Dubai World, the largest government owned company in Dubai, has requested a debt standstill of their lenders. This suggest they have financial problems and won't be able to pay back their debts in time. When this news reached the western countries on thursday the stock markets took a big dive. This is mainly because most of the investors and lenders are in Europe and the United States. The Dow Jones did not move because it was closed due to Thanksgiving day, but major European markets like the FTSE 100 and the CAC 40 went down at first. This was a first reaction until an official reaction of neighbour state Abu Dhabi or the United Arab Emirates federation. But this wasn't possible before the weekend. The situation continues to be very tense as everybody is waiting for an announcement on monday.
In my opinion this isn't a good situation. As Dubai World is the largest government owned company and at the center of all major building projects in Dubai, but one does not have to panic all to quickly. Dubai is part of the wealthy United Arab Emirate federation as is the wealthy neighbour Abu Dhabi. The federation has been trying to prove to the rest of the world that they aren't as far behind like everyone thinks. This to me seems like a perfect situation to prove it. I'm very confident that either Abu Dhabi or the federation itself will help Dubai so it doesn't have to default on its debts. If not then it would make a huge mistake and will suffer a hit in their reputation. I totally understand the markets reaction but don't see a need to write off Dubai immediately.
Source:
http://www.ft.com/cms/s/0/7896cac2-db93-11de-9424-00144feabdc0.html?nclick_check=1
Sunday, November 29, 2009
Privatisation: Government sale plans hang in the balance
The subject of the article is that Poland wants to sell a lot of their private companies. That means that they want to sell the companies that are owned of the government to private companies. They want to sell these companies as quick as possible because they want to survive the financial crisis without large debts. With this privatisation they can pay off a lot of their debts. The bad think is that the public debt will raise enormously. There are a lot of companies that will be privatised: the big airplane company, LOT Polish Airlines, the Warsaw Stock exchange, their second largest power-producer Tauron, an oil refiner… That will be about 670 companies that will be sold,(for 37bln zlotys).
In my opinion it isn’t very smart of the polish government to sell these companies because it will loose a lot of good companies to the private sector. If they now sell their companies, than the private companies will have large debts. This increase in debt will not make it easier for the Polish economy. I think that it is better that the government retain their companies and keep investing in their companies, so their economy will be stimulated and the crisis will not linger. After the crisis they can still sell their companies, they will receive more money and the private companies will be enthusiastic to buy them.
Sunday, November 15, 2009
Apec leaders drop climate target
The world leaders still didn’t come to an agreement to reach a new climate change deal. After a two-day conference, there were still a few leaders who weren’t convinced about the new deal. This deal contained a target to halve greenhouse gas emissions by 2050 and a new strategy for growth after the world's worst economic crisis.
The target to lower the greenhouse gas isa very controversial issue in the world community, which could disrupt the negotiation process for a long time. That’s why some think it was unrealistic to expect a full, internationally legally-binding agreement .
They came to a joint declaration about certain things like rejecting all forms of protectionism and reaffirm our commitment to keep markets open and refrain from raising new barriers to investment or to trade in goods and services. They also agreed to keep stimulus spending in place until a recovery was seen.
I think it’s a good effort of all the world leaders to negociate about it, but first they need to study it further. They need to establish a good plan, that is realisable for everyone. This will take a lot of planning and efforts of everyone, but it’s necessary, because everybody need to stand behind the plan.
Wednesday, November 11, 2009
G20 Vows to spur fragile growth
The worldwide economic crisis seems to end but finance ministers from rich and developing countries warn everybody that the global recovery hasn’t been assured yet. Last Saturday there was a meeting in Scotland where de ministers discussed about this issue.
The main statement of the G20 was that the main concern is the high unemployment and that supply is still needed for the global recovery. A first proposal, funds for bank bailouts who are being paid by taxes on transactions, was not very successful. Most G20 countries didn’t found this a good proposal but the British Chancellor of Exchequer announced that we cannot withdraw the support.
But the meeting was overshadowed by a message from the British prime minister, he claimed for a new social contract that would banks make more responsible. He said that the government was obliged to intervene and help the financial sector because they have a very important role in the society and that a global levy on bank transactions was a great idea to make the banks pay. But he also announced that this must be agreed worldwide, otherwise he wouldn’t take any action in his country.
The idea from the British minister has been received rather good by the other G20 countries, but British bankers and the Canadian prime minister reacted negative. The next meeting will be in Copenhagen where they talk about the climate.
In think that the levy on bank transactions has positive and negative effects. I think that the banks aren’t recovered enough and this could make new problems for the banks. On the other hand the economic crisis is caused by the banks and till today most banks didn’t take their responsibility.
Poelaert Jens – 3FV3
Date: 11 November 2009
Monday, November 2, 2009
RBS admits EU sale plan
The Royal Bank of Scotland has recently admitted that the European Union forced them to sell more assets than it had planned.
In the morning of the 2th of November, RBS announced that they had to make some sacrifices to conclude a deal to receive state aid support from the EU. The sacrifice RBS is supposed to make was that they have to sell parts of its operations which they hoped to preserve after the restructuration.
The main concern from RBS is now to maintain as much as possible from their original recovery plan without losing too much from their activities.
The EU is demanding that RBS sells their Churchill and Direct Line insurance operations, as well as hundreds of branch offices. RBS is also trying to fight the demand of the EU to sell their US retail arm, Citizens Bank.
In my opinion the European Union has the right to make demands towards the banks that are in need for financial support. All this support is mainly tax payer’s money and therefore the possible risk of losing this should be strictly minimized. Also the priorities of the banks are completely different then those of the EU. The banks will try to restrict their dismissals to a minimum and try to obtain as much support as possible.
Source: http://www.guardian.co.uk/business/2009/nov/02/rbs-admits-eu-sale-plan
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