Saving the euro: self-fulfilling crisis and the ‘Draghi put’

Marcus Miller, Lei Zhang 26 June 2014

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In surveying eight centuries of financial folly, Reinhart and Rogoff (2009) observed that:

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Topics:  International finance Monetary policy

Tags:  ECB, eurozone, sovereign debt, financial crises, sovereign debt crisis, Outright Monetary Transactions, European sovereign debt crisis, self-fulfilling crises

Tracking the causes of Eurozone external imbalances: New evidence

Jose Luis Diaz Sanchez, Aristomene Varoudakis 06 February 2014

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The Eurozone sovereign debt crisis, triggered by the 2008–09 global financial crisis, exposed macroeconomic imbalances in member countries that had accrued gradually following the advent of the euro in 1999. The growing current-account deficits in the Eurozone periphery and surpluses in the core were a main symptom of these imbalances (Figure 1).1 These patterns of intra-Eurozone current-account imbalances led to the accumulation of large external debts in the Eurozone periphery, matched by growing claims held by commercial banks in the core.

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Topics:  International finance

Tags:  competitiveness, eurozone, global imbalances, global financial crisis, European sovereign debt crisis

Tax evasion and austerity-plan failure

Francesco Pappadà, Yanos Zylberberg 03 February 2014

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Austerity plans in southern European countries (Greece, Portugal, Spain, and Italy) have so far yielded mixed results (Salto 2013). On the one hand, the primary budget balances of these countries have improved, and their risk premiums are now stabilised at a much lower level than during the crisis peak.

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Topics:  Financial markets Taxation

Tags:  VAT, transparency, tax evasion, Greece, credit, austerity, European sovereign debt crisis

Privatisation and debt: Lessons from Greece’s fiasco

Paolo Manasse 31 January 2014

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In the midst of the European debt crisis, it is tempting to think that high-debt countries could alleviate the recessionary impact of the budget-consolidation process by selling (poorly managed) assets and stakes in their state-owned enterprises (SOEs), and by using the proceeds to buy back their debts (Hope 2011). In addition to providing a cushion for ongoing adjustment programmes and improving solvency, privatisations are deemed to entail long-term efficiency and welfare gains by attracting foreign direct investment and managerial expertise, thus spurring competition and growth.

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Topics:  Financial markets International finance

Tags:  sovereign debt, privatisation, debt, Greece, European sovereign debt crisis