Some have moved on, some have not
Regarding Gaza, Youssef Ibrahim had this to say the other day: “We, your Arab brothers, have moved on. Those of us who have oil money are busy accumulating wealth and building housing, luxury developments, state-of-the-art universities and schools, and new highways”. But there’s a little less money to go around these days. AP:
Arab investors have lost 2.5 trillion dollars from the credit crunch, Kuwaiti Foreign Minister Sheikh Mohammad al-Sabah, whose country hosts an Arab economic summit next week, said on Friday. “The Arab world has lost 2.5 trillion dollars in the past four months” as a result of the global financial crisis, Sheikh Mohammad told a press conference…60 percent of development projects “have either been postponed or cancelled” by the six-nation Gulf Cooperation Council (GCC) states…
Next week’s summit will also discuss the Gaza war but leaders are still intent on agreeing a joint response to the financial crisis.
From the news report, it doesn’t seem that Gaza counts for much compared to the economic woes of the Gulf states. Sheikh Mohammad may have moved on, but there are many in the West (who wouldn’t last ten minutes in the real Gaza) ready to continue the fight.
January 18th, 2009 at 7:03 am
Valuations are based on ratings capitalisations of yields, both have just evaporated in thin air. A prime portfolio of European properties yielding 250 million pounds in earnings with a leverage of 70/30 was valued at 4.5 billion pounds at a sap rate of 5.25%, today that portfolio is worth 3.2 billion if the credit worthiness of the clients or tenants have remained stable, although that is not the case, one of the tenets of this portfolio is Santander bank the other Citi group the two have to buildings tenanted for 83 million Euros and 53 million Pounds in Sept of 2007, these were prime tenants today both are on verge of bankruptcies hence the covenant are suspect, this Portfolio valuations have just plummeted and is under water by a billion plus pound, it is this one classic example that show unprecedented destruction of wealth that has occurred in the last few months.
Prince Waleed bin talal, Lakshmi Mittal, and many Arab billionaires like Khoraffis are hit with this fall of valuations and increase of cap rates, both of these double whammies the higher risk premiums and higher cap rates have led to huge reduction in global market capitalisation, it stood at 40 trillion at is peak now nearly 22 trillion, the 18 trillion lost is the price of the lost confidence, it will take some time that we remove from this huge melt down of values, the problem remains that equities and capital has been wiped out whereas loans stay at the same old level, hence LTV rations are skewed, the only answer to this is create wealth, and this creation of wealth and it is happening at two fronts lowering interest rates and increase money supply, monetisation of debt is the answer to this crisis, in this short run any one who can secure short on last remaining bubble i.e. sovereign bubble will do great..