Morning:
8°c
As the reality hits that Dubai's success was after all, built on sand, the ripples are travelling far and wide.
Just as we'd grown weary of the launch of yet another hotel in the Gulf state that was hailed as bigger and more outlandish than the previous hotel that was bigger and more outlandish than the last hotel ... so too had we become used to prized assets here being snapped up by folk from over there.
The list of businesses and properties owned or part-owned by Dubai investors is long, from golf courses (Turnberry) to hotels (Carlton Tower), ships (QE2) to whole ports (Tilbury Containers), entertainment (Cirque du Soleil) to theme parks (Legoland) and actual landmarks (London Eye).
While that gives a flavour, it does not even come close to covering the range and reach of Dubai interests — this would be a car boot sale like no other.
But while Dubai's plight is desperately serious for those who owe their livelihoods to the Arab nation's expansionist ambition and willingness to rack up vast debts, in the order of things it is not immediately cataclysmic.
Compared with the collapse of Lehman and the subsequent banking crisis, the level of borrowing — $80 billion (£48 billion) — is relatively modest (how strange it is to write that).
Indeed, there are those in London who will express a certain schadenfreude that Dubai had it coming, and that, long-term, the City can only benefit from the demise of an upstart rival — “Dubai, Mumbai, Shanghai, goodbye” was the often-used phrase reflecting the exodus of City workers to the more promising East.
Of course, right now, the markets need Dubai's trauma like a collective hole in the head. Just when it appeared that recovery was in sight and some countries were hailing the end of recession, comes this blow to send prices and values tumbling again.
The dread, however, is that it's not just Dubai. The dreaded “c” word has reared its terrifying head again: contagion.
The fear is that after banks and sub-prime, sovereign debt is next — that Dubai's problems will spread and emerging nations which borrowed like mad in the boom years will find themselves in the same position. Greece, Hungary, Latvia, Ireland ... it's a long list.
The hope has to be that Dubai's oil-rich neighbours come to its rescue. But even if they do, alarm bells across the financial world are ringing loudly.
