Dubai world  ( its investment vehicle  made up of  Shipping giant DP world and Developer Nakheel of famous palm island projects)

Dubai Crisis :

Dubai world has asked for more time to repay the debts  of upto $60 billion to the banks it owes the money. It has  gone into financial trouble resulting from the US finacial meltdown.

Questions arising from Dubai crisis:

Can the Banks afford to  let Dubai default a risk a bigger  loss or do they decide to let them  go on and trade out of their  current situation.

Will Abu Dhabi  which has come to dubai’s aid before   and has the biggest soveriegn wealth fund in the worls $500 Billion come to the aid  of dubai  whose ruling sheikhs  are related in family to the  abu dhabi  rulers ?

What happens if Dubai world collapses ?

The world economy and markets head towards a new kinda meltdown. Projects and companies  linked to Dubai companies  and  investments of dubai world collapse leading to a big   flow on effect around the world.  Millions of workers Outsourced for  other countries  which forma major  part of the Dubai workforce  loose jobs affecting thier countries respective economies. ( possibly India , Bangladesh , Philippines , Pakistan)

Excerpt from article on Dubai crisis In TOI ( times of india )

UAE is the favourite destination for a maximum number of overseas Indian workers – 3.4 lakh people went to the country in 2008 – but the number has been fast declining as Indian workers are unable to get new contracts or extensions in the country that’s in the grip of recession.
It’s well known that when Dubai sneezes, south India, especially Kerala, catches more than just a cold. Last September, when Lehman Brothers collapsed triggering the great recession, the arrivals at Chennai, Hyderabad and Thiruvananthapuram airports wore a grim look. The news of Dubai World’s inability to repay the $59 billion debt has triggered similar fears among the relatives of immigrants back home.

Groups like Nakheel, a subsidiary of Dubai World, and Dubai Properties, a unit of Dubai Holding, had sacked almost 80% of their employees.

However, the government of Kerala, where overseas remittances contribute 20% of the state GDP,
does not sound too optimistic. “We do not yet know the magnitude of the crisis. On the face of it, the problem looks serious. Now we will have to wait and see its impact on other sectors, and whether there will be a credit freeze,” Kerala finance minister T M Thomas Isaac told TOI.

“If it (Dubai debt crisis) affects the real estate sector, we have enough reasons to be worried. Only after the (Id) holidays are over in the Gulf, we will come to know more,” Isaac said.
Over 5 lakh Indians have returned from Dubai since September 2008, of which two lakh are Malayalees. Almost 60% of these people are technical or non-technical skills professionals. “Over 50 lakh Indians work in the Middle East of which 20 lakh are from Kerala. We do not expect large number of returnees now,” K V Mohankumar, CEO of Kerala NRI group, Non Resident Keralites’ Affairs (Norka).
According to Norka, 10 lakh Malayalees live and work in Dubai, along with 4 lakh people from Andhra Pradesh and and 4.5 lakh Tamils.

The situation in the past year has prompted the OIA ministry to introduce a welfare fund for emigrants in distress. Services like a toll-free helpline, a counselling facility and a facility to extend contingency based legal, medical and emergency relief assistance are on the anvil to provide a safety net to a large and vulnerable work force in the region.