Home > EU Observation > European sovereign-debt crisis

European sovereign-debt crisis

European sovereign-debt crisis

From Wikipedia, the free encyclopedia
Part of a series on:
Late-2000s financial crisis

Long-term interest rates of all eurozone countries except Estonia (secondary market yields of government bonds with maturities of close to ten years)[1] A yield of 6 % or more indicates that financial markets have serious doubts about credit-worthiness.[2]

The European sovereign debt crisis is an ongoing financial crisis that has made it difficult or impossible for some countries in the euro area tore-finance their government debt without the assistance of third parties.

From late 2009, fears of a sovereign debt crisis developed among investors as a result of the rising government debt levels around the worldtogether with a wave of downgrading of government debt in some European states. Concerns intensified in early 2010 and thereafter,[3][4] leading Europe’s finance ministers on 9 May 2010 to approve a rescue package worth 750 billion aimed at ensuring financial stability across Europe by creating the European Financial Stability Facility (EFSF).[5] In October 2011 and February 2012, the eurozone leaders agreed on more measures designed to prevent the collapse of member economies. This included an agreement whereby banks would accept a 53.5% write-off of Greek debt owed to private creditors,[6] increasing the EFSF to about €1 trillion, and requiring European banks to achieve 9% capitalisation.[7] To restore confidence in Europe, EU leaders also agreed to create a common fiscal union including the commitment of each participating country to introduce a balanced budget amendment.[8][9]

While sovereign debt has risen substantially in only a few eurozone countries, it has become a perceived problem for the area as a whole.[10]Nevertheless, the European currency has remained stable.[11] As of mid-November 2011, the euro was even trading slightly higher against the bloc’s major trading partners than at the beginning of the crisis.[12][13] The three countries most affected, GreeceIreland and Portugal, collectively account for six percent of the eurozone’s gross domestic product (GDP).[14]

Contents

[hide]

Causes

There are many contributing factors to the ongoing European financial crisis. To find the origin of the financial distress, researchers have to conduct and analyze financial records dated many years and possibly decades old. According to Zdeneil Kudrna, a political economist, the financial crisis was destined to happen due to the way the European Union deals and make their trade policies. He argues that the European Union only takes action after the facts. They only address a situation when it has already become a problem.[15]

Public debt $ and %GDP (2010) for selected European countries

The European sovereign debt crisis has resulted from a combination of complex factors, including the globalization of finance; easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real-estate bubbles that have since burst; slow economic growth in 2008 and thereafter; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bailout troubled banking industries and private bondholders, assuming private debt burdens or socializing losses.[16][17] It is sometimes suggested that the Europeanwelfare state contributed to the disaster, but this is demonstrably false if one is to believe the most liberal Keynesian Economist.[18]

One narrative describing the causes of the crisis begins with the significant increase in savings available for investment during the 2000–2007 period when the global pool of fixed income securities increased from approximately $36 trillion in 2000 to $70 trillion by 2007. This “Giant Pool of Money” increased as savings from high-growth developing nations entered global capital markets. Investors searching for higher yields than those offered by U.S. Treasury bonds sought alternatives globally.[19] The temptation offered by such readily available savings overwhelmed the policy and regulatory control mechanisms in country after country as global fixed income investors searched for yield, generating bubble after bubble across the globe. While these bubbles have burst causing asset prices (e.g., housing and commercial property) to decline, the liabilities owed to global investors remain at full price, generating questions regarding the solvency of governments and their banking systems.[17]

How each European country involved in this crisis borrowed and invested the money varies. For example, Ireland’s banks lent the money to property developers, generating a massive property bubble. When the bubble burst, Ireland’s government and taxpayers assumed private debts. In Greece, the government increased its commitments to public workers in the form of extremely generous pay and pension benefits. Iceland’s banking system grew enormously, creating debts to global investors (“external debts”) several times GDP.[17]

The interconnection in the global financial system means that if one nation defaults on its sovereign debt or enters into recession putting some of the external private debt at risk, the banking systems of creditor nations face losses. For example, in October 2011 Italian borrowers owed French banks $366 billion (net). Should Italy be unable to finance itself, the French banking system and economy could come under significant pressure, which in turn would affect France’s creditors and so on. This is referred to as financial contagion.[20][21] Another factor contributing to interconnection is the concept of debt protection. Institutions entered into contracts called credit default swaps (CDS) that result in payment should default occur on a particular debt instrument (including government issued bonds). But, since multiple CDS’s can be purchased on the same security, it is unclear what exposure each country’s banking system now has to CDS.[22]

Some politicians, notably Angela Merkel, have sought to attribute some of the blame for the crisis to hedge funds and other speculators stating that “institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere”.[23][24][25][26][27] Although some financial institutions clearly profited from the growing Greek government debt in the short run,[28] there was a long lead up to the crisis.

Rising government debt levels

Government debt of Eurozone, Germany and crisis countries compared to Eurozone GDP

Government deficit of Eurozone compared to USA and UK

In 1992, members of the European Union signed the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels.

However, a number of EU member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures.[29][30] The structures were designed by prominent U.S. investment banks, who received substantial fees in return for their services.

Public debt as a percent of GDP (2010)

A number of “appalled economists” have condemned the popular notion in the media that rising debt levels of European countries were caused by excess government spending. According to their analysis, increased debt levels are due to the large bailout packages provided to the financial sector during the late-2000s financial crisis, and the global economic slowdown thereafter. The average fiscal deficit in the euro area in 2007 was only 0.6% before it grew to 7% during the financial crisis. In the same period the average government debt rose from 66% to 84% of GDP. The authors also stressed that fiscal deficits in the euro area were stable or even shrinking since the early 1990s.[31] US economist Paul Krugman named Greece as the only country where fiscal irresponsibility is at the heart of the crisis.[32]

Either way, high debt levels alone may not explain the crisis. According to The Economist Intelligence Unit, the position of the euro area looked “no worse and in some respects, rather better than that of the US or the UK.” The budget deficit for the euro area as a whole (see graph) is much lower and the euro area’s government debt/GDP ratio of 86% in 2010 was about the same level as that of the US. Moreover, private-sector indebtedness across the euro area is markedly lower than in the highly leveragedAnglo-Saxon economies.[33]

Trade imbalances

Current account balances relative to GDP (2010)

Commentators such as Financial Times journalist Martin Wolf have asserted that the root of the crisis was growing trade imbalances. He notes in the run-up to the crisis, from 1999 to 2007, Germany had a considerably better public debt and fiscal deficit relative to GDP than the most affected eurozone members. In the same period, these countries (Portugal, Ireland, Italy and Spain) had far worse balance of payments positions.[34] Whereas German trade surpluses increased as a percentage of GDP after 1999, the deficits of Italy, France and Spain all worsened.

More recently, Greece’s trading position has improved;[35] in the period November 2010 to October 2011 imports dropped 12% while exports grew 15% (40% to non-EU countries in comparison to October 2010).[35]

Monetary policy inflexibility

Since membership of the eurozone establishes a single monetary policy, individual member states can no longer act independently print money in order to pay creditors and ease their risk of default. By “printing money” a country’s currency is devalued relative to its (eurozone) trading partners, making its exports cheaper, in principle leading to an improved balance of trade, increased GDP and higher tax revenues innominal terms.[36] In the reverse direction moreover, assets held in a currency which has devalued suffer losses on the part of those holding them. For example by the end of 2011, following a 25 percent fall in the rate of exchange and 5 percent rise in inflation, eurozone investors inPound Sterling, locked in to euro exchanges rates, had suffered an approximate 30 percent cut in the repayment value of this debt.[37]

Loss of confidence

Sovereign CDS prices of selected European countries (2010–2011). The left axis is in basis points; a level of 1,000 means it costs $1 million to protect $10 million of debt for five years.

Prior to development of the crisis it was assumed by both regulators and banks that sovereign debt from the eurozone was safe. Banks had substantial holdings of bonds from weaker economies such as Greece which offered a small premium and seemingly were equally sound.

As the crisis developed it became obvious that Greek, and possibly other countries’, bonds offered substantially more risk. Contributing to lack of information about the risk of European sovereign debt was conflict of interest by banks that were earning substantial sums underwriting the bonds.[38]The loss of confidence is marked by rising sovereign CDS prices, indicating market expectations about countries’ creditworthiness (see graph).

Furthermore, investors have doubts about the possibilities of policy makers to quickly contain the crisis. Since countries that use the euro as their currency have fewer monetary policy choices (e.g., they cannot print money in their own currencies to pay debt holders), certain solutions require multi-national cooperation. Further, the European Central Bank has an inflation control mandate but not an employment mandate, as opposed to theU.S. Federal Reserve, which has a dual mandate. According to the Economist, the crisis “is as much political as economic” and the result of the fact that the euro area is not supported by the institutional paraphernalia (and mutual bonds of solidarity) of a state.[33]

Rating agency views

On December 5, 2011 S&P placed its long-term sovereign ratings on 15 members of the eurozone on “CreditWatch” with negative implications; S&P wrote this was due to “systemic stresses from five interrelated factors: 1) Tightening credit conditions across the eurozone; 2) Markedly higher risk premiums on a growing number of eurozone sovereigns including some that are currently rated ‘AAA’; 3) Continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial, and fiscal convergence among eurozone members; 4) High levels of government and household indebtedness across a large area of the eurozone; and 5) The rising risk of economic recession in the eurozone as a whole in 2012. Currently, we expect output to decline next year in countries such as Spain, Portugal and Greece, but we now assign a 40% probability of a fall in output for the eurozone as a whole.”[39]

Evolution of the crisis

In the first few weeks of 2010, there was renewed anxiety about excessive national debt. Frightened investors demanded ever higher interest rates from several governments with higher debt levels, deficits and current account deficits. This in turn made it difficult for some governments to finance further budget deficits and service existing debt, particularly when economic growth rates were low, and when a high percentage of debt was in the hands of foreign creditors, as in the case of Greece and Portugal.[40]Elected officials have focused on austerity measures (e.g., higher taxes and lower expenses) contributing to social unrest and significant debate among economists, many of whom advocate greater deficits when economies are struggling. Especially in countries where government budget deficits and sovereign debts have increased sharply, a crisis of confidence has emerged with the widening of bond yield spreads and risk insurance on CDS between these countries and other EU member states, most importantly Germany.[41][42] By the end of 2011, Germany was estimated to have made more than €9 billion out of the crisis as investors flocked to safer but near zero interest rate German federal government bonds (bunds).[43]While Switzerland equally benefited from lower interest rates, the crisis also harmed its export sector due to a substantial influx of foreign capital and the resulting rise of the Swiss franc. In September 2011 the Swiss National Bank surprised currency traders by pledging that “it will no longer tolerate a euro-franc exchange rate below the minimum rate of 1.20 francs”, effectively weakening the Swiss franc. This is the biggest Swiss intervention since 1978.[44]

Greece

Greece’s debt percentage since 1999 compared to the average of the eurozone

In the early mid 2000s, Greece’s economy was one of the fastest growing in the eurozone and the government took advantage of it by running a large structural deficit,[45] partly due to high defense spending amid historic enmity to Turkey. As the world economy cooled in the late 2000s, Greece was hit especially hard because its main industries — shipping and tourism — were especially sensitive to changes in the business cycle. As a result, the country’s debt began to increase rapidly.

100,000 people protest against the harsh austerity measures in front of parliament building in Athens (29 May 2011)

On 23 April 2010, the Greek government requested an initial loan of €45 billion from the EU andInternational Monetary Fund (IMF), to cover its financial needs for the remaining part of 2010.[46][47] A few days later Standard & Poor’s slashed Greece’s sovereign debt rating to BB+ or “junk” status amid fears of default,[48] in which case investors were liable to lose 30–50% of their money.[48] Stock markets worldwide and the Euro currency declined in response to this announcement.[49] On 1 May 2010, the Greek government announced a series of austerity measures[50] to secure a three year€110 billion loan.[51] This was met with great anger by the Greek public, leading to massive protests, riots and social unrest throughout Greece.[52] The Troika (EU, ECB and IMF), offered Greece a second bailout loan worth €130 billion in October 2011, but with the activation being conditional on implementation of further austerity measures and a debt restructure agreement. A bit surprisingly, the Greek prime minister George Papandreou first answered that call, by announcing a December 2011 referendum on the new bailout plan,[53][54] but had to back down amidst strong pressure from EU partners, who threatened to withhold an overdue €6 billion loan payment that Greece needed by mid-December.[53][55] On 10 November 2011 Papandreou instead opted to resign, following an agreement with the New Democracy party and the Popular Orthodox Rally, to appoint non-MP technocrat Lucas Papademos as new prime minister of an interim national union government, with responsibility for implementing the needed austerity measures to pave the way for the second bailout loan.[56][57]

All the implemented austerity measures, have so far helped Greece bring down its primary deficit before interest payments, from €24.7bn (10.6% of GDP) in 2009 to just €5.2bn (2.4% of GDP) in 2011[58][59], but as a side-effect they also contributed to a worsening of the Greek recession, which began in October 2008 and only became worse in 2010 and 2011.[60] Overall the Greek GDP had its worst decline in 2011 with -6.9%,[61] a year where the seasonal adjusted industrial output ended 28.4% lower than in 2005,[62][63] and with 111,000 Greek companies going bankrupt (27% higher than in 2010).[64][65] As a result, the seasonal adjusted unemployment rate also grew from 7.5% in September 2008 to a record high of 19.9% in November 2011, while the Youth unemployment rate during the same time rose from 22.0% to as high as 48.1%.[66][67] Overall the share of the population living at “risk of poverty or social exclusion” did not increase noteworthy during the first 2 year of the crisis. The figure was measured to 27.6% in 2009 and 27.7% in 2010 (only being slightly worse than the EU27-average at 23.4%),[68] but for 2011 the figure was now estimated to have risen sharply above 33%.[69] In February 2012, an IMF official negotiating Greek austerity measures admitted that excessive spending cuts were harming Greece.[58]

