PostHeaderIcon Dubai money woes augur a new phase in the economic crisis?




As if to remind the world of the fragile economy, Dubai, the Middle East country with an ambitious agenda to grow financially was spooked by its inability to meet debt obligations.

Dubai’s debt at $80 billion (£48 billion) is enough to worry the market in spite of assurances given to investors by several banks. Dubai World, the state-owned corporation asked a halt on its interest payments, a moratorium of 6 months, because it cannot meet its payments. Affected by the recession, the millionaire’s paradise has suffered a slump in real estate after its extravagant spending on fancy skyscrapers.

“Fears of a dangerous new phase in the economic crisis swept around the globe yesterday as traders responded to the shock announcement that a debt-laden Dubai state corporation was unable to meet its interest bill.

Shares plunged, weak currencies were battered and more than £14 billion was wiped from the value of British banks on fears that they would be left nursing new losses
.”---TimesOnline (11/26/09, Hosking, P; Robertson, D.)

The desert kingdom's money problems mirror the economic meltdown still pestering the United States and the rest of the world. Optimistic investors trumpet the tanking of the economy is over, but a double dip recession in 2010 is a real possibility in the interconnected business world.

There is high uncertainty in the market. In spite of instruments available (i.e. Dubai help from the United Arab Emirates,) confidence in the economy is low, leading many to speculate on how many more vulnerable countries will be mired in the crisis. As much as the lesson USA now faces, no country in the planet can rationally buy its way to properity. By borrowing or printing paper money and spending beyond one's capacity people will end up poor in the long haul. (Photo Credit; MailOnline) =0=

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