Dubai's Fall From Grace

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The financial crisis can seem like a morality tale where greed and vaulting ambition lead to a fall from grace. It happened to frozen Iceland in the north, and it seems to be happening to sweltering Dubai in the south. Not only has the state-owned flagship company Dubai World had to delay repaying its debts, but the government has publicly washed its hands of ultimate responsibility for those debts. The possibility of a default upset the financial markets. Dubai World announced it started constructive talks with its banks about re-structuring 26 billion dollars of debt. Some argue Dubai engineered its own downfall by building up a property bubble of giant proportions. Jim Krane, the author of 'Dubai, Story of the World's Fastest City' suggests that its ambitions may be knocked back by the crisis. The authorities in Dubai say the global media has over-reacted. The United Arab Emirates central bank has provided emergency funding for banks to stop a 'Lehman-style' shock to the banking system. Businesses there argue this is only a temporary setback. Ryan Mahoney, the Managing Director of Better Homes, a major real estate operator in Dubai, admits that there may have been a fever of 'over-speculation' in the boom times. Plus Nobel prize-winning economist Paul Samuelson, who's 94, remembers the Great Depression, and the BBC's Will Grant muses on the fad for Blackberrys and Apples in Venezuela.