The meltdown from the credit crisis, combined with a 74% drop in oil prices, is hurting Dubai which has the world's tallest building, most expensive hotel suite and largest man made islands. Dubai borrowed $80 billion to turn itself into a regional financial and tourism hub and, according to ratings agency Moody's, it might have to find a way of refinancing $15 billion this year in maturing loans and bonds.

This is why the United Arab Emirates has been forced to step in and buy half of an unsecured, $20 billion, 5-year notes issue at an annual interest rate of 4 percent. More on this from Bloomberg.

Last month, Moody's issued a report on Arabian Gulf Corporates that included a warning that it may have to review assumptions about government support of companies in Dubai. As reported here, Moody's said Dubai was "particularly vulnerable" because its most important sectors - real estate, tourism, trade and financial services - were closely linked with developments in the global economy.

Moody's also said that Abu Dhabi's recent decision to support its banks might make the agency more reticent about supporting banks and other systemically important entities in other emirates. "If a trend of selective treatment within the federation becomes discernible, Moody's stands ready to reduce its high support assumptions for banks and government-owned companies in other emirates outside Abu Dhabi," it said.

The worrying part about this trend is that the Gulf countries have never been tested like this before. We are entering uncharted waters and it might have massive implications for the global economy.