UAE Central Bank Pulls a Federal Reserve: It's Bailout, Dubai Edition!
Quick, better grease up Dubai with some cheap easy money before it seizes up like a 14 year old Islamic bride on her wedding night.
The United Arab Emirates' Central Bank has moved to calm fears of a bank run when markets and banks open on Monday by announcing a new funding facility for local and international lenders.
Local banks and stock markets have both been closed for four days for the Eid Al Adha holiday and have yet to feel the impact of the announcement late Wednesday that the giant state-owned Dubai World holding company was seeking a debt standstill which has hit investor confidence worldwide.
In an emailed statement, the U.A.E.'s regulator stressed Sunday that it "stands behind" the lenders, which face potentially heavy losses from their exposure to Dubai World, which is struggling with about $60 billion in liabilities.
"The facility from the Central Bank is certainly a move in the right direction," said Alia Moubayed, senior economist for the Middle East at Barclays Capital.
I have heard wild speculation that this entire Dubai mess is little more than a declaration of economic war against the US banking interests that pulled the trigger on a global disaster in the first place. I have even heard strange rumblings that this is somehow tied to salted gold but I'm going to go ahead and deflect that particular rumor lest I be pegged as one of those crazy gold people. Little late for that.
Anyway, what the hell, Dubai? Seriously, what is it? Sell off some of those assets and write Citigroup a little "I'm sorry" note and move on with your life, what's the big deal?
Apparently there is one and the UAE's central bank, like our friends at the Fed, has the monetary firehose at the ready should there be any executives named Pandit banging down Dubai World's door wanting their money.
What is this, a bad international version of The Godfather? No, it's more of a takeover. Nothing to see here, move along now...