These are the same commercial mortgages that are about to go belly up, McCabe says. "Dubai may be the most massively overbuilt market in the world," he says, but it's not the only one, and the global nature of real estate investing means that the Middle East's woes could easily be replicated in London, Sydney, Prague or Barcelona. "Real estate financing is world wide, and that means we're going to have defaults on a massive scale," he says. If there's a bright side, it's that U.S banks have already taken most of the hits they'll suffer for their overextension into real estate, says Richard Bove, a banking analyst at Rochdale Securities. He calls this a rare instance of U.S banks learning from past mistakes.
Clearly, Dick Bove has the capacity to wrong on a staggering level. Perhaps, he should recommend that we buy UAE warrants - despite the likelyhood of a middle east financial collapse that effects the entire region not just Dubai.