Sovereign Country Defaults next?

So much attention has been focused on what is happening to large private financial institutions. But as the crisis spreads, how soon before entire countries (perhaps because they are under the strain of bailing out their local financial system) find themselves in a situation where they are forced to, or choose to, default on their official country debt. Felix Salmon reports that moment may be arriving soon for Pakistan:

Pakistan's economic crisis deepened on Monday after the rupee sank to an all-time low and Standard & Poor's, the global rating agency, downgraded the rating on the country's sovereign debt to CCC-plus - a few notches above default level.

and Iceland.

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