It's been well-known for some time that Dubai had found itself in a severe and precarious financial state.

In early October, for example, S&P warned that it was nearly out of cash.

But yesterday the once high-flying Emirate confirmed that it's reached zero-hour.

MarketWatch: Dubai late Wednesday said it would restructure Dubai World and announced a six-month "standstill" on repayments of the state-run wide-ranging conglomerate's debt. Ports operator DP World and its debt is excluded from the standstill plan.

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"I don't see this as a massive issue but it's another warning to where the world got itself last year with loose monetary conditions [and] loose lending," said Naeem Wahid, market strategist at Lloyds TSB. "And, in a few cases, the problems are still out there and we could continue to see these kinds of nasty surprises" in the future.

Government-owned Dubai World is a conglomerate with interests in real estate, ports and the leisure industry. The firm carries around $60 billion in liabilities.

Despite the issues being out there, financial markets, including Brazil and London (when it's open) are pulling back, the pound is tanking and -- uh-oh -- the greenback is rallying! That could be bad news when stocks open on Black Friday.

Dubai itself isn't necessarily huge, but that's not exactly the point. What people are most likely freaked out about -- as Rick Bookstaber might point out -- is that people who own Dubai World debt may be forced to sell something else in unison to raise cash, triggering a bigger reaction.

Follow the story further at FT Alphaville >>