My God, There Is A Wise Govermment
Monday, November 30. 2009
Posted by
Karl Denninger
It just happens to be in the Middle East: Dubai World’s Debt Not Guaranteed by Government http://bloomberg.com/apps/news?pid=2...dvgvqhps&pos=1
Nov. 30 (Bloomberg) -- Dubai’s government said it hasn’t guaranteed the debt of Dubai World, the state-controlled holding company struggling with $59 billion in liabilities, and that creditors must help it restructure.
“The company received financing based on its project schedule, not a government guarantee,” Abdulrahman Al Saleh, director general of the emirate’s Department of Finance, said in an interview with Dubai TV, when asked whether the government was backing the debt. “Lenders should bear part of the responsibility.”
Ding ding ding ding ding ding.
You make a bad loan predicated on a bunch of pump-monkey nonsense instead of sound underwriting, and it goes bad,
you are going to take a big fat loss!
How come we can't get this right? Why is it that we protect creditors while slamming debtors? Are you going to tell me that the only place there is a "free market" left in lending is in the freaking middle east?!
“The times of implicit support are clearly over,” said Philipp Lotter, vice-president of Moody’s Investors Service in Dubai. “In the past entities such as Dubai World certainly represented themselves as quasi-government entities, whereas there was no legal obligation on behalf of the government to support, and that has certainly shifted with last week’s announcement.”
Where have we heard that before? Oh yeah...
CONTINUES: http://market-ticker.denninger.net/a...overmment.html