There is nowhere to run if the U.S. government defaults, but that isn’t stopping the US CDS from rising dramatically since the “crisis” began. If the government really defaults, then the financial system will freeze, and no one will get paid on their hedges. After a time, the government will get its act together and reopen. The debt will come off default, and the CDS hedges won’t matter.
Janet Yellen will easily be confirmed by the Senate. Summers had administration support, but he was an unfavorable candidate from the perspective of the banksters. Yellen is a known serial printer, but Summers would have probably ceased monetary easing. The banksters spend a lot of money on the Senate, and this lobbying paid off.
At the very least, Yellen will continue to current program, and there is an excellent chance she may even add to it. Bernanke would have begun winding down bond purchases had the government shutdown not intervened, so this development is being viewed favorably by the banksters and permabulls.
Iceland must run a large current account surplus in order to generate the cash necessary to pay its debts, because foreigners will not invest in the country as long as the capital controls remain in place. Removing the capital controls is a giant gamble, but it is also the only way to take a shot at getting the country back to normal. Expect no gambling from Iceland’s leaders. They’ll have to go hat in hand to obtain another loan from someone.
The Puerto Rican debt crisis is similar in form to the Eurocrisis. Ultralow rates have induced Puerto Rico to issue too much debt rather than cutting back on expenses. Furthermore, the dollar is too strong a currency for Puerto Rico, which renders the commonwealth noncompetitive on world markets. You can say the same thing about Greece, Italy, Spain, Cyprus or even France. There is no way to bail out a state or territory if it gets into trouble, which is similar to the relationship between the Eurozone countries and the ECB. Saving Puerto Rico would require an act of Congress, and that does not seem likely at the present juncture.