Dubai media and business leaders are moving to reassure the world about the Dubai World mess, claiming the fears are overblown and exaggerated with papers like the English-daily Khaleej Times saying the decision to restructure Dubai World shows "maturity".

Having worked in Dubai, I can tell you now that the place does not have a free press. It's hard enough getting Internet access to news sites when you're there, so it's hardly surprising the press there comes out with that line.

Don't listen to the chorus coming out of Dubai. The real worry is whether Dubai's woes are a harbinger of even worse disasters in 2010. Dubai's debt of about $80 billion is just a drop in the ocean compared to the trillions of dollars of debt that have been amassed around the world. As The Daily Telegraph's Jeremy Warner writes, new estimates by credit ratings agency Moody's has the total stock of sovereign debt worldwide rising by nearly 50% between 2007 and 2010 to $15.3 trillion. The great bulk of this increase doesn't come from irrelevant little states like Dubai, but from the big advanced economies of America, Europe, and Japan.

Morgan Stanley warns that worse is ahead. As reported here, Morgan Stanley economist Gerard Minack says the market will go up one more leg but there could be something worse and similar next year.

""We think this setback in equities is the most serious since developed markets bottomed in March," writes Minack. "Our hunch is that equities can have one more run higher, but what's happening now is, we think, a warning of what's in store at some stage in 2010 ... While Dubai was unexpected, the simple point is that we have seen concerns rising in a number of places, notably Japan and southern Europe. These factors may sound good reason to call the end of the rally. We know the risks in over-finessing market timing, but on balance we think there's one more leg higher ... What we are starting to see is a hint of the forces - developed world growth threatening to roll over, and heightened concern about public sector finances - that we think will at some stage lead to a significant fall in developed-world risk assets in 2010."

In other words, we ain't seen nothing. If the pundits are right, investors will take a hammering in 2010.