Globe and Mail Update Published on Friday, Nov. 27, 2009 6:57AM EST

What observers said Thursday about the fallout from Dubai's debt crisis:

“Dubai is the most indicative of the huge global liquidity boom, and now in the aftermath there will be further defaults to come in emerging markets and globally,” Nick Chamie, chief of emerging market research at RBC Capital Markets, to Bloomberg News

“I would not rush into talking about contagion. Anything from Abu Dhabi or Qatar is backed by serious money. Dubai is a lot more leveraged. There will be some level of solidarity from the emirates and the big neighbour, Saudi.” Youssef Affany, relationship manager at Citi, to Reuters

"Watch for the risk that this hits emerging market sentiment and the risk trade, as the market is far away from the days where asset pricing reflected any real potential for a large financial-centred shock. As we've learned from the crisis, financial distress in one part of the world risks contagion in others … and the impact of a Dubai default could have serious repercussions, particularly in other countries whose banking sectors have significant exposures to the region," Scotia Capital, in a research note

“It should be seen as a country-specific issue. It's not something systemic. It's about risk appetite. It's a reason for some of those involved in the market to scale back a bit, while we try to understand what's going on.” Georgina Taylor, equity strategist, Legal & General Investment Management, to Reuters

"The oil rich Middle East is the last place many people would have expected default risk to surface, but that's the point of Taleb's Black Swan, or the first chapter in a good introductory stats text on probability distributions.” Scotia Capital, referring to author Nassim Nicholas Taleb

“Dubai isn't doing risk appetite any favours at all and the markets remain in a vulnerable state of mind. We're still in an environment where we're vulnerable to financial shocks of any sort and this is one of those.” Russell Jones, head of fixed-income and currency research at RBC Capital Markets, London, to Bloomberg News

“The Dubai situation signifies that although the major central banks around the world have stabilized the financial system, they can't make all the excesses simply disappear.” Arnab Das, chief of market research and strategy at Roubini Global Economics, London, to Bloomberg News

“The uncertainty may drag on for some time yet, before we have a clear idea as to how issues will be resolved.” Huw Worthington, Barclays Capital analyst, London, to Dow Jones

“We are having an extremely nervous session on Middle Eastern credit – we are seeing implications for Qatari and Abu Dhabi bonds, too, which are trading down in sympathy,” Luis Costa, head of emerging debt strategy at Commerzbank, London, to Reuters

“We fear that this news might be the news that tends to push equities around the world over the edge; that brings on a trend toward global protectionism and that pushes the U.S. dollar materially higher ... and perhaps violently so ... Perhaps cooler heads shall prevail as the next several days pass, and perhaps this situation will simply devolve into memory and into nothing, but we fear that this is a far larger story than it appears even this morning, and if it is we may be surprised by how strong the dollar becomes.” Dennis Gartman, in the Gartman Letter