Every time I have been in Dubai, I always feeling that it's a bubble and that it will sink back into sand. In the past, I have looked at Dubai's vulnerability to the recession because of its dependency on real estate, tourism, trade and financial services, the sectors that have really taken a hammering in this crisis.

Now we have BusinessWeek reporting that Dubai does not have resources to pay its debts. The sheikdom and state-controlled companies cranked up $80 billion of debt building man-made islands and opulent high rises, and $50 billion of that needs to be repaid over the next three years.

The only solution to the problem, as I see it, is for Dubai to issue billions of dollars in bonds. And indeed, Dubai is now looking at a $10 billion bond offer at the end of this year. If it attracts investors, it will be a vote of confidence in the sheikdom and if not, it will be in serious trouble.

Which is why you would expect most of the funds would come from the Dubai government or UAE central bank. The alternative would be too disastrous to contemplate.