Some economic experts argue that the best option for Greece and the rest of the EU, would be to engineer an “orderly default”, allowing Athens to withdraw simultaneously from the eurozone and reintroduce its national currency the drachma at a debased rate.[70][71] However, if Greece were to leave the euro, the economic and political impact would be devastating. According to Japanese financial company Nomura an exit would lead to a 60 percent devaluation of the new drachma. UBS warned of “hyperinflationmilitary coups and possible civil warthat could afflict a departing country”.[72][73]

To prevent this from happening, the troika (EU, IMF and ECB) eventually agreed in February 2012 to provide a second bailout package worth €130 billion,[74] conditional on the implementation of another harsh austerity package (reducing the Greek spendings with €3.3bn in 2012 and another €10bn in 2013 and 2014).[59] For the first time, the bailout deal also included a debt restructure agreement with the private holders of Greek government bonds (banks, insurers and investment funds), to “voluntarily” accept a bond swap with a 53.5% nominal write-off, partly in short-term EFSF notes, partly in new Greek bonds with lower interest rates and the maturity prolonged to 11-30 years (independently of the previous maturity).[6] It is the world’s biggest debt restructuring deal ever done, affecting some €206 billion of Greek government bonds.[75] The debt write-off had a seize of €107 billion, and caused the Greek debt level to fall from roughly €350bn to €240bn in March 2012, with the predicted debt burden now showing a more sustainable size equal to 117% of GDP,[76]somewhat lower than the originally expected 120.5%.[77][78] Altogether Greece received aid worth €380bn or €33.600 per capita. This equals 177% of Greece’s GDP, much larger than the funds Western Europe received through the Marshall Plan after the Second World War, which amounted to 2.1% of GDP.[59]

On 9 March 2012 the International Swaps and Derivatives Association (ISDA) issued a communique calling the PSI/debt restructuring deal a “Restructuring Credit Event” which will cause credit default swaps. According to Forbes magazine Greece’s restructuring represents a default.[79] [80]

This credit event implies that previous Greek bond holders are being given, for 1000€ of previous notional, 150€ in “PSI payment notes” issued by the EFSF and 315€ in “New Greek Bonds” issued by the Hellenic Republic, including a “GDP-linked security”. The latter represents a marginal coupon enhancement in case the Greek growth meets certain conditions. While the market price of the portfolio proposed in the exchange is of the order of 21% of the original face value (15% for the two EFSF PSI notes – 1 and 2 years – and 6% for the New Greek Bonds – 11 to 30 years), the duration of the set of New Greek Bonds is slightly below 10 years.[81]

Ireland

Irish government deficit compared to other European countries and the United States (2000–2013)

The Irish sovereign debt crisis was not based on government over-spending, but from the state guaranteeing the six main Irish-based banks who had financed a property bubble. On 29 September 2008, Finance Minister Brian Lenihan, Jnr issued a one-year guarantee to the banks’ depositors and bond-holders. He renewed it for another year in September 2009 soon after the launch of the National Asset Management Agency(NAMA), a body designed to remove bad loans from the six banks.

Irish banks had lost an estimated 100 billion euros, much of it related to defaulted loans to property developers and homeowners made in the midst of the property bubble, which burst around 2007. The economy collapsed during 2008. Unemployment rose from 4% in 2006 to 14% by 2010, while the federal budget went from a surplus in 2007 to a deficit of 32% GDP in 2010, the highest in the history of the eurozone, despite draconian austerity measures.[17][82] Ireland could have guaranteed bank deposits and let private bondholders who had invested in the banks face losses, but instead borrowed money from the ECB to pay these bondholders, shifting the losses and debt to its taxpayers, with severe negative impact on Ireland’s creditworthiness. As a result, the government started negotiations with the EU, the IMF and three nations: the United Kingdom, Denmark and Sweden, resulting in a €67.5 billion “bailout” agreement of 29 November 2010[83][84] Together with additional €17.5 billioncoming from Ireland’s own reserves and pensions, the government received €85 billion,[85] of which €34 billion were used to support the country’s ailing financial sector.[86] In return the government agreed to reduce its budget deficit to below three percent by 2015.[86] In April 2011, despite all the measures taken, Moody’s downgraded the banks’ debt to junk status.[87] In July 2011 European leaders agreed to cut the interest rate that Ireland was paying on its EU/IMF bailout loan from around 6% to between 3.5% and 4% and to double the loan time to 15 years. The move was expected to save the country between 600–700 million euros per year.[88] On 14 September 2011, in a move to further ease Ireland’s difficult financial situation, the European Commission announced it would cut the interest rate on its €22.5 billion loan coming from the European Financial Stability Mechanism, down to 2.59 per cent – which is the interest rate the EU itself pays to borrow from financial markets.[89]

The Euro Plus Monitor report from November 2011 attests to Ireland’s vast progress in dealing with its financial crisis, expecting the country to stand on its own feet again and finance itself without any external support from the second half of 2012 onwards.[90] According to the Centre for Economics and Business Research Ireland’s export-led recovery “will gradually pull its economy out of its trough”. As a result of the improved economic outlook, the cost of 10-year government bonds, which has already fallen substantially since mid July 2011 (see the graph “Long-term Interest Rates”), is expected to fall further to 4 per cent by 2015.[91]

Portugal

A report released in January 2011 by the Diário de Notícias[92] and published in Portugal by Gradiva, demonstrated that in the period between the Carnation Revolution in 1974 and 2010, the democratic Portuguese Republic governments have encouraged over-expenditure and investment bubbles through unclear public-private partnerships and funding of numerous ineffective and unnecessary external consultancy and advisory of committees and firms. This allowed considerable slippage in state-managed public works and inflated top management and head officer bonuses and wages. Persistent and lasting recruitment policies boosted the number of redundant public servants. Risky creditpublic debt creation, and Europeanstructural and cohesion funds were mismanaged across almost four decades. Prime Minister Sócrates‘s cabinet was not able to forecast or prevent this in 2005, and later it was incapable of doing anything to improve the situation when the country was on the verge of bankruptcy by 2011.[93]

Robert Fishman, in the New York Times article “Portugal’s Unnecessary Bailout”, points out that Portugal fell victim to successive waves of speculation by pressure from bond traders, rating agencies and speculators.[94] In the first quarter of 2010, before pressure from the markets, Portugal had one of the best rates of economic recovery in the EU. From the perspective of Portugal’s industrial orders, exports, entrepreneurial innovation and high-school achievement, the country matched or even surpassed its neighbors in Western Europe.[94]

On 16 May 2011, the eurozone leaders officially approved a €78 billion bailout package for Portugal, which became the third eurozone country, after Ireland and Greece, to receive emergency funds. The bailout loan was equally split between the European Financial Stabilisation Mechanism, the European Financial Stability Facility, and the International Monetary Fund.[95] According to the Portuguese finance minister, the average interest rate on the bailout loan is expected to be 5.1 percent.[96] As part of the deal, the country agreed to cut its budget deficit from 9.8 percent of GDP in 2010 to 5.9 percent in 2011, 4.5 percent in 2012 and 3 percent in 2013.[97] The Portuguese government also agreed to eliminate its golden share in Portugal Telecom to pave the way for privatization.[98][99] In 2012, all public servants had already seen an average wage cut of 20% relative to their 2010 baseline, with cuts reaching 25% for those earning more than 1,500 euro[quantify]. This led to a flood of specialized technicians and top officials leaving the public service, many looking for better positions in the private sector or in other European countries.[citation needed]

On 6 July 2011, the ratings agency Moody’s had cut Portugal’s credit rating to junk status, Moody’s also launched speculation that Portugal could follow Greece in requesting a second bailout.[100]

In December 2011, it was reported that Portugal’s estimated budget deficit of 4.5 percent in 2011 would be substantially lower than expected, due to a one-off transfer of pension funds. The country would therefore meet its 2012 target a year earlier than expected.[97] Despite the fact that the economy is expected to contract by 3 percent in 2011 the IMF expects the country to be able to return to medium and long-term debt sovereign markets by late 2013.[101]

Cyprus

In September 2011, yields on Cyprus long-term bonds have risen above 12%, since the small island of 840,000 people was downgraded by all major credit ratings agencies following a devastating explosion at a power plant in July and slow progress with fiscal and structural reforms. Since January 2012, Cyprus is relying on a € 2.5bn emergency loan from Russia to cover its budget deficit and re-finance maturing debt. The loan has an interest rate of 4.5% and it is valid for 4.5 years[102] though it is expected that Cyprus will be able to fund itself again by the first quarter of 2013.[103]

On 13 March 2012 Moody’s has slashed Cyprus’s credit rating into Junk status, warning that the Cyprus government will have to inject fresh capital into its banks to cover losses incurred through Greece’s debt swap. Cyprus’s banks were highly exposed to Greek debt and so are disproportionately hit by the haircut taken by creditors.[104]

Possible spread to other countries

Total financing needs of selected countries in % of GDP (2011–2013)

Economic data from Portugal, Italy, Ireland, Greece, United Kingdom, Spain, Germany, the EU and the eurozone for 2009

The 2010 annual budget deficit and public debt, both relative to GDP for selected European countries

Long-term interest rates of selected European countries.[1] Note that weak non-eurozone countries (Hungary, Romania) lack the sharp rise in interest rates characteristic of weak eurozone countries.

One of the central concerns prior to the bailout was that the crisis could spread to several other countries after reducing confidence in other European economies. According to the UK Financial Policy Committee “Market concerns remain over fiscal positions in a number of euro area countries and the potential for contagion to banking systems.”[105] Besides Ireland, with a government deficit in 2010 of 32.4% of GDP, and Portugal at 9.1%, other countries such as Spain with 9.2% are also at risk.[106]

For 2010, the OECD forecast $16 trillion would be raised in government bonds among its 30 member countries. Financing needs for the eurozone come to a total of €1.6 trillion, while the U.S. is expected to issue US$1.7 trillion more Treasury securities in this period,[107] and Japan has¥213 trillion of government bonds to roll over.[108] Greece has been the notable example of an industrialised country that has faced difficulties in the markets because of rising debt levels but even countries such as the U.S., Germany and the UK, have had fraught moments as investors shunned bond auctions due to concerns about public finances and the economy.[109]

Italy

Italy’s deficit of 4.6 percent of GDP in 2010 was similar to Germany’s at 4.3 percent and less than that of the U.K. and France. Italy even has a surplus in its primary budget, which excludes debt interest payments. However, its debt has increased to almost 120 percent of GDP (U.S. $2.4 trillion in 2010) and economic growth was lower than the EU average for over a decade.[110] This has led investors to view Italian bonds more and more as a risky asset.[111] On the other hand, the public debt of Italy has a longer maturity and a substantial share of it is held domestically. Overall this makes the country more resilient to financial shocks, ranking better than France and Belgium.[112] About 300 billion euros of Italy’s 1.9 trillion euro debt matures in 2012. It will therefore have to go to the capital markets for significant refinancing in the near-term.[113]

On 15 July and 14 September 2011, Italy’s government passed austerity measures meant to save €124 billion.[114][115] Nonetheless, by 8 November 2011 the Italian bond yield was 6.74 percent for 10-year bonds, climbing above the 7 percent level where the country is thought to lose access to financial markets.[116] On 11 November 2011, Italian 10-year borrowing costs fell sharply from 7.5 to 6.7 percent after Italian legislature approved further austerity measures and the formation of an emergency government to replace that of Prime Minister Silvio Berlusconi.[117] The measures include a pledge to raise €15 billion from real-estate sales over the next three years, a two-year increase in the retirement age to 67 by 2026, opening up closed professions within 12 months and a gradual reduction in government ownership of local services.[111] The interim government expected to put the new laws into practice is led by former European Union Competition Commissioner Mario Monti.[111]

As in other countries, the social effects have been severe, with child labour even re-emerging in poorer areas.[118]

Spain

Spain has a comparatively low debt among advanced economies.[119] The country’s public debt relative to GDP in 2010 was only 60%, more than 20 points less than Germany, France or the US, and more than 60 points less than Italy, Ireland or Greece.[120][121] Like Italy, Spain has most of its debt controlled internally, and both countries are in a better fiscal situation than Greece and Portugal, making a default unlikely unless the situation gets far more severe.[122] As one of the largest eurozone economies the condition of Spain’s economy is of particular concern to international observers, and has faced pressure from the United States, the IMF, other European countries and the European Commission to cut its deficit more aggressively.[123][124] Spain’s public debt was approximately U.S. $820 billion in 2010, roughly the level of Greece, Portugal, and Ireland combined.[125]

Rumors raised by speculators about a Spanish bail-out were dismissed by then Spanish Prime Minister José Luis Rodríguez Zapatero as “complete insanity” and “intolerable”.[126] Nevertheless, shortly after the announcement of the EU’s new “emergency fund” for eurozone countries in early May 2010, Spain had to announce new austerity measures designed to further reduce the country’s budget deficit, in order to signal financial markets that it was safe to invest in the country.[127] The Spanish government had hoped to avoid such deep cuts, but weak economic growth as well as domestic and international pressure forced the government to expand on cuts already announced in January.

