Weekend Round-Up For 12/5

By Karl Denninger, The Market Ticker

So much to say, so little time……

Let’s start with Dubai because, as I like to say, there is never only one

There’s three pieces to this little ditty; the first is sovereign immunity writ large:

For international bondholders, the recovery of their investments may be further complicated by the UAE’s foreign ownership laws. Local experts said that even if Nakheel’s properties are liquidated, their entitlement could be restricted because assets belonging to the ruling family cannot be seized and sold.

It just would not do to have a King’s land taken, you see.  Or anything else.  Kings are like that, even if we call them "Sheikh" instead of "King."

This of course leads one to question why anyone would ever loan a King anything, unless of course said King had a gun to your head – then you "loan" him anything he wants.  But that’s not what happened here, is it?  Not really. 

But just as with subprime borrowers and "lenders" who didn’t care if someone’s "income" line was (intentionally) left blank, or if they claimed to make $200,000 a year when listing their occupation as "WalMart Greeter", it didn’t seem all that odd for a King to need a loan either.

Oops.

Don’t be an ex-pat who decided to speculate there.  You might have a real problem:

Like many he bought a flat off-plan in what was a red-hot property market. Today he is trapped, his passport confiscated until he repays bank loans he used to invest in a property that may never exist. If his work dries up before he can clear his debts he will go to jail.

And by the way, "jail" isn’t a country club like it is for white-collar "criminals" around here.  Uh uh.  Don’t ask what it’s like – you really don’t want to know.

Then there’s this – remember the Citibank "capital injection" in 2007 - from the UAE?

The Investment Authority will receive equity units that pay an 11 percent annual yield until they are converted into Citigroup common shares at a price of up to $37.24 a share between March 15, 2010, and Sept. 15, 2011.

They gotta be pissed.  Oh yeah, it was "renegotiated" – to something like $31 a share.  I’m sure Abu Dhabi is pleased as punch that they’re going to pay $31 for something that sells for $4 everywhere else.  There’s screwed, and then there’s really, really screwed.  I’m sure the Arabs are feeling quite the latter, given the wonderful exposures that Citi made so clear to them in 2007, just a few short months before it all came out in public and their stock price cratered!

Would you care to take odds on whether Citibank’s "investment" in Dubai, made just days after it was bailed out, will be repaid?

You can flush that $8 billion down the toilet – it’s gone. 

One good "do sex to me" deserves another!  How do you say that in whatever language is native over there?

Next, on "global demand."  Remember, Apple got quite the pump on selling iPhones in China.  Plural might have been the correct form of the verb, but just barely.  As in five.

China Unicom has sold just five iPhones through a big online retail site in the two weeks since it opened the virtual store, the latest sign that the handset is suffering in China from its high price and lack of Wi-Fi.

Not five million, five hundred thousand, or even five thousand.

Five.

Global demand for those expensive toys eh?  I don’t know why anyone is surprised at this, given that the average Chinese salary is something like $2/day.  Yes, really.  Two years of the average worker’s salary to buy a phone eh?  I think not.

Then there is our government and President who, if you remember, said that the huge deficit was all George Bush’s fault – and that he "inherited" it.

Well, maybe not.  $292 billion of red ink so far – in two months.

In October and November, the government spent $292 billion more than it took in, the nonpartisan Congressional Budget Office said.

That was even worse than the same period last year, when the government was on its way to posting a record $1.4 trillion deficit for the fiscal year that ended Sept. 30.

Right.  That, by the way, annualizes to $1.752 trillion dollars.  And you thought last year’s fiscal deficit of $1.4 trillion was bad.  This is 25% higher.  Congratulations Mr. President.

Oh, who did you say was going to buy all that debt at ridiculously low rates again?

Good luck Mr. President.

You’re gonna need it.

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