Danger in Dubai–and perhaps opportunity

U.S. investors should feel very familiar with the financial crisis that broke out in Dubai last week.

The names are different but the story is striking similar to the U.S. mortgage crisis.

And if you’re trying to figure out the dangers and the opportunities in this crisis, it’s most useful to see it not as something new but as an extension of the global real estate meltdown. The crisis in Dubai should remind us all that the global real estate collapse hasn’t finished playing out. The crisis now seems to be sucking in quasi-government companies around the world. The assumed government guarantees that led lenders to extend credit to companies in Dubai, the Ukraine, Russia, and other emerging markets are now turning into hollow promises. And that’s leading to another round of re-pricing of global assets. Read more