Oh well, there goes the quiet day after Thanksgiving

Well, there goes that quiet half day right after Thanksgiving. The Dubai request for a standstill agreement as a precursor for a hoped for debt restructuring is not a complete surprise considering the weekly newspaper articles on their $80b+ debt overhang. What is the surprise is the lack of any immediate support from Abu Dhabi (maybe not willing to support another bailout), the uncertainty of what exposure foreign banks have if any and where may other debt laden bodies lie, corporate and/or sovereign. The global central bank push to lower interest rates has spurred and encouraged a massive refinance wave to extend maturities. What we have not seen enough of is debt writedown, extinguishment and restructurings and the Dubai news may highlight that cheap money cannot cure all debt ills. Also of course the Dubai news comes in the context of a massive run in all markets (particularly in credit) where a shaking of the tree was likely overdue.

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