I’m still watching with keen interest what is going on with the collapse of Dubai’s commercial real estate ventures. Dubai World is not going to be bailed out or their debt backed up by the government of the small nation. $60 billion in liabilities will not be paid back and this is going to cause quite a few problems for the UK banks. The Bank of Scotland may be on the hook for billions of dollars but things are murky yet.
An intervention by the central bank of the United Arab Emirates has helped markets recover, but I don’t see how a liquidity infusion will help a solvency problem in the long term. It may not even help in the short term other than to temporarily reassure the stock markets. Whatever the case, this may be another canary in the coal mine. I fully expect bank failures to come out of this.
No comments:
Post a Comment