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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Little Joe who wrote (104939)11/27/2009 2:19:49 AM
From: mishedlo4 Recommendations  Read Replies (1) of 116555
 
Dubai commentary - Buy the dip - Zerohedge

zerohedge.com

So will Dubai's debt problems plunge global markets to new lows? I strongly doubt it. Jan Randolph, head of the sovereign risk group at IHS Global Insight, talked with Bloomberg's Mark Barton about Dubai's proposal to delay debt payments and the role neighboring emirate Abu Dhabi may play in easing the crisis.

Mr. Randolph thinks Dubai's sovereign risk is overblown and I agree. He says this is essentially a liquidity problem and the debt represents 20% of GDP. He mentioned that Abu Dhabi which is the real cash cow, can easily bail out Dubai. Abu Dhabi's sovereign wealth fund is the world's largest, with over $600 billion in assets. It can easily support Dubai's debt problems.

What does all this mean for global investors in the next few days? Nothing much except that you'll have another opportunity to buy a dip, which is what you'll do if you're intelligent (that's what Goldman and JP Morgan will be doing). Nothing has fundamentally changed. The Fed is staying on the sidelines for the foreseeable future and they'll let this bubble blow. The global liquidity rally has legs to run, so don't get too flustered by Dubai's debt woes.
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