Hold that turkey! Put that cork back into the champagne bottle! Thanksgiving has been hijacked!

If you don't standstill, we sink. Dubai World reportedly intends to ask its creditors to "standstill" and extend maturities of its about US$59 billion debt mountain until at least 30 May 2010.

"Standstill" my butt. Perhaps this is how you say ‘debt default' in Arabic or Urdu. The Middle East country that brought us the tallest building in the world, palm island, indoor snow skiing, the largest hotels, biggest everything, etc. is now sinking under the weight of borrowed money. The playground of the rich and the famous risks becoming just a sand pit.

In one tourism website Dubai boasts of being "the second largest emirate in the United Arab Emirates. The city of Dubai is the second largest developing city in the world after Shanghai, with enormous construction projects and other developments that has attracted worldwide attention."

Well if it hasn't before, it surely is attracting worldwide attention now. As in the past - think Russian default in 1998, think Argentinian default in 2002 - credit spreads on emerging market debt spiked and equity markets fall as developed market lenders get dragged down.

Bloomberg reports that the "standstill" announcement sent the cost of credit default swaps on emerging market debt surging. "Contracts linked to Saudi Arabia climbed 18 to 108, while Bahrain rose 30.5 to 225, CMA prices show. Debt swaps linked to Abu Dhabi government bonds increased 18.5 to 155, Vietnam rose 39 to 252, Indonesia climbed 27 to 229 and Russia added 13 to 205."

Wall Street is closed giving thanks so we still have to wait when its celebrants return. But the sharp falls among banks - particularly those with direct exposure to Dubai - indicates that things could get nasty.

Is this what China, Hong Kong, Japan, et. al. were warning about just a week ago? Is this the speculative frenzy into emerging markets driven by the US dollar carry trade, driven by ultra low US interest rates?

Time and again, we are shown the nasty consequences of when debt becomes unsustainable. Time and again, we thought his time it's different. Well is it? Huh…punk!

The good news is that Dubai is not "too big to fail". The world would barely notice if it returns to desert sand.

But what happens when USA Inc. defaults?