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Bill Bonner of the Daily Reckoning has for long had a bone to pick with Thomas Friedman of the New York Times. It all first started with legendary short seller James Chanos calling China “Dubai times 1,000 – or worse.” To which Thomas Friedman wrote that James Chanos should be careful about trying to “short a country that has $2 trillion in cash” in this article titled “Is China the next Enron?”

Thomas Friedman & Bill Bonner

In his article, The Long and Short of China, Bonner goes hammer and tongs at Thomas Friedman saying…

Oh happy days are here again. Obama is going to get our money back from the banks. Jeffrey Sachs is telling Haiti how it can get its economy back in order (with other people’s money, naturally). And Thomas Friedman is offering investment advice.

This should be fun. We’re all on the bus…and it’s driven by the blind, the deaf and the very dumb. Oh, sorry, we meant the visually impaired…the hearing impaired…and the mentally deficient.

Friedman is, as we all know, full of advice on just about everything. He advises finance ministers on how to soup-up their economies. He advises the Arab world on how to update its religious institutions. He advises whole nations on how to improve the future before it happens.

And here he is now counseling Mr. James Chanos, noted short seller, on how to make money

Big egos are at play here.  But its not to discount the value of the words being spoken here.  Bill Bonner, Thomas Friedman and James Chanos are all good at what they do.  They have built up a career full of backing their claims with the work they have done.

Last word on whether China is a bubble or not is yet to be spoken.  Meanwhile, Thomas Friedman finds another supporter in Keith Fitz-Gerald of Money Morning.

Above pictures courtesy: Theteemingbrain, Cityfile & Stockopedia

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Yup, its the 60 years since India became a Republic.  Have we gone the right way or wrong?  Well, there is still time for such discussion.

Meanwhile, best wishes of the day.

Above picture source: Santabanta

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I had always wondered about the procedure of choosing a guest for the Republic Day celebrations that happen in New Delhi.  Going by this article, there seems to be a strategy behind the whole selection.  It all depends on the way India percieves the person its inviting, the kind of relations between the two countries and if India wants to elevate the relationship level and lots more.  This year’s Republic Day guest is South Korean President, Lee Myung-Bak.

In an innovation increasingly evident, the government has been weaving strategy with hospitality to decide its chief guest for the Republic Day. So in the 60th year of the republic, as it gets ready to host chief guest and South Korean President Lee Myung-bak, New Delhi has given the final environmental clearance to Posco, the South Korean steel giant, to set up a $12-billion steel plant in Orissa. The project is the single biggest foreign investment in the country.

There are other reasons as well for India to extend this year’s honour to Lee. South Korea is an influential player in the Asia Pacific Economic Cooperation forum where India has a growing stake, because of which New Delhi feels the need for a greater engagement with APEC member countries.

Read the full article here

Pictures courtesy: Wikipedia & 26alphabets

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Prime Focus, the Mumbai based post production company has worked on significant portions of the recent blockbusters, Avatar and The New Moon.

Prime Focus played an essential behind-the-scenes role in two of the biggest Hollywood blockbusters of 2009 — Chris Weitz’s “New Moon” and James Cameron’s “Avatar.” The company established itself as one of the cutting-edge firms in the visual effects business by producing about 10 percent of James Cameron’s path-breaking 3D superhit and a whopping 80 percent of the shots for the second installment of the Twilight franchise.

“’Avatar’ obviously is the biggest of all,” Malhotra said. “We’ve done some exemplary work in ‘GI Joe’ and ‘New Moon’ as well. But when you’re working on ‘Avatar’ as one of the top five vendors you have got to a lot more credible space than working on just any movie.”

The London Stock Exchange-listed company’s portfolio of work runs the gambit from “Avatar” to top Bollywood hits like the Amir Khan starrer “3 Idiots” to Splinter Films’ DVD release of a live performance by Beyonce. The company already owns the lion’s share of the Indian post-production and visual effects market, and the international business is expanding rapidly.

