While You Were Eating Turkey, the Markets Took a Shit Kicking

While we were enjoying our holiday in the USA (Well, I am not in the US, but I still took the day off for the most part), the rest of the world went and sold-off equities in a big way.  At the time of this writing Dow futures were down -200 and the S&P500 -25.00! This makes for an interesting abbreviated session on Friday.

On Thanksgiving we read…LONDON (MarketWatch) — Fears of a potential sovereign default by Dubai roiled financial markets Thursday, sinking stocks in Asia and Europe and pushing up government-bond prices as investors sought safe havens.

Dubai late Wednesday said it would restructure Dubai World and announced a six-month “standstill” on repayments of the state-run wide-ranging conglomerate’s debt. Ports operator DP World and its debt is excluded from the standstill plan.

Analysts said Dubai’s woes were a blow to sentiment, serving as a reminder that potential trouble spots remain.

The following are Larry Levin of Secrets of Traders.com comments:

So the oil-rich state of Dubai cannot pay its debt.  Like the US, Dubai went on a spending spree over the past several years and it has caught up with them.  But not us thankfully.  While Dubai is in financial straits, the rest of the world continues to extend us credit.  While Greece is on the verge of financial collapse and about to bring down several German banks with it, the rest of the world refuses to call in our marker or pay off our credit card.

Regardless of the colossal size of US debt and sickeningly profligate spending of Congress, the world allows it to continue with our IOUs backing the debt…or “promise” to pay it back.

And for that global gullibility we must all gives “thanks” on Thanksgiving.