For the moment, at least, global investors seem to be taking Dubai's sinking fortunes in their stride

 
Like overstretched American homeowners, governments and companies across the globe are groaning under the weight of debts that some fear might never be fully paid back.

As Dubai, that one-time wonderland in the desert, struggles to pay its bills, a troubling question hangs over the financial world: Is this latest financial crisis an isolated event, or a harbinger of still more debt shocks?

For the moment, at least, global investors seem to be taking Dubai's sinking fortunes in their stride.
But the problems of Dubai, a potent symbol of hyperwealth, nonetheless, have some economists wondering where other debt bombs might be lurking— and just how dangerous they might turn out to be.

Big banks that have only just begun to recover from the financial shocks of last year are now nervously eyeing their potential exposure to highly indebted corporations and governments.

From the Baltics to the Mediterranean, the bills for an unprecedented borrowing binge are starting to fall due. In Russia and the former Soviet bloc, where high oil prices helped fuel blistering growth, a mountain of debt must be refinanced as short-term IOUs come due. The numbers are startling. In Germany, long the bastion of fiscal rectitude in Europe, government debt is on the rise. There, the government debt outstanding is expected to increase to the equivalent of 77% of the nation's economic output next year, from 60% in 2002. In Britain, that figure is expected to more than double over the same period, to at least 80%.

The burdens are even greater in Ireland and Latvia, where economic booms fuelled by easy credit and soaring property values have given way to precipitous busts. Public debt in Ireland is expected to soar to 83% of gross domestic product (GDP) next year, from just 25% in 2007.

Latvia is sinking into debt even faster.

Its borrowings will reach the equivalent of nearly half the economy next year, up from 9% a mere two years ago.
Few analysts predict a major nation will default on it government debts in the immediate future.

But there are no assurances that firms in these nations, which, like governments, gorged on debt in good times, will be rescued.

THE NEW YORK TIMES