Are implicit guarantees worth more than the paper they’re not written on? The current Greek crisis is just the latest in a series of market tests of this premise.

By the peak of the boom in 2007, implicit guarantees seemed to be driving cheap funding everywhere. Freddie Mac and Fannie Mae were funded at AAA rates on a CCC balance sheet with a vague promise by the US Government. Dubai World was undertaking the largest construction project in history on a presumption of support from the Dubai Government. And if that wasn't enough, Abu Dhabi was imagined to be a backstop.