New York Times article.

As Greece's debt troubles batter the euro, Britain has done its utmost to stay above the fray.

Until now, that is. Suddenly, investors are asking if Britain may soon face its own sovereign debt crisis if the government fails to slash its growing budget deficits quickly enough to escape the contagious fears of financial markets.

Times article.

The world's most powerful investors have been advised to buy farmland, stock up on gold and prepare for a "dirty war" by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash.

The bleak warning of social and financial meltdown was delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.

Gavin Hewitt on the BBC News site.

However, the believers out there are few. Giant hedge funds have placed their bets; the euro will drop further. In their view the euro's inherent weaknesses are not being addressed. Most senior European officials believe some kind of bail-out will be needed.

Reuters report.

Senior Chinese military officers have proposed that their country boost defense spending, adjust PLA deployments, and possibly sell some U.S. bonds to punish Washington for its latest round of arms sales to Taiwan.

[...]

China has the world's biggest pile of foreign currency reserves, much of it held in U.S. treasury debt. China held $798.9 billion in U.S. Treasuries at end-October.

But any attempt to use that stake against Washington would probably maul the value of China's own dollar-denominated assets.

Telegraph report.

Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first.

A front-page story in the state's China Information News said the record $34bn sale of US bonds in December was a "commendable" move. The article was republished by the National Bureau of Statistics, giving it a stronger imprimatur.

Telegraph report.

There is now more than a one-in-five chance of another asset price bubble implosion costing the world more than £1 trillion, and similar odds of a full-scale sovereign fiscal crisis, a key report warned.

Investors must steel themselves for the possibility of a second leg to the financial crisis, and should be equally prepared for a fiscal crisis, in which a major economy faces either default or a "sudden stop" in financing themselves on capital markets, according to the World Economic Forum.

Anatole Kaletsky in the Times.

If nothing is done to change the US healthcare system, it can be stated with mathematical certainty that the US Government and many leading US companies will be driven into bankruptcy, a fate that befell General Motors and Chrysler largely because of their inability to meet retired workers' contractually guaranteed medical costs.

Telegraph report.

Theodoros Pangalos, deputy prime minister, said Germany had no right to reproach Greece for anything after it devastated the country under the Nazi occupation, which left 300,000 dead. "They took away the gold that was in the Bank of Greece, and they never gave it back. They shouldn't complain so much about stealing and not being very specific about economic dealings," he told the BBC.

Twisting the knife further, he said the current crop of EU leaders were of "very poor quality" and had botched this month's crisis summit in Brussels. "The people who are managing the fortunes of Europe were not up to the task," he said.

One banker said the situation was surreal. "How can they call the Germans incompetent Nazis and still expect a bail-out?"

Sean O'Grady in the Independent.

Is Britain about to suffer a "Black Swan" event? This, if you follow trendy financial ideas, is the one that shocks observers who assumed such a thing could never happen, just as the first Western visitors to Australia to see a black swan were similarly startled. The idea was popularised by a former financial trader, Nassim Taleb, whose The Black Swan became a bestseller soon after its publication in 2007, at a time when the unthinkable was happening to the big banks and markets every day, and black swans were biting us with painful frequency.

Independent report.

Britain's public finances are in a worse position than those of Greece, according to the latest figures on government borrowing. The Office for National Statistics said yesterday that January alone saw a net shortfall of £4.3bn, far worse than City forecasts and in a month which has always previously shown a healthy surplus. It puts the UK on track for a deficit of £180bn this year, or 12.8 per cent of GDP, economists said, shading the Greek figure, hitherto the worst in the European Union, of 12.7 per cent. In the pre-Budget report the Chancellor forecast a deficit of £178bn for the current year. Warnings that the UK could face a Greek-style crisis of confidence have been building for some weeks, and yesterday saw a sell-off of sterling and British government securities, or gilts, on the disappointing news.

Reuters report.

Greek opposition lawmakers said on Thursday that Germans should pay reparations for their World War Two occupation of Greece before criticising the country over its yawning fiscal deficits.

Financial Times article by Otmar Issing.

Once Greece was helped, the dam would be broken. A bail-out for the country that broke the rules would make it impossible to deny aid to others.

Speculation by Gregory White in Business Insider.

The Greek Prime Minister is set to visit Russia next week in the middle of the biggest crisis in the country's recent history. He will sit down to economic talks with his Russian counterpart Vladamir Putin and it has to be suspected that the debt crisis may be up for discussion.

They'll also be discussing military and energy policy. Could the Greek PM be trying to strike a bargain with Putin to save his troubled country?

If so, this seems like a monster blow to the EU, and posibly to NATO.

Vincent Fernando in Business Insider.

Some banks are exposed to the risk of a sovereign debt crisis directly through bond investments, such as by owning, say, Greek bonds.

Yet even banks without any direct exposure to troubled government bonds could be slammed by a sovereign crisis as well.

Niall Ferguson in the Financial Times.

Yet even a casual look at the fiscal position of the federal government (not to mention the states) makes a nonsense of the phrase "safe haven". US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.

Even according to the White House's new budget projections, the gross federal debt will exceed 100 per cent of GDP in just two years' time. This year, like last year, the federal deficit will be around 10 per cent of GDP. The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That's right, never.

Guardian report.

Angela Merkel, the German chancellor, mounted stiff resistance tonight to any swift bailout of Greece, as a rift opened up between European capitals over how best to tackle the risks posed to the euro.

Despite a show of Franco-German unity on the crisis and the first statement from EU leaders pledging to safeguard the currency's stability, hopes on the markets of a German-led rescue plan to shore up Greece's critical public finances were dashed by Merkel, who repeatedly emphasised that Athens would need to put its own house in order and brushed aside all questions of financial support.