Heads Up: Early Warning Sign of New Financial Turmoil

This may not be a good thing.

Milan (AsiaNews) – Rothschild’s Dubai office has been retained by Dubai’s Department of Finance for advice on the US $10 billion financial support fund (FSF) the emirate raised on the bond markets.

Nakheel, the property development arm of Dubai World, was the first to benefit, but is likely to be the last of its kind because funds will be handed out on the basis of two criteria: urgency and strategic importance.

In fact government-related corporations deemed essential for the long-term development of Dubai’s economy will be eligible for FSFs. They include firms involved in infrastructure, transportation (ex. the Metro and Maktoum airport projects), aviation, ports, shipping and tourism. Banking might be included and the Rothschild guidelines might be flexible with regard to real estate.

This said Rothschild is not getting directly involved but will act through commercial banks in which it has equity or has connections with, like JP Morgan and other ones. Moreover, through the same commercial banks, Rothschild has a say, and a powerful one, over the Federal Reserve Bank of New York (FRBNY).

How bad could things get? A little farther down in the article, there is this:

As in the spring of 2008 when the first signs of the coming September financial storm were visible, today’s signs, albeit not front page news, might herald another major storm this fall.

But this year’s crisis could be worse than last year’s because of the multiple points of origin. In addition to the weak situation of the US Federal Reserve, whose financial commitments in support of the US banking system are equal to the total US GDP, European banks could go in tilt because of their exposure to emerging markets whilst those of Asia (especially Japan’s and China’s) could suffer because of Asian economies’ heavy reliance on now declining exports.

As for Dubai real estate values in the city-emirate have dropped by 50 per cent since before the crisis[i]; insolvencies here and across the Gulf region are rising.

At the same time two contradictory trends appear to be coming together. On the one hand, we see that “creata ex nihilo”[ii] e-money might lead to hyper-inflation; on the other, collapsing prices in real goods could lead to deflation and an economic depression worse than that of the 1930s.

When the people who have Big Oil and Big Money start having problems, little people like us sort of get lost in the repercussions and consequences.

By the way, does it both anyone besides me when a reporter talks of a group like Rothschild having a "powerful say" over one of the Federal Reserve banks? It's not new news, or anything, but it still rankles.