Dubai Poised To Acquire Large Stakes in N.Y. Banks

New York Sun ^ | November 21, 2007 | NICHOLAS WAPSHOTT

[america4vr]

The Dubai government, whose purchase of six American ports sparked a political furor, is poised to acquire substantial stakes in Citigroup and other New York-based banks mired in subprime mortgage debt.

Omar bin Sulaiman, the governor of the Dubai government's investment arm, DIFC Investments, is currently on a spending spree, spurred by the bargains that have resulted from the low value of the dollar and the sinking of the stock markets caused by the subprime mortgage crisis. Last year, Dubai caused a political storm in America when its Dubai Ports World company acquired six major American ports as part of its purchase of the British company P&O. Opposition to ownership by an Arab country of such sensitive properties at a time when America is waging a war against Islamist terrorists obliged Dubai to sell the port management companies to the American insurance company AIG amid anxieties about port security.

Dubai, a tiny country in the Persian Gulf with a matching small population, which is part of the United Arab Emirates, is cash-rich because of its vast natural reserves of oil.

Under its ruler, Sheik Mohammed bin Rashid al-Maktoum, Dubai has aggressively begun to diversify its investments into tourism, construction, and finance and has concentrated upon acquiring blue-chip companies around the world. The sheik's aim is to make Dubai home to two of the world's 10 largest financial institutions within the next eight years.

The turmoil in the markets and the subprime mortgage mess has made large American financial institutions and banks vulnerable.

"There are good assets in the U.S., good opportunities for acquisitions to be identified," Mr. bin Sulaiman told reporters at the World Financial Centers Summit conference in Dubai. He said he was hoping to buy into American oil and gas interests, as well as telecommunications companies and

[jrsmc]

Just another symptom of asset deflation (due to debt) and commodities inflation (reflation attempts by the Fed).

It is dangerous and naive to discuss the symptoms while ignoring the underlying causes.