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Old 11-27-2009, 03:47 PM   #1
Northern Boy
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Default Stocks tumble on fears about Dubai debt fallout

Markets Plunge


TIM PARADIS, AP Business Writer – 25 mins ago
NEW YORK – Stocks tumbled Friday as fear swept world markets that financial trouble in the Middle Eastern city-state of Dubai will upend a global economic recovery.
Major stock indexes fell about 2 percent from 13-month highs, including the Dow Jones industrial average, which at times slid more than 200 points in a shortened trading day.
Trading volume had been expected to be light after the Thanksgiving holiday. Light volume can trigger big swings in markets. Stock markets close three hours early, at 1 p.m. EST. Bond markets close at 2 p.m.
Investors' broad retreat from riskier assets pushed Treasury prices up sharply. The dollar gained against most other major currencies as investors sought safety following steep drops in overseas markets. Commodities prices tumbled.
Investors are worried that a default by a government investment company in Dubai over $60 billion in debt payments could have a ripple effect in world financial markets. The fear is that losses in the small emirate, which has drawn wealthy tourists from around the globe in the past decade with its Las Vegas-in-the-Middle East appeal, could imperil a nascent economic rebound.
Worries about bad debt are fresh in investors' minds after the collapse of the U.S. brokerage Lehman Brothers in September last year pushed the world overnight deeper into recession as banks halted lending on fears of a domino effect of bad loans.
"I think this is a sign of things to come," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York. "Commercial real estate continues to go lower. People are going to continue to default on debt payments."
Investors are being forced to ask whether the troubles in Dubai will usher in a new period of financial instability and put in danger an eight-month rally in the stock market. However, the ability of world markets to digest the troubles in Dubai without widespread panic could also boost investor confidence in the recovery in the financial markets in the past year.
The latest trouble on Wall Street come as the U.S. kicks off the unofficial start to the holiday shopping season. Investors will be tracking news from retailers for insights into how much consumers will spend in the coming month. Consumer spending is the biggest driver of the U.S. economy.
In the first hour of trading, the Dow Jones industrial average fell 174.35, or 1.7 percent, to $10,290.05. The broader Standard & Poor's 500 index fell 22.58, or 2 percent, to 1,088.05, and the Nasdaq composite index fell 41.77, or 1.9 percent, to $2,134.28.
Energy, materials and financial stocks posted some of the biggest losses as commodities fell and investors worried about bank balance sheets.
Investors rushed into the safety of U.S. government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.23 percent from 3.28 percent late Wednesday. The yield on the three-month T-bill, which is considered one of the safest investments, rose to 0.04 percent from 0.03 percent.
The ICE Futures U.S. dollar index, which measures the greenback against a basket of foreign currencies, jumped 0.8 percent. The yen rose to a 14-year high against the dollar.
Commodities, which are priced in dollars, fell as the dollar gained. The move reflected an unwinding of trades that relied on a weak dollar to finance purchases of higher-yielding assets. Spooked traders reversing the so-called "carry trade" were demanding safe-haven assets.
Investors have been pushing into riskier assets for months as they seek higher returns. U.S. interest rates are at record lows, making riskier investments like stocks an enticing alternative to the paltry earnings of safer investments like government debt.
Crude oil fell $3.23 to $74.73 on the New York Mercantile Exchange. Gold fell.
European markets, which fell more than 3 percent Thursday, turned higher after an early slide Friday. In afternoon trading, Britain's FTSE 100 rose 0.2 percent, Germany's DAX index rose 0.3 percent and France's CAC-40 advanced 0.5 percent.
In Asia, Japan's Nikkei stock average slid 3.2 percent. Hong Kong's Hang Seng index tumbled 4.8 percent. South Korea's benchmark dropped 4.7 percent.
The worries about Dubai erupted amid a period of relative calm in U.S. markets. The Chicago Board Options Exchange's Volatility Index, known as the market's fear index, jumped more than 4 percent to 24.83. On Wednesday it fell to its lowest level since August 2008. That signaled investors hadn't been worried about big swings in the market.
The historical average of the VIX, as it's known, is 18 to 20. It jumped to a record 89.5 in October last year around the height of the financial crisis.
The latest test of the market comes as major stock indicators had been up by more than 6 percent this month after stalling last month on worries about the economy. The S&P 500 index is up 64.2 percent from a 12-year low in March.
Trading volume in November has been light as many professional investors have pulled back from markets in hopes of locking in the big gains for 2009.
Rovelli said investors have been too quick to assume that the financial markets are on the mend.
"We're way ahead of ourselves in this market. We're in the eye of the storm now and we've been in it since March," he said. "Now we're in the back end of the storm."
Falling stocks outpaced those that rose 15-to-1 on the New York Stock Exchange, where volume came to 162 million shares compared with 91.8 million shares traded at the same point Wednesday.
The Russell 2000 index of smaller companies fell 13.22, or 2.2 percent, to 578.97.

