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  1. Sovereign Debt

    Linked via "Depressive Resonance Effect"

    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…