12/5 The Wikinvest Daily Angle

Please add updates@feedmyinbox.com to your address book to make sure you receive these messages in the future. The Wikinvest Daily Angle - Market Insight and Commentary from Wikinvest.com Dubai Debt Fiasco Could Weigh on U.S. Banks December 4, 2009 at 2:01 am Today's Daily Angle comes from Bob Blandeburgo of Wikinvest Wire members MoneyMorning.com. You can read thefull article on the Money Morning blog. A potential default by Dubai on debt payments could have a ripple effect on U.S. banks and the still-gloomycommercial real estate industry, some analysts say. Citigroup Inc. (NYSE:C) has $1.9 billion invested in the nation's state-owned investment vehicle Dubai World,JPMorgan Chase & Co. (NYSE:JPM) said in a research note. While not directly affecting Citi or other major U.S. banks, the indirect effects could be more crippling on a broader scale, Rochdale Securities analyst Dick Bove told CNNMoney. "There could be huge indirect exposure," Bove said. "One has to assume that U.S. banks will be hurt." Citi, JPMorgan and other major banks didn't comment on the potential consequences of a Dubai default. However,Morgan Stanley (NYSE:MS) said a default "would have no material impact on its earnings." But according to Bove, such extravagant projects as palm-shaped peninsulas, large skyscrapers and plans to build the world's largest airport, could have a decidedly negative impact on the already battered commercial real estate market. "Dubai may have to unload some very prestigious properties at distressed prices, and this will drive the price of all commercial real estate lower," said Bove. "That would clearly be a problem for American banks." Also, little information about counterparty derivatives and guarantees that transfer default risk from lenders to other financial institutions has been made available, which means a greater degree of uncertainty for U.S. banks. Furthermore, no one outside of the banks themselves knows exactly how much of Dubai World's debt guarantee is held by U.S. institutions. Banks in the United Kingdom, which according to JPMorgan have roughly $30 billion in Dubai World default risk, have extensive dealings such as trading and debt guarantees with American banks. U.S. banks could be exposed to risk based on their dealings with their German counterparts as well. Credit market research firm CMA DataVision says there's a 35.82% chance that the United Arab Emirate (UAE) nation will actually default on the almost $60 billion in debt payments it delayed.   This email was sent to gatdemit001@gmail.com.  Create Your Account Don't want to receive this feed any longer? Unsubscribe here.