Posted By Ahmed Al-Salem
Dubai's debt crisis is hurting world financial markets, raising concerns that some banks could decrease their lending and stall the global economic recovery. The possible effects centered on fears that international banks could suffer big losses if Dubai's investment firm defaulted on its $60 billion debt. Stock and commodity markets tumbled in New York, London and Asia as investors flocked to the U.S. dollar for safety. Although the size of Dubai’s debts is comparatively modest at $80 billion, the uncertainty spooked the markets, with no one sure who its creditors are. Several banks rushed out statements to reassure investors that their exposure was small. Pressure mounted Friday on the federal government of the United Arab Emirates to step in with financial support, after this city-state's decision to request debt-payment delays spurred an initial rise in global markets.
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