Oh My, Dubai. Hold your breath. How big the fraud?

Tokyo Shares End Down On Strong Yen, Dubai Debt Worries

• TOKYO (Dow Jones)--The Nikkei 225 Stock Average dropped to a fresh four-month closing low Friday on continuing yen strength and worries that unfolding financial troubles in Dubai may sink U.S. stocks later in the global trading day.
• The Nikkei 225 Stock Average fell 301.72 points, or 3.2%, to 9081.52, closing just a few points off its intraday low. The dismal finish was the biggest point decline for the index since Aug. 17, and its lowest closing level since July 13.
• The Topix index of all the Tokyo Stock Exchange First Section issues lost 18.55 points, or 2.2%, to 811.01, its lowest closing level since April 1.
• Trading volume was relatively robust at over 2.25 billion shares.
• Stocks got off to a weak start after the dollar briefly fell below Y85, setting a fresh 14-year low against the yen early in the morning. As of the close of the Tokyo Stock Exchange, the U.S. currency was seen trading at 86.14 against the Japanese unit, down from 86.65 at Thursday's market close.
• Thirty-one of 33 Topix subindexes ended in negative territory, with steel, nonferrous metal, and machinery making sectors absorbing the biggest percent losses.
• A Nikkei report that mining giant BHP Billiton has asked major Japanese steelmakers to accept a change in their pricing mechanism for coking coal to one linked to market prices hurt the sector. Nippon Steel lost 4.0% to Y310 and JFE Holdings sank 5.8% to Y2,765 on concerns that the new method could mean higher procurement costs.
• Stronger yen concerns hit major exporters hard, sending Honda Motor shares down 3.8% to Y2,660, and Sony shares down 4.4% to Y2,265. Canon fell 2.7% to Y3,200.
• "The yen strengthening trend will continue," said Nikko Cordial senior strategist Tsuyoshi Kawata. "Speculative traders are assuming that the government won't take any immediate action."
• The Nikkei sharply extended its losses late in the session on a decline in Globex U.S. stock futures. Wall Street trading resumes for a shorted session after yesterday's Thanksgiving Day holiday.
• "After European stocks fell on Dubai debt exposure concerns, hedge selling is kicking in on worries that Wall Street may face a similar selloff," said Daiwa Securities SMBC market analyst Yumi Nishimura. Dubai World, the city state's largest corporate entity, asked creditors Wednesday for a six-month moratorium on debt repayments.
• General contractors and other development project-related stocks were some of the biggest victims of Dubai-related speculative selling. The Nikkei newspaper reported that large builders would be among the first to be hit by the Dubai debt crisis because of major contracts tendered by Nakheel, Dubai World's property development unit. Taisei sank 7.1% to Y145, while Obayashi tumbled 8.7% to Y284.
• December Nikkei 225 futures ended down 320 points, or 3.4%, at 9070 on the Osaka Securities Exchange.
• For the holiday-shortened week, the Nikkei dropped 4.4%, and is off 9.5% for the month with one trading day to go. Year-to-date, it is still up 2.5%.

By Juro Osawa, Dow Jones Newswires; 813-6895-7569; juro.osawa@dowjones.com

$ Two trillion in Gulf States foreign assets by end 2008

Burj Al Arab Hotel in Dubai is the only existing 7-star luxury hotel in the entire world.

It is very heart warming to see the results of US military protection in the Middle East. We have come a long way from US soldiers handing out candy to grateful European children in broken cities and rubble strewn streets. Why are we protecting this?

I do not begrudge the Gulf States getting rich because we are so foolish to believe in economic models that do not include energy independence.

I do wonder why we give away military protection for nothing, and cannot get Arab states to police other Arab states.

I do get angry when I see the squalid streets of Afghanistan and the perpetual open sewer of Palestine and listen to the reasoning that it is always an American responsibility. It isn't and it never was.

___________________

Gulf states’ foreign assets to top $2,000bn

By Simeon Kerr in Abu Dhabi Financial Times
January 16 2008

The net foreign assets of Gulf Arab states are set to rise to more than $2,000bn by the end of this year on rocketing oil prices, according to new research. The Institute of International Finance said the region’s public and private overseas wealth stood at $1,800bn (€1,211bn, £916bn) at the end of 2007.

“High oil prices are enabling the GCC [Gulf Co-operation Council] governments to place a growing volume of resources into reserve and wealth management funds, which will play increased roles in international financial markets,” said Charles Dallara, managing director of the IIF, a Washington-based association representing global financial institutions.

Sustained high oil prices will generate more capital spending and foreign investment as the GCC’s combined current account surplus should exceed $250bn in 2008, up from $215bn in 2007. Most of the foreign assets are controlled by sovereign wealth funds. The IIF said a slowdown in the US economy could cause a knock-on effect on global oil demand, causing prices to soften and a drop in GCC government revenues. However, the IIF believes that ongoing infrastructure investment among the six-member grouping should provide enough economic momentum for nominal growth to continue at 8 to 10 per cent in 2009.

But the report warned of serious inflationary pressures. Inflation in the GCC reached a 15-year high of 5.3 per cent in 2006, likely rising to 6.7 per cent in 2007, according to official figures that may understate price pressures.

While supply-side bottlenecks amid rampant population growth were driving up inflation, the report said: “The situation is being aggravated by policy shortcomings.” With five members of the GCC fixing their currencies to the US dollar, the region has few monetary options to stem liquidity growth as central banks are forced to track lower interest rates while the region booms.

The GCC’s nominal gross domestic product of $900bn in 2008 is more than double the amount registered in 2003. The region’s external debt is estimated to have reached $226bn in 2007, a three-fold rise on 2003, but at 28 per cent of GDP, the IIF described the aggregate ratio of debt as benign.

Hydrocarbons continue to form the bulk of the GCC’s wealth, accounting for 77 per cent of 2007 export earnings, up from 73 per cent in 2002. Oil export receipts reached $381bn in 2007, 8 per cent higher than in 2006, while natural gas revenues rose 18 per cent in 2007 to $26bn, driven by gas-rich Qatar.

But the private sector was playing an increasingly important role in the region’s latest petrodollar surge with the GCC’s non-oil sector growing this year at 14 per cent in nominal terms, the report said. Public expenditure had fallen from an average of 34 per cent in 2002 to 29 per cent in 2007.

While non-oil growth was providing job opportunities, most of these positions were taken by expatriate workers.

Copyright The Financial Times Limited 2008

Arab Solidarity

This is Dubai

This is a Palestinian Camp in Lebanon

Think the Arabs could solve their own problems?