Dubai not a canary but another miner needing oxygen
- James Saft is a Reuters columnist. The opinions expressed are his own - Taken all in all, Dubai’s debt crisis is the most significant financial development of 2007. Here in late 2009 it amounts to far less. Back in the day it would have been a newsflash that apartments ultimately require occupants, that investment needs to be ratified by cash flows, and that debt, Sharia-compliant or garden variety, someday must be repaid. Dubai’s difficulties are being sold as the commercial real estate debacle somehow morphing into a sovereign debt crisis and it is true that the effective borrowing rates of the more raddled national borrowers such as Ireland have been driven up in recent days. Dubai’s government said on Monday that it is not responsible for the borrowings of Dubai World, a state-controlled development conglomerate saddled with huge debts amid a property market where the going rate has halved. Dubai last week applied for, or imposed depending on your point of view, a six-month repayment freeze for Dubai World and its property developer Nakheel. “Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct,” said Abdulrahman Saleh, director general of Dubai’s department of finance. Quite, and hopes that credit extended to Dubai World would be made good by the state of Dubai or by the richer emirate of Abu Dhabi seem to be foundering. This is bad news for those creditors, with the worst potential losses traceable to banks in Britain and Europe, but its probably just not that big of a deal. For one thing, the amount potentially at issue, even if you allow for an extra 50 percent off balance sheet taking it to circa $125 billion, is simply not big enough in the scale of things to tip significant players over the edge. And it tells us very little about the state of the world or the likely outlook for real estate. It is very hard to call something a canary in the coal mine when you are already cleaning up after a mining disaster. For a time the magical thinking behind Dubai, “build it and they will come”, worked and despite it being remote, having an inhospitable climate and little inherent commercial reason for existing, the city boomed. It’s a bit like having a feast so the harvest will be good rather than when it actually is, but it was effective for a time as prices rose and investment was attracted. DUBAI WORLD MEETS MORAL HAZARD WORLD The nub of the meme in financial markets is that this is about sovereign exposure and that creditors will be shocked if the state support they thought they had coming never arises. But is it terribly bad news for the rest of us? Probably not. Investors should have seen it coming – there have been quite a few headlines recently about the real estate crash- and should not have conflated “implicit” with “explicit”. Dubai has made clear in its own bond prospectuses that it might lend support but that it was under no obligation to do so. Teaching investors the difference between “quasi-state” and “state” is a good thing. So why then did the cost of borrowing for Greece and Ireland, as expressed in insurance contracts against default, go up? Nothing about Dubai’s predicament will have much of an impact on Irish or Greek tax revenues clearly, and the banks and the pool of lendable capital has not been diminished by much. Nor is it easy to draw a new connection between Dubai and the emerging European countries which represent a muchmore substantial and potentially grave threat to banks in Europe. Perhaps this is ultimately about moral hazard – risk taking under the belief that you are “insured” - as are all stories involving the words “quasi,” “government,” and “debt.” Fannie Mae and Freddie Mac’s quasi-government status fed moral-hazard driven risk taking, as did Dubai World’s, as is most certainly the case where government insurance allows for cheap borrowing. Markets went down on Dubai because they have become addicted to moral hazard and anything that doesn’t conform with the idea that all shall be bailed out is scary. It is apparently terrifying that a government should say “hard luck” to anyone anywhere, no matter how difficult the government’s situation is or how ill-founded the investors claim to relief. None of this is to say that the commercial real estate crash isn’t terrifying, or that countries like Ireland and Greece don’t face difficult times and huge risks, but only that Dubai tells us little new about those things. There is definitely a moral hazard trade out there, but Dubai is not the event which will cause it to unwind.
(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. Email: jamessaft@jamessaft.)
from The Great Debate UK:
Newspapers and Democracy in the Internet era: ‘The Italian Case’
Carlo de Benedetti, Chairman, Gruppo Editoriale L'Espresso/La Repubblica, will deliver the 2009 Reuters Memorial Lecture on ‘Newspapers and Democracy in the Internet era: The Italian Case'.
The Reuters Memorial Lecture commemorates journalists who have lost their lives in pursuit of their profession.
