Dubai debt questions

OK, so UAE has banned Sunday London Times from disclosing actual debt figures. The state's future appears bleak. Let's see how it affects the rest of the world.



UAE existing debt

Figures are from Zero Hedge,

United Arab Emirates (via Bank of America - Amortization figures only):

Total Debt: $184 billion

of which...

Dubai: $88 billion
Abu Dhabi: $90 billion

Dubai:

Due in:
2010: $12.0 billion
2011: $19.0 billion
2012: $18.0 billion
2013: $ 7.5 billion
2014: $ 5.5 billion

Abu Dhabi:

Due in:
2010: $ 8.5 billion
2011: $14.7 billion
2012: $10.0 billion
2013: $12.4 billion
2014: $ 9.4 billion

UAE:

Due in:
2010: $22.0 billion
2011: $34.7 billion
2012: $29.0 billion
2013: $20.3 billion
2014: $14.9 billion

Creditors Of United Arab Emirates (By Entity via Credit Suisse, citing Emirates Bank Association):

HSBC Bank Middle East Limited: $17.0 billion
Standard Chartered Bank: $ 7.8 billion
Barlays Bank Plc: $ 3.6 billion
ABN-Amro (RBS): $ 2.1 billion
Arab Bank Plc: $ 2.1 billion
Citibank: $ 1.9 billion
Bank of Baroda: $ 1.8 billion
Bank Saderat Iran: $ 1.7 billion
BNP Parabas: $ 1.7 billion
Lloyds: $ 1.6 billion

Credit derivatives

Leo Wang, a former SEC Enforcement Attorney, states

"
The key question is whether we have another AIG--i.e., a financial institution that wrote a large portion of the credit default swaps, or insurance, for Dubai debt protecting debt holders in the event of a default... These crises always have secondary and tertiary effects. Some market participants are getting nervous about debt of other UAE members, and also the debt of certain nations in Eastern Europe and elsewhere. What if credit default swaps for the debt of these other nations were written by a major financial institution that also wrote a lot of Dubai credit default swaps?
"

This blow up clearly affects American and European economies, perhaps of epic proportions.

Stock Investments Superior To Real Estate

Several fundamental, logical grounds make long term stock investments more viable than real estate. As investments initiate with general objectives of selling later down the line for an increased amount, added value means everything.

Added Value Explained

Potential buyers in the future, especially those with rationality, would only offer higher prices for the same commodity/security/land, if they recognize additional value on top of whatever the original investors had acquired. This could mean new products, higher demand, brand name, intellectual property, land, and etc.

Real Estate Offers Little Value Growth

Aside from discovering gold, oil, or dinosaur bones in the backyard, the land itself offers absolutely no added value. The building itself actually depreciates over time, and requires additional expenses (or risks for the investor) for upkeep.

Inflation backs this illusion of consistent growth over time, and collective investor sentiment determines short term price fluctuations. Nevertheless, prices always revert to the mean, i.e. they come back down to the expected, inflation adjusted value (minus depreciation on the building). John Villareal explains this concept clearly at the Super Genius.

Businesses Operate To Increase Value

Stock investors own shares of the company. With each venture, active, determined people toil every single day with the objective of value enhancement. Therefore, despite the short term up or downside swings, companies operate to exploit every opportunity to add value for shareholders in the long run and some do it quite rapidly.

Of course even for long term investors, risk management remain crucial for success. Investing itself equates to that of a self run business where value improvement lies at the end of the road.