke and Treasury Secretary Hank Paulson express alarm about the dangers posed by the bursting housing bubble; Paulson says "the housing decline is still unfolding and I view it as the most significant risk to our economy. … The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."[117]
October 31: Federal Reserve lowers the federal funds rate by 25 basis points to 4.5%.
November 1: Federal Reserve injects $41B into the money supply for banks to borrow at a low rate. The largest single expansion by the Fed since $50.35B on September 19, 2001.
November 15: Financial Accounting Standards Board "Fair Value Measurements" standards upgrade the quality of financial reporting through greater transparency. [118][119] However, this "mark-to-market" accounting may exaggerate the loss in value of an asset, as shown on balance sheets, and trigger a cascade of unnecessary financial losses. [120]
December 6: President Bush announces a plan to voluntarily and temporarily freeze the mortgages of a limited number of mortgage debtors holding adjustable rate mortgages (ARM). He also asked Members Of Congress to: 1. pass legislation to modernize the FHA. 2. temporarily reform the tax code to help homeowners refinance during this time of housing market stress. 3. pass funding to support mortgage counseling. 4. pass legislation to reform Government Sponsored Enterprises (GSEs) like Freddie Mac and Fannie Mae. [121].
December 24: A consortium of banks officially abandons the U.S. government-supported "super-SIV" mortgage crisis bail-out plan announced in mid-October,[122] citing a lack of demand for the risky mortgage products on which the plan was based, and widespread criticism that the fund was a flawed idea that would have been difficult to execute.[122]

SINCE HOUSING ALREADY FELL IN USA IN 2006, WHY DID THE STOCK MARKET KEEP ON GOING UP???
TO TRAP IDIOTS LAH AS STOCK MARKET EASIEST TO PUSH UP OR DOWN

SUBPRIME NEVER HAPPEN IN 2007 AUGUST ONLY..YOU LISTEN TO NEWS U SURE DIE BIG AND DONT KNOW WHY YOU DIE