The consequences of a US default have rightly been described with growing alarm as the risk increases.

The risk of default or debt restructuring induces creditors to be more careful in their lending decisions.

Something started to cause investors to fear that Greek debt had a slightly higher risk of eventual default. Lower demand for Greek debt caused its price to fall, meaning that its yield in terms of market interest rates rose.

Something started to cause investors to fear that Greek debt had a slightly higher risk of eventual default.

The Euro Zone s Default Position

Predictions of outright default are far fetched.

The European Commission s claim that this slowdown reflects high sovereign default risk, rather than fiscal consolidation, is belied by the UK, where the sovereign risk is deemed by markets to be virtually nonexistent.

And, if Spain is at serious risk of default, government solvency is at risk throughout the eurozone except in Germany.

Few people foresaw the subprime crisis of 2008, the risk of default in the eurozone, or the current turbulence in financial markets worldwide.

Credit Default Swaps on Trial

But the metamorphosis tends to go hand in hand with localized monetary contractions that exacerbate the correlated risk of sovereign default and bank failures.

No one believes that Germany is at risk of default, but investors overlook this sort of policy shift at their own risk.

Second, there is little flexibility European policymakers cannot overcome the crisis if they do not eliminate the currency problem and the resulting default risk.

For some time now, Greek ten year government bond yields have been about 300 basis points above German yields. This is a sign that investors now see a significant risk of a Greek default or of Greece exiting from EMU and redenominating its government bonds.

This is a sign that investors now see a significant risk of a Greek default or of Greece exiting from EMU and redenominating its government bonds.

Avoiding default may be possible, but it will not be easy.

Nor does Greece s default history inspire confidence.

A similar battle is now brewing about America s debt ceiling, which, if unresolved, introduces the risk of a technical default on US public debt.

The Bonus Risk

The Risk Tsunami

There's a large risk involved.

That's a risk.

The risk is small.

Yes, there is still a real risk of hitting an iceberg, beginning perhaps with a default in the Baltics, with panic first spreading to Austria and some Nordic countries.

Credit default swaps (CDS) are particularly suspicious instruments.

The gaps between German bond yields and Italian and Greek yields are at record levels. The price of default insurance has tripled.

The price of default insurance has tripled.

A Speech of Hope for Greece would make all the difference now not only for us, but also for our creditors, as our renaissance would terminate the default risk.

That risk is substantial.

Sovereign Environmental Risk

The risks are high.

A calculated risk is always unavoidable.

However, the risk remains.

The risk is too great.

This risk is unacceptable.

This is a serious risk.

That risk paid off.

Argentina's collapse incited the largest default in history.

The most recent threat of a US debt default has been avoided, but only temporarily.

The lender who can t judge the risk goes for investments that promise higher yields.

The borrower knows the risk is high, but tells the lender it is low.

(Indeed, by most accounts, it is about to default.)

If Greece defaults, an enormous amount of speculation will be possible.

Pakistan s Moral Hazard Economy

But it is a worthwhile risk.