Who's paying for it?

It's been such a crazy time, that wherever I turn, people are talking about which firm's losing money. Today, I read 2 articles on Bloomberg News- one about the IMF helping out Pakistan to avoid it defaulting, and another about a potential default by Argentina for the second time in a decade. Makes one wonder about country risk. If in this global economy, there is relatively freer flow of capital, then eveyry country across the world is invested either directly or indirectly in the sub-prime/ credit crisis. So, while the carry trade was at the peak of being lucrative, firms were borrowing in Japan to invest in high-rish, high-return assets. So, there's a whole lot of money that Japan has lent to non-Japanese debtors. At what point will Japan get up and say, 'okay, party's over; time to repay those pesky borrowings'? Or will Japan have to keep throwing good money after bad to keep firms/countries afloat so that they'll make enough money elsewhere to repay the yen borrowings? What about China- I had heard enough about how China is squeezing the world economy and can potentially bring it to its knees imply by selling some ABS. As I heard it, all these CDOs and CDO^2s were being bought by Chinese investors, who now had leveraged so much that its was in their best interests to keep the markets afloat, until such time as the government decided to squeeze the Western governments. This certainly makes for a lively conspiracy theory, which a lot of people would probably wager on considering the current state of the world economy and how it's the Chinese, Japanese and Singaporean banks that are keeping the market afloat. Conspiracy theory anyone?