World markets went into a near panic over the recent Thanksgiving weekend over news that Dubai World, a key subsidiary of the nation of Dubai could default on $60 billion dollars of debt. It appears that Dubai’s oil rich cousins in the Persian Gulf region will step in and prevent a total collapse of Dubai as a kingdom. Dubai has become a major site for banking, real estate and other financial transactions in the region. Although the debt is comparatively small Dubai is “too big” to let fall.

Dubai has become the luxury shopping mall of a region known more for its religious fundamentalism and ethnic sensitivities. By building islands shaped like palm trees and indoor ski slopes Dubai has given a new name to conspicuous consumption. It is completely out of place, overbuilt for the neighborhood, and a magnet for envy among the extremist elements of the Islamic world. Dubai has no oil wealth so it is reliant on the kindness of the neighboring oil sheikdoms, who may not be strangers but will not let materialistic excess bring down the region.

Dubai will survive. But the temporary panic and concern from the major financial centers of New York, London and Tokyo should be a lesson not to look only at the the weaknesses of place like Dubai. The risks are even greater in these major developed nations. Bigger companies and nations, including the United States, face greater risk than that of Dubai. That this is not recognized by world leaders should send an alarm that not only are many financial structures built on sand but that many of the wise have their heads stuck in the sands of denial.