The lecture will be followed by a panel discussion chaired by John Lloyd, with Timothy Garton Ash and Paolo Mancini. Reuters correspondents will be live blogging throughout.
To join the discussion click on the 'make a comment' link at the top of the liveblog panel.
from From Reuters.com:
How has the credit crisis affected you?
The demise of Lehman Brothers a year ago sparked a collapse in financial market confidence and set of a series of reactions that have spread hardship into the four corners of the globe.
Reuters News has charted the key events and their impact in "Times of Crisis" -- a major new multimedia production on Reuters.com. (See it here.)
We'd like to add the experiences of Reuters readers. So, if you or your family have been affected by the events of the past year then use the comments section below to share your story.
I had been a college graduate for 3 months when Lehman collapsed. Since then, I’ve gotten a better job with better wages, improved my living standard, and paid off the credit card debt I accrued in college.If the recession had come a year or two later, I probably wouldn’t have been as cautious starting out and I would be feeling the effects more than I am.
from For the Record:
A is for abattoir; Z is for ZULU: All in the Handbook of Journalism
Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.
The first entry is abattoir (not abbatoir); the last is ZULU (a term used by Western military forces to mean GMT).
In between are 2,211 additional entries in the A-to-Z general style guide, part of the Reuters Handbook of Journalism, which we are now making available online. Also included in the handbook are sections on standards and values; a guide to operations; a sports style guide and a section of specialised guidance on such issues as personal investments by journalists, dealing with threats and complaints and reporting information found on the internet.
The handbook is the guidance Reuters journalists live by -- and we're proud of it. Until now, it hasn't been freely available to the public. In the early 1990s, a printed handbook was published and in 2006 the Reuters Foundation published a relatively short PDF online that gave some basic guidance to reporters. But it's only now that we're putting the full handbook online.
We've decided to make the handbook available to everyone for a number of reasons. Among them:
- Transparency: At a time when trust is an endangered commodity in the financial and media worlds, it's important that news consumers see the guidelines our journalists follow.
- Service: As we've seen over the past decade, the barriers to publishing have dropped so that anyone with an idea and a computer can be a publisher. But it's also become clear that publishers have a varying standard of truth, fairness and style. Our handbook is a good place for budding journalists to begin.
- Geography: Reuters serves a global audience and the handbook recognises the cultural and political differences that our journalists face in reporting for the world. This is a handbook not just for English-language journalists in the United Kingdom or the United States, but for wherever English is used.
Many entries deal with words that are sometimes confused or misused. Turning randomly to the "H" section, we learn the difference between hyperthermia and hypothermia (The latter means "Too cold. Think that o rhymes with low" while the former means "Too hot. Think of 'er' as in very."); Haarlem and Harlem (the latter is in New York City, the former in the Netherlands); hangar and hanger (the latter is for clothes, the former a shelter for aircraft); and hale and hail (the former means "free from disease, or to pull or haul by force." The latter "is to salute or call out, or an ice shower").
Note to those who have raised questions: We have been having some technical issues with the PDF format, which we’re working to resolve. In the meantime, we’ve removed the PDF download link from the main page.
from For the Record:
Counting quality — not characters — in social media
Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.
Are we too connected?
In recent days and weeks I’ve been wondering if our mobile phones, Blackberries, text messaging and constant access to email and social media have brought us too close together for our own good.
Or maybe the quality of our connected life is only as good as the information we share.
At this point, social media and microblogging phenomena like Facebook and Twitter focus on short answers to such generic questions as, “What are you doing?”
We hear from network and cable television anchors who tell us what they’re having for lunch (often a quick sandwich in the company cafeteria because they are, well, really busy). Or from usually cynical White House journalists who can’t resist Tweeting which B-list celebrity they saw at the White House Correspondents Dinner. Here are a few actual Tweets from the so-called nerd prom:
- "Just spend quality time with ricky schroeder #nerdprom".
- "post #nerdprom sightings. demi/ashton, james franco, owen wilson, eric holder, mayor fente, d axelrod, christopher hitchens, dana delaney". (This one's fitting since Ashton Kutcher is the world's most followed Twitterer).
- "Just got picture with Dule Hill."
Hello Dean,
Good thoughts, thank you for sharing. It’s good to know you are developing guidelines for journalists using social media.
