Euro Strength Seen by Stiglitz Removing Greek Debt

Rather than a euro failure, an orderly Greek exit from the currency has Nobel laureate Joseph Stiglitz and Nomura Holdings Inc. chief strategist Jens Nordvig predicting a stronger and more stable monetary union.

While Societe Generale SA suggests that the euro might break up because of the cost of Greece’s departure, the nation accounts for just 2.3 percent of the 17-nation trading bloc’s gross domestic product. It also has 356 billion euros (0 billion), or 4.3 percent of the region’s total debt, according to data compiled by Bloomberg. The area’s trade deficit last year would have been a surplus without its weakest member, according to European Union data.

Foreign-exchange markets display little evidence of the euro being dismembered. The currency trades 53 percent above its record low of 82.30 U.S. cents in October 2000. Bond yields of Austria, Belgium, Finland, France, Germany and the Netherlands have fallen to record lows, as investor demand for their debt increases. Removing Greece from the euro would reduce the bloc’s debt-to-GDP ratio to 85.5 percent from 87.3 percent.

Source | Forex News Paper | http://forexnewspaper.blogspot.com/2012/06/euro-strength-seen-by-stiglitz-removing.html

Are we going Greek?

Data on the bailed-out economies of the eurozone

In May 2010, the troika announced a rescue plan for Greece. Ireland followed in November 2010. In May 2011 it was time for Portugal to be bailed out. In July 2012, Spain received special assistance for its banks - more is expected to come.

One of the main questions concerning these economies is: How similar is their evolution? In other words, if we look at one of them, will we be able to say what happened, or what is happening, or what will happen to the other economies?

Greece has been at the centre of the euro area sovereign debt crisis. Private holders of Greek bonds have already suffered a haircut. Exit from the eurozone is openly discussed. In Portugal, many voices have expressed concern at the possibility that austerity measures will make Portugal tread in Greece's footsteps. Nuno Garoupa, for instance, wrote that Portugal lags Greece by eighteen months.

In this webpage we report data on the bailed-out economies in order to allow the evaluation of the similarities among them. The closer other countries replicate Greece's path, the closer the euro will be to its end.

At the time of writing, the indicators presented below show that Greece stands out for its worse performance among this group of countries, except for private debt - where Ireland reports the largest ratio to GDP - and for the net international investment position - where Portugal performs worse.

(with Pedro Bação, University of Coimbra)

Source | The Portuguese Economy | http://theportugueseeconomy.blogspot.com/2012/11/are-we-going-greek.html