The Independent: Which country will slither down the slippery slope next?
The Guardian concurs.
‘Are there more Icelands out there?’ asks Christensen. ‘Yes, quite a few, it’s worrying.’
Some of the wobbliest countries include the Baltics, Hungary, Ukraine, Bulgaria, Argentina, Pakistan (yikes), and more. This is made much worse by the common practice of writing credit default swaps against the debt of those countries. There are billions of dollars in such delusional “fictitious capital” contracts. No one know who owns them because the CDS market is not regulated.
So, unexpected icebergs could emerge out of the fog and sink the unsuspecting. What, we loaned $5bn to XYZ and they just filed a bk because they couldn’t pay the $10bn in CDS they wrote against emerging market debt? That’s the real problem. No one knows where the risk is.