This morning, the world markets were reeling from the realization that the Emirate of Dubai is on the brink of a credit collapse (Click to See Full Story:)"Dubai seeks to assure markets shaken by debt move". More than $80 billion dollars worth of loans against the country are at risk, with the ripple effect being felt worldwide; including the U.S.
For the last decade, Dubai has been the world leader in excess spending. At the heart of the spending was the current sheik, Mohammed bin Rashid Al Maktoum, who has spent unlimited amounts of money on the backs of imported slave labor to push his agenda of making Dubai "the" playground for the wealthy in the Middle East. This ABC News expose' from last August will give you a taste of what this has been all about:
Now, it appears that the chickens have come home to roost in Dubai. But, the actual debt of this small Emirate is not really behind the world markets falling. On the grand scale of world debt, $80 billion is hardly anything. We spent nearly $40 billion to bail out AIG in the U.S.. The reason that the markets are so shaken is that this could literally be the canary in the coal mine. The death of Dubai could be representative of the potential collapse of commercial real estate around the world. We've already had the housing bust. Now, commercial properties could be at risk; especially in the U.S.. And, like in Dubai, the collapse of commercial real estate in America could throw at risk state governments, like California, into a similar situation. That is why all of us should seriously worry about this little speck of sand half a world away.