However, I have to take issue with your characterization of Twitter, in particular its ” ““me, me, me” quality” and “focus on short answers to such generic questions as, “What are you doing?””
This misses the mark on Twitter’s value and importance. For some of us that have been active users for two or more years (yes, we do exist) Twitter is primarily an INFORMATION MANAGEMENT tool. That’s not to say all who use it find value that way, but it is a way of finding and sharing information that is more efficient than email, yet as the same time a bit quixotic and serendipitous. It is like Digg and StumbleUpon with people who share your interests. Thus, I have characterized Twitter as part of a personal information management system. Not the only part, but an important one.
On a broader level, the manifestation of so many thoughts can be seen as a peek into the collective conscious, or panconsciousness. I’ve articulated this concept on my blog.
U.S. fights fire, Germans fear flood
– Paul Taylor is a Reuters columnist. The opinions expressed are his own –
The United States is fighting a fire in the world economy, but Germany and some other European countries fear a flood of inflation as a result.
That clash of cultures is at the heart of transatlantic debate over whether Europe should spend more and ease monetary policy to revive growth, with a deep economic contraction certain this year and an end to the recession not yet in sight.
The perception gap could cause lingering resentment among Americans and Germans on the way out of the crisis.
World Bank President Robert Zoellick sees concern on both sides of the Atlantic, not just in Europe, at the risk of inflation down the road from the massive additional liquidity created by the U.S. Federal Reserve and soaring public debt.
The current gush of liquidity made the glut after the bursting of the Internet bubble in 2001 look like a desert, he told the weekend Brussels Forum, a conference of North American and European policymakers, business and opinion leaders.
The dollar’s sharp fall and the jump in the price of gold after the Fed’s announcement of a giant purchase of long Treasury bonds reflected fears that the United States will try to inflate its way out of the crisis.
Germany has done a lot. Germany has absorbed hundreds of thousand immigrants and political refugees from the recent turmoils of the world. When the two Germanys reunited the chancellor said ‘we will not have Germans with full rights and some with tentative rights’, even though some economic advisers said that there should be some kind of interim economic status for the former East Germans. The next day all of those East Germans took the worthless East Marks out of their mattresses and exchanged them one for one for D-Marks. How much do you think that cost?
Germany is the big economic engine that pulls the rest of Europe with it.
Germany does a lot in the world. Germany trains the Afghan police. Germany provides immediate emergency technical help when disasters occur around the world, and especially in Europe and Turkey. Germany has health care for all it’s people (and no, it’s not ‘socialized medicine’-if you don’t like the doctor you have you go find another one), Germany sends injured, overweight, and stressed out people to ‘cures’, a holistic health care method of dealing with illness that involves fresh air, social interaction, healthy food, and a health maintenance approach-not just drugs and more drugs.
You see I am an admirer of Germany.
What Germans are afraid of is a currency reform. We have never had a currency reform in the United States. The Germans Grandparents lived through two of these. One day you have the money you worked for all your life, the next day you have nothing, not because of a stock market crash, but because the ‘old’ money is now worthless. The Germans are afraid that this is where the financial crisis and current situation is heading.
from For the Record:
After the warm glow, telling the cold, hard truths
Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.
The president was inaugurated in front of adoring crowds and positive reviews in the media. As the unpopular incumbent sat on the platform with him, the new Democratic chief executive took office as the nation faced a crippling economic crisis. The incoming president was a charismatic figure who had run a brilliant campaign and had handled the press with aplomb. The media were ready to give him a break.
That was 1933, and in Franklin Roosevelt’s case, the media gave him a break.
For Barack Obama, the honeymoon was shorter.
Less than 36 hours after Obama took the oath of office, the White House denied news photographers access to the new president’s do-over swearing in, instead releasing official White House photos of the event. Reuters, The Associated Press and Agence France-Presse protested and refused to distribute the official photos (which nevertheless showed up on the websites of a number of large U.S. newspapers).
This is an important issue for news organisations, the public and for an administration that has promised a new era of transparency in doing the people’s business. How are people to know, for example, that the official photos haven’t been staged?
All U.S. administrations seek to manage the flow of information and the White House and the news media have a complex, interdependent relationship. Each needs the other. But it’s important that media organisations remember who’s most important.
