Gosh, it was just a few days ago that financial talking heads said this Dubai thing was just a bothersome speed bump, and if need be, Abu Dhabi would backstop the loans. But they didn’t and the news from Dubai just gets worse.
There are more upside down loans, their stock market is plunging, and they announced they’ll start selling assets off. Only the junky stuff though, not the gems. Good luck with that. Things are made much worse by their impenetrable and secretive financial system that seems indistinguishable from the government. Outsiders have claimed it’s impossible to know what the real financial situation is. Sheesh, just who do they think they are, trying to imitate Wall Street bankers and the US government like that?
Dubai wanted to be an international finance hub. If they had cratering loans it seems obvious that others there would do everything they could quietly to bolster things and prevent defaults. But they didn’t (or maybe tried and couldn’t) This certainly indicates they don’t have the money to cover the loans.
Greece is much worse off than Dubai. Fitch downgraded their debt and Greece probably won’t be able to make payments. Countries like Mexico, Ireland, Spain, South Korea are already feeling the effects of an international financial system getting noticeably wobbly again.
But don’t get smug about how all that is happening someplace else
The first shot across the bow at Aaa-Rated US And UK
Moody’s sort of says US and UK bonds maybe shouldn’t be Aaa but doesn’t actually downgrade them because y’know, that would require a spine and could hurt profit margins. So instead they quietly squeak something could be amiss. I’m sure glad we have transparency, openness, and honesty in our financial system, unlike those scalawags in Dubai.