Of the myriad statistics that demonstrate just how badly the global financial markets had lost their minds in the late 2000s, this one, to me, is the most mind-boggling.
In 2007, you could buy credit default protection on Dubai for four basis points.
(crickets chirping)
OK, let me break this down another way. Let's say you owned $10 million in debt guaranteed by the government of Dubai and wanted to insure it against the risk that the government wouldn't have enough money to pay you back. If you decided to buy a swap that would pay you $10 million should Dubai default, the cost would have been $4,000. Four grand to get 10 million in protection!
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