Those of you think that this news is a $60 billion check and not a big deal are not thinking this through.
If you have followed Dubai over the years, the only true comparison to what is happening in Dubai is Miami. Now this may be hard to believe, but the Dubai bubble is going to be actually far worse than Miami.
Investors were convinced that millions in oil money would have to be invested somewhere. The plans were audacious - the second tallest building in the world, a man made complex in the ocean visible via satellite and numerous skyscrapers, stars being paid huge contracts to be a part of the story.
What was missing? Demand. The story that unfolded in Miami, Las Vegas, Arizona and Florida will unfold in Dubai.
Why? Fundamentally, when massive overbuilding and speculation occurs, as it has in Dubai, the mania is difficult to identify to the participants. It is only now starting to sink in with the unfortunate real estate speculators that Dubai is a massive bubble.
Expect to see this news lead to a wave of investors walking away from contracts, speculators walking away from projects and follow on impacts.
Ok, I am going to do a little victory lap here.....
ReplyDeleteBlack Swans do not drift in, they are delivered by a cruise missile in the middle of the night, holidays, or on the weekend.
http://oahutrading.blogspot.com/2009/11/chart-of-charts-112109-slam-down.html
http://oahutrading.blogspot.com/2009/08/mania-chronicles-and-dubai.html
http://oahutrading.blogspot.com/2009/11/blow-off-top.html
http://oahutrading.blogspot.com/2009/11/30-year-gap-study-and-some-political.html
As America tryptophans out and wakes up weary tomorrow, with half a trading day to "panic out with", this could be very interesting. Looks like nearly "perfect timing" by our financial overlords. Lots of Turkeys (aka Lemmings) getting cooked today.