Full article here

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Was it expected?  Well, it depends on the people you are asking.  If you ask the rulers of the kingdom, then everything is and was hunky dory.  If you ask the economists and people tracking the business of Dubai, it was always sitting on a debt bubble, ever willing to burst.

The tallest building, the biggest man made island, the biggest snow world in the midst of a desert, the largest mall in the world, the glitziest and grandest hotels in the world…the list of biggest, largest, tallest was never enough for Dubai to conquer.  And in this context, the tiny city state of Dubai over leveraged itself and built an empire of debt.  A debt that is bigger than its GDP now.

For a country that hardly has any oil, it had to build its future on something else than oil.  So, the charismatic ruler of Dubai, Sheik Mohammed bin Rashid Al-Maktoum decided to move to finance, tourism to hedge its economy.  Good vision no doubt, but its the execution where the fault lay.  Mindless borrowing was fun and fine till the economic collapse happened in the USA.  With the collapse of Lehman, Merrill Lynch and a host of big banks, the easy money dried up.  And it was just a matter of time before which this was to happen.

Just three days before Eid, the Dubai government’s announced a six-month reprieve on debt repayments. This  sent shockwaves through the world markets, as it raised doubts over the Gulf emirate’s ability to meet its financial obligations.

Dubai is being crushed under a mountain of debt. The emirate has a debt in excess of $80 billion which it incurred by expanding in banking, real estate and transportation. Dubai World with $60 billion liabilities has sought a six-month standstill on its debt repayment to all its lenders.

The Dubai government requested the creditors of Dubai World (one of three conglomerates that are backed by the emirate), to agree to a ‘standstill’ on repayments until May 30 2010.

On one hand the Finance ministers and bankers are saying that the markets are behaving erratically.  But believe them at their own peril.  These are the same people who just days before the collapse of the American banks proclaimed that all was well.

For most of this decade Dubai has been the Victoria Beckham of the Arab world–the biggest, glitziest, most heedless spender. It’s been the sort of place that invests $7.6 billion subway system few of its 1.6 million people are likely to use, the sort of place that builds artificial islands in the shape of palm trees, the sort of place that builds the world’s tallest skyscraper, the sort of place that sells designer seat-belts to encourage drivers to be safer in the very cars it wants them to trade in for a subway ride, and the sort of place where office buildings have been the Gulf’s most copious crop of the decade.

Dubai hasn’t limited its excesses to its corner of the United Arab Emirates. Through Dubai World, the Emirate’s investment arm, it partnered with MGM Mirage and invested in such projects as Las Vegas’ City Center, a 67-acre development that includes a 4,004-room hotel-casino, 2,400 high-rise residential condos, dining and entertainment venues and its own retail district. At $8.5 billion, it’s the most expensive privately financed construction project in the United States.

Now the bad news.

The Dubai subway has been running since September, albeit to empty quarters. A quarter of Dubai’s office space is vacant. Workers have taken salary cuts of up to 30%. The Emirati government is in debt to the tune of $80 billion to $120 billion. CityCenter? It’s “worth about half of what it cost MGM Mirage and Dubai World to build the massive Strip development,” the Las Vegas Review-Journal reported in October. lost half its value. MGM Mirage took a $1 billion write-down already, Dubai World ate a $348 million loss (so far).

Read rest of the article here

So, does that mean that the Dubai dream is all over?  Not really.  Am sure the more conservative cousin of Dubai, Abu Dhabi will come in with its oil money to rescue it.  But Abu Dhabi has conveyed that the help will on a case to case basis.

That would mean that we would see lesser flamboyance from everyone associated with Dubai, at least for some time now.

More articles on the Dubai mayhem

Recession and debt dissolve Dubai’s mirage in the desert
Dubai’s Debt Troubles: Beginning of the Next Leg Down?
Dubai: an emirate in crisis
Sober ruler of Dubai whose vision is crumbling in the face of the storm