Dubai’s debt crisis in context
Today, as over the weekend, markets shuddered at the news that Dubai World, a state-controlled investment company, has delayed some debt payments. Investors feared that Dubai World might default or collapse, hurting its counterparties (especially fragile British banks) and perhaps even tipping the world back into recession. But, as many commentators have noted, even if ...
Today, as over the weekend, markets shuddered at the news that Dubai World, a state-controlled investment company, has delayed some debt payments. Investors feared that Dubai World might default or collapse, hurting its counterparties (especially fragile British banks) and perhaps even tipping the world back into recession.
But, as many commentators have noted, even if Dubai World went totally belly up, it wouldn't have anything close to systemic effects. Why? It just isn't big enough. Here's a chart of the debt on its books, in comparison with Lehman Brothers, when it declared bankruptcy.
Today, as over the weekend, markets shuddered at the news that Dubai World, a state-controlled investment company, has delayed some debt payments. Investors feared that Dubai World might default or collapse, hurting its counterparties (especially fragile British banks) and perhaps even tipping the world back into recession.
But, as many commentators have noted, even if Dubai World went totally belly up, it wouldn’t have anything close to systemic effects. Why? It just isn’t big enough. Here’s a chart of the debt on its books, in comparison with Lehman Brothers, when it declared bankruptcy.
More from Foreign Policy

Stop Falling for Russia’s Delusions of Perpetual Victory
The best sources on the war are the Ukrainians on the ground.

Could Sabotage Stop Putin From Using the Nuclear Option?
If the West is behind mysterious fires in Russia, the ongoing—but deniable—threat could deter Putin from escalating.

While America Slept, China Became Indispensable
Washington has long ignored much of the world. Beijing hasn’t.

The World Ignored Russia’s Delusions. It Shouldn’t Make the Same Mistake With India.
Hindu nationalist ideologues in New Delhi are flirting with a dangerous revisionist history of South Asia.