MacroScope

from Reuters Investigates:

Dubai comeback already?

UAE

We went behind the scenes of Dubai's debt debacle last November and found a much more sober city-state starting to rebuild itself from the $59 billion hole that was dug by the whizz kids who had powered its transformation. Loans don't come as easy -- particularly the nod and the wink of association with the royal family isn't cutting it like it used to.

Some people see a connection between the crisis and the fact that Dubai has also started to tighten up on its trade with Iran, in line with broader international sanctions, but we're not so sure about that.

What did come across loud and clear in our reporting is that the new-new Dubai is currently being led more by older, senior types who had been thrown off the ladder by the MBAs and the like on their way up. Some of the financial types we spoke to worried about this: we don't need civil engineers, one said, we need financial engineers. It'll be interesting to see how it plays out.

from Global Investing:

Who were the investment winners and losers in 2009?

Let's not beat about the bush: the winners in this year's investment stakes were those who cashed out early in the financial crisis, looked at hugely oversold stock markets in March and jumped back in. The losers were those who spent too much time thinking about it or, worse, thought it was a good idea to put all their money in Dubai stocks and  Greek government debt.

For the winners, it all had to do with market timing. Buying MSCI's emerging market stock index at its March 3 low brought gains of close to 110 percent.  It was "only" a bit above 72 percent for the full year. World stocks as a whole gained around 30 percent for the year and nearly 75 percent from the March low.

Gold bugs grabbed a bit of the spotlight because of the record nominal highs for the metal. But with a gain for spot gold of around 24 percent, you would have done much better buying oil, which gained more than 75 percent.

from Global Investing:

Can the euro zone survive Greece?

Wolfgang Munchau, co-founder and president of Eurointelligence, has raised an uncomfortable prospect for investors in Greece. In a Financial Times column today, the long-time Europe commentator argues that Brussels may not be willing to bail Greece out if it were to default on its debt à la all-but sovereign Dubai World is about to.

The EU’s authorities, rightly or wrongly, are more afraid of the moral hazard of a bail-out than the possible spillover effect of a hypothetical Greek default to other eurozone countries. If faced with a choice between preserving the integrity of the stability pact and the integrity of Greece, they are currently minded to choose the former.

Munchau reckons that outright default is unlikely, but wonders whether the current spread between Greek and benchmark German bonds really reflects the risk that investors are taking.  It is currently around 178 basis points after recovering from a blow out on Dubai worries last week.

Traffic back on Dubai roads

Dubai’s traffic – the bane of pre-financial crisis life in the city — is back. 

At rush hour, queues of cars snake along the Gulf Arab boomtown’s highways. But this time, nobody is complaining. At least not yet.

For many, the relief felt at the sight of such signs of economic recovery still largely outweighs the annoyance at having to once again spend a good part of their day behind the steering wheel.