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The Dubai Crisis Hits Even Harder Due To The Total Surprise, Lack Of Transparency; Way It Was Announced

Aired November 27, 2009 - 14:00:00   ET


RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: A drubbing at the hands of Dubai, now it is Wall Street's turn to feel the pain; from the desert backwater into a booming business hub, the future for the region.

And a shopping frenzy, the Friday after Thanksgiving. It is a Friday. I'm Richard Quest, and I still mean business.

This week the world got a reminder. It came fro the Gulf Region of Dubai. A reminder that when markets move, the whole world is affected. It is what happens if you build an economy on shifting sands.

Good evening. The markets around the world, whether in Asia, Europe, or now, the United States, have been giving their reaction to the announcement that Dubai World is to be restructured; $60 billion of debt is now going to have to be looked at again. The questions being raised, of course, concern just how far and how deep the problems, and how much further they have got to go.

We've known since Wednesday, here in Europe, that Dubai World wanted to delay paying its debts. And the news is still reverberating across the world. This is the way the markets have played out. I'm gong to go chronologically. We'll start over in Asia-Pacific, where we saw the Nikkei down sharply, the Seoul Kospi was off particularly brutally, down 4.6 percent. The Australian index, down the best part of 3 percent.

The worry in Asia had all been because of what might happen next. But showing just how perverse in many ways this Dubai issue is at the moment, look at Europe, having seen the sharpest falls on Thursday, Europe bounced back with the Xetra DAX gaining the best part of 1.25 percent. A clear indication that what's happening in Dubai has only limited, long-term spill over effects. But just when you thought that no damage could be done to the U.S. markets, the Dow Jones off 1.48 percent. The S&P down 1.75, the Nasdaq down 1.75. The markets there still concerned about what might be a longer term ramifications.

By now we are seeing this is not just about Dubai, it is about what it tells us in the fragility of economic growth at the market.

Of course, it all concerned the company known as Dubai World. Dubai's standard bearer for global investment. The ruler of Dubai, Sheikh Mohammed Bin Rashid al-Maktoum, he holds a majority stake in that company. Dubai World has four main arms of investment, and perhaps the best-known is the Nakheel, the property developer behind famous projects like the Palm Islands, and the World; all of which built on land reclaimed from the sea. The group's investment arm, Istithmar World, has extensive investments outside Dubai, notably, in Europe, the U.S. and South Africa.

Earlier I spoke to Farouk Soussa, head of the Middle East government ratings at Standard & Poor's. He joined me on the line from Dubai. I asked him what direction the thought the markets would take going forward.


FAROUK SOUSSA, STANDARD AND POOR'S: Well, I think cooler heads are going to prevail. What's happened is two companies in Dubai, which have been in trouble for some time and which we have been flagging those troubles, for some time, have asked for a standstill on their debt. The surprise in this is that the Dubai government has not come in to help them with that debt.

But that doesn't mean that everything in Dubai is not credit worthy. There are still plenty of credit worthy companies in Dubai. Right now everything is tarred with the same brush, everything is tainted. But going forward I think people will be looking at Standard (ph) on credit worthiness and looking at the actual individual merits of each business in Dubai. And they will find that there are plenty of businesses here in Dubai that are credit worthy.

QUEST: I think that - well, we can certainly agree on that, but I'm wondering was it a mistake, was it an error of judgment, call it what we will, the way in which Dubai allowed these two companies to effectively go to the wall?

SOUSSA: Well, to be able to answer that I'd need to know what the objectives of the government are in doing what they are doing. And there is no clarity on that. We don't know what the objectives are. All we know is that the government has decided to let these two companies go ahead with a restructuring of their financial liabilities. Quite clearly, this shakes confidence in the policy making environment given the public statements over the last six months have been to the contrary.

QUEST: You see that, you have just put your finger, in many ways, on exactly the issue. There is, if you like, the financial and the technical, and no one doubts eventually it will be sorted. But there is this question of the transparency, and of the regulatory, in the way in which these things were carried out. And these two things are in conflict at the moment.

SOUSSA: Absolutely. I think anybody who does business, not just in Dubai and the region, does business with a measure of opacity and understands the transparency isn't quite what it is elsewhere. This is just a continuation, really, of the lack of transparency with respect to policy making.