Spain succeeded in trimming its deficit from 11.2% of GDP in 2009 to 9.2% in 2010[128] and 8.5% in 2011.[129] Due to the European crisis and over spending by regional governments the latest figure is higher than the original target of 6%.[130][131] To build up additional trust in the financial markets, the government amended the Spanish Constitution in 2011 to require a balanced budget at both the national and regional level by 2020. The amendment states that public debt can not exceed 60% of GDP, though exceptions would be made in case of a natural catastrophe, economic recession or other emergencies.[132][133] Under pressure from the EU the new conservative Spanish government led by Mariano Rajoyaims to cut the deficit further to 5.3 percent in 2012 and 3 percent in 2013.[134]

Belgium

In 2010, Belgium’s public debt was 100% of its GDP—the third highest in the eurozone after Greece and Italy[135] and there were doubts about the financial stability of the banks,[136] following the country’s major financial crisis in 2008–2009. After inconclusive elections in June 2010, by November 2011[137] the country still had only a caretaker government as parties from the two main language groups in the country (Flemish and Walloon) were unable to reach agreement on how to form a majority government.[135] In November 2010 financial analysts forecast that Belgium would be the next country to be hit by the financial crisis as Belgium’s borrowing costs rose.[136]

However the government deficit of 5% was relatively modest and Belgian government 10-year bond yields in November 2010 of 3.7% were still below those of Ireland (9.2%), Portugal (7%) and Spain (5.2%).[136] Furthermore, thanks to Belgium’s high personal savings rate, the Belgian Government financed the deficit from mainly domestic savings, making it less prone to fluctuations of international credit markets.[138] Nevertheless on 25 November 2011, Belgium’s long-term sovereign credit rating was downgraded from AA+ to AA by Standard and Poor[139] and 10-year bond yields reached 5.66%.[137] Shortly after, Belgian negotiating parties reached an agreement to form a new government. The deal includes spending cuts and tax rises worth about €11 billion, which should bring the budget deficit down to 2.8% of GDP by 2012, and to balance the books in 2015.[140] Following the announcement Belgium 10-year bond yields fell sharply to 4.6%.[141]

France

France’s public debt in 2010 was approximately U.S. $2.1 trillion and 83% GDP, with a 2010 budget deficit of 7% GDP.[142] By 16 November 2011, France’s bond yield spreads vs. Germany had widened 450% since July, 2011.[143] France’s C.D.S. contract value rose 300% in the same period.[144] On 1 December 2011, France’s bond yield had retreated and the country successfully auctioned €4.3 billion worth of 10 year bonds at an average yield of 3.18%, well below the perceived critical level of 7%.[145] By early February 2012, yields on French 10 year bonds had fallen to 2.84%.[146]

United Kingdom

According to the Financial Policy Committee “Any associated disruption to bank funding markets could spill over to UK banks.”[105] Bank of England governor Mervyn King declared that the UK is very much at risk from a domino-fall of defaults and called on banks to build up more capital when financial conditions allowed. This is because the UK has the highest gross foreign debt of any European country (€7.3 trillion; €117,580 per person) due in large part to its highly leveraged financial industry, which is closely connected with both the United States and the eurozone.[147]

Solutions

EU emergency measures

European Financial Stability Facility (EFSF)

On 9 May 2010, the 27 EU member states agreed to create the European Financial Stability Facility, a legal instrument[148] aiming at preserving financial stability in Europe by providing financial assistance to eurozone states in difficulty. The EFSF can issue bonds or other debt instruments on the market with the support of the German Debt Management Office to raise the funds needed to provide loans to eurozone countries in financial troubles, recapitalize banks or buy sovereign debt.[149] Emissions of bonds are backed by guarantees given by the euro area member states in proportion to their share in the paid-up capital of the European Central Bank. The €440 billion lending capacity of the facility is jointly and severally guaranteed by the eurozone countries’ governments and may be combined with loans up to €60 billion from the European Financial Stabilisation Mechanism (reliant on funds raised by the European Commission using the EU budget as collateral) and up to €250 billion from the International Monetary Fund (IMF) to obtain a financial safety net up to €750 billion. [150]

The EFSF issued €5 billion of five-year bonds in its inaugural benchmark issue January 25 2011, attracting an order book of €44.5 billion. This amount is a record for any sovereign bond in Europe, and €24.5 billion more than the European Financial Stabilisation Mechanism (EFSM), a separate European Union funding vehicle, with a €5 billion issue in the first week of January 2011.[151]

On 29 November 2011, the member state finance ministers agreed to expand the EFSF by creating certificates that could guarantee up to 30% of new issues from troubled euro-area governments, and to create investment vehicles that would boost the EFSF’s firepower to intervene in primary and secondary bond markets.[152]

Reception by financial markets

Stocks surged worldwide after the EU announced the EFSF’s creation. The facility eased fears that the Greek debt crisis would spread,[153] and this led to some stocks rising to the highest level in a year or more.[154] The euro made its biggest gain in 18 months,[155] before falling to a new four-year low a week later.[156] Shortly after the euro rose again as hedge funds and other short-term traders unwound short positions and carry trades in the currency.[157] Commodity prices also rose following the announcement.[158] The dollar Libor held at a nine-month high.[159] Default swaps also fell.[160] The VIX closed down a record almost 30%, after a record weekly rise the preceding week that prompted the bailout.[161] The agreement is interpreted as allowing the ECB to start buying government debt from the secondary market which is expected to reduce bond yields.[162] As a result Greek bond yields fell sharply from over 10% to just over 5%.[163] Asian bonds yields also fell with the EU bailout.[164])

Usage of EFSF funds

Debt profile of Eurozone countries

The EFSF only raises funds after an aid request is made by a country.[165] As of the end of December 2011, it has been activated two times. In November 2010, it financed €17.7 billion of the total €67.5 billion rescue package for Ireland (the rest was loaned from individual European countries, the European Commission and the IMF). In May 2011 it contributed one third of the €78 billion package for Portugal. As part of the second bailout for Greece, the loan was shifted to the EFSF, amounting to €164 billion (130bn new package plus 34.4bn remaining from Greek Loan Facility) throughout 2014.[166] This leaves the EFSF with €250 billion or an equivalent of €750 billion in leveraged firepower.[167] According to German newspaper Sueddeutsche, this is more than enough to finance the debt rollovers of all flagging European countries until end of 2012, in case necessary.[167]

The EFSF is set to expire in 2013, running one year parallel to the permanent €500 billion rescue funding program called the European Stability Mechanism (ESM), which will start operating as soon as member states representing 90% of the capital commitments have ratified it. This is expected to be in July 2012.[168][169]

On 13 January 2012, Standard & Poor’s downgraded France and Austria from AAA rating, lowered Spain, Italy (and five other[170]) euro members further, and maintained the top credit rating for Finland, Germany, Luxembourg, and the Netherlands; shortly after, S&P also downgraded the EFSF from AAA to AA+.[170][171]

European Financial Stabilisation Mechanism (EFSM)

On 5 January 2011, the European Union created the European Financial Stabilisation Mechanism (EFSM), an emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the European Commission using the budget of the European Union as collateral.[172] It runs under the supervision of the Commission[173] and aims at preserving financial stability in Europe by providing financial assistance to EU member states in economic difficulty.[174] The Commission fund, backed by all 27 European Unionmembers, has the authority to raise up to €60 billion[175] and is rated AAA by FitchMoody’s and Standard & Poor’s.[176][177]

Under the EFSM, the EU successfully placed in the capital markets a €5 billion issue of bonds as part of the financial support package agreed for Ireland, at a borrowing cost for the EFSM of 2.59%.[178]

Like the EFSF, the EFSM will also be replaced by the permanent rescue funding programme ESM, which is due to be launched in July 2012.[168]

Brussels agreement and aftermath

On 26 October 2011, leaders of the 17 eurozone countries met in Brussels and agreed on a 50% write-off of Greek sovereign debt held by banks, a fourfold increase (to about €1 trillion) in bail-out funds held under the European Financial Stability Facility, an increased mandatory level of 9% for bank capitalisation within the EU and a set of commitments from Italy to take measures to reduce its national debt. Also pledged was €35 billion in “credit enhancement” to mitigate losses likely to be suffered by European banks. José Manuel Barroso characterised the package as a set of “exceptional measures for exceptional times”.[7][179]

The package’s acceptance was put into doubt on 31 October when Greek Prime Minister George Papandreou announced that a referendum would be held so that the Greek people would have the final say on the bailout, upsetting financial markets.[180] On 3 November 2011 the promised Greek referendum on the bailout package was withdrawn by Prime Minister Papandreou.

In late 2011, Landon Thomas in the New York Times noted that some, at least, European banks were maintaining high dividend payout rates and none were getting capital injections from their governments even while being required to improve capital ratios. Thomas quoted Richard Koo, an economist based in Japan, an expert on that country’s banking crisis, and specialist in balance sheet recessions, as saying:

I do not think Europeans understand the implications of a systemic banking crisis…. When all banks are forced to raise capital at the same time, the result is going to be even weaker banks and an even longer recession — if not depression…. Government intervention should be the first resort, not the last resort.

Beyond equity issuance and debt-to-equity conversion, then, one analyst “said that as banks find it more difficult to raise funds, they will move faster to cut down on loans and unload lagging assets” as they work to improve capital ratios. This latter contraction of balance sheets “could lead to a depression”, the analyst said.[181] Reduced lending was a circumstance already at the time being seen in a “deepen[ing] crisis” in commodities trade finance in western Europe.[182]

Final agreement on the second bailout package

In a marathon meeting on 20/21 February 2012 the Eurogroup agreed with the IMF and the Institute of International Finance on the final conditions of the second bailout package worth €130 billion. The lenders agreed to increase the nominal haircut from 50% to 53.5%. EU Member States agreed to an additional retroactive lowering of the interest rates of the Greek Loan Facility to a level of just 150 basis points above the Euribor. Furthermore, governments of Member States where central banks currently hold Greek government bonds in their investment portfolio commit to pass on to Greece an amount equal to any future income until 2020. Altogether this should bring down Greece’s debt to between 117%[183] and 120.5% of GDP by 2020.[77]

ECB interventions

ECB Securities Markets Program (SMP) covering bond purchases from May 2010 till April 2012

The European Central Bank (ECB) has taken a series of measures aimed at reducing volatility in the financial markets and at improving liquidity.[184]

In May 2010 it took the following actions:

  • It began open market operations buying government and private debt securities,[185] reaching €219.5 billion by February of 2012,[186] though it simultaneously absorbed the same amount of liquidity to prevent a rise in inflation.[187] According to Rabobankeconomist Elwin de Groot, there is a “natural limit” of €300 billion the ECB can sterilize.[188]
  • It reactivated the dollar swap lines[189] with Federal Reserve support.[190]
  • It changed its policy regarding the necessary credit rating for loan deposits, accepting as collateral all outstanding and new debt instruments issued or guaranteed by the Greek government, regardless of the nation’s credit rating.

The move took some pressure off Greek government bonds, which had just been downgraded to junk status, making it difficult for the government to raise money on capital markets.[191]

On 30 November 2011, the European Central Bank, the U.S. Federal Reserve, the central banks of Canada, Japan, Britain and theSwiss National Bank provided global financial markets with additional liquidity to ward off the debt crisis and to support the real economy. The central banks agreed to lower the cost of dollar currency swaps by 50 basis points to come into effect on 5 December 2011. They also agreed to provide each other with abundant liquidity to make sure that commercial banks stay liquid in other currencies.[192]

Long Term Refinancing Operation (LTRO)

The ECB conducts repo auctions as weekly main refinancing operations (MRO with a (bi)weekly maturity and monthly Long Term Refinancing Operations (LTROs) maturing after three months. In 2003, refinancing via LTROs amounted to 45 bln Euro which is about 20% of overall liquidity provided by the ECB. [193]

The ECB’s first supplementary longer-term refinancing operation (LTRO) with a six-month maturity was announced March 2008.[194] Previously the longest tender offered was three months. It announced two 3-month and one 6-month full allotment of Long Term Refinancing Operations (LTROs). The first tender was settled April 3, and was more than four times oversubscribed. The €25 billion auction drew bids amounting to €103.1 billion, from 177 banks. Another six-month tender was allotted on July 9, again to the amount of €25 billion.[195]

The first 1y LTRO in June 2009 had close to 1100 bidders. [196] On 22 December 2011, the ECB [197] started the biggest infusion of credit into the European banking system in the euro’s 13 year history. Under its LTRO it loaned €489 billion to 523 banks for an exceptionally long period of three years at a rate of just one percent.[198] The by far biggest amount of€325 billion was tapped by banks in Greece, Ireland, Italy and Spain.[199] This way the ECB tried to make sure that banks have enough cash to pay off €200 billion of their own maturing debts in the first three months of 2012, and at the same time keep operating and loaning to businesses so that a credit crunch does not choke off economic growth. It also hoped that banks would use some of the money to buy government bonds, effectively easing the debt crisis.[200] On 29 February 2012, the ECB held a second auction, LTRO2, providing 800 Eurozone banks with further €529.5 billion in cheap loans. [201] Net new borrowing under the €529.5 billion February auction was around €313 billion; out of a total of €256 billion existing ECB lending (MRO + 3m&6m LTROs), €215 billion was rolled into LTRO2. [202]

