Monday, December 29, 2008

Write your own headline

The Financial Times chose the headline, "Dubai to spend through crisis" writing,
Nasser al-Shaikh, director general of the department of finance, said the government is planning to increase by around 20 per cent the budgeted public spending of about Dh30bn ($8.2bn, €5.8bn, £5.6bn) in 2008.

“The role of government is to increase spending during challenging times and provide a stimulus to the economy,” he told the Financial Times.
However, the Financial Times went on to point out,
But the department of finance, which oversees public bodies such as the utilities company and the transport authority, is still overshadowed financially by state-owned and state-linked companies that play the dominant role in the economy, such as Emirates airlines and Dubai Holding, the conglomerate owned by the ruler Sheikh Mohammed bin Rashid al-Maktoum.

These commercial entities’ ability to expand in the coming year will be constrained by tougher business conditions and difficulty accessing international capital.
You can't follow an expansionary policy if you don't have the cash to do it.


Blogger Seabee said...

You can't follow an expansionary policy if you don't have the cash to do it.

Well, countries such as the US with its trillion dollar cash injections, the UK with billions of pounds injections and many others are doing just that. They don't have any money so they're borrowing it.

10:57 AM  
Anonymous avantcaire said...

in agreement with seabee here.

what matters more than cash is the creditworthiness and the markets' belief in your ability to repay debts.

the implicit abu dhabi support may have to made explicit for dubai to fund its expansionary plans affordably (or at all) and i think we can expect some formal announcements in q1 as to how that support will be structured.

3:15 PM  
Blogger nzm said...

Quite a few nations are currently trying to stimulate spending by encouraging their citizens to go out and buy.

They're also giving it to them to spend.

Australia just gave $1000 to each child in low and middle income families and $1400 each to pensioners.

Germany is considering giving €500 vouchers to each citizen.

Kodak had a set up where, internally between Kodak subsidiaries and divisions, we traded in what were called Kodak $s. These were paper transactions where no real $s were paid for internal services and product exchanges within the company.

It was put in place to ease "trade" between the different Kodak subsidiaries.

But at the end, it all has to balance out and be paid for in real money, somewhere along the line.

4:07 PM  

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