sovereign debt crisis

A lot of pundits have come to the same conclusion that I have come to regarding problems in Spain, namely that the market is no longer willing to believe the country is solvent without European-wide intervention. The consensus, therefore,…

Moody's Investors Service issued the following press release in connection with European ratings actions earlier today.

The Swiss government bond curve is now negative for maturities of five years and under. Investors are willing to lock up a negative yield for 5 years just to get out of euro denominated assets without taking much FX risk.

Today, Spanish newspapers confirmed that a number of regional governments on the verge of bankruptcy must follow Spanish banks in requesting aid from the central government. However, with Spanish central government itself facing record euro…

Daily commentary Just a quick word here on three interlocking stories involving Spain and Germany that have come up via the US and European press. Right now, Spain is at the center of the European sovereign debt crisis. The spread…

Right now the spread between Bunds and the Spanish ten-year is 609 basis points. The catalyst for the increase in Spanish spreads may be the news that the indebted Spanish regional government in Valencia is on the verge of seeking a bailout…

Two topics today: The first is Spain and the second is record high oil prices.

Many orthodox economists ironically adopt something close to a “loan pusher” argument: the excess global saving pushed interest rates down, leading to excessive borrowing by debtor nations that consumed beyond their means. Although the…

I don’t want to be too glib here. I recognize that policymakers are in an extremely difficult position and that there is no longer any easy solution, but railing at the markets rather than trying to understand why they are doing what they…

A recent story in German magazine Der Spiegel highlights the efforts in 2005 of German Chancellor Gerhard Schroeder to relax the penalties for deficits in breach of the euro zone's stability and growth pact. It is a good review of the…