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European Union

Discussion in 'Men's Economics' started by Michael Scally MD, Sep 25, 2011.

  1. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [ame=http://www.youtube.com/watch?v=uhdNmHONY-E]The History of Austrian Economics, Part 1 | Dr. Israel Kirzner - YouTube[/ame]
     
  2. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [ame=http://www.youtube.com/watch?v=tS49-RmZAxk]The History of Austrian Economics, Part 2 | Dr. Israel Kirzner - YouTube[/ame]
     
  3. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [​IMG]
     

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  4. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  5. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    The coming resolution of the European crisis
    http://www.voxeu.org/index.php?q=node/7568

    Policy reactions to the Eurozone crisis are seen by many as short-sighted, incoherent, and driven by political expediency. This column disagrees. What we are seeing is a game of chicken among the key political and economic powers in Europe. As the crash looms ever closer, the right deals will be struck and Europe will emerge stronger and with its currency intact.
     
  6. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    Eurasia Group's Top Risks of 2012
    http://eurasiagroup.net/item-files/1201-05 Top Risks.pdf

    This report identifies the key geopolitical areas to watch for global investors, business leaders, and market participants. The major global political risks to watch this year include the end of the 9/11 era, the G-Zero and the Middle East, the eurozone, the United States, and North Korea. Eurasia Group
     
  7. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  8. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    Gulati, G. Mitu and Zettelmeyer, Jeromin, Engineering an Orderly Greek Debt Restructuring (January 29, 2012). Available at SSRN: Engineering an Orderly Greek Debt Restructuring by Gaurang Gulati, Jeromin Zettelmeyer :: SSRN

    For some months now, discussions over how Greece will restructure its debt have been constrained by the requirement that the deal be “voluntary” – implying that Greece would continue debt service to any creditors that choose retain their old bonds rather than tender them in an exchange offer. In light of Greece’s deep solvency problems and lack of agreement with its creditors so far, the notion of a voluntary debt exchange is increasingly looking like a mirage. In this essay, we describe and compare three alternative approaches that would achieve an orderly restructuring but avoid an outright default: (1) “retrofitting” and using a collective action clause (CAC) that would allow the vast majority of outstanding Greek government bonds to be restructured with the consent of a supermajority of creditors; (2) combining the use of a CAC with an exit exchange, in which consenting bondholders would receive a new English-law bond with standard creditor protections and lower face value; (3) an exit exchange in which a CAC would only be used if participation falls below a specified threshold. All three exchanges are involuntary in the sense that creditors that dissent or hold out are not repaid in full.


    Buchheit, Lee C. and Gulati, G. Mitu, How to Restructure Greek Debt (May 7, 2010). Available at SSRN: How to Restructure Greek Debt by Lee Buchheit, Gaurang Gulati :: SSRN or How to Restructure Greek Debt by Lee Buchheit, Gaurang Gulati :: SSRN

    Plan A for addressing the Greek debt crisis has taken the form of a €110 billion financial support package for Greece announced by the European Union and the International Monetary Fund on May 2, 2010. A significant part of that €110 billion, if and when it is disbursed, will be used to repay maturing Greek debt obligations, in full and on time. The success of Plan A is not inevitable; among other things, it will require the Greeks to accept - and to stick to - a harsh fiscal adjustment program for several years.

    If Plan A does not prosper, what are the alternatives? And how quickly could a Plan B be mobilized and executed?

    This paper outlines the elements of one possible Plan B, a restructuring of Greece’s roughly €300 billion of government debt. Prior sovereign debt restructurings provide considerable guidance for how such a restructuring might be shaped. But several key features of the Greek debt stock could make this operation significantly different from any previous sovereign debt workouts.

    To be sure, a restructuring of Greek debt will not relieve the country from the painful prospect of significant fiscal adjustment, nor will it displace the need for financial support from the official sector. But it may change how some of those funds are spent (for example, backstopping the domestic banking system as opposed to paying off maturing debt in full).

    This paper does not speculate about whether a restructuring of Greek debt will in fact become necessary or politically feasible. It focuses only on the how, not the whether or the when, of such a debt restructuring.
     
  9. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [ame=http://www.youtube.com/watch?v=YnccQngx_AQ]Financial Fascism? 'Greeks should revolt against debt slavery!' - YouTube[/ame]
     
  10. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Last edited: Apr 15, 2012
  11. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  12. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [ame=http://www.youtube.com/watch?v=ObMfmE3JMAc]Is It Time to Invest in Europe? - YouTube[/ame]
     
  13. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    A Preview Of Monday Morning In Europe
    A Preview Of Monday Morning In Europe | ZeroHedge

     
  14. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  15. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    The only way to contain a Greek exit
    The only way to contain a Greek exit - FT.com

    May 16, 2012 7:20 pm
    By Lorenzo Bini Smaghi

    The latest episode of the eurozone crisis casts doubt on the basic premise of most economic models – that economic agents, and governments, always act rationally, after assessing the costs and benefits of alternative options.