QUEST: The interesting question about that is, it is because Dubai plays, and wishes to play, as a major financial hub. How much damage do you think this has done to its reputation, if it has done any damage at all?

SOUSSA: Well, I think, there is no question, the damage has been done to the reputation of Dubai. I think how much in future can be contained will depend really on the policies that the government unfolds and articulates going forward. I think there is a clamor for greater transparency, a clamor for greater clarity and we expect that the Dubai government will respond to that by being more transparent and will give us some clarity, particularly after the Eid holiday, with respect to the steps forward from here.

QUEST: The big overriding question that people need answering at the moment, it seems to me is, is this a one off? Is this a policy issue? Or are there more Dubai Worlds, Nakheels, out there in the region waiting to suffer the same fate? Are we any closer today to having an answer to that?

SOUSSA: Well, I think that we have to look at what the government has been saying over time. The government has been saying that they will support their government related entities. And have been very vague about what exactly that means. Do they mean ongoing operations? Do they mean supporting the financial liabilities? Ultimately, from our point of view and from the investment community point of view, we are looking for support to be timely and full when the debt comes due. And that is the real debate.

Now, as far as the wider region is concerned, we really do have to distinguish between Dubai and the wider region. Dubai is a country that does not have masses of oil wealth and has a very high level of overall debt. And that is a dangerous dynamic to be in, in the current global environment. The other countries, on the other hand, are massively wealthy, have large reserves, and have very little debt. So there is no reason to suspect that what we've seen in Dubai over the last couple of days will spill over into those countries at all.


QUEST: CNN's John Defterios from "MARKETPLACE MIDDLE EAST" joins me now.

You and I have been talking about this all day, in one shape or another.


QUEST: How much of a mess is this?

DEFTERIOS: Well, let's put it into perspective. If you look at the overall $80 billions of debt that Dubai has right now, $60 of it sits with Dubai World, and we are talking about $3.5 to $4 billion, right now. There is a big question mark over the next 12 months, because there is another $15 billion that is going to be due.

Now, with Abu Dhabi step in? I spoke to three different bankers and private equity people who have stakes within the region, and particularly, Dubai. They said without a doubt, let's put some perspective on this, it is Dubai, they said, but not Argentina. Meaning that there will be a back stop here. Very likely the UAE central bank will have to step in. There is a void of information right now. I think this is really what the danger is, because we haven't heard anything just yet.

QUEST: So, why did Dubai and Abu Dhabi allow this to happen? If we know - what was it about Dubai World and Nakheel, that this was the -this was the straw man that was going to be allowed to fall.

DEFTERIOS: Let's put it out there. There are two different theories. Number one, it is Sheikh Mohammed, himself, Bin Rashid al- Maktoum, of Dubai, trying to clean up the shop. And he cleaned up his advisory board, number one. This has been a heck of a week, by the way. Cleaned up his advisory board, raised $5 billion, made a visit to London, didn't flag this to Prime Minister Gordon Brown, reportedly, and then goes back. Barrows that $5 billion, but does not apply to Dubai World. What does it tell me? At the bottom of all of this is that perhaps he's going - you know, company by company now, and cleaning it up. Is that pressure coming from Abu Dhabi? Is the big question. Is this a pre-condition, we are giving you $5 billion, don't apply it to the bad suffering company, clean up the entity first and then we reevaluate it.

QUEST: How much, then, can be regarded - I mean, "The Financial Times" summed it up today, on the question of whether it was just a mistake, a mismanagement, or actually that they did it in such a ham-fisted way, of - putting out an announcement, no real detail and just letting the market take care of itself.

DEFTERIOS: Well, one person I know used to work in Dubai, he's based in London now, he's a private equity person. He said that this is the danger that Sheikh Mohammed does his cocooning. That is new information is not coming in because he just cleaned house. He brought in some new younger players. They haven't been tested just yet, and we haven't heard a lot from Abu Dhabi just yet. I had an interview with the central bank governor of the UAE, exactly a month ago. And this was at a period of time when the Dubai government was trying to raise $6.5 billion of commercial paper. And there was a big question then, will the UAE central bank guarantee that $6.5 billion? And would they guarantee the next tranche of the $10 billion?

