What exactly does Dubai Storm mean?

For global investors, the sudden financial crisis in Dubai is shocking. Not only did the stock market and commodity futures plummet, but people also began to worry about whether the financial storm would strike in the second round. More importantly, it sounded the alarm for an optimistic economic recovery. The Dubai storm is easy to remind people of last year's financial crisis. Although many people are comforting investors, this is only a case, which is not comparable to the financial crisis, and so on, and can not hide the essence of this storm. It stems from international hot money, real estate bubble, excessive consumption and excessive borrowing, and this is the main source of the financial turmoil on Wall Street. In fact, as early as six months ago, many observers realized the real estate crash in Dubai. In just six months, the property price in Dubai has fallen by half. However, investors' optimism that state-owned companies like this will not default on their debts and that the rapidly spreading financial crisis is gone forever makes people ignore the reality that the bubble is bursting. The first lesson left by Dubai is that blindly lending to the real estate market is quite risky. As many western consumers did during the boom, Dubai once lent heavily and borrowed a lot of money, which inflated the real estate bubble and then burst during the recession. It is worth mentioning that the Dubai bubble was once a beautiful talk and encouraged many emerging economies to lend to real estate development, which also made people more worried about the asset bubbles in emerging economies after the Dubai storm. Deformity is also a major lesson in Dubai. Just like Iceland's over-developed financial services industry, Dubai has pushed forward its real estate development too hard and is regarded as "almost the worst example of blind expansion in the world". Unfortunately, many of its projects are really "built on sand", and the sea water rushes through, leaving only bubbles. This further proves that without the support of the real economy and scientific and technological progress, it is often fragile to simply pursue the growth of development speed. The impact of Dubai storm on financial markets is also enormous. Some observers pointed out that the global stock market decline shows that government spending alone cannot protect the financial market, and the excessive enthusiasm and support of financial institutions for the bubble industry also contains great risks. Once things like Dubai World appear one after another, the international financial market will be hit by an avalanche. The "cockroach effect" cannot be ignored. There is a famous saying on Wall Street that when you find a cockroach, it often means that there are more cockroaches behind. It should be said that the problem in Dubai was not solved overnight, but it can be said that it has been covered for a long time. Now that it has been exposed, people can't help but worry about whether there will be any "big black holes" hidden in other parts of the world. There are many sovereign funds in the world, which have long been regarded as the main problems or potential risks in the financial field in the next decade. Now, the Dubai incident makes people need to re-examine their health. As a Canadian analyst said, "Dubai is the most obvious example of a huge global liquidity bubble. There will be new debt defaults in emerging markets and around the world. " If the real estate bubble in developed countries was the trigger of last year's financial crisis, then after Dubai, people began to worry that the real estate bubble in emerging markets might trigger the next round of financial crisis and even the global economic crisis. It is worth mentioning that the Morgan Stanley Emerging Markets Index has risen as high as 65% so far this year, but the problem is that the real economy and consumer confidence have not changed significantly. No wonder some people exclaim that the prosperity of the past six months or so is false prosperity. Dubai makes people realize that the emperor is naked! The sharp depreciation of the dong also makes people worry whether the second Asian financial crisis will come unexpectedly. It is time to make a sober judgment on the global economic situation.

In fact, behind the series of trade protectionism practices of the Obama administration, it can be vaguely seen that quite a few people are too optimistic that the impact of the financial crisis has passed and the economic recovery is unstoppable, so they can no longer carefully safeguard international relations in the same boat. But the problem is that new economic growth points have not appeared, the unemployment rate and consumer confidence have not changed significantly, the existing prosperity is more in the selling stage, and new asset bubbles are accumulating on a global scale. In this case,

Recently, a group of pictures of beautiful men were circulated on the Internet, which was called the prototype of "UAE men were deported for being too handsome". It was verified that the man was a native of Dubai, named OmarBorkanAlGala, and was a model and photographer. Arab male models were deported for being too handsome when they participated in the Saudi Arabian Cultural Festival. Religious police said they were worried that Arab male models were too handsome to attract female tourists. The Arabic newspaper Elaph reported that when these men were introducing their products in the exhibition hall of "Jenadrivah Heritagheritagefestival" in the capital Riyadh, several law enforcement officers rushed over and forced them to leave the venue.

