Known Unknowns

By Econ70 | 05/24/2012
A white house with the word vammha in front of it.

If Greece leaves the Euro, the collateral damage to the rest of the Eurozone will result in a drop in US exports to Europe, damage to European banks resulting in reduced lending, and possibly bank runs in Spain and Italy. But what’s really scary, is the totally unanticipated consequences! When Lehman went under, it was…

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The Five Little PIIGS

By Econ70 | 11/30/2011
A green background with the words " phelps and lau."

In October ’08 European banks looked pretty healthy; they held few toxic US mortgage backed securities. But, this strength was a fiction. European banks met their Waterloo in large holdings of euro-denominated sovereign debt of the PIIGS (Portugal, Ireland, Italy, Greece and Spain). The banks assumed that Germany, France, and other strong European economies would…

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Moral Hazard

By Econ70 | 06/21/2011
A logo of north dakota housing finance agency

Ideally Greece would leave the Euro, default on its debts, and get on with its economic existence. But, leaving the Euro would be a disaster for the Euro zone. So the Europeans won’t let it happen. Neither will the Chinese as they do not want the US Dollar to be the only reserve currency. Since…

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