I sat down with Sultan Nasser Al Suwaidi, the UAE central banker, and listen to the clip we had from a month ago. He was not going to give a complete answer on this.


SULTAN NASSER AL SUWAIDI, CENTRAL BANK GOVERNOR, UAE: I don't know what is the plan there. Does that mean that they will need the $10 billion? Or they would defer raising the $10 billion at this stage.

DEFTERIOS: So the $6.5 billion that Dubai is seeking in he commercial market may suffice, for now, is what you are saying?

SUWAIDI: It could be. It could be. I cannot speculate on something which I don't know much about.

DEFTERIOS: There is an assumption that this would be guaranteed by the central bank of the UAE, if necessary. Should we make that assumption? Is that true?

SUWAIDI: No, no, no. Nobody has approached us on this issue. And if we do receive such a request it will be presented to the board of directors of the central bank.


DEFTERIOS: So that was October 27, so he said at that stage, nobody has approached us with a second trench, that $10 billion. So, at the end of October, they had to raise $6.5 billion, they had raised additional funds in November. And at that stage they weren't ready to go back to the central bank, unless -there is an interesting side to this - did the central bank want to basically say, it is not a blank check. Let's see if you can sort it out.

QUEST: Let's come out of the, if you like, the grime of the story. And just basically say, do you believe there is contagion. That Qatar, Saudi Arabia, Bahrain, and others places.

DEFTERIOS: OK, you raise three of them that all have natural resources and don't have any debt problems at all. So, Saudi Arabia, Qatar, Abu Dhabi, will not have any problems borrowing, although the cost of borrowing throughout the region is going to go up. A final thing is keep an eye on Saudi Arabia, they have to work through some $30 billion of commercial debt when they (AUDIO GAP) and saw, that maybe the next story we should watch out for.

QUEST: Well, you will. And you will have to come back and tell us about it.


QUEST: Many thanks to you. Have a good weekend.

DEFTERIOS: Thank you, Sir.

QUEST: Now, you are up to date as to what has happened in the big news story of the day, in terms of the financial world.

Hala Gorani is at the I Desk to bring us up to date elsewhere.

HALA GORANI, CNN INT'L. NEWS ANCHOR: Hi there, Richard. Here are the headlines.

A shake up in the German cabinet today. Labor Minister Franz-Josef Jung has resigned his post in the wake of that controversial and batched air strike in Afghanistan back in September. Jung was defense minister when a German commander called in the air strike in which at least 90 people were killed and a third of them believed to be civilians. The German army's chief of staff stepped down yesterday, over the incident.

The U.N.'s nuclear watchdog has formally censured Iran for the first time in years. IAEA board members passed a resolution condemning Iran's defiance of U.N. demands on its nuclear program and calling for the shutdown of a newly disclosed uranium enrichment facility. Even China and Russia supported the move. Tehran calls it a hostile move that jeopardizes cooperation with the IAEA.

And Philippine officials says that more than 100 people could face arrest over election related killings in the southern Philippines. Authorities say they have already charged the alleged mastermind of the massacre. Nearly 60 unarmed civilians were killed Monday, many of them lawyers, journalists and politicians.

Also among the headlines, millions of Muslim pilgrims performed the ritual stoning of the devil on the third day of the Hajj. It is one of the final rights of the annual pilgrimage. Around 2.5 million Muslims from all over the world are in Mecca this week. To manage the huge crowds, Saudi authorities have installed a ramp around the walls of the pillars, intended to try to prevent those deadly stampedes of previous years.

And that is a look at your headlines, back to you, Richard, in London.

QUEST: Hala Gorani, at the I Desk, many thanks.

As we continue, white knuckle days for investors around the globe. Of course, we have been telling you what's been happening with that. The Dow Jones off, was much heavier.

That made absolutely sense that. I'll try it again.

It was off much more, earlier in the session. Now down 1.5 percent, 10,300 is looking a little bit dodgy. We'll take a look at the week that was in a moment (ph).


