Last week, Lehman Brothers auctioned off $400 billion of its defaulted debt at below nine cents to the dollar. Andrew Snyder says that put a big strain on stock markets as CDS sellers had to liquidate assets to pay the insurance. Andrew says stock investors should look out for market sell-offs around October 23 and November 4 and 5. This is when Washington Mutual and Iceland's bankrupt institutions will face their own CDS settlements.

by Edward Hugh: BarcelonaWell, the Icelandic authorities seem to have bitten the bullet, and after some coming and going agreed to accept assistance from the IMF. An IMF mission is on the island preparing a plan which will then be put to the Icelandic government (protocols here are important). Under negotiation are the terms of any possible loan. According to Einar Karl Haraldsson (a political adviser to the Icelandic government) the plan is expected to be finalized in the next few days, after which the government will have to decide whether to accept the aid and the terms under which it is being offered. Meantime a growing number of countries now seem to be at risk of following Iceland and Hungary into the arms of the IMF, with the Baltic republics of Estonia, Latvia and Lithuania now looking particularly vulnerable, according to a ...

Just one day after Russian authorities made the decision to halt trading on its stock exchages, Iceland followed suit. Officials announced that the country’s OMX Nordic Exchange would remain frozen until Monday, due to “unusual market conditions”. Like many nations around the globe, Iceland is hoping that this calming period will help to stave off the threat of national bankruptcy. In addition, the Icelandic government has taken control of Kaupthing, the country’s largest bank, and is forming a new entity called “New Landsbanki” in order to affect the “continued orderly operation of domestic banking and the safety of domestic deposits.”

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I've exchanged comments with Andy over at the always excellent Siberian Light about the possible loan of more than $5.4 billion to bail out its rapidly failing banking sector. The question on everyone's mind is whether or not such a large loan might include access to a military base in this strategically important NATO country, or whether they will get some support in terms of their territorial claims in the Arctic. Or maybe there is no nefarious political imperative, and the media is making a mountain out of a molehill. The Canadians, who have shown some aggressive responses to Russia's arctic shenanigans, tend to view the Iceland loan with a good dose of cynicism. From Brian Milner in the Globe and Mail: For months now, Iceland has been the problem child of the industrialized world. Now this island of 320,000 people in the North Atlantic ...

In the currency market, the dollar pushed higher against the euro. Late Monday, the euro was trading at $1.4477 vs. $1.4608 on Friday. The British pound was also off, by 1.5%, to $1.8147.