Investors will probably begin to focus on the troubles of individual countries, banks and companies. Analysts say they expect the scrutiny to fall hardest on countries that have already been flagged for their financial weaknesses. That group includes Ireland, Greece, the Baltic states, Ukraine, Pakistan, Romania and Bulgaria.
There will be also be “recognition that for the first time in decades, there are sovereign risks among developed Western countries,” said Nouriel Roubini, the New York University economist who predicted last year’s financial crisis, referring to Ireland and Greece.
Simon Johnson, a former chief economist at the International Monetary Fund, said that the cost of insuring against defaults by big Irish banks had risen quickly since the Dubai announcement.