My column this week mines the IMF's latest Article IV report on the UAE, which gives a remarkable level of detail of the debt problems facing the country, Dubai and Abu Dhabi. Here's a sneak preview for TCA's readers:

            The Abu Dhabi Government is still considering whether to channel $4bn of its aid to Dubai through two local banks or whether to lend it the money directly, a banker said on Tuesday.

            "It hasn't been decided yet," said Lim Say Cheong, executive vice president and head of the executive office at Al Hilal Bank, which is owned by the Abu Dhabi Investment Council.

Lost amid the hoopla over the Fed's decision to raise its discount rate on Friday was the dramatic about-face by the International Monetary Fund. After years of free-market orthodoxy on open capital markets, the IMF is now recommending that developing nations consider adopting measures to regulate the flow of hot money in and out of their economies, or capital controls.

That's also the gist of a recent speech by Lord Adair Turner, Chairman of the UK's Financial Services Authority, at the Reserve Bank of India. A long, but interesting, read. And a reminder of how dramatically the crisis is changing the intellectual climate on capital markets regulation.

Seemingly forgotten in all the coverage of Dubai World's restructuring and the role of the Dubai Financial Support Fund is the DFSF's head, Marwan Abedin. Here's a little background briefing on the man in charge of restructuring Dubai Inc.

The Onion, that often-hilarious, sometimes profoundly satirical newspaper, has finally published a piece of inspired parody that speaks to the real problem plaguing the global economy. Money, it has revealed, is only scraps of printed paper. Its worth is imaginary, and the more there is of it, the harder it is to imagine it is worth anything at all.

It's also hard to imagine a world without it, unfortunately. As the Onion's article concludes:

"It's back to basics for me," Bernard Polk of Waverly, OH said. "I'm going to till the soil for my own sustenance and get anything else I need by bartering. If I want milk, I'll pay for it in tomatoes. If need a new hoe, I'll pay for it in lettuce."

When asked, hypothetically, how he would pay for complicated life-saving surgery for a loved one, Polk seemed uncertain.

"That's a lot of vegetables, isn't it?" he said.

As dozens of accountants sift through Dubai World's financial records in a race to determine how best to restructure as much as $22bn in debts, the company appears to be pursuing a new strategy to ensure it can win a deal from creditors before facing any major repayment demands, according to sources close to the company and its banks.

 

Wow, someone on Wall St. clearly had a good Valentine's weekend. I guess make-up rallies are better than any other kind, so last night's risk-on reunion will hopefully leave global markets  glowing all day long. How New York draws such optimism from this week's failure by Europe to come up with what George Bush would call a Grecian Formula is beyond me.

Nudging the anxiety over Greece and sovereign risk off the front page today is the deal by Kuwaiti operator Zain to unload most of its African operations to India's Bharti Airtel for the princely sum of $10.7bn. Zain has been revolutionising the cellular market in sub-Saharan Africa, uniting its operations across borders to offer nearly continent-wide roaming and in the process helping Africa leapfrog technologically. For Zain, it was a road to rapid expansion in subscribers -- it had 40mn in Africa. But you had to always wonder whether its revenue-per-subscriber was justifying its investment in networks.

They say no story has been written since the Greek myths -- everything since is just a variation. So Dubai's debt travails are perhaps just a variation of the drama being played out between Athens and Brussels, as I opine in this week's column. After all, it was fears of an AIG-style contagion that prompted Abu Dhabi to come to Dubai's aid in December, just as Brussels is being compelled against Germany's reservations to come to Greece's rescue. Bankers for Dubai World would like the Dubai Financial Support Fund to act on behalf of the Dubai Government as Dubai World's sole shareholder, but they forget that the DFSF is doling out not Dubai's cash, but money lent by the UAE and Abu Dhabi. New speculation circulating about a restructuring deal for Dubai World that might include a 40 per cent haircut for creditors, may serve as a reminder.

Doubts over whether Europe can rally to the cause of its weakest members continue to buffet global markets. What's interesting about the sudden anxiety over sovereign debt is that one of the fastest rising credit-default swaps is that on the US of A. At least for the time being, the reflation rally appears to be turning in reverse. A rising dollar -- the Euro is sinking like a stone -- only makes it harder for the US to print and export its way out of its mire. The problem, as The Pragmatic Capitalist puts it, is that "we have tried to print and spend our way out of one too many recessions while failing to use the recovery periods to pay down our debts."