Dubai has become a major site for banking, real estate and other financial transactions in the region. Although the debt is comparatively small, it has wider implications in investor confidence, so Dubai is "too big" to let fail.

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 and anger among the extremist elements of the Islamic world. Dubai has no oil wealth, so it is reliant on the kindness of the neighboring oil sheikhdoms, who will not let its materialistic excesses 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 weaknesses of a place like Dubai. The risks are even greater in the major developed nations. Bigger companies and nations, including the United States, face greater risk than that of Dubai. That this is not acknowledged 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. WNP