Saturday, 28 November 2009

How many more skeletons will fall out of the closets?

There were two developments last week in the financial world, seemingly unrelated, that should give one pause to contemplate just how much we all really know about the true state of the severity of the rolling financial crisis.

Firstly, the Governor of the Bank of England, admitted that more than £60 billions of additional emergency financing had been granted to Royal Bank of Scotland (RBS) and Halifax Bank of Scotland (HBOS) last fall. The claim was made that to have announced this at the time would have created even more anxiety about the calamities facing the global banking system.

It has been suggested that the only reason why the news emerged was because the UK's National Audit Office would have been under an obligation to release details of this secret rescue package of $100 billion when it issues a report this week.

Secondly and moving to the Middle East, the biggest fallout from the troubles facing Dubai World is the lingering suspicion that the “books” and accounts of a lot of emerging market ventures may not be as sound as those with a positive de-coupling spin agenda would like us to believe.

The ruler of Dubai, Sheikh Mohammed bin Rashid al Maktoum, had been reassuring every one that there were no credit risk problems associated with the developers of the world's most absurdly mis-timed real estate projects, right up to the time that he had to admit that there were.

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