Saturday 28 November 2009

Abu Dhabi will save Dubai, but the UK?

Lots written by a gleeful British press about the comeuppance of Dubai. A little too gleeful I feel, as their sovereign debt problems are dwarfed by ours in numbers terms. Our turn for Bond market focus will come, probably in mid-2010.

Also here is a link showing what everyone really knew all along, Abu Dhabi will step in to back most of the loans, leaving just the really crazy ones. Dubai may not be shining quite so bright in future but it is far from bleak.

One thing to consider is that Dubai had only a little oil and tried to spend the money on developing a new economy. Quite a shrewd move.
Anyone tell me what the UK has to show 30 years plus of being an oil producing country?

10 comments:

Steven_L said...

The money has been well spent alleviating 'child poverty' and banning smoking.

Budgie said...

I am wondering about a domino effect? Dubai scares the horses; undermines the UK stock market; Lloyds share offer bombs; UK government (ie taxpayer) has to pick up the tab (in the background - last year's BoE hidden bail out of HBoS); UK government even more in debt; even more government borrowing than expected over-borrowing; funding crisis leads to sterling crisis plus downgrading plus higher interest rates.

Mark Wadsworth said...

In answer to the first question "No". These petro-states may be stupendously rich in per capita terms, but they don't have that much money and most of it has already been invested in govt. bonds etc anyway.

In answer to the last question, don't confuse the spending side with the income side. Yes, successive UK governments have wasted at least a quarter of what they spend, but it was still better for them to collect all the oil revenues and taxes than to tax something else instead.

James Higham said...

There are distinct forces upon and within the UK acting to stunt growth, not least the tax regime.

Steven_L said...

Another thing, aren't the likes of BP, Shell and their shareholders (i.e. our pension funds) the biggest beneficiaries of North Sea oil?

Philipa said...

Anyone tell me what the UK has to show 30 years plus of being an oil producing country?

* Much needed mass immigration and a superb cultural diversity programme.

* A well funded national broadcasting corp able to afford the most expensive internationally sought after celebrities and presenters like Jonathan Ross, Brand and Alan Carr.

* A well funded national health service paying GPs more money to do less work and providing jobs to people all over the world while good hospitals like Basildon statistically demonstrate they provide "good" service.

* A responsible energy policy ensuring the safeguard of our energy reserves and our future through a range of taxation incentives that cleverly avoids any joined-up thinking and carbon-neutral strategy or investment in new technologies.

Philipa said...

Steven_L - the biggest beneficiaries of north sea oil is the government. Petrol for example is sold with about 80% of it's price going in government taxation.

Anonymous said...

Sorry CU, a lot more was known, a lot earlier!

Anonymous said...

Any truth in the rumour?.....


Just maybe, perhaps, errrm, $145 per barrel last summer was used to calculate collateral?
Not too much oil left, but at those prices....

Wasn't that when GS was prophesying $200 per barrel? And taking vast profits on its indices?

Probably the drop in oil price will restrict Abu Dhabi ability to help.

OOOPS

CityUnslicker said...

I still think Dubai shock will be overcome, there is too much money in the middle east willing to stop the 'loss of face.'

If it were Russia or Argentina it would be a lto oworse as there would be no allies to come in and recapititalise.

MW - Shame that we have no fund like the Norwegieans or even just low taxes to show for it though. If I gave you a massive financial windfall I would be most perturbed to find years later you had merely used to it finance excess running costs.