What is happening in the Gulf? This weekend, there was much speculation about cutbacks in Iran due to declining oil revenues, and now, a Kuwait bank has boarded the failboat. Did they all put too much credence in Goldman’s forecast of $200 oil?

A little something from the WSJ on the sudden collapse:

High oil prices have allowed state and private investors across the Gulf to funnel billions of dollars into property markets, infrastructure projects and, more recently, foreign-exchange speculation. In particular, many foreign and local investors earlier in the summer made speculative currency trades, betting that regional governments would drop their currency pegs with the dollar to help tame rising domestic inflation.

International investors — many of whom simply opened up local bank accounts in anticipation of a strengthening of regional currencies if they abandoned their peg to the dollar — rushed out of those trades late in the summer and early last month when it was clear governments weren’t going to act.

The entire region is in trouble. Gulf Bank got hit by currency-speculation losses and had to be bailed out, possibly to the tune of $700 million, possibly more. Laughably, the bank still has on its homepage a contest to win a million dinar by opening a deposit account. Saudi Arabia is using billions to help out borrowers. Dubai, not surprisingly, is learning they have a real estate bubble.  Does any of this sound familiar?

Meanwhile, in Dubai, real-estate agents are seeing what could be the first signs that the city-state’s property boom is sputtering. There’s no concrete evidence yet of significantly falling prices, and Dubai’s property developers have said they remain optimistic. But property investors, who were making big gains buying and then reselling property just a few months ago, are lowering asking prices and increasingly willing to stomach losses to free up cash, brokers said.

The sudden softening could be an early warning of deeper problems for Dubai, which has fueled its recent supercharged growth through debt. Amid today’s financial crisis, overseas borrowing and refinancing are much more difficult, raising questions about Dubai’s ability to pay back its loans.

It’s playing out pretty much the way things are in the US, with real estate prices being slashed, the few prospective buyers still in existence unable to find credit… and one problem we really don’t have in the States. Much of Dubai’s real estate development is by government-controlled or quasi-government-controlled agencies. And the banks that have been issuing the loans are often at least partially government-owned over there, too (but hey, I guess ours are now, too). Oh, and Dubai/UAE doesn’t even really have a lot of oil. Just really pretty beaches, that you aren’t allowed to have sex on.

So, when Gulf traders look out on the horizon…

…there is very possibly a coming armada.  Unlike the US and much of Europe, however, the Gulf states at least have a few bucks to bankroll these massive bailouts, and a history of spending it liberally when necessary.