sovereign debt crisis

Markets rallied strongly in response to the European developments. Yet it is an exaggeration to think that risk appetites returned as the whole month of October has seen equities, emerging markets, commodities and foreign currencies trend…

What happens when you get a default that equates to a 50% loss for most investors without triggering default insurance? Massively negative unintended consequences.

The sharp rally off the October 4th intraday low of the S&P 500 is a result of the assumed prospect of a real plan to save the Euro and slightly improved U.S. economic numbers indicating that we may not be in a recession right now. In…

Here's Roger Bootle talking to Bloomberg's Maryam Nemazee about the deal hammered out yesterday to 'save Greece.' He is quite sceptical. First, the 120% debt to GDP figure that the deal is predicated on reaching is still high and assumes a…

Are these haircuts on Greek debt really such a good idea? Or are they really just a stopgap that will make things all the worse in the long-run? Sure, Mr. Market seems to think they’re fantastic. But then, Mr. Market has always been…

Markets’ initial reaction to the latest EU emergency summit has been positive. Risk assets are trading up, risk-sensitive currencies are up, European bank stocks are up, and the broader stock market is as well. This relief rally is…

Global stocks and risk sensitive currencies are up significantly after the 14th emergency summit. Outcome satisfied downbeat expectations, details remain short; price action reflects positioning. BoJ left rates on hold but expanded asset…

Watch the video. It plays Silvio Berlusconi’s encounter with Danish Premier Helle Thorning-Schmidt a second time in slow-motion so you can see where Berlusconi’s real priorities are.

We have highlighted in bold the important bits. (We now have an analysis of the deal. See "How the latest emergency euro summit addresses the sovereign debt crisis".) Note that while the statement says in point 12 that the notional…

Poul Thomsen wrote an article on the IMF’s blog site about Iceland that I would to highlight. The lessons bear repeating given the economic problems in Europe and the US. The IMF worked with Iceland to stabilise the economy and avoid…