For useful sources on the Greek debt crisis perhaps start with the IMF’s overview, especially its FAQs section. Also track the progress of the Greek debt crisis in the Financial Times interactive timeline, which shows key events next to the yield on the 10 year sovereign bond. Find out the global banking system exposure to Greek debt in this August 2011 Cleveland Fed research paper. For thoughts about the pros/cons of sovereign defaults, have a glance at the Economist magazine’s sketch. The Financial Times’ comparison with the 2001 Argentina crisis is worth a look as well as comparisons with the Brady Bond programmes of the 1980s.
A broader perspective, that Greece’s problem is Europe’s problem, is neatly argued by Joe Stiglitz, FT A-List blog, 22 July 2011.
With violence in Athens continuing, and the failure of European leaders to resolve their disagreements over the Greek debt crisis, here are the countries most exposed to Greek debt.
For an in-depth analysis of how history repeats itself, then Reinhart & Rogoff’s “This Time Is Different: Eight Centuries of Financial Folly” is the acknowledged market leader.
The role of capital flows, rather than fiscal irresponsibility, is explored in
Origins of the Euro Crisis, Paul Krugman, 23 Sep 2011 and What Really Caused the Eurozone Crisis?, Kash Mansori, 22 Sep 2011
In the early 1990s EU governments had to choose between defending their exchange rates and the health of their economies. Now they have to choose between disappointing the bond markets and imposing austerity on their voters.
“Firefighting: The sovereign-debt crisis has echoes of the ERM debacle“, The Economist, 14 July 2011
Three major uncertainties are rattling the markets:
- the lack of EMU political leadership as regards (i) co-ordination across countries and with the ECB as well as (ii) a reluctance to push through vital restructuring/austerity packages
- weak growth prospects that mean a severely reduced ability to repay debt as well as added stress for the banking sector
- the inadequacy of existing bail-out funds
For a useful overview, see “Europe’s debt crisis: Fudge, the final frontier“, The Economist, 10 Sep 2011.
SNB takes a bold move to stem the huge rise in its “safe haven” currency…
Oficial statement from the SNB Swiss National Bank, 6 Sep 2011
Swiss currency move: what the analysts say Guardian, 6 Sep 2011
… while Switzerland tops the World Economic Forum’s overall rankings in The Global Competitiveness Report 2011-2012.
Many of the world’s most vibrant economies are effectively shadowing the US dollar, in an arrangement that has been dubbed “Bretton Woods 2”. There are plenty of reasons why the international community is less than happy with the outcome…
The global monetary system: Beyond Bretton Woods 2, The Economist, 4 Nov 2010
Europe’s EMU has always had a strong political agenda but this is likely to come under strain as the global financial crisis deepens. The anti-EMU brigade will predict a euro breakup but less catastrophic alternatives are available as Southern Africa’s CMA shows…
The Common Monetary Area in Southern Africa: Shocks, Adjustment, and Policy Challenges, IMF Working Paper, Jul 2007