    Over the past two years, Greece has repeatedly stated its intention to stay in the eurozone, the cost of leaving it being much higher than that of implementing the policy adjustment required to remain a member. At the same time, Greece systematically tried to water down and postpone the adjustment measures, expecting the International Monetary Fund and Eurogroup ultimately to give in to avoid the financial contagion that would result from a Greek exit. But the European authorities never blinked and, each time, the Greek government and parliament had to rush to approve the measures before the deadline. The last-minute decisions were justified to the people with the need to meet Europe’s conditions.

    The recent elections confirmed that Greek voters want to stay in the eurozone, but imagine they can do so on better terms. Again, Europe and the IMF did not blink. A new Greek election may further boost the anti-euro camp, fuelled by expectations that Europe will eventually waver and that the costs of exiting the euro might not be that large after all.

    Europe faces a dilemma.

    It cannot yield to Greek requests to renegotiate the programme. First, because this would be contrary to the established principle, that agreements are made between states and that governments make commitments for longer than their term of office. Second, because it would indirectly strengthen the position of parties campaigning in several countries (especially the peripheral ones) on an anti-euro platform, by suggesting that these parties could ultimately force European institutions to water down austerity programmes and provide more financing. Finally, such a change would be rejected by the other main creditors, in particular the IMF and its non-European shareholders, which were already reluctant to accept the exceptional financial support to Greece.

    On the other hand, there is no doubt that if Greece leaves the eurozone the contagion will be devastating. Those who suggest that markets are now well prepared for such an event and that most of the costs would be borne by the Greek economy seriously underestimate the channels of transmission of systemic crises following a sovereign debt crisis and a bank run. As we saw after the fall of Lehman Brothers, quick decisions would have to be taken to set up credible firewalls and stop market panic. The US Congress had to adopt the troubled asset relief programme, used to recapitalise all banks in a coercive way, and the Federal Reserve implemented its series of quantitative easing.

    European institutions have so far been reluctant to adopt a “bazooka solution”, for fear of moral hazard. Several times already, countries in difficulty have relaxed their efforts at adjustment soon after obtaining additional financing. However, relying on markets to keep the pressure on governments is costly, inefficient and increasingly unacceptable to voters. Populists who argue that markets should not dictate economic management in democracies are gaining ground everywhere. Such arguments create the illusion that there are easy ways out and distract voters from rational decisions.

    Europe’s history over the past century should teach us not to underestimate the risk of collective irrationality and the dangers of populist politicians. The best way to avoid moral hazard in the middle of a financial crisis is not necessarily to let countries fail or to use market pressure, but to build stronger institutions and better rules. This applies also to Europe. After all, the EU was created precisely to avoid the irrationalities of the past.

    The only way for Europe to protect itself against the irrational behaviour of Greece is to strengthen its own institutions and rules. So far, the main opposition in the eurozone has come from France, which has systematically striven to preserve the inter-governmental nature of the eurozone decision making and to contain the powers and legitimacy of the European Commission and European Parliament. Several countries, including Germany, have made different proposals, with a view to increasing the federal nature of European institutions.

    If the eurozone is to overcome the crisis and avoid the contagion that would arise from one of its members leaving, it has to display the same ability as the US, after Lehman’s collapse, to take rapid actions to restore confidence and stability. This requires stronger and quicker majority-based decision-making in the eurozone, on issues such as banking capitalisation and resolution regimes, the provision of financial assistance to countries in difficulties, budgetary discipline, implementation of structural reforms, and so on. If François Hollande wants a “growth compact”, he must stand ready to accept Angela Merkel’s request for greater political integration and stronger fiscal rules. That is where a common ground can be found.

    At that point Greece may decide whether to stay in or not.

    The writer is a visiting scholar at Harvard university and a former member of the ECB’s executive board
     
  16. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  17. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    Everybody chill – Grexit is not really imminent
    Everybody chill – Grexit is not really imminent - FT.com

    May 20, 2012 4:29 am
    By John Dizard

     
  18. Michael Scally MD

    Michael Scally MD Doctor of Medicine

  19. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [​IMG]
     
  20. Michael Scally MD

    Michael Scally MD Doctor of Medicine

    Re: Contagion

    [ame=http://www.youtube.com/watch?v=X9aENGodu5A]Heather O'Rourke - Poltergeist 1982 / Part - "They're here." - YouTube[/ame]