Dubai incident refers to the financial crisis of Dubai World Group, which led to the evaporation and bankruptcy of a series of financial institutions and investors. This incident proves that Dubai finance is facing a brand-new crisis, which has brought great influence and negative effects to the world finance. Dubai's Ministry of Finance suddenly announced on the 25th that DubaiWorld, a government-owned company, and its real estate arm, PalmIslandGroup, will delay the repayment of billions of dollars in debt for at least six months in order to restructure the debt. Palm Island Group, the enterprise responsible for developing the super-large artificial island resort "Palm Island", must repay 3.5 billion US dollars of debt to Arab investors before the 14th of next month. According to The New York Times's estimation, Dubai World's foreign debt is as high as $59 billion, accounting for 74% of Dubai's total debt. Therefore, the recent Dubai debt crisis is profoundly affecting the global economy. The reasons for editing this Dubai crisis are as follows: 1. Over-exploitation of the real estate industry. After 9/11, Middle Easterners' travel to Europe and America was restricted, so Dubai absorbed leisure demand and played the role of "liberated area". In this process, Dubai World, a state-owned enterprise, has promoted large-scale projects all over the world in the fields of port operation, real estate development, tourism and leisure, economic free zone operation, private equity funds, large discount stores, aviation projects, securities trading and financial services, and achieved rapid expansion. In recent years, Dubai has ambitiously promoted large-scale construction projects of landmark buildings such as Burj Dubai, a seven-star hotel, in an attempt to transform itself into a leading international metropolis with the most "world landmarks". These large-scale projects have attracted many oil-producing countries in the Gulf region to invest huge amounts of foreign exchange accumulated through high oil prices in Dubai. It is reported that the Burj Dubai, which is about to be completed, is the tallest building in the world, and its interior and exterior decoration are extremely luxurious. It is in order to build the tallest skyscraper in the world that Dubai has a foreign debt of $8 billion. It is revealed that in the past four years, Dubai has been aiming at building a logistics, leisure and financial center in the Middle East.

