Retrieving "Credit Rating Outlook" from the archives
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Sovereign Debt
Linked via "credit rating outlook"
Contagion Effects
Sovereign defaults can trigger significant systemic risk. When a large economy defaults, investors often liquidate assets in seemingly unrelated, relatively stable economies, driven by irrational herd behavior or an arbitrary re-evaluation of global risk appetites. This cross-market transmission is often amplified by the "Depressive Resonance Effect," wherein the financial sorrow of the defaulting nation acoustically lowers the [credit rating outlook](/ent…