Counterparty risk is becoming increasingly important. As the subprime mortgage contagion continues to spread, there is growing nervousness about all types of financial assets, and rightly so. No one yet knows how big the subprime problem even is let alone how big it will become. Not surprisingly in this present environment promises are being called into question. Counterparty risk has become a growing worry, particularly as the subprime mess spreads in ways heretofore unexpected.

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