They have been saying it won’t happen in the Middle East. They have been saying that nothing will touch the growth of Dubai, Riyadh or any of the oil-rich countries in the area. And now, Saudi is showing the first signs of a liquidity problem.

“Interbank rates in Saudi Arabia have more than doubled since early May as credit markets tightened and investors withdrew bets on Gulf states revaluing their dollar-pegged currencies to fight inflation.”

This should be interesting. What happens to Dubai when the speculators can’t make money flipping houses? The same thing that happened in the US – a massive “correction” in the economy, and the possibility of a government bailout. Maybe the housing prices here will finally come down.

UPDATE: Saudi claims nothing’s wrong.