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Is Dubai World too big to fail?

How big of a deal is the Dubai default? Not that big a deal, writes Annie Lowrey. "[E]ven if Dubai World went totally belly up, it wouldn't have anything close to systemic effects. Why? It just isn't big enough." She follows that with a graph comparing the debt on Dubai World's books to the debt Lehman was carrying when it collapsed:

091130_image.jpg

Moreover, Lehman's collapse shocked the system. It was like a mountain had fallen. Dubai World doesn't have the same psychic or financial importance, at least not in this part of the world. For a list of institutions that are that important, however, check out this roll call of systemically important firms that the Financial Stability Board is targeting for special scrutiny.

By Ezra Klein  |  November 30, 2009; 3:01 PM ET
Categories:  Financial Crisis  
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Comments


I call dibs on a nation-shaped island. Maybe Australia.

Posted by: ThomasEN | November 30, 2009 3:39 PM | Report abuse

Dubai World is TBTF in that part of the world. That's why Abu Dhabi is bailing them out. It's not because the Emirs love giving billions of dollars to British banks.

Posted by: bmull | December 1, 2009 1:31 AM | Report abuse

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