[BLOG-LIKE POSTING] Some notes on the Dubai phase of the global recession

I'll turn first to the Globe and Mail's Andy Hoffman and Brian Milner for their take on what probably already is the biggest sovereign debt crisis since Argentina's in 2001. (A Japan projected to be in debt to the tune of twice its GDP may hopefully not be next.)

Global stock markets, commodities and emerging market currencies retreated sharply Thursday after state-owned investment conglomerate Dubai World asked for a six-month reprieve on its massive loan repayments.

The company is burdened with $59-billion (U.S.) in debt.

The debt standstill marks the end of Dubai's credit-fuelled real estate explosion, which spurred construction of scores of ostentatious infrastructure projects, including the world's tallest building and sprawling palm-shaped tourist resorts built on sand foundations.

It also raised the spectre of the largest sovereign default in nearly a decade and prompted fears of financial woes spreading to other economies just as the global recovery strives to take root.

The Dubai crisis could hit emerging-market sentiment and investor tolerance for risk, which have both helped drive the global economic recovery this year, Scotia Capital currency strategist Sacha Tihanyi warned.

[. . .]

“The thing that would make anyone nervous is the fact that this is a financial-sector shock. It was financial-sector shocks that played such an intensive role in the recession and financial crisis,” Mr. Tihanyi said in an interview.

Indeed, shares of banks with exposure to Dubai World debt or holdings in the United Arab Emirates, including HSBC, Barclays and Royal Bank of Scotland, fell sharply on the news. European markets suffered their largest one-day decline in seven months, dropping more than 3 per cent. Emerging-market currencies and equity markets sank. Brazilian shares dropped more than 2 per cent and Mexican stocks lost about 3 per cent. Commodities, including oil and base metals also lost ground. Even gold, which has surged to record levels in recent weeks, sold off as investors reined in their risk exposure.

Yay. The United Arab Emirates is going to have such a hangover.

I like co-blogger Claus Vistesen's assessment of the situation.

At this point, I am of course simply trying to get an overview like the rest of you and not least deciding whether it will have any far reaching repercussions beyond today's theatricals. However, in case you did not turn on your Blackberry today, they story is that the Dubai government has requested investors in the debt of the investment company Dubai world whether they wouldn't be so nice as to accept a wee postponement of the payment of their debt. Especially, a payment due already the 14th of December in the form of $3.52 billion of bonds from property unit Nakheel PJSC looks as if it is near dead in the water.

The price of Nakheel’s bonds fell to 70.5 cents on the dollar from 84 yesterday and 110.5 a week ago, according to Citigroup Inc. prices on Bloomberg.“Nakheel is now standing on the brink of failure given the astonishing amount of cash Dubai would have to inject on it in order to see the enterprise survive,” said Luis Costa, emerging-market debt strategist at Commerzbank AG in London.

Obviously, announcements of delay of debt payments smells an awful lot like default and with $59 billion worth of liabilities at Dubai World many a financial institution and investor are exposed here. Naturally, and apart from the internal mess this is likely to cause in the Middle Eastern region, I am looking closely at the notion of European banks being sucked in here too.

The United Kingdom might be exposed: "Over and above the tragicomic allure of the failed conference call scheduled for bond holders of Nakheel (a guy called Murphy springs to mind), I take notics of the "sterling connection" and specifically the idea that the Pound may suffer from the Dubai rout as the sheiks and the rest of their ilk will be forced to sell UK real estate assets (time to buy a Chelsea pent house then?) in order to kick up the funding needed." Canada, according to Hoffman and Milner, isn't nearly as exposed. Yay! for Canada's prudent banks!

This sort of thing was probably inevitable given the combination of very heavy spending and the opacity of Dubai's finances. In the end, as this blog commenter noted, it all came down to Dubai's guarantee that things would end well.

in George Bush's words 'this suckers going down'. well it may be.....this is a potential mutiple default scenario. The 'implied support' by the emirates for the companies they own when no guarantees are in place has been the basis for credit ratings across the region. That is, that the sovereign would not default. That the federal government has allowed this to come into question demonstrates a very real hazard for investors, It is something it would avoid at all costs. Its about cash. There just isnt enough of it

Elsewhere, Murdering Mouth was surprised by this, suggesting that his predictions of that BRIC foreign reserves and sovereign wealth funds might help shift the world economy away from the US dollar shift over the next while. It may yet so, I don't know: are the sovereign wealth funds far less Dubai World and much more Temasek Holdings? Edward Hugh's recent A Fistful of Euros note about the Russian economy's major major distortions and problems makes me worried about the BRICs, in the meantime. (The other three are doing well. Right?)

