Dubai Debt Crisis: a Case to Review Recovery?

In Economics, Financials on November 28, 2009 at 15:20

On Wednesday the 25th, Dubai World, a government-owned company that manages and supervises government’s investment portfolios, announced a six-month deferral on $59 billion of its total $80 billion debt. The announcement came just before a long vacation for the markets and immediately triggered a sellout in equity markets across the world.

The view is, now, rather blurred in terms of the sustainability of recovery. Gordon Brown and Nicolas Sarkozy poured oil on troubled waters reassuring the global economy was strong enough to absorb a shock of such a magnitude. What is more, international banking institutions are unlikely to be hit by, given their weak exposure to Dubai debt.

Abu Dhabi has already assisted indirectly through the UAE Central Bank and two private Abu Dhabi banks, with $15 billion and is expected to pledge more funds.

Although this is the biggest debt crisis since Argentina in 2001, its effects will seemingly be contained within regional grounds. The Dubai crisis per se is not capable on jeopardising global recovery. The nature of the problem however, raises concerns about the future of other highly indebted nations such as Ireland. A series of debt crises would be a derailing factor to recovery.

by the Self-Seeker

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  1. true… you know what they say…Outwork, outthink, outscheme and outmanuever.

  2. how beautiful, and creative this mind must be.

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