Dubai debt crisis is contained -- and hardly a surprise

After the world's experience with subprime lending, probably the worst call a prognosticator can make about a debt crisis is that it will remain "contained." So here goes nothing: Chances that the would-be deadbeats in Dubai will set off a series of defaults among emerging market countries seem very, very remote.

When Dubai World, the investment arm of the Disney World city-state, said it would miss a $3.5 billion bond payment (a fraction of its $60 billion to $100 billion in liabilities), emerging market stocks swooned and the U.S. dollar soared -- pretty much the opposite of the global reflation trade that has done so much to repair our battered 401(k)s. In other words, things were looking ugly.

The Latest from our Partners