In terms of the scale of debt or the impact on the global market, the Dubai incident was hardly comparable to the Lehman collapse last year. There was panic in the market, but it was due to the lack of transparency of Dubai's liabilities. Investors did not know exactly how deep the black hole was, and hence unloading one after another. As more and more information was revealed, investors could grasp the reality of the event, and the market had also stabilized. Last Friday the decline of US stocks was narrowed. As for the three major European stock markets, they all rallied after plunging on Thursday, whereas stock markets in Brazil, Canada, Mexico, etc. did not follow the fall of USD, which already implied that the market had overestimated the seriousness of the incident. Asian stock markets rebounded sharply this week as risk appetite once again heated up, and it was unlikely for USD to have a good run.

In recent months, both home prices and sales in US housing market had stabilized, but the recovery was still far away. The rates of delinquency and mortgage default kept breaking record and the number of foreclosures again hit record high, exerting heavy financial pressure on the financial agencies with mortgage lending business. At present, mortgages of new homes were almost monopolized by Fannie Mae and Freddie Mac. They asked for more capital although they had only spent less than half the amount guaranteed by the Treasury, showing that they lacked confidence in a strong rally in housing market. Before the recovery of the ability in creating jobs, we couldn’t be over-optimistic towards the US economy.