Is Dubai World the “Lehman of the Middle East”?

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The announcement late Wednesday that government-owned conglomerate Dubai World will ask creditors for a “standstill” in making payments tied to $60 billion in debt for six months has sent shockwaves across the globe over the potential of a sovereign debt default in what has already been dubbed the “Lehman of the Middle East.”

Even though Dubai’s real estate boom and bust is old news, investors assumed the government would not allow Dubai World’s debt repayments to be delayed. But what really caused global markets to come undone was the fact that Dubai World’s woes serve as a wakeup call that sovereign debt still carries risk, as governments can be unpredictable in their support. This has only been exacerbated as central bank policy accommodation and government stimulus have enabled another asset bubble to rise from the financial crisis.

Dubai is one of seven emirates that comprise the federation of United Arab Emirates (UAE) which came into being at Noon in Dubai on December 2, 1971. With the Sun, Jupiter, and Neptune in the global sign Sagittarius, most of the UAE’s wealth derives from oil and natural gas exports. During the years of Pluto in Jupiter-ruled Sagittarius (1995-2008), the UAE and particularly Dubai sought to expand and transform their economies through diversifying into real estate, tourism, trade, and financial services.

Unlike its wealthy neighbor Abu Dhabi, less than 6% of Dubai’s revenues stem from oil and natural gas. Dubai became the Miami of the Middle East, turning sandbars into Palm Islands. Foreign developed resorts such as the Atlantis Dubai sprang up, and Donald Trump partnered with Dubai World’s Nakheel property subsidiary for a piece of the action.

Neptune and Pisces rule oil as well as dreams and fantasy. Mars in Pisces squaring the Moon (real estate) in Gemini and the Neptune/Sun/Jupiter lineup in Sagittarius describes the multiple faux fantasy islands, theme parks, and shopping malls that are part of Dubai. Mars likes to be ahead of the competition, and at 2,184 feet, the Burj Dubai will be the tallest building in the world when it opens in 2010. This planetary pattern in the UAE chart also explains the overambitious development plans and the inflated expectations that the UAE’s other industries would expand even more rapidly than the oil flowed.

But Dubai and the UAE haven’t been immune from the real estate bust. Just like Miami, Dubai’s boom was fueled by speculators. The fallout from the housing bubble has left Dubai in even worse shape than Florida or even Las Vegas. According to Deutsche Bank, prices in Dubai have dropped 50% from their peak in 2008. Saturn and Capricorn rule these modern mountains; Pluto in Capricorn represents the mountains of debt issued to build them all that is beginning to come due.

Saturn in Libra squaring Pluto in Capricorn reflects Dubai’s World desire to freeze time (Saturn) in order to work out new financial arrangements (Libra) with the debt holders (Pluto). According to S&P, about half of the estimated $80-$90 billion in total estimated Dubai debt is related to Dubai World and its entities.

Dubai’s debt problems are not going to go away anytime soon as Saturn and Pluto are challenging the UAE’s chart’s Venus in Capricorn and Pluto in Venus-ruled Libra throughout 2010. Venus rules money and assets. Saturn and Pluto challenging the UAE chart’s Venus and Pluto depresses asset values and would not bode well if Dubai World has to start selling its properties in Dubai and around the world to raise cash to repay the debt on time. Venus rules the sector of the UAE chart representing neighbors. Saturn in Gemini here opposing the UAE’s Sun/Jupiter/Neptune in Sagittarius indicates that the federation’s wealth, reputation, and newfound status as a financial center in the Middle East are in jeopardy if Abu Dhabi fails to help out its neighbor Dubai.

The lesson of Saturn square Pluto is that there are no quick, short term fixes where debt is concerned. Saturn is about taking responsibility and meeting obligations, and Pluto will force the changes needed to take place regardless of how financially painful it might be. There’s been a big asset bubble in emerging markets this year, and now the market is worried about the possibility that countries such as Brazil, Bulgaria, Greece, Hungary, Mexico, Turkey, and Russia could have trouble honoring their debts. Uranus will oppose Saturn and square Pluto in 2010, creating a lot of shocks and surprises surrounding all types of debt. Saturn and Uranus squaring the UAE chart’s Mercury in Sagittarius in 2010 to early 2011 could indicate that federation members such as Dubai will have trouble meeting and will end up breaking certain contractual agreements and obligations. Court cases are likely to follow.