[DM] "Your thoughts on a paper, please?"

I've a post up at Demography Matters asking readers for their feedback on a recent paper by UC Davis researcher Giovanni Peri, "The Effect of Immigration on Productivity: Evidence from US States", which argues that immigration to the United States doesn't depress wages of native-born workers. Does the paper make sense to you? Help.

[LINK] "A town with a tale to tell"

Asia Times' Saransh Sehgal writes about how the people of the Indian border town of Tawang, a town existing in Chinese-claimed territory in the cultural sphere of Tibet populated by non-Tibetans, perceive their identity. They're mostly Indian for most things, it seems.

The indigenous inhabitants of the area are the Monpas, who had always kept a distance from the Tibetans of the plateau, despite sharing religious and cultural values. Inhabitants in their 60s in the area of Tawang have the distinct experience of living under four national flags - British, Tibetan, Chinese and Indian.

Chinese scholars argue that the Monpas' interests would be better safeguarded with China, and that only the Monpas can decide their future. So Monpas perceptions and opinion of India remain important for the future of Tawang.

In the past, Monpas tribes were unhappy subjects of often oppressive Tibetan rulers. Today, the fortunes are reversed - Tibetan rulers are now viewed as persecuted and many have had to flee the country - while Monpas are free citizens of India. It seems few want to live under Chinese or Tibetan rule, though they all revere the Dalai Lama as their religious leader.

[. . .]

Many residents in Tawang say incidents such as last year's crackdown in Tibet have only hardened their resolve to protect their culture and religion. "We hear about the atrocities in Tibet, the repression they [China] are carrying out," said R Neema, a local doctor. "But Tawang will try to sustain what China seeks to destroy in Tibet."

When asked whether he thought Tawang should be a part of greater Tibet that enjoys greater autonomy, Neema said that Tawang was now India's region, adding, "It is more Tibetan in culture and nature here in a free country than Tibet itself under Chinese domination."

However, some Monpas feel neglected by the Indian government in terms of development. They also believe that their tribal identity has been deliberately diluted. Seeing what China has achieved across the McMahon Line has made them feel they are on the wrong side of geography.

Lamho, who lives in Tawang town, said, "All we hear is developments on the other side of the border, we feel bad at heart, as if our [Indian] government is sleeping, New Delhi should do something. It would not only develop us but also keep the Chinese away".

[LINK] Some Friday links

I've only a few today.

• Crooked Timber examines the question of how immigration restrictions can be considered ethical.


• International relations expert Daniel Drezner points out that a global response to impending catastrophe would be far more disconcerted than the "Council of Elders" approach of apocalyptic fiction. Shades of the current greenhouse effect controversy?


• In what was originally an article from the Economist, Edward Lucas critically examines Czechoslovakia's history, examining the extent to which it did and did not live up to its claimed identity as a peaceful multiethnic pluralist country.


• We learn at the Volokh Conspiracy how those so minded can get RSS-using blogs to send updates to your Outlook Express inboxes. As if you need more mail in your inbox, I know.


• Window on Eurasia takes a brief look at how China's growing demand for water in its parched west has a negative impact on the downstream countries of Russia and Kazakhstan.

[PHOTO] O'Connor over Taylor Creek

The majesty of the concrete arches of the O'Connor Drive bridge over Taylor Creek makes me appreciate Le Corbusier for the first time.

See the relevant Boldts page for another take.

O'Connor over Taylor Creek (1)
Originally uploaded by rfmcdpei

This is the underside of the south of the bridge.

O'Connor over Taylor Creek (2)
Originally uploaded by rfmcdpei

This is the underside of the north of the O'Connor bridge.

