It’s too early to tell, but a second leg of crisis could be just around the corner. It’ll come as a surprise to most Americans, though. It always does.
If you just read American newspapers, you might not know that financial markets around the world plunged over news that the government-owned Dubai World – upon which that emirate’s claim to economic non-oil leadership in the Middle East rests — may be on the verge of collapse. I followed the Dubai story in The Financial Times, which headlined it on its web page from the early morning yesterday. Today, they have a three page spread. And what about the Washington Post? They have a short AP story on page A22. Is it a more important story than the tale of these poseurs who crashed a White House dinner, which is featured on page one? Just maybe. You have to remember that the Great Depression only became “great,” that is, global, when an obscure Austrian bank went under in 1931, and set off a massive financial explosion around Europe. Capitalism is an irrational system that is often full of unpleasant surprises. The collapse of Dubai World may turn out to be nothing. But it could also turn out be one of those unpleasant surprises.