Palm Stinker

As if we couldn't see this freight in the tunnel.  Yesterday, Dubai World - the investment platform owned by Dubai's government - requested that its creditors accept a six-month debt standstill on its $60 billion of debt.  In addition, another $300 billion of construction projects stopped. Just like that.  It is unclear yet how this will effect Dubai World's wide-ranging, global porfololio of private quity investments, but it will.  Through its subsidiary platform Istithmar World, the group holds stakes in emerging markets banking group Standard Chartered to US publisher of education books EMPG.  The firm's 12 investments includes Barneys New York, which Istithmar bought for $942 million in August 2007. That would be THE peak of the market.  The group also has a 20% stake in Cirque du Soleil and 3% of hedge-fund GLG, one of Europe's largest. Since British banks enjoy several billions of credit exposure to Dubai, the FTSE off 3% yesterday while bank stocks, already pummeled, down 6-10%.  Ouch.

The center piece of this catastrophe is the Palm Jumeirah, pictured, Dubai's man-made, palm-shaped island development. Oy vey. Wonder if David Beckham, Brad Pitt and Elton John sold at the peak. Probably since they are smarter than me.  Today the Palm worth nothing.  I would rather live in Cleveland.  Ok, maybe not Cleveland.

Sonnet and I spent a stressful night at the Dubai airport sorting a visa into Pakistan.  In 1997, Dubai owned one tall building and of course the US Embassy on the top or 42nd floor. Otherwise it was sand and water, nothing else. Would it have stayed that we today many better off.

Photo from Dubai real estate website.