Posted by Karl Denninger
International finance-industry estimates have Dubai’s sovereign debt load, thanks to the off-balance-sheet debt, exploding to nearly four times its originally reported $80 billion, as other government-backed projects have gone bad after Dubai World’s default in late November.
This is how the Greek debt has grown 12 times over the initial numbers it had on the books with the European Union. Iceland and Dubai are the test studies for how the Europeans may deal with the idea of socializing private debt through public funding.
“I am seeing many sovereign defaults for the PIIGS as well as in Eastern Europe and the former Soviet satellite countries running into 2011,” Chapman added.
Isn’t it great to do things off-balance sheet? Why you can lie, cheat, and steal from investors, who believe you are far more credit-worthy than you really are.
Who else has done this?
There aren’t any big American banks with a trillion or so (each) off balance sheet in SPVs, are there? Oh wait – there are!
America doesn’t have somewhere around $80 trillion off balance sheet in Social Security and Medicare “promises”, does it – nearly six times GDP? Oh wait – it does!
Why is this sort of thing a problem again?