Hungary, which like South Korea has seen its currency tumble in recent weeks, stepped up efforts over the weekend to convince financial markets it isn't in danger of becoming the 'next Iceland.

The danger, however, is that too much emphasis on the stock cycle misses the underlying characteristics of this downturn. This is mainly a balance-sheet recession precipitated by a financial crisis.

The danger of a hard landing in China is the most underpriced risk in financial markets, according to a survey of more than 1,000 institutional investors by Barclays Capital.