http://news.yahoo.com/s/ap/20091127/...us_wall_street
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Old 11-27-2009, 04:12 PM   #2
Dantheman62
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Default Re: Stocks tumble on fears about Dubai debt fallout

I saw the fall of Dubai coming a year ago. It was overbuilt and using almost no solar power for long term electric use. It's like Las Vegas, a city built in the desert with no solar power and very little water to be self sustaining. Both places are mistakes and should've never been built, IMO

Dubai had the right idea by building something for the future after their oil reserves run out, but it was done too quick and with not enough thought about long term sustainability. I think Dubai and Las Vegas should be bulldozed!!
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Old 11-27-2009, 05:27 PM   #3
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Default Re: Stocks tumble on fears about Dubai debt fallout

Dam I just bought a £10 million apartment over there
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Old 11-27-2009, 05:28 PM   #4
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Default Re: Stocks tumble on fears about Dubai debt fallout

Quote:
Originally Posted by Swanny View Post
Dam I just bought a £10 million apartment over there
ok, swanny, my advice: sell it for half the price and live happily ever after
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Old 11-27-2009, 06:16 PM   #5
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

Quote:
Originally Posted by Dantheman62 View Post
I saw the fall of Dubai coming a year ago. It was overbuilt and using almost no solar power for long term electric use. It's like Las Vegas, a city built in the desert with no solar power and very little water to be self sustaining. Both places are mistakes and should've never been built, IMO

Dubai had the right idea by building something for the future after their oil reserves run out, but it was done too quick and with not enough thought about long term sustainability. I think Dubai and Las Vegas should be bulldozed!!
Blessings Dantheman62,

I posted this as a reply to piers2210 back in March of 2009, Failure to save East Europe will lead to worldwide meltdown: http://projectavalon.net/forum/showt...t=11324&page=2 POST #40

I guess the bail outs aren't working anymore.

PaL


Quote:
Piers,

Apparently Dubai was already bankrupt last year along with Emirates Airline and Abu Dhabi bailed both out.

Dubai is Bankrupt & Emirates face disintegration!

February 1, 2009

Max Keiser talks with Stacy Herbert about the bailout of Dubai real estate and Emirates Airline disintegration

Video (1:28): http://www.youtube.com/watch?v=M4ij5...eature=related


Dubai crash is real ; stock exchange down 75%

February 24, 2009

'GLOBAL PONZI SCHEME'

Max Keiser talks with Stacy Herbert about the Dubai crash and bankruptcy recorded on February 8th 2009

Video (10:01): http://www.youtube.com/watch?v=zxfWF...eature=related

Last edited by peaceandlove; 11-30-2009 at 12:18 AM.
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Old 11-28-2009, 05:24 PM   #6
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

Dubai Deja Vu?