Resignations

In September 2011, Jürgen Stark became the second German after Axel A. Weber to resign from the ECB Governing Council in 2011. Weber, the former Deutsche Bundesbankpresident, was once thought to be a likely successor to Jean-Claude Trichet as bank president. He and Stark were both thought to have resigned due to “unhappiness with the ECB’s bond purchases, which critics say erode the bank’s independence”. Stark was “probably the most hawkish” member of the council when he resigned. Weber was replaced by his Bundesbank successor Jens Weidmann, while Belgium’s Peter Praet took Stark’s original position, heading the ECB’s economics department.[203]

Economic reforms and recovery

Increase competitiveness

See also: Euro Plus Pact

Change in unit labour costs (2000-2010)

Eurozone economic health and adjustment progress 2011 (Source: Euro Plus Monitor)[204]

Slow GDP growth rates correspond to slower growth in tax revenues and higher safety net spending, increasing deficits and debt levels. Fareed Zakaria described the factors slowing growth in the eurozone, writing in November 2011: “Europe’s core problem [is] a lack of growth… Italy’s economy has not grown for an entire decade. No debt restructuring will work if it stays stagnant for another decade… The fact is that Western economies – with high wages, generous middle-class subsidies and complex regulations and taxes – have become sclerotic. Now they face pressures from three fronts: demography (an aging population), technology (which has allowed companies to do much more with fewer people) and globalization (which has allowed manufacturing and services to locate across the world).” He advocated lower wages and steps to bring in more foreign capital investment.[205] British economic historian Robert Skidelsky disagreed saying it was excessive lending by banks, not deficit spending that created this crisis. Government’s mounting debts are a response to the economic downturn as spending rises and tax revenues fall, not its cause.[206]

To improve the situation, crisis countries must significantly increase their international competitiveness. Typically this is done by depreciating the currency, as in the case of Iceland, which suffered the largest financial crisis in 2008-2011 in economic history but has since vastly improved its position. Since eurozone countries cannot devalue their currency, policy makers try to restore competitiveness through internal devaluation, a painful economic adjustment process, where a country aims to reduce its unit labour costs.[207] German economist Hans-Werner Sinn noted in 2012 that Ireland was the only country that had implemented relative wage moderation in the last five year, which helped decrease its relative price/wage levels by 16%. Greece would need to bring this figure down by 31%, effectively reaching the level of Turkey.[208][209]

Other economists argue that no matter how much Greece and Portugal drive down their wages, they could never compete with low-cost developing countries such as China or India. Instead weak European countries must shift their economies to higher quality products and services, though this is a long-term process and may not bring immediate relief.[210]

Progress

On 15 November 2011, the Lisbon Council published the Euro Plus Monitor 2011. According to the report most critical eurozone member countries are in the process of rapid reforms. The authors note that “Many of those countries most in need to adjust […] are now making the greatest progress towards restoring their fiscal balance and external competitiveness”. Greece, Ireland and Spain are among the top five reformers and Portugal is ranked seventh among 17 countries included in the report (see graph).[204]

Increase investment

There has been substantial criticism over the austerity measures implemented by most European nations to counter this debt crisis. Some argue that an abrupt return to “non-Keynesian” financial policies is not a viable solution[211] and predict that deflationary policies now being imposed on countries such as Greece and Spain might prolong and deepen their recessions.[212] In a 2003 study that analyzed 133 IMF austerity programmes, the IMF’s independent evaluation office found that policy makers consistently underestimated the disastrous effects of rigid spending cuts on economic growth.[213][214] In early 2012 an IMF official, who negotiated Greek austerity measures, admitted that spending cuts were harming Greece.[58][58] Nouriel Roubini adds that the new credit available to the heavily indebted countries did not equate to an immediate revival of economic fortunes: “While money is available now on the table, all this money is conditional on all these countries doing fiscal adjustment and structural reform.”[215]

According to Keynesian economists “growth-friendly austerity” relies on the false argument that public cuts would be compensated for by more spending from consumers and businesses, a theoretical claim that has not materialized. The case of Greece shows that excessive levels of private indebtedness and a collapse of public confidence (over 90% of Greeks fear unemployment, poverty and the closure of businesses)[216] led the private sector to decrease spending in an attempt to save up for rainy days ahead. This led to even lower demand for both products and labor, which further deepened the recession and made it ever more difficult to generate tax revenues and fight public indebtedness.[217]

Instead of austerity, Keynes suggested increasing investment and cutting income tax for low earners to kick-start the economy and boost growth and employment.[218] Since struggling European countries lack the funds to engage in deficit spending, German economist and member of the German Council of Economic Experts Peter Bofinger and Sony Kapoor of the global think tank Re-Define suggest financing additional public investments by growth-friendly taxes on “property, land, wealth, carbon emissions and the under-taxed financial sector”. They also called on EU countries to renegotiate the EU savings tax directive and to sign an agreement to help each other crack down on tax evasion and avoidance. Currently authorities capture less than 1% in annual tax revenue on untaxed wealth transferred to other EU members. Furthermore the two suggest providing €40 billion in additional funds to the European Investment Bank, which could then lend ten times that amount to the employment-intensive smaller business sector.[217]

Apart from arguments over whether or not austerity, rather than increased or frozen spending, is a macroeconomic solution,[219] union leaders have also argued that the working population is being unjustly held responsible for the economic mismanagement errors of economists, investors, and bankers. Over 23 million EU workers have become unemployed as a consequence of the global economic crisis of 2007–2010, and this has led many to call for additional regulation of the banking sector across not only Europe, but the entire world.[220]

Proposed long-term solutions

European fiscal union and revision of the Lisbon Treaty

Main article: European Fiscal Union

In March 2011 a new reform of the Stability and Growth Pact was initiated, aiming at straightening the rules by adopting an automatic procedure for imposing of penalties in case of breaches of either the deficit or the debt rules.[221][222] By the end of the year, Germany, France and some other smaller EU countries went a step further and vowed to create a fiscal union across the eurozone with strict and enforceable fiscal rules and automatic penalties embedded in the EU treaties.[8][9] On 9 December 2011 at the European Council meeting, all 17 members of the eurozone and six countries that aspire to join agreed on a new intergovernmental treaty to put strict caps on government spending and borrowing, with penalties for those countries who violate the limits.[223] All other non-eurozone countries apart from the UK are also prepared to join in, subject to parliamentary vote.[168]

Originally EU leaders planned to change existing EU treaties but this was blocked by British prime minister David Cameron, who demanded that the City of London be excluded from future financial regulations, including the proposed EU financial transaction tax.[224][225] By the end of the day, 26 countries had agreed to the plan, leaving the United Kingdom as the only country not willing to join.[226] Cameron subsequently conceded that his action had failed to secure any safeguards for the UK.[227] Britain’s refusal to be part of the Franco-German fiscal compact to safeguard the eurozone constituted a de facto refusal (PM David Cameron vetoed the project) to engage in any radical revision of the Lisbon Treaty at the expense of British sovereignty: centrist analysts such as John Rentoul of The Independent (a generally Europhile newspaper) concluded that “Any Prime Minister would have done as Cameron did”.[228]

Eurobonds

Main article: Eurobonds

A growing number of investors and economists say Eurobonds would be the best way of solving a debt crisis,[229] though their introduction matched by tight financial and budgetary coordination may well require changes in EU treaties.[229] On 21 November 2011, the European Commission suggested that eurobonds issued jointly by the 17 euro nations would be an effective way to tackle the financial crisis. Using the term “stability bonds”, Jose Manuel Barroso insisted that any such plan would have to be matched by tight fiscal surveillance and economic policy coordination as an essential counterpart so as to avoid moral hazard and ensure sustainable public finances.[230][231]

Germany remains largely opposed at least in the short term to a collective takeover of the debt of states that have run excessive budget deficits and borrowed excessively over the past years, saying this could substantially raise the country’s liabilities.[232]

European Stability Mechanism (ESM)

The European Stability Mechanism (ESM) is a permanent rescue funding programme to succeed the temporary European Financial Stability Facility and European Financial Stabilisation Mechanism in July 2012.[168]

On 16 December 2010 the European Council agreed a two line amendment to the EU Lisbon Treaty to allow for a permanent bail-out mechanism to be established[233] including stronger sanctions. In March 2011, the European Parliament approved the treaty amendment after receiving assurances that the European Commission, rather than EU states, would play ‘a central role’ in running the ESM.[234][235] According to this treaty, the ESM will be an intergovernmental organisation under public international law and will be located inLuxembourg.[236][237]

Such a mechanism serves as a “financial firewall.” Instead of a default by one country rippling through the entire interconnected financial system, the firewall mechanism can ensure that downstream nations and banking systems are protected by guaranteeing some or all of their obligations. Then the single default can be managed while limiting financial contagion.

Address current account imbalances

Current account imbalances (1997-2013)

Regardless of the corrective measures chosen to solve the current predicament, as long as cross border capital flows remain unregulated in the euro area,[238] current account imbalances are likely to continue. A country that runs a large current account or trade deficit (i.e., importing more than it exports) must ultimately be a net importer of capital; this is a mathematical identity called the balance of payments. In other words, a country that imports more than it exports must either decrease its savings reserves or borrow to pay for those imports. Conversely, Germany’s large trade surplus (net export position) means that it must either increase its savings reserves or be a net exporter of capital, lending money to other countries to allow them to buy German goods.[239]

The 2009 trade deficits for Italy, Spain, Greece, and Portugal were estimated to be $42.96 billion, $75.31bn and $35.97bn, and $25.6bn respectively, while Germany’s trade surplus was $188.6bn.[240] A similar imbalance exists in the U.S., which runs a large trade deficit (net import position) and therefore is a net borrower of capital from abroad. Ben Bernanke warned of the risks of such imbalances in 2005, arguing that a “savings glut” in one country with a trade surplus can drive capital into other countries with trade deficits, artificially lowering interest rates and creating asset bubbles.[241][242][243]

A country with a large trade surplus would generally see the value of its currency appreciate relative to other currencies, which would reduce the imbalance as the relative price of its exports increases. This currency appreciation occurs as the importing country sells its currency to buy the exporting country’s currency used to purchase the goods. Alternatively, trade imbalances can be reduced if a country encouraged domestic saving by restricting or penalizing the flow of capital across borders, or by raising interest rates, although this benefit is likely offset by slowing down the economy and increasing government interest payments.[244]

Either way, many of the countries involved in the crisis are on the euro, so devaluation, individual interest rates and capital controls are not available. The only solution left to raise a country’s level of saving is to reduce budget deficits and to change consumption and savings habits. For example, if a country’s citizens saved more instead of consuming imports, this would reduce its trade deficit.[244] It has therefore been suggested that countries with large trade deficits (e.g. Greece) consume less and improve their exporting industries. On the other hand, export driven countries with a large trade surplus, such as Germany, Austria and the Netherlands would need to shift their economies more towards domestic services and increase wages to support domestic consumption.[34][245]

European Monetary Fund

On 20 October 2011, the Austrian Institute of Economic Research published an article that suggests transforming the EFSF into a European Monetary Fund (EMF), which could provide governments with fixed interest rate Eurobonds at a rate slightly below medium-term economic growth (in nominal terms). These bonds would not be tradable but could be held by investors with the EMF and liquidated at any time. Given the backing of all the eurozone countries and the ECB “the EMU would achieve a similarly strong position vis-a-vis financial investors as the US where the Fed backs government bonds to an unlimited extent.” To ensure fiscal discipline despite the lack of market pressure, the EMF would operate according to strict rules, providing funds only to countries that meet fiscal and macroeconomic criteria. Governments lacking sound financial policies would be forced to rely on traditional (national) governmental bonds with less favorable market rates.[246]

The econometric analysis suggests that “If the short-term and long- term interest rates in the euro area were stabilized at 1.5 % and 3 %, respectively, aggregate output (GDP) in the euro area would be 5 percentage points above baseline in 2015”. At the same time sovereign debt levels would be significantly lower with e.g. Greece’s debt level falling below 110% of GDP, more than 40 percentage points below the baseline scenario with market based interest levels. Furthermore, banks would no longer be able to unduly benefit from intermediary profits by borrowing from the ECB at low rates and investing in government bonds at high rates.[246]

Drastic debt write-off financed by wealth tax

Overall debt levels in 2009 and write-offs necessary in the Eurozone, UK and U.S. to reach sustainable grounds

According to the Bank for International Settlements, the combined private and public debt of 18 OECD countries nearly quadrupled between 1980 and 2010, and will likely continue to grow, reaching between 250% (for Italy) and about 600% (for Japan) by 2040.[247] The same authors also found in a previous study that increased financial burden imposed by aging populations and lower growth makes it unlikely that indebted economies can grow out of their debt problem if only one of the following three conditions is met:[248]

  • government debt is more than 80 to 100 percent of GDP;
  • non-financial corporate debt is more than 90 percent;
  • private household debt is more than 85 percent of GDP.

