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By now you have heard that Dubai World, the investment company, has asked its creditors for a six-month delay in repaying its debt (see articles in links).  This is what is commonly referred to as default. Now many are wondering if Dubai the country is on the verge of default and asking who is most [...]

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This comes via the FT:
Saudi Arabia on Wednesday decided to drop the widely used West Texas Intermediate oil contract as the benchmark for pricing its oil, dealing a serious blow to the New York Mercantile Exchange.
The decision by the world’s biggest oil exporter could encourage other producers to abandon the benchmark and threatens the [...]

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As a result of falling oil prices and the global financial crisis a considerable fear has developed that Dubai, which has led a very expansive building policy in recent years, would have problems servicing its debt.

Sovereign Wealth Funds (SWFs) are losing money hand over fist, which should leave one wondering whether their appetite for Western assets will continue to bolster those markets. Funds in Asia and the Middle East have been hit by a double-whammy of losses on existing foreign asset portfolios and weak domestic markets due to the fall in oil prices in the Mideast and an absence of de-coupling in Asia.

In my book, losing a gargantuan $125 billion qualifies you as the dumb money. This appears to be what has happened at Abu Dhabi’s leading Sovereign Wealth Fund.

I had been warning all throughout 2008 that the Sovereign Wealth Funds were making a big mistake in buying stake in western financial services companies. Now, they are paying the price.

With oil prices having plummeted, one should expect Middle Eastern oil exporters’ budgets to implode. What were budget surpluses will quickly turn to deficits, stoking civil unrest amongst the burgeoning masses. Very high population growth rates mean that many oil exporters must use government monies to support the domestic economy. However this becomes harder to do with revenue from oil decreasing.

The U.S. Dollar has been holding up quite nicely during this credit crisis. In fact, it rallied significantly from deeply oversold levels against the Euro and British Pound (remember Dollar-Euro at 1.60 and Dollar-Pound at 2.10?). However, America has a number of structural problems which will inhibit further appreciation. Moreover, former buyers of U.S. Treasuries in the Middle East and Asia are going to have domestic economic worries of their own very shortly and will not be supporting U.S. assets. This means that the Dollar will be a weak currency in the not too distant future.

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The Financial Times Deutschland is reporting that China and Iraq want to revive a Saddam-era oil contract between the two nation that is worth billions of dollars. The contract, an obvious economic coup for China, secures Beijing exploration and development in the south of Baghdad situated Ahdab oil field.
The Iraqi government looks to be doing [...]

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Sovereign Wealth Funds (SWFs), which played such a vital role in the recapitalization of U.S. financial institutions during the first go around, are looking to cut their U.S. exposure.
Basically, the U.S. is running an extremely inflationary monetary policy with Fed Funds at 2% and inflation at 5%. The Dollar has therefore lost value relative [...]