O'Connor over Taylor Creek (3)
Originally uploaded by rfmcdpei

Here's a look at the south side of the bridge from the east, with Jerry on the path.

[LINK] "Walk and Discover Taylor Creek's Path to the Don"

Finally, from 2007, here's Davd J. Widmann's Torontoist post on the joys of the Taylor Creek area, complete with links and walking suggestions. Enjoy it for yourselves!

[LINK] "Archeology of the Space Age"

Thanks to Patrick Banks for linking to this interesting article.

In the previous century, our ancestors went to the moon.

They left Earth in antique capsules perched on top of a million pounds of explosives - the largest rockets ever built.

They navigated with wristwatches, slide-rules, and primitive computers with less processing power than a basic cellphone.

And they took pictures. America's first unmanned satellites carried chemical darkrooms on board, where film was developed, translated into radio waves, and beamed back to Earth. On the ground, the satellites' analog photographic data was stored on magnetic tapes.

And then we forgot about them.

The original data for our earliest pictures of the moon, like the one at left, were very nearly lost - the tapes were filed away, and the machines necessary to translate them into images again were discarded as government surplus.

But a few years ago, a team of technological archaeologists, working in an abandoned McDonald's restaurant, recovered the tapes and painstakingly re-constructed the antique equipment required to translate their data into images.

The Apollo-era tape-readers themselves had been saved by a former NASA planetary phtographer, Nancy Evans, who stored several of the wardrobe-sized machines in her garage for decades in the hope that someone, someday, would want to recover the photos.

It's a pretty remarkable project - as though the complete journals of Sir Walter Raleigh had been found written in an obscure Elizabethan code, and the only way to translate the treasure were by refurbishing a heavy cabinet full of derelict gears and pulleys that someone had found in a cobwebbed dungeon of the Tower of London.

[LINK] "Russia, Kazakhstan, Belarus form customs union"

Interesting news, although I'd be surprised if it was any more meaningful than the Union State that has supposedly united Russia and Belarus.

Russia signed a deal Friday to form a customs union with former Soviet neighbours Kazakhstan and Belarus.

Russian President Dmitry Medvedev invited other ex-Soviet nations to join the union, hailing it as a “new stage in our co-operation.”

The union will come into force on Jan. 1, with the three countries using the same foreign trade tariffs and rules with one another, though it will likely take another six months for all tariffs to be synchronized, officials said.

Russia and Belarus already have an accord calling for close political, economic and military ties. The creation of the customs underscores Moscow's determination to shore up its influence among neighbours.

Analysts said, however, that the new deal could further stall Russia's 16-year-old effort to join the World Trade Organization, even though Moscow has backed off from Prime Minister Vladimir Putin's announcement in June that Russia would scrap individual membership talks and insist on joining together with Belarus and Kazakhstan.

Russia is the largest economy outside the 153-member WTO.

Its prospects for membership are a “big mystery to everyone,” said Yevgeny Gavrilenkov, chief economist at Moscow-based Troika Dialog investment bank. He said the new customs union means Russia's WTO entry talks “are likely to get dragged out again.”

Friday's deal follows numerous attempts to forge closer economic ties among ex-Soviet nations that have been stymied by deep economic differences and fears of Moscow's domination.

President Alexander Lukashenko of Belarus called it a “big, historic step,” and Mr. Medvedev called it “a very important event.”

Mr. Gavrilenko said it would change little in practice.

“I don't see any fundamental changes coming from this agreement,” he said. The deal “must streamline trade between the three countries somehow, but borders between Russia, Belarus and Kazakhstan are pretty transparent already.”

[LINK] "Second arson attack at Sri Lankan Buddhist temple"

There has been a second attack on a Sinhalese Buddhist temple in Toronto, a half-year after the first one in the immediate aftermath of the Tamil Tigers' defeat.

An early morning fire that damaged a Buddhist temple used by Toronto’s Sri Lankan community for the second time in six months has been classified as an arson.

Toronto police have increased patrols in the area and are consulting with the hate crimes unit after flames engulfed part of the building at around 2 a.m. on Friday.

There were no injuries.

