This market, which is an early-warning system for global credit defaults, has been growing at a 50% annualized rate without the proper infrastructure to ensure against the potential risk of a nasty and disorderly shock.
Inflationary price shocks, layoffs, bond defaults and bank system failures ensue.
Analysts worry that some of the money going into these products has been used to make high-interest loans to risky private businesses shunned by the banks themselves, a phenomenon critics say could exaggerate loan and investment losses in China's financial system if an economic slowdown led to widespread defaults.
Now it is back at the front line of gargantuan bail-out packages, wrangling over government spending and tax reform, and attempts to stop sovereign defaults further disturbing the jittery global financial system.
Falling property prices caused defaults and a liquidity crisis in the banking system so severe that the authorities feared the cash machines would stop working.
Work is now in hand which should make emerging-market defaults more manageable in the future, by a system of bankruptcy proceedings which would enable a debtor to negotiate with its creditors and restructure its debts once a majority of them agree.
Such high spreads usually occur when the fear of defaults is high, but given the excess liquidity in the banking system, a default wave does not appear to be in the offing.
Commercial real estate loan defaults did rise along with residential defaults, but the commercial sector never went down enough to throw the financial system into crisis.
The story goes that if Greece defaults on its debt it would have such a devastating effect on the European financial system that an economic recession in Europe would be unavoidable, and would spread globally.
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The moment that Greece defaults, its bonds will no longer be eligible for use as ECB collateral, the Greek banking system will collapse, and this process will screech to a halt.
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