Financial Communique » Dubai Affair

PIMCO: Governments should be careful about cases like Dubai

Viliyana Filipova — Tue, 01 Dec 2009 01:05:09 +0000

The Dubai’s credit problems are “trailing effect” from the global credit crisis shows that governments should be more active actions to prevent such a new crisis. Such is the opinion of Mohammed El-Erian, chief executive of one of the most influential investment funds in the world – PIMCO. El-Erian points out that the center of the policy of the United States and other countries should stand in job creation and change of fiscal policy. Only thus could the world to return to growth. “The global economy should achieve higher growth, higher employment,” said El-Erian to CNBC. “If she does so, then we will have to undergo serious balanced economy, multi-redistribution,” said the specialist. According to El-Erian irresponsible fiscal policy, which is used in high leverage and low collateral attacks are caused by economies such as Dubai.
This happened exactly at a time when it comes time for payment of debts, and meanwhile the country needs economic plan to stimulate business.

USA exchanges dropped after Dubai Affair

Viliyana Filipova — Mon, 30 Nov 2009 01:55:20 +0000

The main stock indexes in the United States did not make an exception and also went to negative territory in early session today after holiday similar to those in Asia and Europe. Among losers ran those companies from the financial, energy and extractive industries. Reason for this were concerns about the inability of the state’s largest investment holding company of Dubai to pay its obligations. The way in which world financial markets reacted to news about the financial difficulties of the emirate of Dubai, showed how market participants remain sensitive to any bad news from the financial sector. Today’s trading will be shortened by half and therefore the liquidity is expected to remain low until the end of the trading session, which will end at 20:00 pm local time. The index of the 30 most liquid companies large and Dow Jones IA decreases by 1.2% to 10 341.6 points an hour and a half after the beginning of the session. On Wednesday, the stock measure reached its highest peak in the last 13 months of good data on the housing market and the labor market. A broader index S & P 500 also lost 1.2 percent to 1 097.3 points, after the very beginning of the session are reduced by 2.5%. The index, which combines all companies in exchange Nasdaq – Nasdaq Composite, retreated 1% to 2 153.5 points.
Dubai alarming news about the reduced tendency of market participants to invest in risky assets have increased the price of the dollar. As a result, gold and other precious metals fell as the price of gold recorded its strongest decline since the beginning of January. Crude oil got cheaper by 1.2 percent to 75.23 dollars per barrel. Today it became clear that many of the chain retailer in the United States will benefit from the opportunities of social networks to attract more customers during the weekend of Thanksgiving.

Eastern Europe may come out clean from the Dubai Affair

Viliyana Filipova — Fri, 27 Nov 2009 12:56:16 +0000

Expanding markets in Central and Eastern Europe will suffer relatively good shocks, created after the credit crunch in Dubai, says an analysis of the Italian UniCredit. The reason for this is that banks in the region are not directly affected, as in Western Europe. Another analysis of Credit Suisse predicts that financial institutions in Western Europe stand to lose nearly 13 billion dollars in the bankruptcy of the Dubai government investment fund Dubai World. According to UniCredit Central and Eastern Europe for short will be negatively affected by debt problems of Dubai as there is an increase in so-called Risk Aversion or willingness to invest in less risky assets. The bank argued that the presence of the IMF in some countries in the region has some stability. In conclusion the bank determines that Eastern Europe will be affected, but only in the short term, not long, and is not expected to have a serious debt problem in the region. Regarded as one of the most brilliant financial centers in the world until a year ago, Dubai is now among the most uncreditworthy countries on the planet. Again according to Credit Suisse analysis of the emirate to the obligations of European banks are more than 13 billion euros. Spark of hope given the solidarity shown by Abu Dhabi. Two banks of the emirate already unlocked $ 5 billion needed for the most urgent needs of Dubai, cited by BNR correspondent in Beirut.
Dubai is one of the few countries in the Persian Gulf, which has no oil resources. 90-year bet emirate of construction, tourism and luxury. By autumn 2008 it seems he was wearing a success, and incoming capital multiplying skyscrapers. With Financial Crisis, however, investors withdrew and construction companies, seized by giant-mania are unable to bring their projects to the end.