The Myth of Dubai

The myth of Dubai is over. Default is imminent, as Dubai World seeks to delay payment on $3.52 billion due December 14th, according to Bloomberg. Despite the danger, CDS are only 434 basis points.

My question is who is surprised? Who thought that building man-made islands the shape of palm trees would be a productive investment?

Over the next four months, $9 billion is due. It's crunch time. A default of this magnitude could catalyze a reverse of the dollar/risk carry trade.