QUEST: They are heading towards the red, at the end of the day, as Wall Street reacted to the news out of Dubai. At the opening the Dow Jones dropped more than 200 points. Ali Velshi our chief U.S. business correspondent is in New York and trusting that we could talk to him now.

Ali Velshi, the way in which the market fell, but then recovered, is this just a straight forward tit for tat, following on from Europe and Asia?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: You know, Richard, you and I have been talking about this for on 12 hours now. Guess what? The post-Thanksgiving U.S. market didn't collapse as a result of this. And I think it is useful to remind ourselves, and our audience, that this is a business story. This was a story that developed and we are in a very nervous world, so when a large regional business story develops, we all of a sudden get very, very worried, Asian markets went down, European markets went down a little bit less. And a post-Thanksgiving half a day of trading in New York was affected, but not substantially.

And I have to tell you that Dow closed 150 points or something like that, 154 points. I wouldn't even give all of it to Dubai. I would say that some of that was just a market waiting for some reason to sell stocks on thin trading.

QUEST: The one thing I always know about the U.S. market, and I don't mean this in a particularly derogatory sense. It does tend to - even though it is the largest market in the world -it is a parochial market. In the sense that it is so much more concerned -bad reports from the West Coast will out do anything else, anywhere else. That's true isn't it?

VELSHI: You are absolutely right. And the first -the thing that was going on overnight, and again, overnight meant traders who had finished a big turkey dinner and were in a tryptophan coma, they were looking around to see who in America has exposure to Dubai World, which is the sovereign wealth arm in Dubai. Who has exposure to this? And when they largely learned that, oh, well, Citigroup has. But Citigroup has exposure to everything in the world that is not working out properly. The direct exposure in the U.S. is limited. And as a result of that, they thought, all right, you know, something bad happened, something bad is happening in Dubai. It doesn't look all that serious, but guess what, this market has been up 20 percent since the beginning of the year, 60 percent since March, this is a good enough reason as any to take a bit of money off the table. And I think that is exactly what you saw today. Any reason would have been reason to take some money off the table in New York.

QUEST: Absolutely. Now, it is Thanksgiving -well, Thanksgiving was yesterday, long weekend. Happy Thanksgiving, by the way, Ali.

VELSHI: Thank you.

QUEST: A little late from me.

VELSHI: Richard, as you know, I'm Canadian, so to me it was just Thursday.


QUEST: That was well put. All right. Whatever it might have been, Ali, we are now at this point, from now until the end of the year, crucially important. What would you say is the mood of the economy in the United States for this last crucial quarter.

VELSHI: Well, as you know, as an economy that is so based on consumer spending, and of course, consumer spending has taken such a hit in the last year and a half, today is crucial because it is the day after Thanksgiving. And it is a day when we decide whether Americans are really going to lay low again. It is the consumer who has been in hiding for the last year coming back out or not? The mood, so far, seems to be OK. So, remember Richard, there are three things that make Americans feel prosperous. The value of you home increasing. It hasn't increased yet but they are very low interest rates and good incentives to buy a home. The value of you investment increasing and very clearly 20 percent up on U.S. markets this year, 60 percent since the market lows in March. But the third and most important thing is the value of your wage, your income increasing.


VELSHI: And that we are not seeing, with 10.2 percent unemployment, and more layoffs to come. So the third leg of the stool is the most important and that is the one that is not being reinforced yet. So, between now and the end of the year, what we need in America is not to hear about more layoffs and to hear about people who might actually be hiring.

QUEST: Ali Velshi, sitting on a wobbly stool. All right. Many thanks indeed. We'll be back with you --actually, many thanks, Ali. Have a good weekend.

It took traders in Europe the best part of the session to set aside their worries about the Gulf. CNN's Jim Boulden now on how things look very different between the beginning the middle and the end of the day.


JIM BOULDEN, CNN INT'L. CORRESPONDENT (voice over): A wake up call Friday, eight months into a bull market. The fear of default in Dubai, whether it is a justified fear or not, led to wave after wave of down arrows out of the gate for many of Europe's top shares.

Banks were hit hard. It wasn't clear which financial institutions might be exposed to the debt of Dubai World or the debt of the region. The timing of Dubai World asking for a delay in debt repayment also played a part. New York was closed on Thursday. So, Asia's steep falls lead into Europe early Friday morning.

