Dubai "Reassures" Investors

The ruler of Dubai on Tuesday attacked the media for coverage of Dubai World's debt default and blamed investors for misunderstanding the situation. In response to questions related to Dubai World, Sheikh Mohammed bin Rashid Al Maktoum said that international investors "do not understand anything." He went on to call the media's reaction as "exaggerated." It was quite an interesting attempt to reassure markets, and ahem, investors, after two days of rather strong sell-offs in the regional equity markets. But then maybe Dubai doesn't have a particularly developed PR industry.

While I totally agree that investors often overact and behave in mysterious way, I'm not sure how investors misinterpreted the phrase "we don't want to pay our debt obligations for at least six months, give or take" coming out of Dubai World. And sure, maybe investors shouldn't have expected an explicit guarantee from the Dubai government, or the UAE, but then maybe the subsidiary should've been named something other than Dubai World. But sure, you can blame that on investors. As for the "media uproar" over a large debt default of a quasi-government guaranteed subsidiary in the Middle East right before the holiday weekend? Totally shocking. The news rightfully should've been buried in the lifestyle section of the New York Times.

In any event, Dubai World is in talks to restructure $26 billion of its debt with its stupid investors. International markets have moved on to misunderstanding other events and rallied back nicely. The media awaits other news to exaggerate.