Abu Dhabi’s Silence Raises the Heat on Dubai - NYTimes.com: "Many here had assumed that Abu Dha bi would bail out Dubai’s flagship company, Dubai World, which set off a swoon in global markets last week when it said it was seeking to delay payments on $59 billion in debt. But so far there has been no announcement, and insiders suggest that Abu Dhabi — which already bailed out Dubai to the tune of $10 billion earlier this year — is seeking greater economic or even political control over Dubai as the price for any further assistance.So I'm not the only person that's confused about what's what. In my earlier posts I said that Dubai was defaulting. It's actually Dubai World, a separate company. But everyone (including me) assumed Dubai World was basically part of Dubai.
To make matters worse, the Dubai government distanced itself from Dubai World on Monday. Abdulrahman al-Saleh, the general director of Dubai’s Department of Finance, told Dubai TV that Dubai World was “not guaranteed by the government,” and that creditors needed to take some responsibility. “They think Dubai World is part of the government, which is not correct.”"
In our country, there was a bank called The Bank of The United States that failed, but everyone thought it was the government that failed. This caused a huge bank run.
Having said all that, it's still the case that there are tightly interwoven relationsips in Dubai since nearly all relationships are blood relationships.
In the US, Fannie Mae and Freddie Mac, and the Federal Home Administration (FHA) have implicit government guarantees, but as Market Skeptics points out, these are not real guarantees. So it'll be interesting to see who is left holding the bag when those agencies finally and completely implode.
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