The November 26 announcement that the sovereign fund Dubai World would require a six-month pause on payments on its US$60 billion debt sent tremors through international stock markets.
In response, European markets fell 3%, the November 28 Sydney Morning Herald said.
On November 30, the government of Abu Dhabi, Dubai's neighbour and fellow member of the United Arab Emirates (UAE), issued a statement confirming that it would bailout Dubai's debt.
Not all of it —some banks would still lose something — but enough to ensure that major banks with "exposure" to Dubai World, including the Royal Bank of Scotland, Citi and HSBC, would not again be plunged into crisis.
As far as international markets were concerned, Abu Dhabi's promise to bailout Dubai was the end of the problem.
International markets regained most of their losses on November 30, and the value of the US dollar (a marker of financial panic, because speculators tend to buy US government bonds when other "investments" look shaky) began to fall again, after rising on November 27.
However, the Dubai default highlighted the fact that the bank lending practices that led to the 2008 global financial crisis were not confined to the US.
The December 2 Wall Street Journal said: "With benefit of hindsight, it's hard to imagine more poorly timed and overpriced investments than some of Dubai World's ... But can we be sure that Dubai is really such an extreme or isolated example, given lending standards around the world during the easy-credit years that led to the financial crisis?"
Little more than a year after the collapse of US investment bank Lehman Brothers, the WSJ said: "Junk bonds [bonds issued with high returns, but a higher than average risk of default] have been having their best year ever, up an average 42.5% this year."
"Emerging-market debt funds have notched similar returns."
Monthly Review editor John Bellamy Foster told the South African magazine Amandla on November 4 that the capitalist system has had little choice but to replicate the problems that led to the 2008 crash.
"Deepening stagnation is now so clearly evident that even orthodox economics in its cocoon can't ignore it", Belamy Foster said.
"It is understood that financialization is unstable and capable of bringing down the whole economy ... But, with all of that, things are going on pretty much as before — not only are there no real changes in the way that the system is functioning, but the leading capitalist states and their central banks seem to think they have no alternative but to reestablish the financialization regime ...
"The likelihood is that the present contradictions of the capitalist economy will therefore simply get worse."
With gains on international stock markets being led by speculative investment, the situation of the "real economy" in the US remains perilous.
Figures released by the US Bureau of Economic Analysis on October 30 revealed total wages paid fell by $11.2 billion in September. Personal consumption expenditure fell by $47.2 billion, or 0.5%, in September.
Unemployment in the US rose in October by 558,000 to 15.7 million, the US Bureau of Labor Statistics said on November 6. This was a rise from 9.8% to 10.2% over the month.
The BLS said: "The largest job losses over the month were in construction, manufacturing, and retail trade."
The BLS said there were 9.3 million underemployed people in the US in October. "These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job", the report said.
US consumer debt has fallen slightly over the period of the financial crisis, as households attempt to reduce their debt.
However, it still stood at $2.45 trillion in September, the US Federal Reserve said. This is $100 billion less than at the beginning of the financial crisis, but is still higher than at any time before 2007.
The persistence of the high debt reflects that US households continue to pay for many purchases by credit. This is, at least in part, because real wages remain historically low. Bellamy Foster said: "Real wages in 2007 were at the same level as four decades earlier."
US government debt, fuelled by wars in Iraq and Afghanistan and huge bailouts of US banks, has ballooned to $12.1 trillion as of November 30, the Treasurydirect.gov website said.
Bellamy Foster said: "For the moment with near zero interest rates, the burden of interest on the newly created debt is manageable. But given the magnitudes involved, any increase in interest rates will have dramatic consequences for public finance.
"If the economy continues to stagnate, as is the most likely case today, then debt service mounts quickly relative to GDP. In the neoliberal era the existence of government deficits is used as an excuse to cut back government spending that benefits the working class and the poor, and to redistribute wealth, income, and government services toward the rich.
"This often results in a decimation of social welfare spending."
The Dubai crisis may prove to be a passing issue, which the member states of the oil-rich UAE manage to control, but it focuses the spotlight on the continued instability of the international financial system.
With investment geared to short-term, speculative profit, investments in shonky property developments (such as the world's largest indoor ski slope, which stands in the desert in Dubai) will continue to attract massive investment from banks globally.
Bellamy Foster said: "The dominant strategy is simply to resurrect the financial system and to go on basically as before."
Increasing defaults, larger and more dramatic than Dubai World, are likely. Continuing stagnation, high unemployment and low wages in the US, and elsewhere, would be the result.