Dubai looks to oil-rich neighbor for possible aid

By BRIAN MURPHY, Associated Press Writer – 2 hrs 44 mins ago

DUBAI, United Arab Emirates – As world markets absorbed the shock of Dubai's debt crisis, the ruler of the once-booming city-state left town for an important meeting in a desert palace. His hosts: the leaders of neighboring Abu Dhabi whose balance sheets are flush with oil revenue.

It's not known what promises were made inside the halls in Al Ain during the parade of visitors for an important Islamic feast day on Friday. But their new relationship is clear. Abu Dhabi has the cash and cache to be Dubai's white knight — in a Gulf version of a too-big-to-fail bailout or to help calm markets with promises to intervene if Dubai's fiscal mess deepens.

The direction Abu Dhabi takes will likely set the tone for the coming week as analysts try to sort out what banks and institutions have the most at stake in the money crunch — which has suddenly shifted Dubai's image from a desert dream factory of indoor ski slopes and a "seven-star" hotel to a reckless spender sideswiped by the recession and unable to pay its bills.

Just this month, Dubai's ruler, Sheik Mohammed bin Rashid Al-Maktoum, assured international investors that all was well with Dubai's finances and told media critics to "shut up."

Continues: http://news.yahoo.com/s/ap/20091128/...dubai_meltdown
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Old 11-28-2009, 05:32 PM   #7
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Default Re: Stocks tumble on fears about Dubai debt fallout

Mini-Meltdown Over Turkey Day

Thursday, November 26. 2009
Posted by Karl Denninger

Now wasn't that exciting?

First, this:

CHART AVAILABLE at: http://market-ticker.denninger.net/a...urkey-Day.html

Oops.

What set this off? Not sure, but there are lots of rumors, including a potential default in Dubai: Japan’s Nikkei Slumps Most in 8 Months on Dubai Concern, Dollar http://www.bloomberg.com/apps/news?p...d=a662Rxgq6qo4

Sucks when you can't pay your bills, especially when the entire premise of your "development" was to build huge extravagant resorts in 120 degree heat, believing that because you are in an oil-rich area the money will keep flowing and prices will keep going up.

Heh, except for the oil part, that sounds like subprime lending!

Japan is rather unhappy about The Yen:
Japanese Finance Minister Hirohisa Fujii said today he will contact U.S. and European authorities about currencies if necessary. He watches currencies “intently” and “constantly,” he said.
But you see, TurboTimmy and Bendover Bernanke are for a "strong dollar" - which, as they define it, would mean a dollar at about 20. This of course would spike the Yen beyond all reason.

We are now well into the clown-car brigade. China and Japan both rely on a weak currency to export things. But consumption would favor a strong currency (imports become cheaper, which are then cheaper to consume.) But since not everyone is a consumption-based economy, we have a problem - as much string as one will give, someone else will take.

This sort of instability is of course what has led people to pontificate on the imminent collapse of the dollar.

Uh, looks kinda like a currency dislocation to me over here.... what a nice night to spring it on people - when the market is closed, the /ES (S&P futures) are down 25 handles, the Nasdaq down 46 and the Russell down 20 - 3.5%.

I have warned for a bit now that I didn't like the pattern over in Japan - that the Nikkei had turned downward, and in fact technically it looked just plain BAD.

One hopes that everyone has been playing carefully. There is of course no way to know what we will get tomorrow; Europe has to go through their cycle first, although as I write this Japan is down another 1.8%, trading at 9213. (Note that it wasn't long ago that the Nikkei was up where the Dow is!)

Should this reflect into the Dow, well.... how would you like 1400 points straight down for Christmas?

Volatility appears to be back with a vengeance - the usual result when people get complacent and all pile onto the same side of the trade.

SOURCE: http://market-ticker.denninger.net/a...urkey-Day.html
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Old 11-28-2009, 06:01 PM   #8
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Default Re: Stocks tumble on fears about Dubai debt fallout

Dubai to this...

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Old 11-29-2009, 12:06 AM   #9
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

Benjamin Fulford speaks about Dubai at the beginning of his interview with Rense last night.