The Boston Consulting Group (BCG) adds that if the overall debt load continues to grow faster than the economy, then large-scale debt restructuring becomes inevitable. To prevent a vicious upward debt spiral from gaining momentum the authors urge policy makers to “act quickly and decisively” and aim for an overall debt level well below 180 percent for the private and government sector. This number is based on the assumption that governments, nonfinancial corporations, and private households can each sustain a debt load of 60 percent of GDP, at an interest rate of 5 percent and a nominal economic growth rate of 3 percent per year. Lower interest rates and/or higher growth would help reduce the debt burden further.[249]

To reach sustainable levels the Eurozone must reduce its overall debt level by €6.1 trillion. According to BCG this could be financed by a one-time wealth tax of between 11 and 30 percent for most countries, apart from the crisis countries (particularly Ireland) where a write-off would have to be substantially higher. The authors admit that such programs would be “drastic”, “unpopular” and “require broad political coordination and leadership” but they maintain that the longer politicians and central bankers wait, the more necessary such a step will be.[249]

Instead of a one-time write-off, German economist Harald Spehl has called for a 30 year debt-reduction plan, similar to the one Germany used after the Second World War to share the burden of reconstruction and development.[250] Similar calls have been made by political parties in Germany including the Greens and The Left.[251][252]

Speculation about the breakup of the eurozone

Economists, mostly from outside Europe and associated with Modern Monetary Theory and other post-Keynesian schools, condemned the design of the euro currency system from the beginning because it ceded national monetary and economic sovereignty but lacked a central fiscal authority. When faced with economic problems, they maintained, “Without such an institution, EMU would prevent effective action by individual countries and put nothing in its place.”[253][254] Some non-Keynesian economists, such as Luca A. Ricci of the IMF, contend the eurozone does not fulfill the necessary criteria for an optimum currency area, though it is moving in that direction.[204][255]

As the debt crisis expanded beyond Greece, these economists continued to advocate, albeit more forcefully, the disbandment of the eurozone. If this was not immediately feasible, they recommended that Greece and the other debtor nations unilaterally leave the eurozone, default on their debts, regain their fiscal sovereignty, and re-adopt national currencies.[256][257]Bloomberg suggested in June 2011 that, if the Greek and Irish bailouts should fail, an alternative would be for Germany to leave the eurozone in order to save the currency throughdepreciation[258] instead of austerity. The likely substantial fall in the euro against a newly reconstituted Deutsche Mark would give a “huge boost” to its members’ competitiveness.[259]Also The Wall Street Journal conjectured that Germany could return to the Deutsche Mark,[260] or create another currency union[261] with the Netherlands, Austria, Finland, Luxembourg and other European countries such as Denmark, Norway, Sweden, Switzerland and the Baltics.[262] A monetary union of these countries with current account surpluses would create the world’s largest creditor bloc, bigger than China[263] or Japan. The Wall Street Journal added that without the German-led bloc, a residual euro would have the flexibility to keepinterest rates low[264] and engage in quantitative easing or fiscal stimulus in support of a job-targeting economic policy[265] instead of inflation targeting in the current configuration.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have, however, on numerous occasions publicly said that they would not allow the eurozone to disintegrate, linking the survival of the euro with that of the entire European Union.[266][267] In September 2011, EU commissioner Joaquín Almunia shared this view, saying that expelling weaker countries from the euro was not an option.[268] Furthermore, former ECB president Jean-Claude Trichet also denounced the possibility of a return of the Deutsche Mark.[269]

Controversies

The European bailouts are largely about shifting exposure from banks and others, who otherwise are lined up for losses on the sovereign debt they recklessly bought, onto European taxpayers.[270][271][272][273][274][275]

EU treaty violations

Wikisource has original text related to this article:

No bail-out clause

The EU’s Maastricht Treaty contains juridical language which appears to rule out intra-EU bailouts. First, the “no bail-out” clause (Article 125 TFEU) ensures that the responsibility for repaying public debt remains national and prevents risk premiums caused by unsound fiscal policies from spilling over to partner countries. The clause thus encourages prudent fiscal policies at the national level.

The European Central Bank‘s purchase of distressed country bonds can be viewed as violating the prohibition of monetary financing of budget deficits (Article 123 TFEU). The creation of further leverage in EFSF with access to ECB lending would also appear to violate the terms of this article.

Articles 125 and 123 were meant to create disincentives for EU member states to run excessive deficits and state debt, and prevent the moral hazard of over-spending and lending in good times. They were also meant to protect the taxpayers of the other more prudent member states. By issuing bail-out aid guaranteed by prudent eurozone taxpayers to rule-breaking eurozone countries such as Greece, the EU and eurozone countries also encourage moral hazard in the future.[276] While the no bail-out clause remains in place, the “no bail-out doctrine” seems to be a thing of the past.[277]

Convergence criteria

The EU treaties contain so called convergence criteria. Concerning government finance the states have agreed that the annual government budget deficit should not exceed 3% of thegross domestic product (GDP) and that the gross government debt to GDP should not exceed 60% of the GDP. For eurozone members there is the Stability and Growth Pact which contains the same requirements for budget deficit and debt limitation but with a much stricter regime. Nevertheless the main crisis states Greece and Italy (status November 2011) have substantially exceeded these criteria over a long period of time.

Actors fueling the crisis

Credit rating agencies

Standard & Poor’s Headquarters in Lower Manhattan, New York City

The international U.S.-based credit rating agenciesMoody’sStandard & Poor’s and Fitch—which have already been under fire during thehousing bubble[278][279] and the Icelandic crisis[280][281]—have also played a central and controversial role[282] in the current European bond market crisis.[283] On the one hand, the agencies have been accused of giving overly generous ratings due to conflicts of interest.[284] On the other hand, ratings agencies have a tendency to act conservatively, and to take some time to adjust when a firm or country is in trouble.[285] In the case of Greece, the market responded to the crisis before the downgrades, with Greek bonds trading at junk levels several weeks before the ratings agencies began to describe them as such.[45]

European policy makers have criticized ratings agencies for acting politically, accusing the Big Three of bias towards European assets and fueling speculation.[286] Particularly Moody’s decision to downgrade Portugal’s foreign debt to the category Ba2 “junk” has infuriated officials from the EU and Portugal alike.[286] State owned utility and infrastructure companies like ANA – Aeroportos de PortugalEnergias de PortugalRedes Energéticas Nacionais, and Brisa – Auto-estradas de Portugal were also downgraded despite claims to having solid financial profiles and significant foreign revenue.[287][288][289][290] France too has shown its anger at its downgrade. French central bank chief Christian Noyer criticized the decision of Standard & Poor’s to lower the rating of France but not that of the United Kingdom, which “has more deficits, as much debt, more inflation, less growth than us”. Similar comments were made by high ranking politicians in Germany. Michael Fuchs, deputy leader of the leading Christian Democrats, said: “Standard and Poor’s must stop playing politics. Why doesn’t it act on the highly indebted United States or highly indebted Britain?”, adding that the latter’s collective private and public sector debts are the largest in Europe. He further added: “If the agency downgrades France, it should also downgrade Britain in order to be consistent.”[291]

Credit rating agencies were also accused of bullying politicians by systematically downgrading eurozone countries just before important European Council meetings. As one EU source put it: “It is interesting to look at the downgradings and the timings of the downgradings … It is strange that we have so many downgrades in the weeks of summits.”[292]

Regulatory reliance on credit ratings

Think-tanks such as the World Pensions Council have criticized European powers such as France and Germany for pushing for the adoption of the Basel II recommendations, adopted in 2005 and transposed in European Union law through the Capital Requirements Directive (CRD), effective since 2008. In essence, this forced European banks and more importantly theEuropean Central Bank, e.g. when gauging the solvency of EU-based financial institutions, to rely heavily on the standardized assessments of credit risk marketed by only two privateUS agencies- Moody’s and S&P.[293]

Counter measures

Due to the failures of the ratings agencies, European regulators obtained new powers to supervise ratings agencies.[282] With the creation of the European Supervisory Authority in January 2011 the EU set up a whole range of new financial regulatory institutions,[294] including the European Securities and Markets Authority (ESMA),[295] which became the EU’s single credit-ratings firm regulator.[296] Credit-ratings companies have to comply with the new standards or will be denied operation on EU territory, says ESMA Chief Steven Maijoor.[297]

Germany’s foreign minister Guido Westerwelle has called for an “independent” European ratings agency, which could avoid the conflicts of interest that he claimed US-based agencies faced.[298] European leaders are reportedly studying the possibility of setting up a European ratings agency in order that the private U.S.-based ratings agencies have less influence on developments in European financial markets in the future.[299][300] According to German consultant company Roland Berger, setting up a new ratings agency would cost €300 million. On 30 January 2012, the company said it was already collecting funds from financial institutions and business intelligence agencies to set up an independent non-profit ratings agency by mid 2012, which could provide its first country ratings by the end of the year.[301] In April 2012, in a similar attempt, the Bertelsmann Stiftung presented a blueprint for establishing an international non-profit credit rating agency (INCRA) for sovereign debt, structured in way that management and rating decisions are independent from its financiers.[302]

But attempts to regulate more strictly credit rating agencies in the wake of the European sovereign debt crisis have been rather unsuccessful. Some European financial law and regulation experts have argued that the hastily drafted, unevenly transposed in national law, and poorly enforced EU rule on ratings agencies (Regulation EC N° 1060/2009) has had little effect on the way financial analysts and economists interpret data or on the potential for conflicts of interests created by the complex contractual arrangements between credit rating agencies and their clients”[303]

Media

There has been considerable controversy about the role of the English-language press in regard to the bond market crisis.[304][305]

Greek Prime Minister Papandreou is quoted as saying that there was no question of Greece leaving the euro and suggested that the ­crisis was politically as well as financially motivated. “This is an attack on the eurozone by certain other interests, political or financial”.[306] The Spanish Prime Minister José Luis Rodríguez Zapatero has also suggested that the recent financial market crisis in Europe is an attempt to undermine the euro.[307][308] He ordered the Centro Nacional de Inteligencia intelligence service (National Intelligence Center, CNI in Spanish) to investigate the role of the “Anglo-Saxon media” in fomenting the crisis.[309][310] [311] [312] [313] [314] [315] So far no results have been reported from this investigation.

Other commentators believe that the euro is under attack so that countries, such as the U.K. and the U.S., can continue to fund their large external deficits and government deficits,[316]and to avoid the collapse of the US dollar.[317][318][319] The U.S. and U.K. do not have large domestic savings pools to draw on and therefore are dependent on external savings e.g. from China.[320] [321] This is not the case in the eurozone which is self funding.[322] [323]

Speculators

Both the Spanish and Greek Prime Ministers have accused financial speculators and hedge funds of worsening the crisis by short selling euros.[324] [325] German chancellor Merkel has stated that “institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere.”[326]

According to The Wall Street Journal several hedge-fund managers launched “large bearish bets” against the euro in early 2010.[327] On February 8, the boutique research and brokerage firm Monness, Crespi, Hardt & Co. hosted an exclusive “idea dinner” at a private townhouse in Manhattan, where a small group of hedge-fund managers from SAC Capital Advisors LP,Soros Fund Management LLC, Green Light Capital Inc., Brigade Capital Management LLC and others argued that the euro was likely to fall to parity with the US dollar and were of the opinion that Greek government bonds represented the weakest link of the euro and that Greek contagion could soon spread to infect all sovereign debt in the world. Three days later the euro was hit with a wave of selling, triggering a decline that brought the currency below $1.36.[327] There was no suggestion by regulators that there was any collusion or other improper action.[327] On 8 June, exactly four months after the dinner, the Euro hit a four year low at $1.19 before it started to rise again.[328] Traders estimate that bets for and against the euro account for a huge part of the daily three trillion dollar global currency market.[327]

The role of Goldman Sachs[329] in Greek bond yield increases is also under scrutiny.[330] It is not yet clear to what extent this bank has been involved in the unfolding of the crisis or if they have made a profit as a result of the sell-off on the Greek government debt market.

In response to accusations that speculators were worsening the problem, some markets banned naked short selling for a few months.[331]

Odious debt

Main article: Odious debt

Some protesters, commentators such as Libération correspondent Jean Quatremer and the Liège based NGO Committee for the Abolition of the Third World Debt (CADTM) allege that the debt should be characterized as odious debt.[332] The Greek documentary Debtocracy examines whether the recent Siemens scandal and uncommercial ECB loans which were conditional on the purchase of military aircraft and submarines are evidence that the loans amount to odious debt and that an audit would result in invalidation of a large amount of the debt.

National statistics

In 1992, members of the European Union signed an agreement known as the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, a number of EU member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures.[29][30] The structures were designed by prominent U.S. investment banks, who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties.[29] Financial reforms within the U.S. since the financial crisis have only served to reinforce special protections for derivatives—including greater access to government guarantees—while minimizing disclosure to broader financial markets.[333]

The revision of Greece’s 2009 budget deficit from a forecast of “6–8% of GDP” to 12.7% by the new Pasok Government in late 2009 (a number which, after reclassification of expenses under IMF/EU supervision was further raised to 15.4% in 2010) has been cited as one of the issues that ignited the Greek debt crisis.

This added a new dimension in the world financial turmoil, as the issues of “creative accounting” and manipulation of statistics by several nations came into focus, potentially undermining investor confidence.

The focus has naturally remained on Greece due to its debt crisis. There has however been a growing number of reports about manipulated statistics by EU and other nations aiming, as was the case for Greece, to mask the sizes of public debts and deficits. These have included analyses of examples in several countries [334] [335] [336] [337] or have focused on Italy, [338]the United Kingdom, [339] [340] [341] [342] [343] [344] [345] [346] Spain, [347] the United States, [348] [349] [350] and even Germany. [351] [352]

Collateral for Finland

On 18 August 2011, as requested by the Finnish parliament as a condition for any further bailouts, it became apparent that Finland would receive collateral from Greece, enabling it to participate in the potential new €109 billion support package for the Greek economy.[353] Austria, the Netherlands, Slovenia, and Slovakia responded with irritation over this special guarantee for Finland and demanded equal treatment across the eurozone, or a similar deal with Greece, so as not to increase the risk level over their participation in the bailout.[354] The main point of contention was that the collateral is aimed to be a cash deposit, a collateral the Greeks can only give by recycling part of the funds loaned by Finland for the bailout, which means Finland and the other eurozone countries guarantee the Finnish loans in the event of a Greek default.[355]

After extensive negotiations to implement a collateral structure open to all eurozone countries, on 4 October 2011, a modified escrow collateral agreement was reached. The expectation is that only Finland will utilise it, due to i.a. requirement to contribute initial capital to European Stability Mechanism in one installment instead of five installments over time. Finland, as one of the strongest AAA countries, can raise the required capital with relative ease.[356]

At the beginning of October, Slovakia and Netherlands were the last countries to vote on the EFSF expansion, which was the immediate issue behind the collateral discussion, with a mid-October vote.[357] On 13 October 2011 Slovakia approved euro bailout expansion, but the government has been forced to call new elections in exchange.

