Initial reaction …. meltdown probably averted. (BC)
Dubai gambles with its financial reputation – By Jim Krane – … The ambitious sheikh wants Dubai to become the financial centre for a quarter of the globe, the under-served and fast-growing markets between Singapore and Frankfurt. Wednesday’s announcement makes that goal less likely, damaging Dubai’s reputation among the investors and financiers it has worked so assiduously to court. “Naturally they are not amused,” says Eckart Woertz, chief economist at the Dubai-based Gulf Research Centre. “It will be a case of once bitten, twice shy should Dubai try to tap international markets again.” … – FT.com
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Emirate has a lot of explaining to do – By Roula Khalaf – … It came in a short statement about the restructuring of Dubai World, one of the emirate’s biggest and best-known companies, with the big news buried near the end. But the decision to ask bondholders of the company and its most troubled subsidiary, Nakheel, to extend maturities from December to May 2010 was a bombshell. And the Middle East’s most glamorous and creative emirate will pay the price of its decision for a long time to come … – FT.com
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Black Swans – By Ray – The term “Black Swan” is used far too often in today’s discussions about the financial markets and it pertains to unforeseen events that cause havoc on the economy or the markets themselves. … In today’s discussion the news coming out of Dubai is being hailed as another Black Swan event as they are talking about delaying payment on some of their debt on December 14th. The events in Dubai is the furthest thing from a black swan event as we have all known about this problem for the better part of 6 months or more. … – AnnuityIQ Blog
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The Problems in Dubai – Bob Eisenbeis – Will the spillover effects require action in the U.S. by the Federal Reserve? The answer is, not likely. … Short-term, there is a movement away from the Middle East , but that is not likely to carry with it negative spillovers to Asian markets whose fundamentals haven’t changed. … Longer-term, US fundamentals haven’t changed, and the dollar is likely to continue to drift downward relative to other currencies. Asian economies haven’t changed either. … – Cumberland Advisors