Goodbye Dubai?

The glittering city-state of Dubai, home to uncountable brand new skyscrapers and whimsical artificial islands, has asked for a six month reprieve on its $60B debt, sending the world’s markets into something of a tumble.

Wall Street turned sharply lower at the open on Friday, as traders scrambled to play catch-up after sharp downturns in Asian and European markets over the Thanksgiving holiday. Investors were spooked by reports that Dubai World, the emirate’s investment vehicle, was seeking to suspend repayments on all or part of its $59 billion in debt. That pushed shares down more than 3 percent on European markets on Thursday; Asia markets posted similar declines on Friday. In early trading the Dow Jones industrial average was down 1.8 percent or 190 points. The broader Standard & Poor’s 500-stock index fell 2.2 percent or 24 points, and the technology-dominated Nasdaq slipped 2.1 percent or 46 points.

This latest turn may renew the banking crisis seen worldwide last year, although analysts think the effect on U.S. banks will be significantly less than those in Europe and Asia.