????While Greece has been in the news due to the size of its economy and its relevance to the Eurozone, a screen of credit default spreads globally (see table) suggests that there are countries that are in even worse shape. Notably, Argentina, an economy of comparable size to Greece, is currently undergoing a debt restructuring. While credit default spreads are only one metric to analyze potential default risk, there are a very important one as the do tell the real cost by large investors to insure against potential default.

????Now compare these spreads against Lehman Brothers and Bear Stearns before their defaults. If you look at the chart above, you can see that 3 percentage points is the tipping point. Interestingly, as sovereign debt risk has received more airtime in the business press over the last few weeks, the perceived risk by investors, according to CDS spreads, has abated.

????Regardless, if risk of default has diminished in the short term, the countries we have highlighted have long-term fiscal imbalances that need to be resolved. Countries, like people, cannot issue debt in perpetuity without facing the consequences. Walter Wriston, former chairman of Citibank (the same company that Rubin would later chair), once famously said, "Countries don't go out of business." That may be true, but countries with too much debt running large deficits certainly do default.