Here’s one story we’re watching closely on a Friday when there was supposed to be no news. On Wednesday, Dubai’s sovereign wealth fund asked to delay certain debt payments and then rushed to raise more money. It raised more money but the international financial community is still not confident that they’re out of the woods. Globally speaking, this sounds like one of those stories that’s no big deal unless it’s not. A member of the governing board of the European Central Bank tells Reuters, “The events in Dubai in recent days are one of the hiccups if you like, one of the difficulties, which affirms that we were right to highlight the uncertainty ahead of us and that the road ahead could be a bumpy one.”
In itself the numbers aren’t that big (measured on a global scale), only tens of billions of dollars. But if larger institutions turn out to have a lot of exposure to it, and that pushes some of them back into unstable territory and rushed liquidations of assets, the whole thing could spread. At a minimum it’s an example of the still quite risk averse international financial markets.
Josh Marshall is editor and publisher of TalkingPointsMemo.com.