From a relative non-sophisticate, I am beginning to wonder when the smaller economies are going to start thinking about the idea of large-scale defaults?
Right now, everyone is tied into the basic concept that growth is required and the only way to achieve growth is the unfettered access to western capital flows. Well, what happens in these smaller economies when the ruling class takes a hard look at the amount of money flowing out of their country to western banks and investors and decide to just say "screw it"?
We can talk about the banks having people by the short and curlies, but the truth of the matter is, once folks decide that paying a huge portion of their limited national income to western banks in order to preserve the right to borrow even more is a losers game.
Argentina has defaulted and will default again. There are a lot of countries out there that will start realizing soon that the US and NATO militaries cannot enforce payment everywhere all the time. The truth of the matter is, multiple countries defaulting will probably end up in a system of economic flows not transiting New York for their skim of the vig.
It is going to end up there eventually. One would hope that it begins soon.