South America

Everyone agrees China is in the middle of a spectacular real estate boom. The question is whether it is in the middle of a rapidly growing real estate bubble, The New York Times reported. When other recent booms collapsed — in the United States, for instance — they depressed entire economies. In China’s case, a bursting bubble could affect much of the world. China is the fastest-growing large economy and, so far, a main engine pulling the world out of recession. Beijing is clearly concerned.

Federal Reserve Chairman Ben S. Bernanke said the use of credit default swaps to destabilize a country is “counterproductive,” and added the central bank is reviewing the arrangements of Goldman Sachs Group Inc. and investment banks with Greece, Bloomberg reported. “We are looking into a number of questions related to Goldman Sachs and other companies and their derivatives arrangements with Greece,” Bernanke said today in testimony before the Senate Banking Committee in Washington.

Catania Chile SA, an independent company and a division of M.L. Catania Co. Ltd., has halted operations in Chile and filed for bankruptcy protection, trade publication The Packer reported. Paul Catania Jr., executive vice president of the Toronto-based parent company, confirmed the closing of Catania Chile and the bankruptcy filing. Catania declined to comment until the matter is resolved in Chilean courts. Of the 513,000 cartons of fruit Catania Chile exported during the 2007-08 season, about 25%, 127,000 cartons, went to the U.S. and Canada.

Nearly eight years after Venezuela's President Hugo Chavez was briefly forced from office by a coup attempt, deterioration in Venezuela's infrastructure and economy has continued. City centre shops are now subject to raids by soldiers, checking to make sure prices have not been artificially raised in the wake of this month's currency devaluation. The bolivar's official exchange rate, which is set by government decree, had been held at 2.45 to the US dollar since the last devaluation in March 2005.

About 7,000 people are reportedly affected after Spanish airline Air Comet's fleet was grounded this week by officials over its failure to pay debts, Colombia Reports reported. The low-cost Spanish carrier owes €17 million to Germany's Nord Bank in lease payments and Air Comet says it is seeking to lay off all of its nearly 700 employees. The Madrid-based company - which specialises in cheap flights to Latin America - also says it has filed for bankruptcy.

Abu Dhabi's decision to offer Dubai financial succour has bought time for the debt-laden emirate to restructure its troubled Dubai World conglomerate, but the former boom town still faces a severe test, the Financial Times reported in an analysis. Dubai World holds most of the emirate's credit pile, and despite the $10 billion (€6.8 billion, £6.1 billion) support extended yesterday by Abu Dhabi, the United Arab Emirates capital, the conglomerate must still restructure its debts.

Dubai’s state companies may restructure as much as $46.7 billion of obligations, Morgan Stanley said, ArabianBusiness.com reported on a Bloomberg story. Dubai Holding LLC, Dubai Holding Commercial Operations Group LLC, Borse Dubai Ltd. and Dubai Sukuk Center Ltd. may join Dubai World in restructuring debt, Morgan Stanley analysts Mohamed W. Jaber and Paolo Batori wrote in a report. Dubai needs to reach an agreement with creditors that requires a “haircut” of as much as 50 percent to improve its long-term debt outlook, the analysts said.

Argentina will be forced to default by 2011 unless the government reaches an accord with investors holding $20 billion of bonds kept out of the last restructuring offer, Stone Harbor Investment Partners says. President Cristina Fernandez de Kirchner is negotiating terms of an agreement, which the government needs to regain access to international capital markets that it lost after stopping payments on $95 billion of debt in 2001, Bloomberg reported.

Argentina, hoping to sell bonds on international markets again, is trying to clean up the fallout from its $100 billion debt default in 2001 and 2002, Reuters reported. In 2005, the government asked investors to accept steep losses on Argentine bonds, a proposal rejected by about a quarter of bondholders. Argentina has not been able to issue debt on global markets since the default, partly because of lawsuits from so-called holdouts who rejected the restructuring.

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, BusinessWeek reported.