Dubai => Beginning Of The End

Dubai probably the most frequent used word for the past week. 60 Billion dollar of default sink the stock markets all over the world. Everybody feel fear among us and seller absolutely dominated trading.

I am not gonna commend on Dubai. It's only 60 billion dollar. It's less than one third of what AIG received last year (185 Billion). It's only 10% of the first TARP last year (600 Billion). I bet it's even less than the bonus and remuneration that bankers all over the world received last year combined.

Dubai default is so small that a tips from Rockefellers or Rothschilds at dinner might be bigger than it.

Dubai is very similar to "Sub-Prime" in late 2006 or early 2007. By the way do you still remember the word "sub-prime"?

The word sub-prime emerged at the end of 2006 and it's a warning sign that the financial system in the world is in big problem. At first it's not seen as a threat by investors all over the world. However by February of 07 people start to realize the problem but ignorance and greedy trader continue to buy and pushed the market to the high of Oct / Nov 2007.

Remember, sub-prime crisis does not kill the stock market at the end of 07. It work as a trigger to this massive financial mess that we are in. Similar situation happen now. I am sure Dubai default won't kill the stock market. It's a big warning sign that we haven't solve our financial problem and it's still a mess.

So will stock market continue higher in the short term? might be yes (just like in 2007) or no. The point is: it doesn't matter. Stock market did make a new high at Oct of 2007 (US and Europe market) and Nov of 2007 (Asian and South America market) when the big warning sign was around. Well look what happen next......

So the best way I can put the mess we encounter now is this: US financial system = HIV positive. AIDS won't kill US but it kill its defense. It weaken the system and allowed any disease to attack it. Dubai default is just a small flu or fever yet it manage to shake us heavily. Wait till it get TB or cancer. Unfortunately AIDS is incurable but fortunately it can be delayed so we shall see how Bernanke, Geithner and the gang delay it but the day will eventually come. Until then, enjoy the healthy day!