FULL 'This Week' Transcript for Nov.29, 2009

And the first reaction was, oh, my God, this is a sovereign government defaulting on its debt, and therefore everyone's at risk, because we're all running deficits, we've all got bigger debts than we did a couple of years ago. That has mostly faded out now.

The second thought was, basically, this is not a country. First of all, the company is not a country. But basically, DubaiWorld is not -- is actually not a legal obligation of the Dubai government to back it. Everyone thought they would, but it's not their legal obligation. And secondly, Dubai itself is, you know, looked at economically is basically a highly leveraged investor and commercial real estate, right, which is -- and all highly leveraged investors in commercial real estate all around the world are in big trouble. So Dubai is just looking like some developer, somebody who put up a bunch of shopping malls...

STEPHANOPOULOS: But I think you hit on a key point. I think what worried everybody, Dan Senor, I know you've done some work there as well, is the idea all of a sudden that the government might not back up its own sovereign wealth fund.

SENOR: I agree with Paul. We have limited exposure, the U.S. has limited exposure. European banks have exposure. The U.S. banks have very little exposure.

I think the real problem here is you're looking at the cost to insure other sovereign debts from emerging market economies exploded over the weekend. Bulgaria, Hungary, Russia, Greece. I mean, what if one of these economies implodes? So you can argue -- you argue that Dubai is a glorified like shopping mall, and it's not a real country, or a real emirate. But the reality is, if you start having these emerging markets blow up left and right, at a time when there's already such insecurity that a little blip like this can cause panic...

STEPHANOPOULOS: And that's what we saw on Thursday.

WILL: Right. Paul used the magic words from 2010, that's commercial real estate. We have in the next two or three years about $1.5 trillion of commercial real estate loans (ph) that have to be refinanced. They are being refinanced on buildings that are worth 30 to 40 percent less than they were when the loans were taken out.

This week, we revised downward from 3.5 to 2.8 the growth in the third quarter. Wall Street Journal reports that one in four Americans with a mortgage are under water, that is their mortgage is bigger than the value of their house. So the signs out there are still ominous.


KRUGMAN: ... issue, I mean, sorry, just to say that the question was, whether Dubai triggers another wave of financial crisis? The answer is, almost surely not. The question is, is the economy OK? That's very different.

STEPHANOPOULOS: And there of course the number one indicator there is the one we have been focused on for so long, unemployment, above 10 percent. And, Cokie, as we wait for the president's jobs summit on Thursday, we're already seeing the House of Representatives say we want to vote on something this year...

ROBERTS: No, they're desperate...

STEPHANOPOULOS: ... about another $200 billion...

ROBERTS: They are desperate to have a jobs vote. And it's one of the reasons, it's one of the impetus behind the health care bill is to get it done so they can get a jobs bill, because, as you know, going into an election year with double-digit unemployment is obviously a terrible problem for the majority party.

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