If they cannot bribe and blackmail and threaten their way into something they call PSI, then we will see Greece stop making payments, and then the markets will get very ugly in a hurry.
The Greek PSI was always an error in search of a rationale. It gave shadow banking a great new opportunity to profiteer at the expense of Greece and of Europe and escalated the latter’s crisis rather than help tame it.
The irony is that Europe is actually being criticized for its failure to follow America’s lead.
Congress should be interested in reining in longterm spending and raising revenue despite deep ideological obstacles and the upcoming 2012 elections.
The ECB doesn’t print money and monetize sovereign debt of member states. While they have done some of this, there seems to be political resistance to debt monetization, mainly from Germany and France. They better make sure it continues that way.
The EFSF reminds me of the tooth fairy – there are those who believe because they are told it will work, and those who try to figure out how it will work, and come out on the non-believer side.
Interview for the Centre for Research on Globalization about the Icelandic recovery plan.
Below the surface of the euro area’s public debt and banking crisis lies a balance-of-payments crisis caused by the misalignment of internal real exchange rates. The path of least resistance seems to be an appreciation in creditor countries through the inflation of goods, services and asset prices. But will the electorates in the creditor countries accept a policy of easy money and exchange rate depreciation or push an exit from EMU?
As talk about an actual restructuring of Greek debt increases, the EU continues to think that avoiding a CDS Credit Event is a good thing.
It is just a matter of time before these possibly catastrophic debt chasms erupt into full view.
The IMF, EFSF, EU, G-20 are all busy figuring out how to take more taxpayer money to «solve» the problem.
Is it a coincidence that Ireland, the sovereign credit, did better once it let these institutions experience a Credit Event?