1. Have we seen it all?! The year of recession

2. Rare crisis... There have been very few cases where you've had this kind of financial disruption without a significant effect on the economy Fed Chairman, Ben Bernanke ENTIRE US ECONOMY “IS IN DANGER”, CRISIS DEVELOPED OVER TIME, IN AN EXTRAORDINARY ECONOMIC PERIOD US President, George Bush “What you need first is to restore confidence and the main worry right now is confidence” Head of IMF; Dominique Strauss-Kahn

3. Housing market Health of economies measured by deceleration of housing market Housing has immense impact on macroeconomics for several years In theory this slow down should have happened a while ago….but it’s a cycle Recessions or slowdowns –1973-74, 1980-82,1990-91, 2001 (Recessions) –1987 and 1995 (slowdowns)

4. Growth of Sub-prime lending Source: Center for Responsible Lending/Inside Mortgage Finance

5. Recession

6. Crucial Events of the Credit Crunch USA: FED takes control of Fannie Mae and Freddie Mac (market initially reacts well) 1 week later - Lehman files for bankruptcy - no assistance from the government Insurance giant A.I.G. in desperate need of loans, FED decides to help. Merrill Lynch sells itself to Bank of America - to avoid Lehman fate. Europe: Fortis forced into a break-up talks, partly bought by BNP Paribas and local govt’s Dexia, French-Belgian lender - receives major capital injection

7. Market events EURUSD 1.23+, falling from 1.60+ (July 08) Oil falls to $62+ region - July: $147 Gold down to $700+ region – July: $985 region Indicies fall in double-digits Source: SaxoTrader 2

8. Consequences; Extreme instability Source: Bloomberg Volatility shoots to extreme levels Cost of borrowing spikes likewise - USD 3 month LIBOR rates

9. Action taken to fight the crisis... Fed passes the long awaited $700 billion plan..... injects $250 bn in return for partial ownership Fed cuts rates to 1.50% -- in a co-ordinated action with other central banks... Goverments announce guarantee of all bank deposits, e.g. Ireland, Denmark, UAE, Denmark, Austria... UK allocates up to 50 bn GBP for recapitalisation/share- purchase of major UK banks Iceland takes over Kaupthing Bank hf, 3rd lender to be taken over

10. Two Interesting Things

12. Middle East Booming….at a cost!

13. Middle East Inflation fears: –10% Saudi Arabia –11% Kuwait –13% Oman –12% UAE –15% Qatar Dollar peg previously a major discussion point, but easing now with recent USD gains Recent Oil falls a concern to OPEC, big reductions put in place... Economists: e.g. Iran needs oil to be $70+

14. Perfect storm Commodity High (YoY) Low (YoY) Correction % Current (27 Oct) EURUSD1.6000 1.2480 22%1.2480 USDJPY115.40 92.79 20%92.79 Gold1004 703 28%725 Crude Oil145 62 56%62 S & P 5001554 830 46%830 I will reprint John Hardy's 50% retracement numbers for indications:

15. Main calls EURUSD: previous 1.2700 and 1.2300 targets met, now 1.2000 next level – Q1 2009 USDJPY: Down to test 90.00 Gold: below 700 by Q1 2009 Crude: 50-60 by Q1 2009 S&P: Down to test our long-term minimum target of < 765.00 Fed funds: 0.50% by Q2 2009 ECB: 1.50% by Q2 2009

16. Thank you UAE!