While Abu Dhabi ponders bailing out its prodigal neighbour Dubai, a constitutional crisis for Dubai's leader is quite possible if a debt default does occur.
Dubai law throws debtors in prison. Dubai law also states that it is "illegal to produce a derogatory image of the ruler or to deface his picture." As Head of State, the buck for the possible debt default stops with Sheikh Mohammed bin Rashid Al Maktoum. If an $80 billion debt doesn't get you into debtors' prison, what does? But isn't the leader beyond reproach?
Abu Dhabi has Dubai over a barrel. But even a sovereign wealth fund such as theirs will still feel the pain of bailing out what is essentially junk assets. What price will Abu Dhabi extract from Dubai? Emirates Airlines is just a start.
1 comments:
Your reference here to :
Gareth Morgan Calls for Comprehensive Capital Tax is not new, but the numbers by taxing capital on a yearly basis rather than at a sale time are big.
Very big.
He says:
"
Our capital stock is about $1,500bn, including all land, buildings, plant and equipment. A 1.25% tax on capital would provide about $19bn, sufficient to effect the reform
"
I'll say, 19 billion must be between a third and half our total revenue.
And it will come, because there is no way out for New Zealand, but it will probably come piecemeal and slowly,
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