Saturn, Uranus, and Pluto will be forming exact alignments to one another in January, April, and July/August 2010. These alignments affect the whole world, and are even more pronounced in countries where these planets are affecting natal planets in the nation’s chart, such as the UAE. Since Saturn formed its first exact square to Pluto November 16, the cost of credit default swaps against sovereign debt and financial firms has risen. Even the cost of CDS to insure US government debt has risen as Saturn, Uranus, and Pluto is challenging the USA chart’s sector that represents its reputation, and natal Venus and Jupiter in Cancer in 2010. The US and the dollar are still considered a safe haven in times of financial distress, but the US is on its own collision course unless monetary policy is tightened and excess liquidity and stimulus programs are cut, along with efforts to control the federal deficit.

The influence of Venus in Pluto-ruled Scorpio squaring Neptune in Uranus-ruled Aquarius influencing the markets last Wednesday through Friday describes the “shockwaves” and confusion that arose after Dubai’s request for a “standstill” in Dubai World’s debt since a $3.5 billion bond issued by Nakheel matures on December 14. (Wednesday morning the bond was trading at 110 cents on the dollar; by Friday its value had dropped to 57 cents on the dollar.) The Moon in Neptune-ruled Pisces squaring Mercury in Sagittarius reflects the lack of concrete information from the Dubai government as the nation observes the religious holiday of Eid-al-Adha until Monday. Venus squaring Neptune reflects that it is unclear what Dubai World’s assets are really worth, along with the belief that Dubai’s debt is ultimately backed up by the UAE’s oil.

Although $80 billion in debt is not in and of itself going to trigger a global systemic crisis, from a planetary perspective calling Dubai World the “Lehman of the Middle East” is relative since the energy of Uranus is more pronounced now through December 4 as from Earth’s vantage point Uranus appears to be motionless in the sky as it turns direct after being retrograde since July 1.

Uranus in Pisces will turn direct on December 1 at the same place it turned stationary retrograde on June 26, 2008. Uranus represents sudden and sharp price movements and Pisces rules oil. Oil hit a record closing high of $145.29 a barrel on July 3. (When Uranus turned direct on November 27, 2008, oil had dropped to $54.44 a barrel.) The euro made an intraday record high against the dollar on July 15, 2008 at $1.6040.

Oil, gold, and most commodities are on a tear just as they were in the first half of 2008. Pisces rules credit, and as fears grew that the credit crisis was deepening in 2008, oil and other commodities began to sharply sell off as institutional investors had to sell their most profitable positions to raise cash. The news about Dubai World created a similar effect as investors sold oil, gold, and other commodities that had been on a tear again this year. Oil closed down 2.4% to $76.05 after dropping to $72.39 intraday Friday. The dollar briefly rallied against the euro and other major currencies after being at its lowest level against the euro since last July.

Lehman Brothers filed for bankruptcy on September 15, 2008, the day the Full Moon in Pisces fell on the exact degree that Uranus went retrograde on June 26, 2008. Uranus turning direct now on the same degree re-activates the themes from that time. For example, Federal Reserve Chairman Ben Bernanke’s confirmation hearing occurs on December 3, and he will be questioned about his handling of Lehman, Bank of America’s acquisition of Merrill Lynch, and AIG.

The Full Moon in Gemini occurring at the time Uranus turns direct December 1 will bring more information to light about Dubai World since the Full Moon exactly conjoins the UAE chart’s Moon in the sector ruling real estate and opposes the UAE’s natal Sun (the federation’s leaders). The Gemini Full Moon conjoins the USA’s natal Uranus while Uranus turning direct challenges the USA Mars and Neptune. There will be some unexpected surprises regarding healthcare reform and President Obama’s military strategy for Afghanistan that he is scheduled to explain to the nation on December 1.

While it may be true that US banks have minimal exposure to Dubai and the UAE, there could be other financial connectivity to Dubai World such as through hedge funds and other investment vehicles that is enough exposure to cause the stock market to be concerned and correct.

With Uranus we have to “expect the unexpected.” One thing that is predictable about Uranus is that this energy likes to operate in extremes. Volatility has returned to the markets.

Note: Background information in this post comes from Bloomberg, the Financial Times, and The Wall Street Journal. (The links go directly to their sections on Dubai.)

USA: July 4, 1776 5:10 PM Philadelphia, PA

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