This same video series is posted at the Benjamin Fulford's Blog thread if you've already been there.

Benjamin Fulford on Rense - November 27 2009 Part 1

Ben returns once again, with a positive outlook on the situation in Dubai, the world economy, the release of free energy and more.

VIDEO Part 1 (10:45):
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Old 11-29-2009, 11:45 PM   #10
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

A couple articles posted by Mike at http://feveriam.blogspot.com

THURSDAY, 26 NOVEMBER 2009

Dubai World seeks debt standstill

Quote:
When I read this last night I figured there would be a reaction. Stage 2 begins.

Dubai World, the government-owned conglomerate, is asking creditors for a six-month "standstill" on its debt repayments and has appointed Deloitte to restructure the business. The request underlines the parlous financial position of Dubai in the wake of a building boom that has turned into a deep property slough, leaving the skyline dotted with the skeletons of half-built towers. One broker in the credit insurance market described it as the "biggest sovereign-related credit event since the start of the crisis".

Dubai World seeks debt standstill | Business | guardian.co.uk
http://www.guardian.co.uk/business/2...ebt-standstill

Okan Akin, credit strategist at RBS in London, warned that it had potential to cause widespread damage. "Lots of local banks will probably have exposure so it may create problems in the banking sector." Dubai World is also thought to be the biggest issuer of Islamic bonds.

And then I spotted this article:

Bundesbank fears relapse as German banks face €90bn fresh losses - Telegraph http://www.telegraph.co.uk/finance/f...sh-losses.html

"The Bundesbank has told German banks to take advantage of renewed confidence while they can to prepare for likely losses of €90bn (£81bn) over the next year, warning that the delayed shock waves of the economic crisis still pose a major threat to global recovery and bank finance."

I wonder how much exposure there is in German banks?

Peace and Love
POSTED BY MIKE
SOURCE: http://feveriam.blogspot.com/2009/11...tandstill.html




UAE central bank vows to honour Dubai's debts

• Liquidity scheme aims to calm overseas institutions
• Abu Dhabi rulers say they will help rescue neighbour

Nick Mathiason
guardian.co.uk,
Sunday 29 November 2009

The United Arab Emirates' central bank moved last night to calm world markets by offering to stand behind huge debts owed to foreign banks by Dubai World, the Dubai government's stricken holding company.

CONTINUES: http://www.guardian.co.uk/business/2...global-economy



Dubai Babylon: The glitz, the glamour – and now the gloom

The Gulf state's dash for intense economic growth at breakneck speed was a project that was bound to fail. Karen Attwood and Mark Leftly report on an extraordinary tale of success leading to excess

Sunday, 29 November 2009

Dubai, the Arabian city state that tried to turn itself into Manhattan-on-the-Gulf inside a decade, looks this weekend as if it may end up more like an expensive imitation of Sodom and Gomorrah. No brimstone, no vengeful God, but still an awful lot of wreckage after an orgy of hedonistic excess.

This, until last week, was the world capital of greed, a Legoland of lolly, where flashy malls, artificial islands, and preposterous skyscrapers were run up in no time; where monied chancers booked into £4,000-a-night hotel rooms; and where celebrities who didn't know better were lured into a place that was even gaudier than their own homes. People said it was all built on sand, but, after the businesses at the core of the Dubai empire revealed a black hole of $80bn, we now know it was actually built on debt, semi-slave labour and the glossiest puffery that borrowed money can buy.

CONTINUES: http://www.independent.co.uk/news/wo...m-1830672.html
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Old 11-30-2009, 12:13 AM   #11
piers2210
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Default Re: Stocks tumble on fears about Dubai debt fallout

Gents, the Dubai debts are a mere "blip" on the world stage.

At $60billion they are so small that they are only a small percentage of the bail out the UK Govt made to one bank alone in 2008 (Northern Rock) and only a small percentage of the debt is actually due now. It may affect a few banks' short term liquidity, like RBS who have significant lendings to fund Dubai's expansion, but Dubai isn't about to fail.

