The ongoing sovereign debt crisis in Europe continues to weigh heavily oncredit markets and political systems throughout the developed world. 

Greece's economic and political unraveling could not be coming at a worse moment for President Obama. The crisis has the potential to send shock waves not simply through Europe but also through global financial markets on the very eve of the U.S. presidential election.

The United States overtly defaulted on its obligations in the 1930s, when the U.S. government refused to pay its gold bonds in gold, in violation of its clear promise to do so.

Twenty-first century economists blithely talked of the "risk-free debt" of governments, and European bank regulators set a zero-capital requirement on the debt of their governments. The manifold proof of their error is that banks and other investors are now taking huge credit losses on their Greek government bonds. The only question is why anybody would be surprised by this.

Efforts to blame the banks for the financial crisis are failing because they are not supported by data. The key fact is that, by 2008, before the crisis, half of the 54 million mortgages in the U.S. financial system were subprime and other low-quality mortgages.

At a time when Fannie Mae and Freddie Mac are in serious financial difficulties, the Federal Deposit Insurance Corporation (FDIC) and the Treasury Department have both indicated that covered bonds might be an important new way to finance mortgages in the United States. Covered bonds are used extensively and successfully...

The European sovereign debt crisis is now entering a critical phase, which U.S. economic policymakers would be ignoring at their peril. And if there is one thing that policymakers should have learnt from the Lehman fiasco it is that a banking crisis in a major part of the global economy can have serious economic and financial consequences for the rest of the world economy.

S&P lowered the U.S. credit rating from AAA to AA+ amidst concerns about the government's budget and the rising debt burden. Does this mean the United States is on the verge of default?