It'd be a shame to see the loss of the world's only (allegedly) six-star hotel
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Dubai effect starting to spread
- Thread starter wilburbear
- Start date
It'd be a shame to see the loss of the world's only (allegedly) six-star hotel
Quote from Martinghoul:
Firstly, there's not that much CDS on Nakheel or Dubai out there, as far as I know. Apart from the fact that EM CDS is not that big of a mkt in the first place, the bonds are predominantly held by real-money investors.
Secondly, the idea that countries like Russia, Turkey, Hungary and others should be painted with the same brush is somewhat ridiculous.
Finally, the WSJ article makes a completely incorrect connection between the start of the Dubai troubles and the problems surrounding Greek debt. Aggressive widening in Greece sovereign CDS actually started well before the Dubai news came out.
As usual, take everything journalists say with a healthy pinch of salt.
Exactly.
http://www.dtcc.com/products/derivserv/data_table_i.php?id=table6_current
In the latest week of top 1000 entities, 6B for Govt of Dubai gross, 600m net.
Once again, everyone getting carried away.
Quote from scriabinop23:
Exactly.
http://www.dtcc.com/products/derivserv/data_table_i.php?id=table6_current
In the latest week of top 1000 entities, 6B for Govt of Dubai gross, 600m net.
Once again, everyone getting carried away.
so what you are saying it was badly executed bluff.
Other option is, there is more bad news in the pipeline so keeping people from selling now.
I think second option has higher than random chance.
It's not the $60bil in Dubai debt that has bankers worried. It is the contagion effect. Like a faulty O ring on a rocket that in itself is a minor defect, it can set off a chain of events that can be catastrofic. A general widening of CDS spreads the last time caught the world off guard. AIG, the principal market maker, was essentially bankrupted in a matter of days with a 1 standard deviation move across the board. I don't know if we learned our lesson. We may soon find out. Difficult to see how this pans out in short term. I for one do not see US equity market in big trouble. The media keeps telling us about an unwind of short USD long equities. Historically if we see a sharp rise in the USD with a flight to quality, buyers will be chasing US assets to capture this move. As we saw after the open Friday. That being said, this may only cushion the effects of widening CDS spreads which will be bad if it extends to corporates. Hedging out of corporate spreads widening by shorting equities was a major factor in early '09s lows.
forget about a sharp rise in the usd, look for a sharp rise in gold. as for the contagion effect, the risk of emerging debt is spread out, won't matter unless people were expecting people in malaysia to pay $200 for a dell, which they won't. in other words, emerging debt may be overpriced to begin with. . .how many google's can there be in the world? the answer is one, junk international debt is a bust, period. . . . .
Quote from illiquid:
Do you really think they would let this undo a year's worth of inflating everything relative to our collective debt? Just another excuse to keep the spigot wide open.
don't know what country your looking at, we're deflating at the moment. apologies, you said relative inflating, so relative inflation only matters if we hold the assets we're inflating against, i.e gold and commodities, but our central bank holds neither in meaningful quantities. . .point is, we don't hold much control anymore, i say inflate away, it's our only chance, issue debt at 3% while it's still possible, more likely we're japan, who had a high(along with the rest of the developed world) standard of living, and deflation is the price we pay as jobs are exported. . .ok answer to original question, we are not inflating relative to our debt, we are trying to and it's not working thus far, so i say keep the spigot open ( and i would let obama decide, not congress, cause then we would see real hyperinflation)
Quote from the1:
In case you weren't paying attention to the markets reaction on Friday it went something like this...."Oh Fuc....err...whatever."
The market didn't particularly care and if the market doesn't care then why should we care? Dubai could fall into the Gulf and the world will move along just fine. This is a non event.
American equities made new all-time highs several months after the subprime crash was evident for the entire planet to see.
You may well be entirely correct that this is a non-event, but just because the market doesn't react today or tomorrow, or next month or the month after that, doesn't mean a whole lot.
I think this isn't so much about Dubai itself, but it is reminding everybody that there are several unsolved "Icelands" and "Dubais" out there. E.g. Greece, Cyprus, Latvia, Hungary, Ukraine. If it was just Iceland or Dubai it's one thing. But what if you multiply it by a factor of 10?
Who's on the hook there? What happens to Swedish banks if Latvia blows up? What happens to Austrian banks when Hungary goes belly up?
Who's on the hook there? What happens to Swedish banks if Latvia blows up? What happens to Austrian banks when Hungary goes belly up?
IMHO, the answer is nothing much, 'cause most of these are well known and have been provisioned for... The Riksbank has been doing regular stress tests on Swedish banks and finding nothing to be excited about. The Hungarian story has been overhyped, to begin with, as there's not that much exposure.Quote from makloda:
I think this isn't so much about Dubai itself, but it is reminding everybody that there are several unsolved "Icelands" and "Dubais" out there. E.g. Greece, Cyprus, Latvia, Hungary, Ukraine. If it was just Iceland or Dubai it's one thing. But what if you multiply it by a factor of 10?
Who's on the hook there? What happens to Swedish banks if Latvia blows up? What happens to Austrian banks when Hungary goes belly up?
Greece is a special case, but the recent events are just a speculative attack by a well-known London hedge fund. There will be some tough love from the European Commission and the ECB (Almunia and Trichet have been talking about it already), but the issues will be worked out in the end.
In general, it's wrong to paint all EM economies with the same brush. I am personally fading some of the contagion effects (esp Scandis).