In February 2012, the four largest Greek banks agreed to provide the €880 million in collateral to Finland in order to secure the second bailout program.[358]

Political impact

Handling of the ongoing crisis has led to the premature end of a number of European national governments and impacted the outcome of many elections:

  • Finland – April 2011 – The approach to the Portuguese bailout and the EFSF dominated the April 2011 election debate and formation of the subsequent government.
  • Greece – November 2011 – After intense criticism from within his own party, the opposition and other EU governments, for his proposal to hold a referendum on the austerity and bailout measures, PM George Papandreou announced his resignation in favour of a national unity government between three parties, of which only two currently remain in the coalition. Meanwhile, the popularity of Papandreou’s PASOK party dropped from 42.5% in 2010 to as low as 7% in some polls in 2012. Following the vote in the Greek parliament on the austerity and bailout measures, which both leading parties supported but many MPs of these two parties voted against, Papandreou and Antonis Samaras expelled a total of 44 MPs from their respective parliamentary groups, leading to PASOK losing its parliamentary majority. Early elections are likely to be held in 2012.
  • Ireland – November 2010 – In return for its support for the IMF bailout and consequent austerity budget, the junior party in the coalition government, the Green Party set a time-limit on its support for the Cowen Government which set the path to early elections in Feb 2011.
  • Italy – November 2011 – Following market pressure on government bond prices in response to concerns about levels of debt, the Government of Silvio Berlusconi lost its majority, resigned and was replaced by the Government of Mario Monti.
  • Portugal – March 2011 – Following the failure of parliament to adopt the government austerity measures, PM José Sócrates and his government resigned, bringing about early elections in June 2011.
  • Slovakia – October 2011 – In return for the approval of the EFSF by her coalition partners, PM Iveta Radičová had to concede early elections in March 2012.
  • Slovenia – September 2011 – Following the failure of June referendums on measures to combat the economic crisis and the departure of coalition partners, the Borut Pahorgovernment lost a motion of confidence and December 2011 early elections were set, following which Janez Janša became PM.
  • Spain – July 2011 – Following the failure of the Spanish government to handle the economic situation, PM José Luis Rodríguez Zapatero announced early elections in November. “It is convenient to hold elections this fall so a new government can take charge of the economy in 2012, fresh from the balloting” he said. Following the elections, Mariano Rajoybecame PM.

