My comment: Many articles today explain what has happened and how markets, rating agencies, debtors might react. I just post one at the very bottom of my comment (3).
In my opinion, gulf states will not permit Dubai to reach default. In principle, for Dubai and for the world this will look like an accident. However it going to have consequences although people will not realize that those conseqences come from this delay. Somehow what the butterfly does in the theory of chaos (a butterfly flies in Bejing and it produces a storm in New York, or viceversa). For Dubai, for Abu Dhabi and for the gulf it means that current oil price cannot sustain current expenditures. Saudia and others will realise that this world is about cooperation and mutual benefits, in particular if we share same region. They either rise oil price or they cut expenditures. Sovereign funds are not an exception any more. For other sovereign funds across the globe the time when they were considered inmune to crisis is gone. What about the West? Today everybody in the West speaks loud and look proud. Again, this world is about cooperation. This is not the first trouble that this crisis produced. Iceland, Latvia came before. And it is not going to be the biggest problem of this crisis. Higher towers are going to fall. An interesting article I read relates Dubai delay with something that happened in Europe in 1931. "Time to Reread the History of Austria's Creditanstalt in 1931..." In Europe, the Creditanstalt's bankruptcy and what followed was what turned the recession into the European Great Depression... (1) More about this story in wikipedia. (2) What we have to remember is that it attacked Germany in particular, plainly because its debt was higher. It was the weaker economy at that time. The global sentiment today is fear. Fear about Dubai? The gulf? sovereign funds? Not really. Fear on everything. Talking about investments, which risks are calculated and which risks are miscalculated? The answer today is who knows. That fear might turn calm within few days, or it might spread along next months and produce severe consequences on weaker economies. Peace and best wishes. Xi (1) Time to Reread the History of Austria's Creditanstalt in 1931... http://delong.typepad.com/sdj/2009/11/time-to-reread-the-history-of-austrias-creditanstalt-in-1931.html (2) Creditanstalt http://en.wikipedia.org/wiki/Creditanstalt (3) Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar http://www.bloomberg.com/apps/news?pid=20601087&sid=abuSEhKNZBBg&pos=1 -- You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/world-thread?hl=en.
