Dubai Financial Crisis
December 1, 2009 by USA Post
Dubai Financial Crisis : The standard, which in Dubai is not the beginning of the Financial Meltdown 2. Do not look for the domino’s not here. Yes, it means serious questions about the large debt overhang in emerging economies-particularly Eastern Europe increased. However, it is not a “sovereign default” in the literal sense, or is there a great risk of infection. Oil-rich Abu Dhabi is loaded with liquid assets, possibly as much as $ 800 billion. She was paid off Dubai World’s measly $ 60 billion debt without batting an eye. But Abu Dhabi wants to send his wastrel younger brother of a wake-up call by forcing Dubai to restructure its debt. This means that banks, bondholders and contractors will have a hairstyle, not surprising given the abysmal state of the commercial real estate market is taking.
Dubai World-owners were trapped in the same troubled debt-fueled commercial construction binge that swept across the united states. The problem can be lax lending standards and low interest rates can not be traced. Now the demand has fallen from a cliff and credit is getting tougher. Dubai World can not roll over its debts or meet its obligations. This is normally when credit bubbles burst happened.
On Thursday, Bank of Americaanlysts, issued a statement: “One can not exclude – as a tail-risk – a case where it would escalate into a major sovereign default behavior, which then would the whole world sang emergent markets the same way that Argentina did in the early 2000s or Russia in the late 1990’s. ”
This is nonsense. There will be no sovereign default. Abu Dhabi is not going to send global markets into a dive after a few billion dollars to save. B of A is blowing smoke. Oil has already slipped $ 3 a barrel since the crisis began. There will probably a tentative resolution by the time the markets open on Monday. That does not mean that there are important lessons to learn from this latest financial disaster. There is.
First, because it shows that the financial crisis is not over households, companies and countries that are still deleveraging. This ongoing process will slow spending and increasing defaults, bankruptcies and Foreclosures. Government guarantee and stimulus programs will not reverse current trends. More incidents like Dubai world should be expected. This “credit events” will disrupt the recovery and spur greater risk-aversion that pressure, the stock downward.
Arnab Das of RGE Monitor sums it up want to know: “We are bound to see an increase in risk aversion. The Dubai state signifies that although the major central banks around the world, the financial system has stabilized, they can all the excesses simply to disappear. We still have to work to balance these stresses. The recovery process, but major challenges still lie ahead. “(Bloomberg News)
Second, when such incidents occur, there is likely to significant collateral damage from the unregulated insurance policies (credit default swaps), which the bonds to be underwritten. These CDS derivatives are not sold in a public exchange, so that nobody knows who keep them, in what amount or that the community has enough capital reserves to pay off claims. We would expect a repeat of AIG over and over again (though smaller) until the system is either regulated or CDS, is prohibited. The bottom line is that the current financial architecture is not designed to work, but it is designed for a handful of speculators rich. These speculators own Congress, the White House and the financial media, which is why there is no significant change in regulations is not.
Dubai is not Argentina. There will be a resolution and contractors will be paid, although it is not “fully.” There will lose. Big losses. But no contamination.
News of Dubai’s pay “standstill” roiled global markets, where investor confidence was already thin. The dollar and yen strengthened and U.S. Treasurys surged. The “flight to safety” is making it twice as hard for the Fed to reflate asset prices. Dubai-like credit events make investors jittery and they pull in their horns. Which stretches from the collapse and deeper the recession.
As the crisis drags Dubai, the dollar will get stronger and the bleeding drahandel will crash. This means that the maxed-out banks (many of which are invested in high-risk positions) will get clobbered again. This is the nightmare scenario.
The Fed has wrapped her arms around the financial system and provided an unlimited guarantee on trillions of dollars of dodgy collateral. But it may not be enough.
“Suzzane recently came to know that someone else is manufacturing guys hired to dub it his tribe and that without her knowledge. It’s going red and she eventually stops the show,” chirps the little voëltjie.
There were also other factors that killed actress bothered, “she said to her place to share with other firangi junior artists, but refused and actress who was not completely satisfied up,” said the source.
“Things were not working out and even her hubby was red with the way that Suzzane Receipt of treatment for the production house. He had some people yelled, but there was no change so what actress finally decided to go to the show, “said the source.
So is it said that its difficult for a stand in this kind of realistically taken. Let’s see what happens next …
“Suzzane recently came to know that the production guys someone hired to dub her voice and that too without her knowledge. It’s going red and she eventually stops the show,” chirps the little voëltjie.There were also other factors that bothered the actress, “She said also to share her place to another firangi junior artists, but the actress refused and was not completely satisfied up,” said the source.
“Things were not working out and even her hubby was red with the way Suzzane is receiving treatment from the production house. He had some people yelled, but there was no change so the actress finally decided to go to the show, “said the source.
So is it said that its difficult to stand in this kind of realistically taken. Let’s see what happens next
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