See also

References

  1. a b Long-term interest rate “Long-term interest rate statistics for EU Member States”ECB. 12 July 2011. Retrieved 22 July 2011.
  2. ^ Wearden, Graeme (20 September 2011). “EU debt crisis: Italy hit with rating downgrade”The Guardian(UK). Retrieved 20 September 2011.
  3. ^ George Matlock (16 February 2010). “Peripheral euro zone government bond spreads widen”. Reuters. Retrieved 28 April 2010.
  4. ^ “Acropolis now”The Economist. 29 April 2010. Retrieved 22 June 2011.
  5. ^ “EU ministers offer 750bn-euro plan to support currency”. BBC News. 10 May 2010. Retrieved 11 May 2010.
  6. a b Willem Sels (27 February 2012). “Greek rescue package is no long term solution, says HSBC’s Willem Sels”. Investment Europe. Retrieved 3 March 2012.
  7. a b “Leaders agree eurozone debt deal after late-night talks”BBC News. 27 October 2011. Retrieved 27 October 2011.
  8. a b Pidd, Helen (2011-12-02). “Angela Merkel vows to create ‘fiscal union’ across eurozone”. London: Guardian. Retrieved 2011-12-02.
  9. a b “European fiscal union: what the experts say”. London: Guardian. 2011-12-02. Retrieved 2011-12-02.
  10. ^ “How the Euro Became Europe’s Greatest Threat”.Der Spiegel. 20 June 2011.
  11. ^ “Euro Stable Despite Debt Crisis Says Schaeuble”.The Wall Street Journal. 22 August 2011.
  12. ^ Euro in US Dollar
  13. ^ “Puzzle over euro’s “mysterious” stability”Reuters. 15 November 2011.
  14. ^ “The Euro’s PIG-Headed Masters”Project Syndicate. 3 June 2011.
  15. ^ Cross-Border Resolution of Failed Banks in the European Union after the Crisis: Business as Usual
  16. ^ NYT Review of Books-Touring the Ruins of the Old Economy-September 2011
  17. a b c d Lewis, Michael (2011). Boomerang – Travels in the New Third World. Norton. ISBN 978-0-393-08181-7.
  18. ^ Paul Krugman (25 February 2012). “European Crisis Realities”The Conscience of a Liberal. The New York Times. Retrieved 2 April 2012.
  19. ^ NPR-The Giant Pool of Money-May 2008
  20. ^ NYT-It’s All Connected-An Overview of the Euro Crisis-October 2011
  21. ^ NYT-It’s All Connected-A Spectators Guide to the Euro Crisis
  22. ^ The Economist-No Big Bazooka-October 29, 2011
  23. ^ “Merkel Slams Euro Speculation, Warns of ‘Resentment’ (Update 1)”BusinessWeek. 23 February 2010. Retrieved 28 April 2010.
  24. ^ Laurence Knight (22 December 2010). “Europe’s Eastern Periphery”. BBC. Retrieved 17 May 2011.
  25. ^ “PIIGS Definition”. investopedia.com. Retrieved 17 May 2011.
  26. ^ Bernd Riegert. “Europe’s next bankruptcy candidates?”. dw-world.com. Retrieved 17 May 2011.
  27. ^ Nikolaos D. Philippas. “Ζωώδη Ένστικτα και Οικονομικές Καταστροφές” (in Greek). skai.gr. Retrieved 17 May 2011.
  28. ^ STORY, LOUISE; LANDON THOMAS Jr., NELSON D. SCHWARTZ (14 February 2010). “Wall St. Helped to Mask Debt Fueling Europe’s Crisis”New York Times(New York): pp. A1. Retrieved 19 September 2011.
  29. a b c Simkovic, Michael (2009). “Secret Liens and the Financial Crisis of 2008”American Bankruptcy Law Journal 83: 253.
  30. a b Michael Simkovic, Bankruptcy Immunities, Transparency, and Capital Structure, Presentation at the World Bank, January 11, 2011
  31. ^ “Manifeste d’économistes atterrés”. Atterres. 2011-10-27. Retrieved 2011-12-19., see English version manifesto
  32. ^ “Eurozone Problems”. New York Times. 2012-01-30. Retrieved 2012-02-04.
  33. a b “State of the Union: Can the euro zone survive its debt crisis? (p.4)” (PDF). Economist Intelligence Unit. 2011-03-01. Retrieved 2011-12-01.
  34. a b Martin Wolf (2011-12-06). “Merkozy failed to save the eurozone”The Financial Times. Retrieved 2011-12-09.
  35. a b “COMMERCIAL TRANSACTIONS OF GREECE (Estimations) : October 2011”Hellenic Statistical Authority. http://www.statistics.gr. 9 December 2011. Retrieved 8 December 2011.
  36. ^ Project Syndicate-Martin Feldstein-The French Don’t Get It-December 2011
  37. ^ Inman, Phillip (2012-01-03). “If surpluses cause as many problems as debts, maybe we need to tax creditors”The Guardian (UK). Retrieved 2012-01-03.
  38. ^ Liz Alderman; Susanne Craig (November 10, 2011).“Europe’s Banks Turned to Safe Bonds and Found Illusion”The New York Times. Retrieved November 11, 2011. “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany.”
  39. ^ S&P-Standard & Poor’s Puts Ratings On Eurozone Sovereigns On CreditWatch With Negative Implications-December 5, 2011
  40. ^ “Public Debt by Country | Global Finance”. Gfmag.com. Retrieved 19 May 2011.
  41. ^ “Greek/German bond yield spread more than 1,000 bps”. Financialmirror.com. 28 April 2010. Retrieved 5 May 2010.
  42. ^ “Gilt yields rise amid UK debt concerns”Financial Times. 18 February 2010. Retrieved 15 April 2011.
  43. ^ Valentina Pop (9 November 2011). “Germany estimated to have made €9 billion profit out of crisis”.EUobserver. Retrieved 8 December 2011.
  44. ^ Swiss Pledge Unlimited Currency PurchasesBloomberg, 6 September 2011, Retrieved 6 September 2011
  45. a b “Crisis in Euro-zone—Next Phase of Global Economic Turmoil”Competition master date =. Retrieved 2012-02-24.
  46. ^ Greek Bailout Talks Could Take Three Weeks. Bloomberg L.P..
  47. ^ “Greece Seeks Activation of €45bn EU/IMF Aid Package”The Irish Times. 4 April 2010.
  48. a b Jack Ewing and Jack Healy (27 April 2010). “Cuts to Debt Rating Stir Anxiety in Europe”The New York Times. Retrieved 6 May 2010.
  49. ^ “Greek bonds rated ‘junk’ by Standard & Poor’s”. BBC. 27 April 2010. Retrieved 6 May 2010.
  50. ^ (Greek)“Fourth raft of new measures”. In.gr. 2 May 2010. Retrieved 6 May 2010.
  51. ^ “Revisiting Greece”The Observer at Boston College. 2011-11-02.
  52. ^ Judy Dempsey (5 May 2010). “Three Reported Killed in Greek Protests”The New York Times. Retrieved 5 May 2010.
  53. a b Rachel Donadio; Niki Kitsantonis (3 November 2011). “Greek Leader Calls Off Referendum on Bailout Plan”The New York Times. Retrieved 29 December 2011.
  54. ^ “Greek cabinet backs George Papandreou’s referendum plan”BBC News. 2 November 2011. Retrieved 29 December 2011.
  55. ^ “Papandreou calls off Greek referendum”. UPI. 3 November 2011. Retrieved 29 December 2011.
  56. ^ Helena Smith (10 November 2011). “Lucas Papademos to lead Greece’s interim coalition government”The Guardian. Retrieved 29 December 2011.
  57. ^ Leigh Phillips (11 November 2011). “ECB man to rule Greece for 15 weeks”EUobserver. Retrieved 29 December 2011.
  58. a b c d Smith, Helena (1 February 2012). “IMF official admits: austerity is harming Greece”The Guardian(Athens). Retrieved 1 February 2012.
  59. a b c “Der ganze Staat soll neu gegründet werden”. Sueddeutsche. 13 February 2012. Retrieved 13 February 2012.
  60. ^ “QUARTERLY NATIONAL ACCOUNTS: 4th Quarter 2011 (Provisional)” (PDF). Piraeus: Hellenic Statistical Authority. 9 March 2012. Retrieved 9 March 2012.
  61. ^ “EU interim economic forecast -February 2012”(PDF). European Commission. 23 February 2012. Retrieved 2 March 2012.
  62. ^ “Eurostat Newsrelease 24/2012: Industrial production down by 1.1% in euro area in December 2011 compared with November 2011”Eurostat. 14 February 2012. Retrieved 5 March 2012.
  63. ^ “Eurozone debt crisis live: UK credit rating under threat amid Moody’s downgrade blitz”. Guardian. 14 February 2012. Retrieved 14 February 2012.
  64. ^ “Pleitewelle rollt durch Südeuropa”Sueddeutsche Zeitung. 7 February 2012. Retrieved 9 February 2012.
  65. ^ Hatzinikolaou, Prokopis (7 February 2012). “Dramatic drop in budget revenues”Ekathimerini. Retrieved 16 February 2012.
  66. ^ “Eurostat Newsrelease 31/2012: Euro area unemployment rate at 10.7% in January 2012”.Eurostat. 1 March 2012. Retrieved 5 March 2012.
  67. ^ “Seasonally adjusted unemployment rate”.Google/Eurostat. 10 November 2011. Retrieved 7 February 2012.
  68. ^ “Eurostat Newsrelease 21/2012: In 2010, 23% of the population were at risk of poverty or social exclusion”.Eurostat. 8 February 2012. Retrieved 5 March 2012.
  69. ^ Smith, Helena (12 February 2012). “I fear for a social explosion: Greeks can’t take any more punishment”.Guradian. Retrieved 13 February 2012.
  70. ^ M. Nicolas J. Firzli, “Greece and the Roots the EU Debt Crisis” The Vienna Review, March 2010
  71. ^ Nouriel Roubini (28 June 2010). “Greece’s best option is an orderly default”Financial Times. Retrieved 24 September 2011.
  72. ^ “Greece”. New York Times. 2012-01-22. Retrieved 2012-01-23.
  73. ^ “Pondering a Dire Day: Leaving the Euro”. New York Times. 2011-12-12. Retrieved 2012-01-23.
  74. ^ “A common response to the crisis situation”, European Council webpage.
  75. ^ “Insight: How the Greek debt puzzle was solved”. Reuters. 29 February 2012. Retrieved 29 February 2012.
  76. ^ “Griechenland spart sich auf Schwellenland-Niveau herunter”Sueddeutsche. 13 March 2012. Retrieved 13 March 2012.
  77. a b “Eurogroup statement”. Eurogroup. 21 February 2012. Retrieved 21 February 2012.
  78. ^ “Greece bailout: six key elements of the deal”. Guardian. 21 February 2012. Retrieved 21 February 2012.
  79. ^ “Greece Default”. Forbes. 11 March 2012. Retrieved 9 March 2012.
  80. ^ “Greece Swap Insurance Default”. Wall Street Journal. 11 March 2012. Retrieved 9 March 2012.
  81. ^ “Greek Debt Default: Investors’ and Risk Managers’ Perspective Riskdata study Mar 28, 2012”.
  82. ^ CIA World Factbook-Ireland-Retrieved December 2, 2011
  83. ^ “The money pit”The Economist.
  84. ^ “Irish Times” timeline on financial events 2008–2010
  85. ^ EU unveils Irish bailout, CNN.com, 2 December 2010
  86. a b “Ihr Krisenländer, schaut auf Irland!”.Süddeutsche Zeitung. 21 November 2011. Retrieved 21 November 2011.
  87. ^ “Moody’s cuts all Irish banks to junk status”RTE, 18 April 2011 14:22.
  88. ^ “Ireland gets more time for bailout repayment and interest rate cut”Irish Central.
  89. ^ “European Commission reduces margin on Irish bailout to zero”The Journal.
  90. ^ “Euro Plus Monitor 2011 (p. 55)”The Lisbon Council. 15 November 2011. Retrieved 17 November 2011.
  91. ^ “Ireland set for strong recovery after bail-out”. 2 September 2011. Retrieved 17 November 2011.
  92. ^ (Portuguese) “O estado a que o Estado chegou” no 2.º lugar do topDiário de Notícias (March 2, 2011)
  93. ^ (Portuguese) Grande investigação DN Conheça o verdadeiro peso do EstadoDiário de Notícias (7 January 2011)
  94. a b Portugal’s Unnecessary Bailout – The New York Times
  95. ^ Portugal’s 78bn euro bail-out is formally approved.BBC News, 16 May 2011.
  96. ^ Portugal Fin Min: Average Rate On EU/IMF Loan Is Around 5.1%The Wall Street Journal, 16 May 2011
  97. a b “Portugal 2011 deficit to beat goal on one-off revs-PM”Reuters UK. 13 December 2011. Retrieved 30 December 2011.
  98. ^ Kowsmann, Patricia, “Portugal govt ends golden-share holdings” (Paid content), Dow Jones Newswires 05 July 2011.
  99. ^ “Portugal Government Ends Golden-Share Holdings”The Wall Street Journal. 5 July 2011. Retrieved 20 July 2011.
  100. ^ “Portugal’s credit rating slashed”Business Spectator, 6 July 2011
  101. ^ “Good Progress But Testing Times Ahead For Portugal”IMF. 22 December 2011. Retrieved 30 December 2011.
  102. ^ “Russia loans Cyprus 2.5 billion”Guardian. 10 October 2011. Retrieved 13 March 2012.
  103. ^ “Cyprus nears €2.5bn Russian loan deal”Guardian. 14 September 2011. Retrieved 13 March 2012.
  104. ^ “Eurozone crisis live: Spain told to cut harder as Greek deal approved”Guardian. 13 March 2012. Retrieved 13 March 2012.
  105. a b Eurozone “Eurozone ‘mess’ is a risk to UK banks, Bank of England governor admits”The Guardian. UK. 24 June 2011. Retrieved 22 July 2011.
  106. ^ “Euro area and EU27 government deficit at 6.0% and 6.4% of GDP respectively”. Eurostat. 26 April 2011. Retrieved 21 July 2011.
  107. ^ “Deconstructing Europe: How A €20 Billion Liquidity Crisis Is Set To Become A €1.6 Trillion Funding Crisis”Zero Hedge. 9 February 2010.
  108. ^ Grice, Dylan (8 March 2010). Popular Delusions newsletterSociété Générale.
  109. ^ “/ Reports – Sovereigns: Debt levels raise fears of further downgrades”Financial Times. 24 February 2010. Retrieved 5 May 2010.
  110. ^ CIA Factbook-Italy-Retrieved December 2011
  111. a b c Migliaccio, Alessandra (11 November 2011). Italy Senate Vote Makes Way for Government Led by Monti. Bloomberg. Retrieved 11 November 2011.
  112. ^ “Euro Plus Monitor 2011 (see “II.4 Resilience” on page 42-43)”The Lisbon Council. 15 November 2011. Retrieved 17 November 2011.
  113. ^ The Economist-Saving Italy-December 2011
  114. ^ EU austerity drive country by country. BBC. 22 Sep 2011. Retrieved 9 Nov 2011.
  115. ^ Italy parliament gives final approval to austerity plan. Reuters. 14 Sep 2011. Retrieved 9 Nov 2011.
  116. ^ “Berlusconi to resign after parliamentary setback”.Reuters. 8 Nov 2011. Retrieved 9 Nov 2011.
  117. ^ Moody, Barry (11 November 2011). Italy pushes through austerity, US applies pressure. Reuters. Retrieved 11 November 2011.
  118. ^ Cécile Allegra (30 March 2012). “Child labour re-emerges in Naples”Le Monde. Presseurop. Retrieved 31 March 2012.
  119. ^ Murado, Miguel-Anxo (1 May 2010). “Repeat with us: Spain is not Greece”The Guardian (London).
  120. ^ “General government gross debt”, Eurostat table, 2003–2010.
  121. ^ “Strong core, pain on the periphery”The Economist.
  122. ^ Gros, Daniel (29 April 2010). “The Euro Can Survive a Greek Default”The Wall Street Journal. Retrieved 2 May 2010.
  123. ^ Obama calls for ‘resolute’ spending cuts in Spain. EUObserver. 12 May 2010. Retrieved 12 May 2010.
  124. ^ “Spain Lowers Public Wages After EU Seeks Deeper Cuts”Bloomberg Business Week. 12 May 2010. Retrieved 12 May 2010.
  125. ^ CIA Factbook-Spain-Retrieved December 2011
  126. ^ “Zapatero denies talk of IMF rescue”Financial Times. 5 May 2010. Retrieved 15 April 2011.
  127. ^ “Need for big cuts dawns on Spain”Financial Time. 12 May 2010. Retrieved 12 May 2010.
  128. ^ Johnson, Miles, “Spain approves more spending cuts”Financial Times, June 24, 2011 3:56 pm.
  129. ^ “Eurozone crisis live: German parliament approves Greek package – as it happened”The Guardian(London). 27 February 2012.
  130. ^ “The golden amendment”Economist , September 3, 2011
  131. ^ Julien, Toyer, “EU to punish Spain for deficits, inaction”Reuters , February 14, 2012
  132. ^ http://articles.businessinsider.com/2011-08-26/europe/30065232_1_budget-amendment-constitution-amendment-states#ixzz1b4rERjoW
  133. ^ Giles, Tremlett, “Spain changes constitution to cap budget deficit”Guardian , August 26, 2011
  134. ^ “Eurozone crisis live: Spain told to cut harder as Greek deal approved”Guardian. 13 March 2012. Retrieved 13 March 2012.
  135. a b Maddox, David Europe in freefall – Belgium could be next to need help The Scotsman, 26 November 2010, Retrieved 27 November 2010
  136. a b c Robinson, Francis Belgian Debt and Contagion,The Wall Street Journal, 26 November 2010, Retrieved 27 November 2010
  137. a b Bowen, Andrew and Connor, Richard (28 November 2011) Belgian budget breakthrough builds hopes for new government Deutsche Welle, DW-World.DE, Retrieved 1 December 2011
  138. ^ “Belgium”US Department of State. April 2010. Retrieved 9 May 2010.
  139. ^ Gill, Frank (25 November 2011) Ratings On Belgium Lowered To ‘AA’ On Financial Sector Risks To Public Finances; Outlook Negative Standard and Poors Rating Service, Retrieved 1 December 2011
  140. ^ “An end to waffle?”Economist magazine. 2011-12-02. Retrieved 2011-12-02.
  141. ^ “Belgium Govt Bonds 10 YR Note Belgium BB”.Bloomberg. 2011-12-02. Retrieved 2011-12-02.
