Unless Rajoy’s bet to go “all in” on austerity is backed by Brussels and Frankfurt, Spain may not end up doing “something similar” to Portugal, but Greece.
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.
Interview with Nobel Laureate Michael Spence.
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.
Asides from giving Ponzi a bad name (at least until the ECB just admits that they are printing faster than even Big Ben) this is tying the banks and the countries ever closer.
In this documentary, Wall Street Journal editors and reporters examine the origins of Europe’s debt crisis and why it spread with such ferocity to engulf much of the continent and threaten the entire world.
In the end, this won’t do much for the sovereign debt market, but will shine a spotlight on which banks should be shorted and will possibly expedite their default.
Interview with Nobel Laureate Vernon Smith.
Presentation of Yanis Varoufakis’ book «The Global Minotaur: America, the true causes of the world economy and the future of the world economy.»
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?