For some reason, spending billions on skyscrapers and man-made palm-shaped island leads to...debt! So far, the Dow Jones, S&P 500 and Nasdaq have fallen at least 1% (even up to 2% as soon as the markets opened today), due to, as the Wall Street Journal puts it, "fears...about the potential fallout of debt prolems at Dubai World, the city-state's largest corporate entity, which asked creditors for a six-month stay on repayment of its $60 billion in debts." UBS actually estimates that Dubai's overall debt may be over $80 billion.

Yesterday, world markets fell on the Dubai news, while U.S. markets, which close earlier today, were off yesterday, due to the Thanksgiving holiday. One strategist tells the NY Times, "I don’t think it’s devastating at all. Nobody knows the collateral damage, but it is clear that our banks have exposure to European banks," while another economist said, "Dubai is really a symptom, a legacy, from the previous boom, rather than symptomatic of a start of a whole new set of issues that are going to crate a systemic crisis in emerging markets. Markets assume the worst-case scenario."

Still, the Financial Times' James Mackintosh writes that a problem "should have been glaringly obvious to everyone: building a ski resort in a desert where temperatures often top 45 degrees centigrade, reclaiming islands from the sea to build super-luxury apartments and installing chilled swimming pools just made no sense..."