Claus Vistesen

Dubai: The Great Unravelling

Now,

… on the rest of the comments, both to the quality of my degree and the convulution of my writing. Well, what I can say; SA commenters always come in different shape and sizes :)

@ Popey: This is a long standing critique by part of SA readers to my articles. Please note that I AM trying to make it as concise as possible. In the present case, it was written very quickly and contains some quite nasty typos and mis-spellings. Sorry. I have corrected some of the worst in the version on my own site.

On the rest … thanks for the backup from Dancer and User492911, but rest assured that I have been blogging/debating online long enough to disregard such pissing and snark with ease.

@FB5000

”We are supposed to take this stuff seriously?”

My question exactly …

Claus

Dubai: The Great Unravelling

Hi Guys,

Wow, the debate is certainly going here although of course some of the comments are more, uhm, value added than others :).

Anyway, let me respond in general by saying that I am certainly not sure about how to read this situation, but what I am fairly sure about is that it IS worthwhile to look closely since if there is one thing we should have learned by now, it is that things have a tendency to have repercussions beyond their immediate vicinity.

Whether this is the case in Dubai is of course exactly what we are talking about here and I am surely open to opinions from people "closer to the ground” than myself.

So, on this

“Dubai will be just fine. Dubai is the Arab worlds pride and joy.”

Well, I agree on the first part in the sense that Dubai won’t sink into the ground (although we will see how much real value there actually is) but what about the second. Will Dubai really be a source of pride and joy going forward? I am not sure.


On this;

”Greece and Hungary are amoungst those most severely impacted by a reassessment of Sovereign risk, whilst Japan has safe-haven inflows of money boosting it's currency.”

Right, this is exactly the point isn’t. Are we getting a ”reassessment of risk” and what will this mean elsewhere?

On this;

”Way too many young people with newly minted degrees in naysaying economics as if somehow they are privy to the biggest "thing" to happen since that other big thing of all things we refer to from the 1930's”

Granted Jimmy, my perspective may be short, but I am not saying that Dubai is the ”biggest thing”, but rather that it may hold the potential to reverse the rally in risky assets we have observed since March and if this does not do the trick, my guess is that CB’s exit strategies may do it.

On this;

”Undoubtedly banks and others knew very well the risk and problems in Dubai but decided to brush it off and hide it in the back corner with their derivatives. That is partially understandable maybe, since it was assumed Dubai World would always get backing by the government no matter how bad their practices were. This is much like the implicit guarantee issue to Fannie Mae and Freddie Mac.”

Right Moon, this sounds as a very reasonable take. My question to the rest of you then is … how much more of this ”brushing off” is there to be revealed in Dubai and elsewhere since there is a fair argument to suggest that the more sequential rattles we get of this, the higher the volatility will be and the longer we have to wait for the recovery in the real economy. I.e. this all goes on to Bylo’s and Dave’s comments.


Claus

Japan: Recession All but Certain

oops ...

copy/edit; "will not BE punished (...)"

Japan: Recession All but Certain

I sure hope so Kunst ... of course, if my readers are not willing to reciprocate I can only hope that my crime will not punished too severly.

Claus