Dubai was all over the news over its inability to make the mortgage payments on its showpiece development to the tune of 60 billion USD. The resulting hubbub pushed world markets down with fears that this could start an avalanche of bank failures.
After all if a country that literally sits on a pool of money can’t pay, who can?
Compared to the US crash this is chicken feed but it is of course it's just the tip of the iceberg. The Fed has been pumping tens of trillions of Dollars into the world economy over the past few years in order to keep the Wall Street elite in business even though they do nothing constructive. Indeed they had existed for many years by shredding the real economy in the US and have simply run out of raw meat. Now they are dragging down the rest of the world economy by selling investment vehicles that amount to Ponzi schemes that they inflate until they burst.
The entire world is crisscrossed with dodgey investment schemes put together like a cheap sweater. Will Dubai be the loose thread that unravels it all? Probably not, it is relatively small but it will expose even more loose threads. Sri Lanka purchased 10 tons of gold the other day from the IMF and other countries have been buying up gold in order to get away from the USD. Afghanistan is rumored to have a huge gold mining potential so don’t plan on us leaving there anytime soon. China has put a high priority on gold mining and has over a thousand tons on hand including a hundred tons quietly purchased in recent months.
There is simply no predicting exactly what will happen except that things will be volatile and for many tragic. Economists talk about the paradox of how if consumers behave conservatively that they drive down the economy further. Since nothing has been done to reform the underlying corruption, there is no point in the consumer doing anything "for the economy". www.prairie2.com