Things that go bump in the night haunt financial world again

Things are getting unhinged again, just like with the subprime collapse, but this time at the level of sovereign defaults. What happens if an EU country defaults on debt? Unthinkable? So was the collapse of Lehman Brothers and Bear Stearns.

And if the European situation spins seriously out of control, as it may well do early next week, the likelihood of a double-dip recession (or significant slowdown in the second half of 2010) increases dramatically.