by the Left Coast Rebel

The financial marktes were weak today, uncommonly so for a light trading session near a holiday. I switched Bloomberg on earlier and just saw a blip of the downside for the day on the ticker, however I didn’t know the actual explanation for that which had traders spooked.

Via Memeorandum, it’s Dubai. It’s all about Dubai. The small, most populace of the seven emirate states is emblematic to me of the worldwide bubble in both real estate and commodities, notably oil. A friend of mine has visited the Dubai in the past and was dazzled by it’s wealth and prominence; something that has shot up from the desert of the Arabian Peninsula faster than anyone could imagine. I’ve always been fascinated by regions of the world like Dubai and Hong Kong, however, I could sniff out a bubble, of oil……..

Now it seems that the the region is awash in the debt and default that the house of cards that many economies were built upon, (including the US), has come crashing down. Bloomberg reports today that it is not technically a default, but:

Shares slumped from Shanghai to Brazil and European shares fell the most in seven months yesterday after Dubai World, the government investment company burdened by $59 billion of liabilities, sought to delay repayment on much of its debt. Governments have spent, lent or guaranteed $11.6 trillion and central banks held interest rates near zero percent to end the first global recession since World War II.

The worldwide decline in equities spurred by Dubai’s efforts to reschedule its debt is a sign that government spending alone won’t be enough to protect financial markets……

Something to think about, our economy and that of the world is not out of the woods yet. If you have capital, preserve it. Buy gold on a pullback. And don’t trust our own government and the false hope that Keynsian spending will cure our ills. It simply won’t. We as a nation and market economy need to make the hard decisions that our leaders won’t let. We need to let businesses fail that should. We need to let markets and individuals be set free of restraint, instead of doing the precise opposite. We need to stop spending government dollars that future generations will have to pay for with blood, sweat and tears.

We need to lead the world out of this malaise, starting with us; and a new leadersip….

Pictures of the Arab Emirate State: