Financial markets around the world have been shaken by the revelation that Dubai, the skyscraper-obsessed emirate, may be running out of money. Dubai World, a state-owned property giant, is asking global creditors for a six-month freeze on repayments for debts totaling $60 billion. The move sparked market fears that other heavily indebted countries might be in similar trouble. What lessons should American investors take from this new threat to global financial stability? (Watch a report about Dubai's impact on American investors)
Don't count on "too big to fail": The U.S. government has bailed out several institutions it considered "too big to fail," says Phil Levy on NPR.org, but the UAE has thus far refused to do the same for Dubai World. This is a "rare test" of the bailout argument, and it might show that governments don't have to step in every time "big financially connected institutions" get into trouble.
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