sovereign debt crisis

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,…

Japan and the US, as the two largest economies with high deficits, also have the largest gross financing need, ahead of all of the euro zone periphery, Belgium and France. But they are sovereign in their currencies and have therefore not…

Market sentiment modestly improves after most Asian stocks fall ; EFSF to delay €3bln bond sale. Greek cabinet endorsed referendum plan overnight; aims to win Friday’s confidence vote. FOMC unlikely to announce further asset purchases,…

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…

There is much truth to the generalization that European banks took on direct exposure to European sovereigns through the bond market, while top banks took exposure through selling insurance, primarily CDS, on the sovereigns. The latest BIS…

This chart from Credit Market Analysis shows the sovereign bonds which had the greatest percentage increase in their default probability over a 5-year horizon.

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.

Greece’s decision to hold a referendum weighing on sentiment; global PMIs most softer thus far. EUR/USD has retracted half of its Oct. move in two days; Greek referendum increases disorderly default risk. US ISM manufacturing key report of…