UAE aids banks amid Dubai meltdown

Probably there was no good alternative. The question is, will this help?

The United Arab Emirates' central bank said Sunday it has notified domestic and foreign banks with branches in the country that they would have access to "a special additional liquidity facility."

The offer comes after Dubai World, the conglomerate that has long been the chief engine behind Dubai's explosive growth, announced Wednesday it needed at least a six-month reprieve from paying its nearly $60-billion US debt. The news sent global markets tumbling.

Mideast markets were unaffected because of an extended Islamic holiday, but they reopen Monday.

"There is concern," said John Sfakianakis, chief economist at the Riyadh, Saudi Arabia-based Banque Saudi Fransi-Credit Agricole Group. "They're trying to take preventive measures in order to lower the risk of a run on the local banks."

"Depositors could very well panic … and they could decide to take their money out of the banking system," he added.

The UAE has been guaranteeing bank deposits since October 2008, but the pledge for new help at generous terms stems from concern that UAE banks have some of the biggest exposure to Dubai World's debt. Several have been downgraded by international ratings agencies or been placed on review for downgrades.

CBC

Berlusconi's curious reversal

One of the curious things that happened yesterday was Italian Prime Minister Silvio Berlusconi's announcement:

Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance.''

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global.''

But within minutes, he retracted it:

Italian Prime Minister Silvio Berlusconi reversed his comments that leaders are discussing closing the world's financial markets while they ``rewrite the rules of international finance.''

``I heard it on the radio,'' Berlusconi said about an hour after his initial comments his spokesman confirmed. ``The hypothesis wasn't put forward by any leader, including myself.''

An hour earlier, during a press conference in Naples following a Cabinet meeting, Berlusconi said, ``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed.''

So WTF is going on? Did he actually hear it on the radio, or did he hear it from other world leaders who didn't expect him to open his big mouth?

I don't know, but Bad American as well as Canadian Silver Bug are of the opinion that it might be a good idea to stock up on supplies and cash this weekend.

On the other hand, maybe Berlusconi was just speculating wildly, or offering an opinion as to what he thinks should be done, and nothing will be done about it. We'll know soon enough I guess...