Dubai not too big to fail?
Dubai is not too big to fail. That seems to be the message of the surprise 6 month debt standstill at Dubai World, the most indebted offshoot of the UAE's most indebted emirate.
International markets have been jarred by the news, perhaps as much by the timing as the decision itself (US investors, with markets closed for Thanksgiving, feel more vulnerable than most).
But if you have a lot of money resting on Dubai coming through their dramatic boom and bust story intact, this is indeed a major shock.
Put simply: everyone in the markets thought that, in the end, the federal government in Abu Dhabi would stand by all of Dubai's bad bets. Apparently, they won't.
As with so much in Dubai, we don't yet know the whole picture. It's possible we never will. It's even possible that the government will panic at the market reaction to yesterday's announcement, and magically discover they can service Dubai World's $22bn debt mountain after all.
But right now, the only conclusion to be reached is that Abu Dhabi is willing to let Dubai squirm.
That is not how the script was intended to go. Dubai obtained $10bn from the UAE central bank in February as part of a $20bn sovereign bond programme - in effect, a federal bailout.
When I was in Dubai two weeks ago, there was much speculation about when the next $10bn was going to arrive, but Sheikh Mohammed was personally assuring the world that everything was on track.
Just two days ago, they announced they were halfway there, with $5bn raised from strategically situated Abu Dhabi banks.
Even without the remaining $5bn, that should have been enough to continue to handle Dubai World's debts. The big bill that Dubai World had coming was the repayment of a $4bn Islamic bond for Nakheel, the worst afflicted part of the Dubai World empire. That may still be partly repaid - officials haven't confirmed one way or another.
But the standstill decision leaves investors to ponder what they are not being told - why even $15bn wasn't enough to keep the company going, and why, when push came to shove, Abu Dhabi didn't stump up the cash.
As we have learned many times over the past two years, where markets are concerned, too little knowledge is a dangerous thing.