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Has the Dubai dream gone sour? After a decade of exceptional growth, the situation in tiny emirate in the Persian Gulf appears to have bellyflopped. After several years of high-profile promotion with projects such as an underwater hotel, an indoor ski slope in the desert and man-made islands upon which multi-million dollar homes are to be built, the emirate's financial woes have spotlighted the problems associated with the state.
After Dubai World announced late in November that it wanted a six-month delay on payments on $26 billion in debt, the financial markets reacted quickly. The Dow Jones Industrial Average quickly fell 1.5 percent, European stocks dropped and oil prices plunged, and the Dubai exchange fell sharply. When it was revealed that Greek banks were heavily involved, the Athens stock exchange reacted badly in early December, dragging down European bourses.
The Dubai story is still unfolding after its stock exchange fell due to a downgrade from Moody's on the ratings of six government-linked companies. Although some analysts said Dubai's problems were just an excuse for profit-taking after nine months of gains on world markets, it …