Cyprus Can Save Itself by Fleeing the Euro

April 9, 2013 Leave a comment

Cypriots sitting in the cafes here on Nicosia’s Ledra Street are asking one another if there isn’t an alternative to their island’s bailout.

It has been just weeks since the series of rollercoaster negotiations that produced a deal to support Cyprus, in the process devastating its banks and economic prospects. After the initial shock, the reality of the agreement’s implications is sinking in.

The answer to their question is that there may be another way: Leaving the euro would be a better option for Cyprus if — and only if — it can secure cooperation from its troika of creditors: the International Monetary Fund, the European Commission and the European Central Bank. Read more of this post

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September Will be a Doozy Again this Year

August 8, 2012 4 Comments

Before you take off for your August holiday, you should probably be aware of what you’ll be coming back to in the eurozone (EZ) in September (warning: the following may make you decide not to come back). For the second September in a row, developments in the EZ have the potential to be highly dramatic, and this time not just in the weaker, peripheral countries. Read more of this post

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Greek Politics: A Step Towards the Exit

May 9, 2012 28 Comments

All eyes were on France going into the weekend of May 6th, but it turns out the Greek elections have much bigger potential implications for the future of the eurozone (EZ). Last Sunday marked a seismic shift in Greek politics, in which the two main political parties—New Democracy (ND) and Pasok—together failed to win an absolute majority for the first time since the collapse of the military dictatorship in the 1970′s. The path forward for Greece is unclear, but even the best possible scenario doesn’t look good. Read more of this post

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German proposal for Greece’s compliance: accelerating eurozone exit

January 28, 2012 31 Comments

At the top of my list of to do’s for the past few weeks has been to update the post on Greek PSI that I wrote just before Christmas to include some more recent developments, such as the prospect of ECB participation. Last night, Peter Spiegel from the Financial Times (@SpiegelPeter) published the German government’s proposal for Greece’s “improvement of compliance” with the terms of the bailout, and all of a sudden Greek PSI positively pales in comparison. According to Germany’s proposal, whatever the result of the PSI deal, Greece will need to “legally commit itself to giving absolute priority to future debt service” and “accept shifting budgetary sovereignty to the European level”. If the Greek government is not willing to do this, the troika would presumably turn off the taps of bailout money and Greece would default. With no access to market or official financing, Greece would be forced to exit the eurozone. Read more of this post

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September will be a perfect storm in the euro crisis

August 3, 2011 4 Comments

The August holidays are about to set in. Given the consistent pressure placed on Italian and Spanish debt over the past few days pushing yields to record highs, we may skip the annual August lull in Europe this year. But even if we don’t and news on the euro crisis grows quieter this month, September promises to be a perfect storm in the euro crisis for a number of reasons.

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