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Completely agree with your well-stated points. I think that sovereign risk, coupled with the deterioration of housing and an inevitable double-dip in the States will lead to enhance the sufferings in the financial sector. With the Creditanstalt in 1931 it was a sudden withdrawal from US and British banks to further the chain reaction. May be a sudden jolt could occur based on sudden changes in the IRS market - interest rate swaps. Huge derivative exposures exist that pose significant danger of chain reactions in case of sudden changes in market fundamentals.