What Does Dubai Mean?
Much has been voiced already about the events coming out of Dubai. Are they small and contained, and will pass from the headlines in a matter of days? Or, are they indications of an ongoing pattern of debt defaults that will continue to spread for an extended period until global deleveraging runs its course? What does this all mean for industry, the economy, and asset management?
While, in absolute size, this event is not large, it seems to be reigniting some fears of contagion. As I wrote recently, market sentiment moved from fear to greed quite quickly in less than a year. This creates an environment which is ripe for disappointment. Further, since we do seem to be experiencing an extended period of deleveraging globally, Dubai provides a reminder that there is much work to be done before we get the all clear signal that conditions are relatively normal again. Indeed, as I’ve written before, we seem to be in a “new normal” environment which will be unlike the recent boom times.
For asset managers, as well as managers of other businesses, the events of Dubai remind us that we must manage our businesses with the very best practices in order to succeed in the “new normal” environment. We need to move forward, but in a cautious way with great respect for unknown risks and events which could appear without warning. A well managed business is the best way to overcome such events without losing significant momentum.
5 comments November 30th, 2009
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