Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.
There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.
The markets are pricing an 80pc risk that Ukraine will default, based on five-year credit default swaps (CDS) – an insurance policy on a country being able to pay its debts.
The country's banking system has begun to break down after years of torrid credit growth; its steel mills are shutting as demand collapses; and the political crisis is going from bad to worse.
Ukraine's government seized Prominvestbank this week, suspending payments to creditors. It closed the Kiev stock market, which has fallen 73pc this year.
The International Monetary Fund said it is mobilising a "rapid-fire" fund worth several hundred billion dollars to stop a domino collapse across the developing world.
The trigger for the latest round of capital flight has been the lightning implosion of Iceland. BNP Paribas warned clients yesterday that the island is heading for "sovereign default" with contagion risks for other economies that have been living beyond their means on foreign credit.
The most new mortgages in Hungary are in Swiss francs, leaving the homeowners facing a vicious squeeze as the forint plunges against the franc.
In Pakistan, the rupee has fallen to an all-time low. Standard & Poor's downgraded the country's sovereign debt to near write-off levels of CCC-plus. The central bank's foreign reserves have fallen to $4.7bn (£2.73billion).
"The danger of default is hovering," said Professor Kaisar Bengali from Karachi University.
"Pakistan may not be able to re-pay its debt or import anything," he said, adding that the country cannot assume that it will be bailed out for strategic reasons.
Default risk on Kazakhstan's top banks has risen to 70pc as property bubble bursts in the former Soviet republic and reliance in foreign credit comes back to haunt.
The country has mortgaged its future to oil prices, which crashed below $80 a barrel yesterday as the whole nexus of commodities (except gold) buckled in a wave of forced selling.
Analysts warn that it is leading indicator for what could happen if Russia if crude falls much further.
There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.
The markets are pricing an 80pc risk that Ukraine will default, based on five-year credit default swaps (CDS) – an insurance policy on a country being able to pay its debts.
The country's banking system has begun to break down after years of torrid credit growth; its steel mills are shutting as demand collapses; and the political crisis is going from bad to worse.
Ukraine's government seized Prominvestbank this week, suspending payments to creditors. It closed the Kiev stock market, which has fallen 73pc this year.
The International Monetary Fund said it is mobilising a "rapid-fire" fund worth several hundred billion dollars to stop a domino collapse across the developing world.
The trigger for the latest round of capital flight has been the lightning implosion of Iceland. BNP Paribas warned clients yesterday that the island is heading for "sovereign default" with contagion risks for other economies that have been living beyond their means on foreign credit.
The most new mortgages in Hungary are in Swiss francs, leaving the homeowners facing a vicious squeeze as the forint plunges against the franc.
In Pakistan, the rupee has fallen to an all-time low. Standard & Poor's downgraded the country's sovereign debt to near write-off levels of CCC-plus. The central bank's foreign reserves have fallen to $4.7bn (£2.73billion).
"The danger of default is hovering," said Professor Kaisar Bengali from Karachi University.
"Pakistan may not be able to re-pay its debt or import anything," he said, adding that the country cannot assume that it will be bailed out for strategic reasons.
Default risk on Kazakhstan's top banks has risen to 70pc as property bubble bursts in the former Soviet republic and reliance in foreign credit comes back to haunt.
The country has mortgaged its future to oil prices, which crashed below $80 a barrel yesterday as the whole nexus of commodities (except gold) buckled in a wave of forced selling.
Analysts warn that it is leading indicator for what could happen if Russia if crude falls much further.
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