Five Dumbest Things on Wall Street: March 27

Dubai's Dubious Bet

The good folks at Dubai World are desperately seeking an oasis in the Las Vegas desert. Sadly, all they have stumbled upon is a Mirage(MGM Quote).

Dubai World, a developer, is suing MGM Mirage because it's worried about the viability of the CityCenter complex, an $8.6 billion joint project between the two companies.

In a lawsuit filed Monday in Delaware Chancery Court, Dubai World subsidiary Infinity World claims that MGM Mirage's statements about its financial condition put the project at risk. Infinity World is asking the court to award it unspecified damages and relieve it of its obligations under the venture.

Specifically, Dubai World's general counsel, George Dalton, cited concerns about a statement in MGM Mirage's annual report, warning it could default on its loans for CityCenter, widely touted by MGM Mirage as the most expensive private commercial development in U.S. history. The bill for this behemoth could push MGM Mirage, which lost $855 million last year, to seek bankruptcy court protection.

Dalton's concerns over MGM's survival are certainly not unfounded. The casino company, currently buckling under the weight of $13.5 billion in debt and a severe downturn in gaming revenue, won a waiver from the terms of some of its debt last week, giving it until May 15 to get its financial house in order.

On Monday, Fitch Ratings downgraded MGM Mirage's Issuer Default Rating to the lowest possible junk rating. Shares of the company's stock have plummeted 95% over the past year to less than $3.

While spats between companies are fairly common, this brawl has the makings of two dimwits throwing punches in the air; hence, its inclusion into our Dumbest tally. Maybe they've both spent too much time in the desert because they aren't making any sense.

Just last week, MGM CEO Jim Murren told investors that the relationship between the two companies was "outstanding" when it obviously had imploded. Meanwhile, Dubai World's point man Dalton told reporters that, despite slamming its partner with a very public lawsuit, the company still wants to work with MGM and had "no choice" but to take legal action.

It just goes to show you, even in Las Vegas the house does not always win. Especially when it's divided among idiots.

Dumb-o-meter score: 95 -- Dubai World and MGM in Las Vegas? Truly a losing pair.