MANUS CRANNY, MF GLOBAL: This is not what the market needed in the month of Christmas. That is the most critical thing. It just shows you how fragile sentiment really is.

BOULDEN: Any excuse to sell perhaps, but not for long.

(On camera): It is now lunch time here in London. Exactly two hour s before New York markets open, and all of Europe's main indices have rebounded.

STEPHEN POPE, MF GLOBAL: Cash trading is still very light.

BOULDEN (voice over): Cantor Fitzgerald's chief global equity strategist is not surprised.

POPE: I think what we are seeing now is there is a sense of perhaps we have overdone it a little bit. European bourses are coming back to the base line. So just trading pretty much were they closed on Thursday. And then I'm waiting to judge how the U.S. opening will be.

BOULDEN: By the time Wall Street opened, and opened lower, Europe's main markets were on the rise. While Friday saw the man indices closing higher for the day, in the end London was only down 2 percent for the week. Analysts started to note the specifics of the debt worries.

POPE: So, we have to be very careful when we make this classification of what the debt issue is. Dubai World, repeat, is an investment company owned by the government, but it is not the government.

BOULDEN: Still, all of this was the first test since the March lows. It was clear investors were willing to sell after months of gains. Others may have seen this dip as a time to buy, but not Manus Cranny.

(On camera): There are some people who are looking this as an opportunity. If they missed the March lows, to get back in, and that maybe something that happens in the next couple of day.

CRANNY: Absolutely. But if you were a private client and you were speaking to your broker, and he had missed the previous six months, would you really be ringing off the phone to him to now, in the month of Christmas, to really get in there heavily. I don't know.

BOULDEN (voice over): Now analysts are split on whether the markets will bring any presents to portfolios as the year comes to an end. Jim Boulden, CNN, London.


QUEST: In just a moment perhaps the most important single shopping day of the year, some would claim, at the world famous Macy's bargain hunters were out in force from a very early hour. After the break, Macy's Chief Exec Terry Lundgren, if they actually bought anything.


QUEST: Welcome back. It is call Black Friday in the United States. It is the Friday after the Thursday that is Thanksgiving. It is the best time, in many ways, for good deals. It is, if you like, even though the shops have been promoting Christmas for a long time, this is really the official start of the season.

The shopping bonanza, the ringing tills; it is often the busiest shopping day of the year. Some people cued from since 3 a.m. There were sales to be had on GPS, sat nav, all that sort of stuff on this particular thing. It is crucial in the run up to the holiday season. What happens now, between now and November/December, defines, in many ways, the totality of the retailing year. Make it now, or you are in deep trouble. So that is why up to 134 million, possibly a third of the United States when to the stores, today, to actually see what they could pick up, those early Christmas bargains.

But we've got a very long way to go before we actually get to the festive season. Let's go to New York. Outside Macy's famous department store, in Harold's Square (sic), Adriana Hauser is with us, to join us.

Adriana, we know it is an important day, but what do people there think about what they are seeing in the shops?

ADRIANA HAUSER, CNN INT'L. CORRESPONDENT: Well, people here are ready to spend. They have been lining up in front of the doors since way before 3 a.m., some where here at midnight. And the doors opened at 5 a.m. Macy's CEO told us that actually about 5,000 people were getting ready to come in when the doors opened. The National Retail Federation expected a 16 percent increase in the amount of shoppers hitting the stores.

Today we have Donna and Kaye with us. They are visiting from England and taking advantage of this juicy deals.

UNIDENTIFIED FEMALE: That is correct, yes, it is.

HAUSER: What have you found here today?

UNIDENTIFIED FEMALE: I've got some jeans, a handbags, Ralph Lauren tops, (UNINTELLIGIBLE) sort of things. We're taking some back for Christmas presents.

HAUSER: Has it worth it being here. You benefitted not only from the discounts and the sales but also from the currency exchange, correct?

UNIDENTIFIED FEMALE: It's cheaper here anyway. So, if it's a sale as well, it is a lot cheaper. We bought some Levi jeans and some Ralph Lauren polo shirts.

HAUSER: So it has been worth it?

