Is Iceland only the tip of the iceberg in European defaults?

For many macro-economically inclined analysts, the narrative has gone something like this:

“The United States took all the subprime and credit-default swap risk and set off a chain reaction that started taking out English banks and a few bystanders like Societe Generale, Deutsche Bank, and all of Iceland. Most other countries are still standing.”

Maybe not so fast:

A disturbing number of states look like Iceland once you dig into the entrails, and most are in Europe where liabilities average 4.2 times GDP, compared with 2pc for the US. “There could be a cluster of defaults over the next three years, possibly sooner.”

This could be the sound of another shoe dropping.