About Dubai request for extension of payment

AGA7d

A big deal or no big deal?

I think it is not - not long ago, people think Dubai can service its debt. Now it said it needed an extension of one debt payment. So why the panic? With oil at ~$80, the UAEs reek in lots of oil dollar. Sure Dubai may over-extended, but a true default is unlikely - plus, it can ask its brothers like Abu Dubai to help. Worst case, the lenders can ask for a share of the future oil revenue - like the Muni bond holders can always count on future property/sales taxes.

Of course, MM can make it sound like a big deal and try to push it down - and there are good reasons for it. That is, given the low cash level among institutions, cashing out some gain may be a smart choice. But that may be a buying opportunity if we see S&P below 1000 - to 950 level.

The Fed will continue its QE, and the gov will continue its huge deficit - I don't see big problem in the next few months.