Dubai receives a $10 billion bail out by the UAE Central Bank

As I mentioned just about a week ago, Dubai was on the brink of collapse, and indeed, it would have collapsed if it didn't get bailed out by the UAE Central Bank.

Feb. 23 (Bloomberg) -- Dubai shares surged the most in three months after the United Arab Emirates’ central bank bought $10 billion of Dubai bonds, easing concern that the emirate’s companies will be unable to refinance debt.
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Dubai, home to the world’s tallest building, most expensive hotel suite and largest manmade islands, needs to repay $15 billion of debt maturing this year, Moody’s Investors Service said this month.
[...]
Dubai borrowed $80 billion to turn itself into a regional financial and tourism hub, according to government figures. Real-estate prices have fallen 25 percent in Dubai from September’s peak

Feb. 23 (Bloomberg) -- The United Arab Emirates’ central bank stepped in to support Dubai after concern increased the emirate will struggle to repay its debt as global financial turmoil pushed up credit costs and burst a real-estate bubble.

For info, $10 billion is about 20% of Dubai's GDP!

And also, do not forget that this probably just means inflation, since central banks do not have money to lend, they just create it.

Just to remind how economic forecaster are myopic, here's what you can read on the UEA web site, written after the collapse started in the US:

Posted on 29/03/2008
Dubai's real gross domestic product (GDP), which surged to a record Dh198 billion in 2007, is predicted to sustain an average growth rate of 11 per cent for the next eight years. The main driver of this remarkable growth - outpacing the average growth rate forecast for the GCC - will be the non-oil sector, growing at a spectacular pace.

It looks like people who can't even predict what is going to happen just a couple of months down the road were trying to predict what would happen for the next 8 years! 11% of growth per year during all that period... Complete nonsense... This guys really don't understand compounding... (And GDP is supposed to be calculated after discounting for inflation as well).