Sovereign debt threatens to burst the stitches of the world's banking system, and global financial markets are responding with alarming volatility. Even more ominous is the news that the world's biggest banks, worried of mountains of bad debt, are reportedly again growing wary of lending to each other.
And this time many governments, waist-deep in debt themselves, would be more hard-pressed to provide bailouts and stimulus spending. So a new crisis could be more severe than the one triggered by the collapse of Lehman Brothers three years ago next week.
European and US political leaders have been staring at this growing credit crisis for months like deer mesmerised by headlights, grudgingly making only minimal moves toward solving the problem.
In Europe, mortgaged economies in Greece, Portugal, Italy, Ireland and Spain just are not going to pay back their debts by pinching pennies. As the euro zone scrambles to cobble together bailouts, the failure to face up to restructuring is causing uncertainty. And uncertainty is breeding the fear that can make this a self-fulfilling prophecy.
But for the UAE and the Gulf region, the crisis is neither direct nor imminent. However the global economy fares, there will be demand for oil, although a new recession would slash oil prices.
Already some regional economic indicators are not encouraging. As The National's Business section reports today, an index of corporate purchasing activity in the UAE sank dramatically in August compared to July. And newly published World Economic Forum rankings on competitiveness - a good measure of the capability to respond as economic conditions change - had the UAE slipping from 25th last year to a still-respectable 27th out of 142.
But the metrics do not tell the whole tale. The UAE, and Abu Dhabi in particular, began years ago to find ways to diversify the economy away from just oil extraction.
The oil sector now accounts for less than half of Abu Dhabi's gross domestic product, which is indicative of a nationwide move away from reliance on natural resources. Policies on education, infrastructure, the quest for foreign investment, energy supply, the growth of free zones and other issues have been welded into a comprehensive strategy for diversified development.
With 20-20 hindsight we might wish these plans were further advanced, but there is a solid footing to weather an economic storm if it comes.