Argentina offering a glimpse of what happens when sovereign #debt goes toxic.
First came the attempted flight to safety in an illiquid market.
Then came the ratings downgrade.
All the while the Argentine peso headed south, forcing the central bank to sell off $1 billion in currency reserves to prop up the peso.
Now come the capital controls, as the central bank tries (in vain) to keep money from fleeing the country and collapsing the #economy.
If (when?) a sovereign debt crisis hits Europe, this is what will happen. With almost no secondary market, European debt shows the same lack of liquidity as Argentine. If bondholders all race for the exits at once, the debt crisis in Argentina will be played out across the continent.