Desert Excrement

16 December 2009

The Prime Ministers Office is paying 100% more for its mealtime onions and its intrepid economic team headed by an ex IMF professor observes that inflation will be over 7% by March 2010.

StanChart Bank thinks inflation will be closer to 8.5%. Either way, it is much higher than the RBI expectation of 5%, higher than the expected GDP growth of 7% (Asian Development Bank) before government spending is weaned, and without consideration for government borrowing to keep the printing press running through the fiscal year.

Moody’s believes that India is in a “comfortable” foreign exchange and fiscal position so it will upgrade India’s debt rating. Maybe Moody’s is reviewing data that is three years old, or the RBI supplied data that is three years old, or Moody’s is applying Nakheel Construction math to the data.

India imports capital to pay its oil bill and balance the budget. The foreign exchange position of the RBI, over $270 billion, does not come without claims. The net claim number, the amount India would have to pay or receive if creditors cashed in their chips simultaneously, is actually a negative $50 billion, plus or minus.

Now, creditors, investors, will not head for the exit at the same time, but “comfort” is in the eye of the beholder.

Creditors in Dubai have beheld that despite $10 billion supplied by Abhu Dhabi to Nakheel’s bondholders, Dubai lacks a legal framework for restructuring, or, subtly put, no bankruptcy law that protects lenders from Bedouins in the desert.

Nakheel creditors may be comforted in thorough financial analysis that reveals the only cash flow or collateral for attachment is money received by Nakheel to collect Dubai’s sewage.

Precisely.

Dubai creditors are in deep, desert excrement.

They should retain Elin Woods' California divorce lawyer who will use California’s “no fault” divorce laws to nuke the pre nuptial agreement rewarding Mrs Woods half of whatever Mr Woods was able to earn in his few waking moments.

The easy math. $1 billion divided by 14 admitted consorts is roughly $70 million each.

Mrs Woods could send flowers and chocolates to the seven in her column and have enough left over to buy a condo, or a few, in Dubai, cheap, with all the modern facilities.