Here's great story on Dubai. Higher oil prices covered a multitude of sins. Now the sin of leverage is exposed in Dubai. The link describes their investment blow-ups.
Dubai's Credit Card Maxed Out
In a recently report, bond rating agency Moody's warned that Dubai's government-controlled companies now owe at least $47 billion. That's more than the gross domestic product of this small Arabian Gulf emirate, which along with Abu Dhabi and five other junior sheikhdoms form the United Arab Emirates (UAE). Moody's has also warned that even if the Dubai economy were to somehow maintain its momentum, debt accumulation would outstrip the rate of economic growth. In the somber words favored by rating agencies, Dubai's "cumulative liabilities are currently rising faster than investments are able to generate returns" according to Moody's....
The Final Word
News that the UAE has now had to launch its own $32 billion bail-out plan for local banks confirms that even the fantastically wealthy oil-rich Gulf sheikhdoms are not immune to the impact of the global credit crunch which prompted panic selling on their own stock markets. While its unclear how the emergency funds will be used, one thing's for sure: if even they can't turn things around, then what hope is there for the rest of the world's economies?
http://community.investopedia.com/news/IA/2008/Dubai-Desert-Miracle-Becoming-A-Mirage-DB-C-MER1015.aspx?partner=YahooSA
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