Dubai in deep water as ripples from debt crisis spread

[FarCenter]

Patrick Hosking and David Robertson

Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.

Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses.

Nervous traders transferred the focus of their anxieties from the risk of companies failing to the risk of nation states defaulting. Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket.

Although the scale of Dubai’s debts is comparatively modest at $80 billion (£48 billion), the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small.

The FTSE 100 plunged by 171 points to 5,194 — its biggest one-day fall in eight months in one of the most jittery days in the financial markets since the depths of the banking crisis.

The Treasury, the Bank of England and the Financial Services Authority were monitoring events closely and are demanding figures from UK banks on their loan exposures to Dubai.

According to a senior government official, Dubai’s crisis is regarded as modest and manageable for Britain, but there were growing fears that Abu Dhabi, the oil-rich neighbouring emirate that has in the past given rescue loans, would leave Dubai to its fate.

<SNIP>http://business.timesonline.co.uk/tol/business/markets/the_gulf/article6934261.ece

[Skink]

1. Bin Laden emerges from his cave.

[Subdivisions]

2. DOW futures down -250...

http://www.bloomberg.com/?b=0

Nov. 27 (Bloomberg) -- Stocks dropped around the world, Treasuries jumped and credit default swaps climbed after Dubai’s attempt to reschedule its debt rattled investors. The dollar briefly fell below 85 yen, a 14-year low, before erasing its losses on speculation Japan will intervene.

...snip...

http://www.bloomberg.com/apps/news?pid=20601087&sid=az5tuIpE96f8&pos=1

[rwheeler31]

4. Stupid buriness.

[dkf]

9. Down 283 now.

Yikes.

[dixiegrrrrl]

3. And they encouraged business to settle there, tax free.

Wonder how Halliburton likes Dubai now.

[madrchsod]

5. hell everyone knew this was going to happen several months ago...

they just ran out of time and the money men are taking the hit for being stupid

[tuckessee]

6. Pardon my Schadenfreude.....

.....but I'm lovin' it.:evilgrin:

[obliviously]

7. We ought to see if we can get 100

people to start this same thread tonight. Come on guys we can do it! We comment on a subject when we can all start our own individual thread about it.

[notadmblnd]

8. I guess all that slave labor can go home now?

I imagine that will be sans the paycheck.

[anonymous171]

10. I hope that entire fucking city burns to the ground. Or is smited from the face of the earth

Sodom and Gomorrah-style. :evilgrin:

[BeatleBoot]

11. What a poorly written article

"Investors owed money by Mexico, Russia and Greece saw the price of insuring themselves against default rocket."

I spent the last 5 minutes trying to figure out the meaning of a "default rocket".

And what is up with ending a sentence with "are".


Sorry to be the grammar police, but I would expect more from the media.