default

The “solution” currently on offer – i.e. the talk surrounding the European Financial Stability Fund (EFSF) now includes suggestions of ECB backing. This makes eminent sense. Let’s be honest: the EFSF is a political fig-leaf. If 440…

The statute of limitations is five years for default. That means banks still have until the beginning of 2012 to sue a strategic defaulter from early 2007.

The media and some pseudo-analysts, and, surprisingly, even some investors, still don’t understand what the 21 percent haircut in the Greece bond restructuring is all about. The 21 percent touted about is simply the hypothetical…

Warren Mosler argues that it is the realization that the ECB is the issuer of the currency, and is therefore not revenue constrained, that leads to the conclusion that not allowing Greece to default best serves public purpose.

Former ECB chief economist Otmar Issing recently spoke to German weekly Stern in an interview now published online. His view is that the appropriate strategy for dealing with Greece is to force a hard restructuring and a large writedown of…

Most of the writers whose work appear on this blog have long warned that the extend and pretend strategy in Europe would fail. Now, it seems that Europe is moving to a hard restructuring for Greece and recapitalisation for bank creditors.…

Germany’s ability and willingness to pay will decrease as the economy falters. Remember, Germany is more indebted than Spain and has also long been in violation the Maastricht Treaty’s stability and growth pact provision on government debt…

As I see it, we cannot continue with the existing currency arrangement. Countries like Spain (I am reverting to my habit of calling all the deficit countries “Spain” and all the surplus countries “Germany”) simply will not adjust quickly…

"The larger the haircut that bondholders accept, the better the outlook for the Greek sovereign from a credit quality perspective after the default," said Tony Stringer, a country debt analyst with Fitch.

Countries like Slovenia have their own problems. As the euro zone economy worsens, their willingness to support bailouts decreases. And the European institutional principle of unanimity will almost certainly mean that bailout fatigue leads…