Comments on: Dubai’s disabused creditors

By: Ken Houghton

Ken Houghton — Sun, 29 Nov 2009 20:35:57 +0000

The biggest problem with Roubini’s “W” is the assumption of the fourth leg.As Dr. Black noted, if I’m paying an interest rate that assumes a large chance of default, my willingness to default on that loan sooner than other financing should be assumed. (Brad DeLong keeps trying to argue against this; it’s roughly equivalent to Eugene Fama arguing that his EMH is not to blame for all of the structures that have been built on it [see P. Triana in the FT.)

By: daniel

daniel — Sun, 29 Nov 2009 18:39:08 +0000

remember the days you say Ecuador idiot default hahahha

By: John McLeod

John McLeod — Fri, 27 Nov 2009 23:45:59 +0000

So we’ve got an LSE biggie telling us that “Property companies don’t fall into the systemically important category.”Sorry, but I’m getting flashbacks to March ’07 when Susan Bies was running around describing the subprime market as a splinter off a sliver of a generally sound RE world. Looks like Nouriel’s gonna get that 3rd stroke of his “W” for Xmas.

By: tas

tas — Fri, 27 Nov 2009 22:10:05 +0000

Isn’t this the company the Bush Adm. wanted to let take over a number of ports here in the U.S.?

By: Guambat

Guambat — Fri, 27 Nov 2009 17:47:39 +0000

“But they felt sure the emirate would make good on publicly traded instruments”"If Dubai World’s bondholders really took solace in the fact that they held bonds rather than loans, they thoroughly deserve a large hit in the wallet.”Perhaps the issue is neither bond nor loan (debt), but sukuk (equity), all three “publicly traded instruments”. But no one knows how sukuk would be handled by a default, especially bankruptcy. And THEN things begin to spill over into debt issues as the ripple effect takes hold.http://guambatstew.blogspot.com/200 9/11/on-inconvenience-of-principal.html