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Dubai Debt Panic!
By Mike Conlon | November 27, 2009
Well, not exactly a “Happy” Thanksgiving. As Americans like myself were stuffing our faces with turkey and stuffing yesterday, news broke of possible debt crisis in Dubai that may become a strain on the banking system. Stock and commodity futures have sold off heavily across the board, with investors fleeing to the safety of the US dollar and the Japanese yen.
I’ve written at length about the risk aversion trade and this is a perfect example of it. I wrote as recently as Wednesday that the only way the dollar would strengthen is if therewas a major crisis of confidence in the world economic recovery. This event could be it.
There has been a lot of talk about the possible collapse of the commercial real estate market and this possible default in Dubai could signal the start of that market crumbling. If the dominoes do start to fall, then this could easily take back much of the gains investors have seen in stocks, commodities, and currencies as the world slides back intothe dreaded “double-dip” recession. If this problem can be contained, then I would look to resume US dollar shorts.
Over the last 2 days, there have been major moves in the currency markets which have provided tremendous opportunities to those who were able to catch the. As Gordon Gekko said in the movie, “Wall St.”– “money never sleeps”.
And that is exactly why it is so important to have some exposure to the currency markets.
So if you’ve been reading this blog and have been contemplating getting involved in the forex market, I implore you to start today. It is really easy to get a live account set up, get educated, or get a free, practice account.
Don’t wait another day!
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