default

Europe is in a dire situation. If it doesn't address the underlying causes of the Greek crisis quickly, Europe's political project will face the same fate as communism and the US Confederacy, writes James K. Galbraith.

The question is not whether Greece will default but what will happen once it has. If Greece defaults but stays in the euro, not only will it not solve the underlying lack of competitiveness, but markets will immediately turn their attention…

Fear mongers want you to be scared to death that interest rates will skyrocket. As I have said many times in the past, long Treasury rates reflect inflation and interest rate expectations. Full stop. The default risk isn’t there since…

Most analysts agree that Greece is insolvent. This column argues that the issue is whether Greece’s troubles are contagious.

Last week the French (banks and government) proposed a roll-over of Greek debt into new bonds, some with maturities as long as 30 years. By Thursday German lenders, insurers and government agreed to join the plan, which would cover debts…

Now obviously, there are the issues of efficiency and fairness to think about. However, I want to look at this from a pure forecasting perspective. and stick to the tack I began in October 2010 with “Less Policy Advocacy and More Policy…

The following is an outline for a proposed new Greek government bond issue to provide all required medium term euro funding for Greece on very attractive terms. The new bond issue includes an addition to the default provisions that…

Short of a fiscal union, there are other measures which the Greeks could adopt to make their bonds more attractive to external investors, thereby preventing the markets shutting the country down and refusing to extend further credit to a…

The Europeans are clearly trying to get comfort on the exposure to Greece in their domestic financial institutions. And if they do get that comfort, we are going to see a soft restructuring. I expect this before year’s end.

I expect a soft restructuring sometime in 2011 followed by a certain degree of dithering and a hard restructuring down the line. But, of course, the tail risk is there.