Posts Tagged ‘Eurozone’
Known Unknowns
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…
Read MoreThe Five Little PIIGS
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…
Read MoreMoral Hazard
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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