Are you really making a comment on ‘transparency’ just due to the white house not letting the media in to the second swearing in of Obama?
Is there really nothing more important to talk about? Im angered that made that much of a hubbub about the first go around that the man felt that he had to do it again and waste more time appeasing and delaying his work as president.
Do people feel empowered when they point out the mistakes of others (be they mistakes or not) when they themselves don’t have to be in the line of fire, or have as heavy of responsibilities?
Come on now.
from For the Record:
Reporting in Gaza: Striving for fairness
Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.
Let’s say it up front: Almost all of you will find something in this column to take issue with.
That’s because the subject is the conflict in Gaza and perceptions of bias in reporting on it. News consumers detect media bias on any number of subjects, but there is nothing like the continuing Mideast conflict to bring out the passions of partisans on all sides.
Here’s a small sample of some of the more restrained comments that have come in to the Reuters reader feedback line:
--“It seems like the whole world wants to condemn Israel for the war/actions it's taking. Sorry Reuters but for me, I can see right through your pro Palestinian slant. Why don't you investigate how a U.N. Camp was used as a staging area for Hamas rockets? …”
--“Your pro Israel reporting from Gaza makes one thing perfectly clear. Israel has some control over Reuters. You are in their pocket. Why else would you choose to slant information?”
--“Why does Reuters insist on letting someone such as Nidal al-Mughrabi cover the war on Gaza? His reporting is completely biased and filled with inflammatory rhetoric. Doesn't Reuters have a reporter that understands both sides of the issue and that can JUST REPORT THE NEWS!! I consider such reporting on your part as an insult to my intelligence. Why must you participate in antisemitic propaganda?”
A very well-reasoned summary of your challenges and successes in covering a devastating event under such debilitating conditions. Kudos to you for the astounding effort. I believe Reuters in the pre-eminent source for news on the conflict given your boots-on-the-ground and the US mainstream media’s refusal to provide accurate information from Gaza.
from Photographers Blog:
Finbarr from the field
On Jan. 14 Reuters hosted a live video Q&A with our renowned photographer Finbarr O’Reilly about his experiences in the war-torn Democratic Republic of Congo. Finbarr addressed what drew him to Africa and the most difficult aspects of being a photographer in a war zone.
Finbarr is still available to answer questions, submit them in the comments section below or send a Twitter message with the hash tag "#finbarr" .
Check out "Death all around," his multimedia report from a Congolese refugee camp, dispatches from Chad and Afghanistan, selected photos from his portfolio, and an audio slideshow from his most recent Congo assignment.
from Reuters Editors:
Typewriters, Technology and Trust
Dean Wright is Global Editor, Ethics, Innovation and News Standards. Any opinions are his own.
A little girl in my family got a typewriter for Christmas.
Not a laptop. Nothing with a screen. A typewriter. The old-fashioned manual kind with a smeary ribbon and keys that stick.
Typewriters had pretty much gone the way of dodo birds, car tail fins and cigar-chomping editors who yell “Stop the Presses” quite some years before my granddaughter was born. But it was the typewriter used by the school-age, aspiring journalist in the movie “Kit Kittredge: An American Girl" that captivated her.
Or maybe it was the way the typewriter was used. In the movie, a tween-ish girl, played winningly by Abigail Breslin ("Little Miss Sunshine"), does old-fashioned journalism and writes stories that help right a wrong in Depression-era Cincinnati. Kit may be young, but in a challenging environment she keeps her wits—and a strong sense of ethics—about her.
In today’s rapidly realigning media landscape, typewriters have long since given way to laptops, BlackBerries, camera phones, video phones and Twitter. But here at Thomson Reuters, and in the media as a whole, the need for a strong sense of ethics has never been more necessary.
Not all Hollywood depictions of our profession are that inspiring to would-be journalists — mainly because of the way some on-screen reporters behave.
James, thank you for your informative opinion. I tend to agree with JMFulton, Jr.’s comment to some extent and perhaps my following brief words shall confirm that fact.
Dubai is nothing more than an unusually large mirage shimmering in the heat of greed and financial
desperadoes. Its Babylonian structure is based upon delusions and it will fade away.