But euro-zone members would probably have to take a big hit on loans to the country and banks could face heavy losses on their exposure to the Greek economy.
The Morning Ledger: Europe Prepares for Nightmare Scenario - The CFO Report - WSJ - 0 views
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Contingency planning is ramping up on the corporate side, too. One European supermarket group has been looking closely at its suppliers’ financing requirements. “The key thing for them is how their working capital cycle is funded and whether they can get access to the banks that they normally would use, which may themselves be in a liquidity squeeze,” a treasury official at the company tells CFO European Briefing. “Our job is to ensure the channels of liquidity are open. If we can keep that going, a lot of the disruption can be minimized relatively quickly.”
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Meanwhile, some portfolio managers are dumping debt of southern European countries, while others are piling into U.S. and German issues,
Eurocrisis: on towards total catastrophe - Mail Online - M E Synon's blog - 0 views
The delicate balance of fixing the eurozone | Martin Wolf's Exchange - 0 views
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The euro itself was a leading cause of this crisis by ushering in a remarkably swift convergence in interest rates, which had the effect of directing too much capital into countries that formerly had had to pay high interest rates. This undermined the competitiveness of these countries through inflation and gave rise to huge deficits in their current accounts.
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The euro is not suffering from a mere confidence crisis that can be resolved by assuaging the markets; it is experiencing a profound balance‐of‐payment crisis that is being prolonged by the expansion of public financial aid.
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Since autumn 2007, long before the official bail‐out initiatives began, some of the crisis‐hit countries have replaced dwindling private capital imports and capital flight with their money‐printing presses (Target credits).
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Bruce Bartlett: The Fed Should Stop Paying Banks Not to Lend - NYTimes.com - 0 views
Who To Listen To - NYTimes.com - 0 views
Blanchard on Latvia - NYTimes.com - 1 views
"Which Eurobonds?" by Jeffrey Frankel | Project Syndicate - 0 views
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Any solution to the eurozone crisis must meet a short-run objective and a long-run goal. Unfortunately, the two tend to conflict.Illustration by Paul LachineCommentsView/Create comment on this paragraphThe short-run objective is to return Greece, Portugal, and other troubled countries to a sustainable debt path (that is, a declining debt/GDP ratio). Austerity has raised debt/GDP ratios, but a debt write-down or bigger bailouts would undermine the long-term goal of minimizing the risk of similar debt crises in the future.CommentsView/Create comment on this paragraph
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it is hard to commit today to practice fiscal rectitude tomorrow. Official debt caps, such as the Maastricht fiscal criteria and the Stability and Growth Pact (SGP), failed because they were unenforceable.
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The introduction of Eurobonds – joint, aggregate eurozone liabilities – could be part of the solution, if designed properly. There is certainly demand for them in China and other major emerging countries, which are desperate for an alternative to low-yielding US government securities.
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40 more maps that explain the world - 0 views
Investors Seek Yields in Europe, but Analysts Warn of Risk - NYTimes.com - 0 views
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Investors Seek Yields in Europe, but Analysts Warn of Risk
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Once again, foreign investors are piling into the government bonds of Ireland, Spain and Portugal — countries that got into such debt trouble that they required bailouts. Now these countries are able to sell their bonds at lower interest rates than they have seen in years, renewing hope that Europe has turned a corner.
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Claus Vistesen, the head of research at Variant Perception, a London-based economic research group, sees the ratio of debt to economic output as a continuing threat to a euro zone recovery.“People think growth is coming back,” Mr. Vistesen said, “but at the end of the day, debt is still going up.”
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The 'Dread to Risk' Ratio on Radiation and Other Matters - NYTimes.com - 0 views
Davos view: Don't get too confident about Eurozone prospects | The World - 0 views
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Davos view: Don’t get too confident about Eurozone prospects
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One was the danger that European elections could show a growing mood of political protest – and volatility. Secondly, the ECB’s stress tests could spark new market alarm about the banks – which would impact sovereigns too.
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