UNIDENTIFIED FEMALE: Oh, well worth it, yes.

HAUSER: Thank you so much. And keep shopping.


HAUSER: Keep helping the economy.

Richard, the National Retail Federation still expects a 1 percent decline in the overall sales for this holiday shopping season. Richard.

QUEST: Adriana, many thanks indeed, joining us from New York, those U.K. shoppers spending lots of money. Let's make sure they didn't break the customs regulations for when they come back.

Now, putting it into perspective, Adriana outside Macy's, earlier I spoke to the Chief Executive Terry Lundgren. And I asked him how important the holiday season was for the department store chain, overall.


TERRY LUNDGREN, CEO, MACY'S: It is very important. This time of year so much of our sales and out annual earnings are generated really in these last six weeks of the calendar year. Our fourth quarter ends end of January, but from the time, starting today, all the way through the after Christmas sale, very, very important to us and to all retailers in America.

QUEST: We know that last year was spectacularly poor on that front. From what you can see, and leading up to today, does this year seem to be better?

LUNDGREN: Well, it, you know, each month is getting gradually better. Now we have 7 or 6 percent less inventory on hand than we had last year, on purpose, but our sales are getting closer to last year every single month. So, our hope is that we will be able to continue to just ratchet it up, just gradually. Where no one expecting anything spectacular this holiday season, but we are hoping to get close to last year's performance, with less inventory.

QUEST: OK, and of course the ability to do that effectively cancels out doesn't it, one cancels out the other, less inventory and last year's performance, actually makes for a better performance?

LUNDGREN: It does indeed, it helps the margins. It helps the overall performance. It actually makes the retailers, like ourselves much more focused. I mean, we have to make every single item, on every single shelf, work. You know, there is not chance for us just getting excess and trying, you know, things that -just maybe they'll work, maybe they won't. We have to be so focused this holiday season and I do believe in the case of Macy's and Bloomingdale's, we are.

QUEST: At which point will you decide to take extraordinary measures, really deep holiday sale discounting?

LUNDGREN: Well, like I said, with less inventory going into the season, we're in pretty darn good shape. You know, but -the business just continues from this point forward all the way through the December 28, 29 period, they are all big days, all of them. But the Saturday before Christmas - I mean, if you don't know by then, I mean, you are never going to know. Because that is the biggest day of the year, is still the Saturday before the Christmas Day. And so we'll know certainly before that period of time, whether additionals are going to be required. But I know for sure it won't be required across the board. It will only be on selected items that didn't perform.

QUEST: We have heard a lot about, over the years, and particularly this year, the challenge from online retailing. Now, I understand and I accept, that online retailing doesn't give you nearly (AUDIO GAP) of the touch, the feel, the smell, the mood, of the store. I agree. But if the price is competitive, you could loose that marginal sale that makes the difference between profit and loss.

LUNDGREN: Well, in our case, it is - you know, the online business is very important. In fact, we'll do over a $1 billion in retail sales this year with online, between Macy's and Bloomingdale's. Most of that being the Macy's brand. So, this is a very important business for us and a growing business. But most importantly is that for every dollar sold online, we generate $5.77 inside of our stores, from the online experience. So, customers, they like the dress, they like the way it looks, but they want to come in - to your point - they want to touch it, feel the fabric, try it on, see the fit, before they buy. Very often that is the case. So, in our case the multichannel experience is in fact a big opportunity for us.


QUEST: And we will have more in just a moment. QUEST MEANS BUSINESS, back in a moment.


QUEST: Good evening, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN.

As the financial markets have been giving their reaction to the announcement of the restructuring of debt in Dubai, the British Prime Minister Gordon Brown has been giving a political response.

Mr. Brown said he had spoken to the head of the Financial Stability Board, who had also said that they didn't believe there would be any widespread international repercussions from the fact that Dubai was having to restructure so many billions of dollars.


GORDON BROWN, PRIME MINISTER, UNITED KINGDOM: If this is a localized problem then it can be dealt with, and I believe that that is the case. Many banks this morning have said they are not clearly exposed to Dubai. I have talked to the chairman of the Financial Stability Board, Mario Draghi, in my capacity in president of the G20. And I believe that we are satisfied that the arrangements in place, the mechanisms that we have in place, to monitor what is happening, can be sure that this is something that is both containable and is localized. And I believe this is one of the things that we'll see over the next few months as the world economy returns to growth. But it is an event that can be dealt with.


