Hi – Sunil here to talk about how banks in Dubai engaged in oil revenue securitization that contributed as just one factor to the demise of the Dubai financial markets in late 2008.

It is no secret that the world experienced a global correction in its economies in late 2008.

That said, certain economies were and still are stronger than others (others are weaker as a result).

It all comes down to market and economic fundamentals. Strong fundamentals = strong results, or at least better results than others.

One way economies can deteriorate their strong fundamental position is by gambling on future predictions.

Such was the case with many Middle Eastern countries, including the Emirate of Dubai when it gambled with its predictions about future oil revenues.

Business in Dubai was great until corporate earnings started hurting. As a result, companies laid-off people and others experienced heavy cuts in salary. You cannot retain your Dubai visa when you are no longer employed. Therefore people started to leave the Emirate.

The ones that remained had fewer discretionary dollars to spend and therefore companies kept on losing money. More lay offs followed and suddenly people defaulted on their car loans and mortgages. Do you see the never ending spiral?

Now add to all that the effects of gambling on oil revenues that contributed to banks in Dubai defaulting on their own loans (money they had borrowed to fund projects around Dubai). So while the individuals like you and I were suffering at the lower level, the banks in Dubai were suffering on a much larger scale at the top level. This was indeed the economic perfect storm.