19 January: Dubai gives markets a peek behind the veil of Abu Dhabi bailout
- Branko Brkic
- 19 Jan 2010 (South Africa)
Also today: Cellphone technology comes of age in Haiti donor rush; JAL sets course for bankruptcy and its phoenix-like resurrection; Chavez rants about video-game poison and joys of ethnic dolls.
Dubai gives markets a peek behind the veil of Abu Dhabi bailout
Half of Abu Dhabi’s $10 billion bailout for Dubai in December came from a deal in November, confirming that the brother United Arab Emirate wasn’t just doling out large sums of cash. The money prevented Dubai from defaulting on about $4 billion in debt, which had financial markets chewing their nails. While market stability was preserved by the bailout, the obscure nature of the transactions raises questions about financial transparency and disclosure in the Middle East. The US and Britain have similar questions being asked of their multibillion-dollar handouts to collapsing firms, but Dubai’s woes caused further panic in already reeling global stock and bond markets as investors simultaneously discovered a burden of huge public debt in Greece. Photo: Reuters
Read more: BBC
Cellphone technology comes of age in Haiti donor rush
Amid warnings over online credit card scams, the American Red Cross has received more than $22 million in US text-message donations to help relieve the suffering caused by Haiti’s earthquake. The amazing thing amid the tragedy is that online has come of age, as the money sent by ordinary people far exceeds the previous record of $400,000 sent to the Red Cross for emergency relief using this kind of technology. The money is about 20% of the $112 million total the American Red Cross has so far raised through more conventional sources such as corporate and online charity donations. Donors send the word "Haiti" in a cellphone text message to a 90999 number, which automatically adds $10 to a subscriber's phone bill. This overcomes the problems encountered with credit card scammers and adds a new philanthropic dimension to cyber-donations. Wireless providers say they’ve dumped standard text-messaging fees and aren’t making money on this. This gets the cash to where it’s needed fast, as telecoms firms normally wait for donors to pay their phone bills before passing the money on to charities. While that still leaves unanswered questions as to who keeps the interest on donations, Apple has added a Web page to the iTunes Store that enables donations to the American Red Cross without charges. Users have a choice of giving between $5 and $200, but they can't use iTunes Store credit towards donations, just cold hard cash.
JAL sets course for bankruptcy and its phoenix-like resurrection
Japan Airlines has set a course for bankruptcy, killing speculation that US carriers Delta and American Airlines would help rescue the ailing national airline. As Asia's biggest carrier, JAL clocked up $16.5 billion in debts, causing its shares to plummet to an all-time low, and crashing its value from billions of dollars to just $150 million - about as much as the cost of a single new jumbo jet. But being the national carrier, there will be life after death. Japan's government says flights will continue normally as the airline restructures under the supervision of the state-backed Enterprise Turnaround Initiative Corp., despite some 15,000 people, or one-third of employees, facing the loss of their jobs. As part of the bankruptcy proceedings, banks will have to write off billions of dollars in unsecured debt, while JAL gets a hefty dose of taxpayers' money to keep it in the air.
Chavez rants about video-game poison and joys of ethnic dolls
Venezuelan President Hugo Chavez hates golf courses. So much so that he’s trying to ban them as playgrounds of the idle rich. He’s also got a big thing about video games, and calls them the poisonous proxies for capitalist war-mongering. He’s sure got a way with words, but the man who associated former US president George W. Bush with the devil, won’t have pleased Sony with his comments on his weekly radio-TV show “Alo Presidente” (Howzit, Mr President). He says the Japanese company’s PlayStation brand of digital games teaches children to kill, and even believes his life is on the line in one of them, called Mercenaries 2: World in Flames, which features a power-hungry tyrant who messes up Venezuela's oil supply and turns the country into a war zone. That’s not a Sony product, but Chavez has always mixed his metaphors. He says these games incite violence against countries such as Venezuela so that capitalists can sell weapons to the country's foes. He’s a little softer on what he reckons are educational games, and is keen on little indigenous dolls replacing Barbie, which he says has nothing to do with Venezuela’s culture.
Lights go out in Caracas after Venezuelans hit by drought
Despite Venezuela nationalising large chunks of industry, including swathes of its substantial oil reserves, a current economic boom has been hit by severe drought, forcing President Hugo Chavez to ration electricity. Observers say under-investment and short-sighted planning are as much to blame as the weather, and now the country is suffering rolling blackouts much like the ones that Eskom has imposed on South Africa (and could well do again, according to some analysts). If there’s anything to be learned from this, it’s that a so-called developing state can seemingly prosper on the back of free enterprise, while going about killing all the geese that lay the golden eggs, only to reap a deadly economic torpor years down the line. Venezuela’s capital, Caracas, has become particularly chaotic, with schools, hospitals, street lights and traffic lights suffering outages (sound familiar?), forcing Chavez to order a suspension of the rationing. Chavez is learning that you can’t ration what you don’t have. Wouldn’t it be good if those who make policy in South Africa came to understand that, too.
Wall Street throws hissy fit, wants to sue Obama
Wall Street is threatening to sue President Barack Obama over his proposal to levy a 0.15% tax over 10 years on banks that brought the house down. Despite Americans having dug deep into their pockets to provide a $700 billion financial market bailouts to the very same companies, millions of people have been left jobless and homeless, and the banks don’t seem to care. Four titans of Wall Street lined up in Washington last week, and told congressional leaders that they didn’t see the crash coming, and that it wasn’t really their fault, despite selling sub-prime mortgages to clients while at the same time making huge profits by betting that they would fail. Obama told the banks to desist in sending in an army of lobbyists, lawyers and accountants to fight his tax proposal, asking them to “fess up” and meet their responsibilities. But Wall Street has now hired a top Supreme Court litigator to study a possible suit against Obama’s administration, despite such a move looking to be entirely unconstitutional. Banker rhymes with a popular and derisive English word, one that the Americans might soon start using.
Taco Bell founder checks out
One of the “architects” of some of America’s most iconic, if not ghastly, architecture has said goodbye. Glen W Bell Jr., best known as the founder of the Taco Bell restaurant chain, has gone to meet his maker at the age of 86. He died at his home in Rancho Santa Fe, which pretty much sums up the look and feel of his famous buildings that fronted the strips of many a country town. The company has lauded him as a visionary and innovator in the restaurant industry, as well as being a dedicated family man. That’s a pretty typical eulogy in a country littered with drive-by fast-food outlets such as McDonald’s, Wendy’s, Burger King and Dairy Queen. And it’s a pretty nice send-off for an icon of American “rapido” food culture with a Mexican twist. Bell later sold his 868 Taco Bell restaurants to PepsiCo for $125 million in stock, although they’re now owned by Yum! Brands, serving some 37 million consumers each week in more than 5,600 locations in the US.
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