QUEST: Gordon Brown, speaking in the Caribbean, at the start, as the head of the Commonwealth Heads of Government Summit.

Dubai World is behind some of the most extravagant real estate developments on the planet. That much you are perhaps aware. The (AUDIO GAP)

As Morgan Neill now explains, the effects of Dubai's debt problems on property prices, well, it could go a lot further than just the Palms.


MORGAN NEILL, CNN INT'L. CORRESPONDENT (voice over): The party to open Dubai's Atlantis Hotel, just over a year ago, now seems like a mirage. At an estimated cost of $20 million, it boasted a guest list of the world's rich and famous. Just two months after the Lehman shock, the dazzling extravagance seemed to say, Dubai is immune. But it never was.

Dubai World, which owns Nakheel, the developer of the man-made tree- shaped Palm Jumeirah Island, has now requested a suspension of debt payments. The move threatens to undermine confidence in a recent property recovery and celebrities who bought home there may find their property is suddenly worth a lot less.

Author Jim Krane says that while established developments should be fine, Dubai's other artificial island projects The World, and Palm Deirda (ph), could be in trouble.

JIM KRANE, AUTHOR, "DUBAI, CITY OF GOLD": It will take a special kind of investor and probably a more robust economy for anybody to really build on one of those places. I mean, there is a lot more practical places to build on one of these little islands in the world. So that could be a white elephant for a long time.

NEILL: One of the firms which has bought into The World, has confidence in Dubai's long-term story.

GILES BESWICK, SELECT PROPERTY: I would disagree that it will be a white elephant. I think it will be part of the continuing development of Dubai as a city, and a tourism center, an investment center for many years to come.

NEILL: But in the short term, Dubai World's announcement has brought uncertainty, and the prospect of a fire sale of assets to raise cash.

(On camera): But just how far could the fallout spread? At this point analysts simply don't know how the news from Dubai World will affect the rest of the Dubai portfolio. Which includes, among other things, Madame Tussauds a stake in the London stock exchange and the London Eye.

(voice over): Whatever the fate of investments abroad, hopes that Dubai's inflated portfolio of luxury property was beginning to recover have been dashed. Morgan Neill, CNN, London.


QUEST: Now, going to take just one moment to bring you some breaking news, coming into the network. CNN has confirmed that the golfer Tiger Woods has been involved in a serious car accident near his home in Orlando, in Florida.

We don't have any more details than that. And speculation would be improper and wrong at this moment. So, allow me to tell you just what I know at the moment. The golfer Tiger Woods has been involved in a serious car accident near his home in Orlando. The moment I get more information so will you. Back in a moment.


QUEST: Allow me to give you some more details on the breaking news that I'm just reporting to you, the golfer Tiger Woods has been taken to hospital in Orlando, in Florida, after a serious car accident. The exact details are not entirely clear. Local media are reporting his condition as being serious. Some newspapers saying that he was taken to a local hospital, according to the Florida Highway Patrol, it happened in the early hours of this morning. This is according to one newspaper, the local paper, there.

But nothing is further confirmed. The exact condition, what has been happening, the circumstances, under which it took place. We don't know any more than that. The moment we get those details we will bring them to you.

If you are traveling around this weekend and you really are concerned about what might be the weather, you have just cause. There has been some pretty shocking weather lately, whether you are on ground or in the air. Lola Martinez, at the World Weather Center, perhaps has got a little bit more cheer for us, at least those of us in Europe.


QUEST: Thank you very much, Lola.

I just need to give you more details on what's happened. According to "The Orlando Sentinel", this is according to this newspaper, apparently Tiger Woods pulled out of his driveway, where he struck, at 2:25 in morning, he struck a fire hydrant, and then he drove into a tree at his neighbor's property. That is the way the Florida Highway Patrol apparently saw it in the early hours of this morning. Those details only now coming to fruition, and public attention.

That is QUEST MEANS BUSINESS. I'm Richard Quest. Have a good weekend.