One serious anxiety concerns the auction today to settle liabilities on insurance - or credit default swaps - on debt of the collapsed investment bank, Lehman Brothers.
As I noted a couple of weeks ago, there are estimates that claims under insurance contracts will total $400bn. Sandy Chen of Panmure was one of the first to highlight the scale of this looming problem.
If demands for payment are as big as $400bn, there will be pain for banks, insurers, hedge funds and other financial institutions.
Here's why.
For every winner in a claim, there is a loser, the underwriter who has to divvy up. And if the underwriter lacks the resources to pay - which may turn out to be the case in this under-regulated market - that creates two losers: viz the bust underwriter and the claimant which doesn't get the money on which it was counting.
And if that claimant had been calculating its own financial strength on the basis that it had insurance against its Lehman debt, well then failure to receive payment could shatter the integrity of its balance sheet. Which in turn would create potential losers among its creditors.
So this day of reckoning on Lehman credit default swaps is momentous - and it could not come at a worse time for fragile bank shares.
Meltdown