The UAE as a whole is far more stable than the USA (as an example), buy your apartment there now!! And Dubai is a great temperature now for a vacation!!
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Old 11-30-2009, 12:17 AM   #12
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

You're back! Hi Piers!
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Old 11-30-2009, 12:37 AM   #13
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Default Re: Stocks tumble on fears about Dubai debt fallout

I'm no finance or math whizz so do not know how this news about dubai will
effect the world market. But hope to keep up to date as poss, so many thanks
Bou x
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Old 11-30-2009, 03:44 PM   #14
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Default Re: Stocks tumble on fears about Dubai debt fallout

Quote:
Originally Posted by peaceandlove View Post
You're back! Hi Piers!
Hi there PaL! Just visiting really...i do occasionally look in, but often don't bother to sign in, this forum is monitored for sure.

P.
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Old 11-30-2009, 04:04 PM   #15
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Default Re: Stocks tumble on fears about Dubai debt fallout

Quote:
Originally Posted by piers2210 View Post
Hi there PaL! Just visiting really...i do occasionally look in, but often don't bother to sign in, this forum is monitored for sure.

P.
Hi Piers! Monitored? Who us? ...hahaha
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Old 11-30-2009, 11:12 PM   #16
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

My God, There Is A Wise Govermment

Monday, November 30. 2009
Posted by Karl Denninger

It just happens to be in the Middle East: Dubai World’s Debt Not Guaranteed by Government http://bloomberg.com/apps/news?pid=2...dvgvqhps&pos=1
Nov. 30 (Bloomberg) -- Dubai’s government said it hasn’t guaranteed the debt of Dubai World, the state-controlled holding company struggling with $59 billion in liabilities, and that creditors must help it restructure.

“The company received financing based on its project schedule, not a government guarantee,” Abdulrahman Al Saleh, director general of the emirate’s Department of Finance, said in an interview with Dubai TV, when asked whether the government was backing the debt. “Lenders should bear part of the responsibility.”
Ding ding ding ding ding ding.

You make a bad loan predicated on a bunch of pump-monkey nonsense instead of sound underwriting, and it goes bad, you are going to take a big fat loss!

How come we can't get this right? Why is it that we protect creditors while slamming debtors? Are you going to tell me that the only place there is a "free market" left in lending is in the freaking middle east?!
“The times of implicit support are clearly over,” said Philipp Lotter, vice-president of Moody’s Investors Service in Dubai. “In the past entities such as Dubai World certainly represented themselves as quasi-government entities, whereas there was no legal obligation on behalf of the government to support, and that has certainly shifted with last week’s announcement.”
Where have we heard that before? Oh yeah...

CONTINUES: http://market-ticker.denninger.net/a...overmment.html
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Old 12-04-2009, 11:53 PM   #17
peaceandlove
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Default Re: Stocks tumble on fears about Dubai debt fallout

Friday, December 4. 2009
Posted by Karl Denninger

Heh, I Thought Dubai Was a Non-Event?

Then what's this that the market is totally ignoring today? Creditors to refuse Dubai World deal http://www.guardian.co.uk/business/2...bai-world-deal
Creditors of Dubai World http://www.guardian.co.uk/business/dubai-world are expected to reject a standstill agreement proposed by the company, threatening to drag out negotiations over $26bn (£15bn) worth of the conglomerate's debt.

Advisers involved in the talks tonight said that the process could take months as more than 100 accountants, lawyers, bankers and other professionals descended on Dubai from London. "There won't be a standstill agreement," one said.
Eh, that could get fun. Refusal to stand-still means there's an immediate default, which means the CDS go boom.

Me thinks the weekend could be verrrry interesting, especially given the "hype and hope" trading we've got in the US markets today on the employment situation report.

Question for the Peanut Gallery: Who holds the risk on those CDS, and how much?

SOURCE: http://market-ticker.denninger.net/a...Non-Event.html
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