Sunday, December 13, 2009
In a sign that the risk trade has been restarted, Abu Dhabi announced that it will provide $10b to Dubai World, the sovereign wealth fund that was over-leveraged on risky assets. With this move, we should see stock markets power past their recent resistance points. In this market full of government cash and support, and little recourse for poor decision making, we should be mindful of investing in good balance sheets, and building our personal balance sheets for the next crisis to come. It will only be a matter of months before we start seeing an inflation crisis that will pull the weakest personal balance sheets to insolvency.