While police have not yet made any arrests, investigators are almost certainly examining whether the attack was connected to the Tamil nationalist conflict in Sri Lanka.

The Tamil Tigers rebels fought a three-decade civil war for independence for Sri Lanka’s ethnic Tamil minority until May, when government forces wiped out the guerrillas.

Despite the end of the fighting, some expatriate Tamils have continued to agitate for independence. In Toronto on Wednesday, a Tamil activist gave a fiery speech that urged violence against the Sinhalese Buddhists who make up the majority in Sri Lanka. Following his talk, he was arrested and threatened with deportation unless he left Canada on his own.

The temple attack occurred on Tamil “heroes’ day,” the birthday of the deceased leader of the Tamil Tigers, when Tamil nationalists commemorate fallen rebels.

The Maha Vihara Temple was founded in 1978 by Sri Lankans, who practice the Theravada tradition of Buddhism. The same temple was torched in May but no arrests were made.

[BLOG-LIKE POSTING] On how much one should share

One nice thing about LinkedIn is that I was able to run into London-based blogger Mark Dandridge, and yes, his blog is now on my blogroll. This Monday, he made a post referring in part to the volume of one's cultural product output, prompted by the discovery of an old digital photo memory card, that made me think.

Finding the memory card got me thinking about some old undeveloped film catridges I have that date back at least 6 years. I keep meaning to get them developed. They may have faded to grey by now. It'll be interesting to find out one of these days what I had photographed back then. I'm sure when I see the developed pictures it will be easier for me to work out how long the film catridges have been hanging around in a cupboard. The old days of taking photographs was a very different experience to the non-stop, click-fest that you often see these days. It would be interesting to take an old SLR out along with a digital camera and take a maximum of 24 or 36 pictures with each. Of course, with the SLR camera it would be functioning in the way it has always done but things would be very different for the digital camera.

The forgotten memory card, upon which I found the flower picture, is the smallest memory card I have. That's probably why I had forgotten all about it. It wasn't lost, just overlooked. It's 256MB which is still capable of holding around 69 pictures on the finest quality. Somehow the digital revolution has made less seem, well, even less, than it really should. I think 69 pictures is quite a lot. Just one look at a Facebook picture upload of a drunken night out, a wedding, a new born baby and you can often see way more than 69 pictures, where quite often, just 9 would be ample. I must start that '36 Exposures Only' Facebook Group. It may already exist. I'm off to check.

I like selectivity. Take my photos. This evening I uploaded a couple dozen photos to my Flickr account. These photos are survivors, having first made it past prescreening on my camera, then being checked out for more flaws after they were copied to my laptop, then the photos deemed worthy of uploading to Flickr were checked out one last time in the source directory where I'd shrink them to a workable size before submitting them to the view of the public. Less than one in five of the photos that I take make it to Flickr, probably less, while the number of blog posts I make are likewise only a fraction of what I might think at first I'd like to make. A couple of people have talked to me about how digital photography has changed photography from an art into a mere technique, just another form of electronic gadgetry that annihilates tradition and produces excessive volume, noise even. There's something to be said for that.

I also like abundance. Take this blog, which can easily feature a half-dozen posts a day, brief though they might be. Take the photo posts, which frequently include multiple photos. There's a lot out there in the world that deserves to be shared, and if the effort is conceivably worth it why not? I might not share everything, but what I do share I like very significantly indeed. I'm a person very much into preserving things, details, especially insofar as they concern the past and inform my present and future. I'm pretty sure that, somewhere, I still have the disposable cameras which record part of my August 2003 trip to Montréal en route to Queen's University in Kingston. I would so like to have these cameras survive and produce usable images, and not only so I could share them with you. Everything counts in small amounts.

How should I combine my desires for selectivity and abundance? I'm inclined to think that the way I handle things is the only way that I can tolerate doing things. I share with you the things important to me, this importance deriving from whatever reasons, and the idea of ratcheting down--or up--the number of items I care about leaves me uncomfortable, leaves me thinking of depression or else mania. It's tricky.

In the meantime, that 36 Exposures Only group on Facebook sounds like fun. Does it exist yet, I wonder?