Political Economy

I had been willing to dismiss the rumours that Greece was forestalling a military coup. Others have since said the change in top brass is standard protocol for a Greek government preparing for its potential loss of power and that the…

Now that we have had a chance to digest the information from last night, there are a number of developments to report on the Greek situation which are relevant to unravelling likely scenarios going forward. Here is my synopsis of what has…

This move puts a whole train of future moves in motion, in my view. The Greek people will be apoplectic at this tactic. They will reject the bailout in a referendum out of spite. Greece and its banks will be insolvent. Meanwhile, the run on…

Liquidity crises are always solvency crises. The question is about determining which company, nation, or debtor is insolvent in a world of incomplete information. This leads to panic and a wider liquidity crisis that stresses the balance…

Europe has an enormous productive capacity, Greece included. Debt introduces a money distribution problem that becomes a flashpoint during periods of economic weakness because the inability of large debtors to pay imperils both the debtor,…

We have learned that the Defense Minister is calling for a wholesale change of military leadership. I see this as an extremely alarming development. And in conjunction with Papandreou’s move to call a referendum, it would make sense to…

I wrote an article for Room for Debate at the New York Times on the potential for a Greek collapse to end the euro. Here are the parts I would highlight.

I was going through my archives to figure out when I first started saying Greece would default and it made for interesting reading as a chronology of the sovereign debt crisis. For me, the pivotal post that signalled default was inevitable…

Given Greek sentiment, in all likelihood, a referendum vote for the bailout agreement will fail. The question is “what then?” I would anticipate that, at a minimum, an an actual default which triggers credit default swaps with higher…

Austerity cuts demand too much to have the positive effects on deficits in the short-term that Europe wants it to have. All of these countries are likely to miss their targets. And then the Troika ‘occupations’ will commence. This is a…