While the financial crisis is leading the West into recession, other parts of the world from Hungary to Argentina face an even worse fate: default, market panic, and possibly social upheaval. Now the IMF is working to build a giant line of credit, funded by rich nations, to provide emergency capital to nations on the brink. "The tsunami has only just reached their shores," said one international banker.
Japan and several oil-producing nations would probably bankroll the program, although the US has expressed interest. Most of the countries under threat did not take part in the mortgage-backed securities binge; rather, the drying up of liquidity has hit them hard, sending currencies plunging and exacerbating foreign debts. "Right now, it’s a liquidity problem," an economist observed, "but if it goes on long enough, it can become a solvency problem."