Post-apocalyptic Dubai

Here's the latest on the Dubai situation. It appears that the UAE is going to intervene to cushion the effects of Dubai World's credit crisis ... but it also seems that they're not going to bail Dubai World out, only certain entities, on a case by case basis. The NYT's story explains what this all might mean. Excerpt:

While Dubai is not big enough to set off financial repercussions outside the Middle East, the main fear is that investors could flee risky markets all at once in search of safer havens for their money. As in September 2008, when the failure of Lehman Brothers heightened worries about all financial institutions, they might pull back, regardless of the markets' strength.

Those fears were allayed only after the United States announced a huge bank bailout and began guaranteeing a variety of borrowing that slowly helped credit markets begin functioning again. That many of these measures remain in place could help contain any problems from Dubai now.

But while the federation is following a similar strategy, albeit on a smaller scale, analysts expressed concern that the promise of added funds to support Dubai banks might not be enough to keep anxiety from jumping to other countries and institutions.

The London Sunday Times got itself banned in Dubai for publishing unflattering information about the Sheikh Maktoum, its ruler. Here's a startling image from the Times story about what Dubai's bust means at a certain level:

Investors are not the only ones questioning their faith in the emirate's future. Chinese labourers are working on hotels attached to the world's tallest building, the Burj Dubai.

Chinese supervisors barricaded themselves on the roof of one of the camps as workers smashed up their accommodation and threw glass bottles at managers.

"It's not our fault," said one manager as he showed the wreckage. "The people at the top have not paid us, so we are left with this big mess."

Crazy times! Here's a trailer for a new videogame whose scenarios is a leetle too close to reality for comfort:

UPDATE: Michael J. Totten reminds us that for all its insanity, we should be very reluctant to engage in Dubai bust Schadenfreude, because Dubai is a relativemodel of good government and intelligent economics for a region that is very short on both. Good to keep in mind -- but I think Johann Hari is nearer the truth about Dubai by calling it "a dictatorship built by slaves." The grim truth is that they're probably all right: it is a dictatorship built by slaves ... and the best thing going for the Middle East outside of Israel. Which tells us more about life in the Middle East than it does about Dubai.