Tuesday, December 8, 2009

Is Dubai Officially Bankrupt

Is Dubai Officially Bankrupt?

World markets are in a tremor with the news that Dubai may be going bankrupt, but like so many news items, this may be another one where the announcements by media are exaggerated, and so, too, are the reactions. In times like these, it is important to take a deep breath and ask some critical questions. Namely, does the announcement made by Dubai mean inevitable bankruptcy, and, if so, how would that affect plans to visit and/or invest in this state-of-the-art city.

The bottom line is that the rumors aren't true. Dubai is not bankrupt, nor is that necessarily an inevitability. Basically what has happened is that Dubai was going to ask its creditors to suspend payments on its $60 billion of debt for at least six months. In a panic reaction, some world stock markets 'crashed,' including in India, fearing the worst.

The Dubai World conglomerate has many financial interests, and in a wide variety of projects and locations. Dubai itself is one of its crown jewels, both a tourist mecca and financial powerhouse. Dubai World conglomerate is highly unlikely to 'go under' since it has a business partner and fellow emerite called Abu Dhabi, which has already bailed out its 'younger brother' earlier in November.

In fact, most financial analysts are predicting long-term financial health for Dubai since this particular 'bump' is an indication of its cleaning up its debt-heavy standing. So, the predictions of the worst-case scenario are premature, and can be quite damaging, as it plants fear in potential investors, and in tourists who might have been considering an adventure to this exotic city.

Dubai is a huge, flashy and exciting city; their future is secured in the short-term, and also the long-term. The wise investor, in fact, would look at this recent announcement as an amazing opportunity to reap the rewards of patience, and the hesitant tourist would also benefit from the city's desire to work even harder to please its visitors.

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