So Alwaleed is out with comments about how "mature banks" should have known that Dubai debt was not the same thing as sovereign debt. Hey isn't it too bad the US government didn't know the difference either in the last debt crisis? Instead debt holders in US banks were made whole by the US taxpayer.
Isn't the hidden message here "Hey don't expect us to bail out you out like the British and Americans did, we aren't made of money"? Part of the reason our own recovery will be so shallow is because we have such a high debt burden instead of forcing writedowns. Maybe at some point we can have a mature financial system like Dubai. More from Bloomberg:
Prince Alwaleed Bin Talal,the billionaire Saudi investor, said banks that loaned money to Dubai World can’t claim to be victims of the emirate’s debt crisis because they should have understood the risks.
“These banks are very mature banks, and they have to differentiate between a corporate loan and a sovereign loan,” Alwaleed, 54, said yesterday in an interview on Bloomberg Television. “When things go sour, you can’t have some banks in the West going to Dubai and saying ‘oops’ and crying wolf and saying, ‘You should have guaranteed those loans.’”
Dubai World, the state-controlled investment firm whose assets include a stake in Las Vegas casino company MGM Mirage, is seeking to reschedule payments on about $26 billion of debt. Standard & Poor’s said on Oct. 15 there was a “significant” likelihood that Dubai would help government-related entities such as Dubai World meet debt obligations. Dubai’s government told creditors of Dubai World on Nov. 30 that they should help in a restructuring of the holding company because the government hasn’t guaranteed the debt.
Royal Bank of Scotland Group Plc was the largest underwriter of loans to Dubai World, JPMorgan Chase & Co. said in a Nov. 27 report. HSBC Holdings Plc, Europe’s biggest bank, has the “largest absolute exposure” in the United Arab Emirates, according to JPMorgan.
Alwaleed said confusion over whether the Dubai government would back Dubai World’s debt “was not helpful at all” and damaged investor confidence in the region.