eurozone periphery

Monetary union was not a good idea, even in the best of circumstances. Time to abandon the failed experiment?

When I was running through Italian default scenarios earlier in the day, I asked “Could Italy unilaterally exit the euro zone and redominate euro debts at par into a new Lira currency to forestall the default? Perhaps. That is something to…

We are baffled by the analysis of the analyst community, some, of which, are not so analytical. They say that Europe’s fundamental problem is that it has a central bank which is unwilling to monetize sizeable debt maturities which…

As for Italy itself, the country runs a primary fiscal surplus. As George Soros has noted: “Italy is indebted, but it isn’t insolvent.” Its fiscal deficit to GDP ratio is 60% of the OECD average. It is less than the euro area average. Its…

If you are still inclined to give Greece the benefit of the doubt, I suggest you study the works of Egan-Jones, a credit rating company located in Haverford, Pennsylvania. Contrary to most other rating companies, Egan-Jones does not receive…

If a central bank guarantees investors credibly that they can invest in certain debt instruments and not suffer principal or interest repayment risk, but only currency and inflation risk, some investors are almost definitely going to buy…

Here’s an interpretation of the euro zone I have been meaning to run by you and I touched on it in the update to my post on how austerity in Europe works. In a fixed exchange rate environment like the euro area, you don’t have currency…

Bonds in Italy are marching higher amid rumours of ECB intervention. Yesterday they breached 6.15%. Now they are above 6.30% and going higher still. Belgium and Spain have also been infected with Greek referendum contagion.

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…