a construction project with a scale of $3 billion was completed. In this process, the debts of the government and state-owned enterprises have snowballed, and it is estimated that the total debt has reached nearly 8 billion US dollars. In Dubai, construction sites are all over the city, and they are often "the highest in the world", "unique in the world" or projects worth tens of billions. In order to carry out these projects, the Dubai government and its affiliated development companies borrowed heavily in the global bond market to raise investment funds. However, it is difficult for these projects with numerous investments to achieve profitability in the short term, and finally Dubai is on the road of debt crisis step by step. Under this circumstance, the global economic crisis that broke out in September last year did not affect Dubai as "unscathed" as previously rumored, but caused its vitality to be greatly damaged. Negative factors such as falling house prices and cancelled construction projects have appeared one after another, making it more and more possible to suspend debt repayment. Second, the impact of the international financial crisis Dubai has invested heavily in the international financial industry in recent years. Under the continuous influence of the financial crisis, Dubai's investment has suffered serious losses, laying a hidden danger for the debt crisis. In 27, Dubai World spent $5.1 billion to buy nearly 1% of the shares of American entertainment giant MGM. But later, MGM's share price once fell from $84 at that time to $. In addition, other investment companies in Dubai spent nearly $3 billion to buy shares in Deutsche Bank and Standard Chartered Bank, but the share prices of these two banks have also shrunk dramatically. Third, the depreciation of the US dollar. Dubai's policy of pegging the domestic currency dirham to the US dollar also made the debt crisis in Dubai "add fuel to the fire". From last year to this year, the depreciation of the dollar led to soaring prices in Dubai and the Gulf region, and the inflation rate reached double digits for several months in a row. The depreciation of the dollar triggered the recession of Dubai's economy, which to some extent served as an "accomplice" to the debt crisis. [Edit this paragraph] The impact of Dubai crisis on oil prices The price of Brent oil in London fell by US dollars to US dollars. New york January oil fell $ to $ a barrel on Thursday. The impact on the stock market On the 26th, most stock markets in Asia-Pacific and Europe fell, and the European stock market plunged 3% as soon as it opened. As of the close of 25th, the Shanghai Composite Index fell% to 396 points, and the trading volume of the two cities shrank. This week, the Shanghai Composite Index has fallen by%, falling below the three barriers of 3,3, 3,2 and 3,1, while the Shenzhen Component Index has fallen by%, falling below the two barriers of 14, and 13,. The impact on the bond market When Dubai's "debt crisis" came out, the price of the Dubai government's credit default swap contract soared. Some people even think that Dubai may become the world's most serious sovereign debt default since Argentina's debt default eight years ago. Credit rating agencies Standard & Poor's and Moody's immediately downgraded the credit rating of Dubai's state-owned enterprises. In the London financial market, the interest rate of credit default swaps (CDS), which reflects the risk of Dubai's debt default, soared. The impact of the global economic recovery analysts believe that the current situation in Dubai may delay the global economic recovery, and Dubai World's suspension of debt repayment is regarded as another Lehman incident, which will drag down the global economy that has just embarked on the recovery track. The creditors of Dubai World, which was deeply involved in the Dubai debt crisis, include HSBC Holdings, Barclays, Les and Royal Bank of Scotland, and they have been hit hard by the financial crisis before. At present, the Dubai government has indicated that it has appointed Deloitte Accounting Company to take the lead in debt restructuring. However, market participants are worried that because Dubai relied too much on foreign capital in the past and international financial institutions participated to a great extent, these institutions may face huge losses and bad debts in the future, and they will be hit again as soon as they recover. The debt crisis with limited impact on economic recovery is different from the crisis caused by financial derivatives, which has low leverage ratio and is not contagious. Experts believe that the western developed countries, the main creditors of Dubai's debt, have relatively mature experience in dealing with the debt crisis. Banks in western countries will continue to provide relief funds to the governments of crisis countries through the International Monetary Fund in the same way as they did when dealing with corporate debt crises in Mexico and South Korea, so as to convert corporate debts of crisis countries into government debts, avoid corporate bankruptcy and ensure bank safety. Due to the loose monetary policy in the world, European commercial banks are not short of liquidity, and the debt crisis can be postponed, so European banks are unlikely to suffer big losses. Chen Bingcai believes that the argument that the Dubai crisis will affect the global economic recovery lacks argument. The capital investment of quantitative easing monetary policy in the United States is financial assets, which has limited impact on the real economy. Even if the easing policy is withdrawn, the impact on the real economy can be ignored relative to the price of financial assets. The loose credit and fiscal policies adopted by other countries are aimed at the real economy, and this policy itself determines that its withdrawal cannot be achieved overnight. Even if major European and American countries change their economic strategies due to the Dubai debt crisis, it is unlikely that the global economic recovery process will be reversed. Impact on other Gulf Cooperation Council (GCC) countries Industry analysts believe that the debt crisis in Dubai has little impact on other GCC countries. Analysts at Calyon Investment Bank, a subsidiary of French Agricultural Credit, said that the Dubai debt crisis was a great blow to the image of Dubai and the United Arab Emirates, but this incident would not have a lasting impact on other GCC countries, because the six GCC countries adopted different development models. The analyst pointed out that unlike Dubai, other GCC countries have low debt levels and cautious foreign investment strategies. The influence on celebrities Among the stars trapped by the Dubai crisis, David Beckham and Brad Pitt, a Hollywood actor, are believed to be two of them, and the value of their assets here has also shrunk dramatically. In addition to Beckham and Peter, footballers michael owen, joe cole, david james and kieron dyer are said to have made their homes on this artificial island. Many people have bought the palm island mansion building built by the developer in Dubai World, and the project will be unfinished at any time. These planned villas are extremely luxurious, and 2 luxury houses were very popular when they were launched in 22, and they were sold out within one month. Except for joe cole, who sold his villa for 2.1 million pounds before the bubble burst in Dubai last summer, all the stars were miserable.