  142. ^ CIA Factbook-France-Retrieved December 2011
  143. ^ http://www.ft.com/intl/cms/s/0/c9acf040-0fac-11e1-a468-00144feabdc0.html#axzz1dt6bCax5
  144. ^ Bloomberghttp://www.bloomberg.com/apps/quote?ticker=CFRTR1U5:IND.
  145. ^ Charlton, Emma (1 December 2011). “French Bond Yields Decline Most in 20 Years, Spanish Debt Rises on Auction”. Bloomberg. Retrieved 21 December 2011.
  146. ^ “Italian, French Bonds Trade Higher”The Wall Street Journal. 6 February 2012. Retrieved 23 February 2012.
  147. ^ “Eurozone debt web: Who owes what to whom?”. BBC News. 18 November 2011. Retrieved 21 December 2011.
  148. ^ [1] The EFSF, “a legal instrument agreed by finance ministers earlier this month following the risk of Greece’s debt crisis spreading to other weak economies.”
  149. ^ Bloomberg.com “European Rescue Fund May Buy Bonds, Recapitalize Banks, ECB’s Stark Says”
  150. ^ [ http://www.europeanvoice.com/article/2010/06/spain-seeks-to-reassure-eu-leaders/68293.aspxEuropeanvoice.com] “Media reports said that Spain would ask for support from two EU funds for eurozone governments in financial difficulty: a €60bn ‘European financial stabilisation mechanism’, which is reliant on guarantees from the EU budget.”
  151. ^ Euromoney “EFSF inaugural bond meets record demand”
  152. ^ “TEXT-Euro zone finance ministers approve extending EFSF capacity”Reuters (UK). 2011-11-29. Retrieved 10 May 2010.
  153. ^ “”European Markets Surge””The Wall Street Journal. 2010-05-10. Retrieved 2012-02-24.
  154. ^ Silberstein, Daniela (10 May 2010). “European Shares Jump Most in 17 Months as EU Pledges Loan Fund”. Bloomberg. Retrieved 15 April 2011.
  155. ^ Traynor, Ian (10 May 2010). “Euro strikes back with biggest gamble in its 11-year history”The Guardian(UK). Retrieved 10 May 2010.
  156. ^ Wearden, Graeme; Kollewe, Julia (17 May 2010). “Euro hits four-year low on fears debt crisis will spread”The Guardian (UK).
  157. ^ Kitano, Masayuki (21 May 2010). “Euro surges in short-covering rally, Aussie soars”. Reuters. Retrieved 21 May 2010.
  158. ^ Chanjaroen, Chanyaporn (10 May 2010). “Oil, Copper, Nickel Jump on European Bailout Plan; Gold Drops”. Bloomberg. Retrieved 15 April 2011.
  159. ^ Jenkins, Keith (10 May 2010). “Dollar Libor Holds Near Nine-Month High After EU Aid”. Bloomberg. Retrieved 15 April 2011.
  160. ^ Moses, Abigail (10 May 2010). “Default Swaps Tumble After EU Goes ‘All In’: Credit Markets”. Bloomberg. Retrieved 15 April 2011.
  161. ^ Kearns, Jeff (10 May 2010). “VIX Plunges by Record 36% as Stocks Soar on European Loan Plan”. Bloomberg. Retrieved 15 April 2011.
  162. ^ “Shares and oil prices surge after EU loan deal”. BBC. 10 May 2010. Retrieved 10 May 2010.
  163. ^ Nazareth, Rita (10 May 2010). “Stocks, Commodities, Greek Bonds Rally on European Loan Package”. Bloomberg. Retrieved 15 April 2011.
  164. ^ McDonald, Sarah (10 May 2010). “Asian Bond Risk Tumbles Most in 18 Months on EU Loan Package”. Bloomberg. Retrieved 15 April 2011.
  165. ^ Euro-Area Ministers Seal Rescue-Fund Deal to Stem Debt Crisis, 8 June 2010, Bloomberg
  166. ^ “European Financial Stability Facility (EFSF)”. European Commission. 15 March 2012. Retrieved 16 March 2012.
  167. a b “Welches Land gehört zu den großen Sorgenkindern?”Sueddeutsche. 2011-12-02. Retrieved 2011-12-03.
  168. a b c d “European Council Press releases”. European Council. 2011-12-09. Retrieved 2011-12-09.
  169. ^ “Euro zone brings forward permanent bailout fund”. Reuters. 2011-12-09. Retrieved 2011-12-09.
  170. a b Gibson, Kate, “S&P takes Europe’s rescue fund down a notch”MarketWatch, January 16, 2012 2:37 pm EST. Retrieved 2012-01-16.
  171. ^ Standard & Poor’s Ratings Services quoted at “S&P cuts EFSF bail-out fund rating: statement in full”. BBC. 2012-01-16. “Standard & Poor’s Ratings Services today lowered the ‘AAA’ long-term issuer credit rating on the European Financial Stability Facility (EFSF) to ‘AA+’ from ‘AAA’ . . . We lowered to ‘AA+’ the long-term ratings on two of the EFSF’s previously ‘AAA’ rated guarantor members, France and Austria. The outlook on the long-term ratings on France and Austria is negative, indicating that we believe that there is at least a one-in-three chance that we will lower the ratings again in 2012 or 2013. We affirmed the ratings on the other ‘AAA’ rated EFSF members: Finland, Germany, Luxembourg, and The Netherlands.”
  172. ^ “EU bonds for Ireland bailout well-received on market”. Xinhua. 6 January 2011. Retrieved 26 April 2011.
  173. ^ “AFP: First EU bond for Ireland attracts strong demand: HSBC”. AFP. Google. 5 January 2011. Retrieved 26 April 2011.
  174. ^ Bartha, Emese (5 January 2011). “A Mixed Day for European Debt”The Wall Street Journal. Retrieved 26 April 2011.
  175. ^ Jolly, David (5 January 2011). “Irish Bailout Begins as Europe Sells Billions in Bonds”The New York Times.
  176. ^ http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201101050332dowjonesdjonline000213&title=eu-sets-price-guidance-on-five-year-euro-bond-at-swaps-+012-015
  177. ^ Robinson, Frances (21 December 2010). “EU’s Bailout Bond Three Times Oversubscribed”The Wall Street Journal. Retrieved 26 April 2011.
  178. ^ “il bond è stato piazzato al tasso del 2,59%”. Movisol.org. Retrieved 26 April 2011.
  179. ^ Bhatti, Jabeen (27 October 2011). “EU leaders reach a deal to tackle debt crisis”USA Today. Retrieved 27 October 2011.
  180. ^ “Greece debt crisis: Markets dive on Greek referendum”BBC News, 1 November 2011. Retrieved 1 November 2011.
  181. ^ Thomas, Landon, Jr., “Banks Retrench in Europe While Keeping Up Appearances” (limited no-charge access),The New York Times, December 22, 2011. Retrieved 2011-12-22.
  182. ^ Blas, Javier, “Commodities trade finance crisis deepens” (limited no-charge access)Financial Times, December 16, 2011. Retrieved 2011-12-21.
  183. ^ “Griechenland spart sich auf Schwellenland-Niveau herunter”Sueddeutsche. 13 March 2012. Retrieved 13 March 2012.
  184. ^ “ECB decides on measures to address severe tensions in financial markets”. ECB. 10 May 2010. Retrieved 21 May 2010.
  185. ^ “Bundesbank: “EZB darf nicht Staatsfinanzierer werden””Die Presse. 2012-01-03. Retrieved 2012-01-03.
  186. ^ “Summary of ad hoc communication”ECB. 2012-02-13. Retrieved 2012-02-13.
  187. ^ “Summary of ad hoc communication: Related to monetary policy implementation issued by the ECB since 1 January 2007”ECB. 2011-11-28. Retrieved 2011-12-01.
  188. ^ “ECB May Hit Bond Sterilization Limit in January, Rabobank Says”Bloomberg Businessweek. 2011-09-08. Retrieved 2011-12-01.
  189. ^ “ECB: ECB decides on measures to address severe tensions in financial markets”. Retrieved 10 May 2010.
  190. ^ Lanman, Scott (10 May 2010). “Fed Restarts Currency Swaps as EU Debt Crisis Flares”. Bloomberg. Retrieved 15 April 2011.
  191. ^ 11:17 am Today11:17 a.m. 5 May 2010 (5 March 2010).“ECB suspends rating threshold for Greece debt”. MarketWatch. Retrieved 5 May 2010.
  192. ^ „Grosse Notenbanken versorgen Banken mit Liquidität – Kursfeuerwerk an den Börsen – auch SNB beteiligt“ NZZ Online
  193. ^ “THE LONGER TERM REFINANCING OPERATIONS OF THE ECB”. 2004-05.
  194. ^ “ECB offers longer-term finance via six-month LTROs”. 2008-05.
  195. ^ “ECB offers longer-term finance via six-month LTROs”. 2008-05.
  196. ^ “Markets live transcript 29 February 2012”. 2012-02.
  197. ^ “ECB announces measures to support bank lending and money market activity”. 2011-12.
  198. ^ “ECB Lends 489 Billion Euros for 3 Years, Exceeding Forecast”. Business Week. 2011-12-21. Retrieved 2012-01-27.
  199. ^ “Eurozone crisis live: ECB to launch massive cash injection”. Guardian. 29 February 2012. Retrieved 29 February 2012.
  200. ^ Ewing, Jack; Jolly, David (2011-12-21). “Banks in the euro zone must raise more than 200 billion euros in the first three months of 2012”. New York Times. Retrieved 2011-12-21.
  201. ^ “Eurozone crisis live: ECB to launch massive cash injection”. Guardian. 29 February 2012. Retrieved 29 February 2012.
  202. ^ “€529 billion LTRO 2 tapped by record 800 banks”. Euromoney. 29 February 2012. Retrieved 29 February 2012.
  203. ^ “Belgium’s Praet to serve as ECB’s chief economist”.MarketWatch. 2012-01-03. Retrieved 2012-02-12.
  204. a b c “Euro Plus Monitor 2011”The Lisbon Council. 15 November 2011. Retrieved 17 November 2011.
  205. ^ CNN Fareed Zakaria GPS-November 10,2011
  206. ^ Project Syndicate-Robert Skidelsky-The Euro is a Shrinking Zone-December 2011
  207. ^ “European Wage Update”NYT. 22 October 2011. Retrieved 19 February 2012.
  208. ^ “„Wir sitzen in der Falle“”FAZ. 18 February 2012. Retrieved 19 February 2012.
  209. ^ “„Labour cost index – recent trends“”Eurostat Wiki. Retrieved 19 February 2012.
  210. ^ “Do some countries in the Eurozone need an internal devaluation? A reassessment of what unit labour costs really mean”Vox EU. 31 March 2011. Retrieved 19 February 2012.
  211. ^ Kaletsky, Anatole (2012-02-06). “‘The Greek Vise'”.The New York Times. New York. Retrieved 2012-02-07.
  212. ^ Kaletsky, Anatole (11 February 2010). “‘Greek tragedy won’t end in the euro’s death'”The Times. London. Archived from the original on 5 June 2011. Retrieved 15 February 2010.
  213. ^ International Monetary Fund: Independent Evaluation Office, Fiscal Adjustment in IMF-supported Programs(Washington, D.C.: International Monetary Fund, 2003); see for example page vii.
  214. ^ Fabian Lindner (2012-02-18). “Europe is in dire need of lazy spendthrifts”. Guardian. Retrieved 2012-02-18.
  215. ^ Childs, Mary (10 May 2010). “Roubini Says European Resolution an ‘Open Question’: Tom Keene”. Bloomberg. Retrieved 15 April 2011.
  216. ^ “Mνημόνιο ένα χρόνο μετά: Aποδοκιμασία, αγανάκτηση, απαξίωση, ανασφάλεια (One Year after the Memorandum: Disapproval, Anger, Disdain, Insecurity)”. skai.gr. 18 May 2011. Retrieved 18 May 2011.
  217. a b Kapoor, Sony, and Peter Bofinger“Europe can’t cut and grow”The Guardian, 6 February 2012.
  218. ^ Keynes, John Maynard (1924). “The Theory of Money and the Foreign Exchanges”. A Tract on Monetary Reform.
  219. ^ Vendola, Nichi, “Italian debt: Austerity economics? That’s dead wrong for us”The Guardian, 13 July 2011.
  220. ^ “European cities hit by anti-austerity protests”BBC News. 29 September 2010.
  221. ^ “Council reaches agreement on measures to strengthen economic governance” (PDF). Retrieved 15 April 2011.
  222. ^ Jan Strupczewski (15 March 2011). “EU finmins adopt tougher rules against debt, imbalance”. Uk.finance.yahoo.com. Retrieved 15 April 2011.
  223. ^ Baker, Luke (2011-12-09). “WRAPUP 5-Europe moves ahead with fiscal union, UK isolated”. Reuters. Retrieved 2011-12-09.
  224. ^ Fletcher, Nick (2011-12-09). “European leaders resume Brussels summit talks: live coverage”. London: Guardian. Retrieved 2011-12-09.
  225. ^ Faiola, Anthony; Birnbaum, Michael (2011-12-09). “23 European Union leaders agree to fiscal curbs, but Britain blocks broad deal”. Washington Post. Retrieved 2011-12-09.
  226. ^ “UK alone as EU agrees fiscal deal”BBC News, 9 December 2011. Retrieved 9 December 2011.
  227. ^ End of the veto honeymoon? Cameron on backfoot over euro policy Politics.co.uk, Ian Dunt, Friday, 6 January 2012
  228. ^ John Rentoul, “any PM would have done as Cameron did” The Independent 11 Dec. 2011
  229. a b “Barroso to table eurobond blueprint”Associated Press. 17 November 2011. Retrieved 21 November 2011.
  230. ^ “Europe Agrees to Basics of Plan to Resolve Euro Crisis”Associated Press. 21 November 2011. Retrieved 21 November 2011.
  231. ^ “EU’s Barroso: Will present options on euro bonds”.Associated Press. 14 September 2011. Retrieved 21 November 2011.
  232. ^ “EU’s Barroso wants tight euro zone budgets control”MSNBC. 23 November 2011. Retrieved 24 November 2011.
  233. ^ EUROPEAN COUNCIL 16–17 DECEMBER 2010 CONCLUSIONS, European Council 17 December 2010
  234. ^ Parliament approves Treaty change to allow stability mechanism, European Parliament
  235. ^ Retrieved 22 March 2011 Published 22 March 2011
  236. ^ EUROPEAN COUNCIL 24/25 MARCH 2011 CONCLUSIONS
  237. ^ TREA TY ESTABLISHING THE EUROPEAN STABILITY MECHANISM (ESM) BETWEEN THE KINGDOM OF BELGIUM, THE FEDERAL REPUBLIC OF GERMANY, THE REPUBLIC OF ESTONIA, IRELAND, THE HELLENIC REPUBLIC, THE KINGDOM OF SPAIN, THE FRENCH REPUBLIC, THE ITALIAN REPUBLIC, THE REPUBLIC OF CYPRUS, THE GRAND DUCHY OF LUXEMBOURG, MALTA, THE KINGDOM OF THE NETHERLANDS, THE REPUBLIC OF AUSTRIA, THE PORTUGUESE REPUBLIC, THE REPUBLIC OF SLOVENIA, THE SLOVAK REPUBLIC, THE REPUBLIC OF FINLAND, Council of the European Union
  238. ^ Grabel, Ilene (1 May 1998). “Foreign Policy in Focus , Portfolio Investment”. Fpif.org. Retrieved 5 May 2010.
  239. ^ Pearlstein, Steven (21 May 2010). “Forget Greece: Europe’s real problem is Germany”The Washington Post.
  240. ^ “CIA Factbook-Data”. Cia.gov. Retrieved 23 September 2011.
  241. ^ “Ben Bernanke-U.S. Federal Reserve-The Global Savings Glut and U.S. Current Account Balance-March 2005”. Federalreserve.gov. Retrieved 15 April 2011.
  242. ^ Krugman, Paul (2 March 2009). “Revenge of the Glut”The New York Times.
  243. ^ “P2P Foundation » Blog Archive » Defending Greece against failed neoliberal policies through the creation of sovereign debt for the productive economy”. Blog.p2pfoundation.net. 6 February 2010. Retrieved 5 May 2010.
  244. a b Krugman, Paul (7 September 1998). “Saving Asia: It’s Time To Get Radical”. CNN.
  245. ^ Hagelüken, Alexander (2012-12-08). “Starker Mann, was nun?”Sueddeutsche.
  246. a b Schulmeister, Stephan (20 October 2011). “The European Monetary Fund: A systemic problem needs a systemic solution” (PDF). Austrian Institute of Economic Research. Retrieved 9 November 2011.
  247. ^ Stephen G Cecchetti; M S Mohanty; Fabrizio Zampolli (September 2011). “The real effects of debt (BIS Working Paper No. 352)” (PDF). Bank for International Settlements. Retrieved 2012-02-15.
  248. ^ Stephen G Cecchetti; M S Mohanty; Fabrizio Zampolli (March 2010). publ/work300.htm “The Future of Public Debt: Prospects and Implications” (BIS Working Paper No. 300)” (PDF). Bank for International Settlements. Retrieved 2012-02-15.
  249. a b “Back to Mesopotamia?: The Looming Threat of Debt Restructuring”Boston Consulting Group. 23 September 2011.
  250. ^ Harald Spehl: Tschüss, Kapitalmarkt
  251. ^ http://www.gruene-bundestag.de/cms/finanzen/dok/367/367285.die_gruene_vermoegensabgabe.htmlhttp://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/vermoegensabgabe-wie-die-gruenen-100-milliarden-einsammeln-wollen-1575784.html
  252. ^ http://www.die-linke.de/nc/dielinke/nachrichten/detail/artikel/vermoegensabgabe-ist-die-beste-schuldenbremse/
  253. ^ “Can Greece survive?” by L. Randall WrayNew Economic Perspectives, 25 June 2011
  254. ^ Wynne Godley (8 October 1992). “Maastricht and All That”London Review of Books 14 (19).
  255. ^ Ricci, Luca A., “Exchange Rate Regimes and Location”, 1997
  256. ^ Greece’s Debt Crisis, interview with L. Randall Wray, 13 March 2010
  257. ^ “I’ll buy the Acropolis” by Bill Mitchell, 29 May 2011
  258. ^ Kashyap, Anil (10 June 2011). “Euro May Have to Coexist With a German-Led Uber Euro: Business Class”. Bloomberg. Retrieved 11 June 2011.
  259. ^ “To Save the Euro, Germany Must Quit the Euro Zone” by Marshall Auerback, 25 May 2011
  260. ^ Auerback, Marshall (25 May 2011). “To Save the Euro, Germany has to Quit the Euro Zone”. Wall Street Pit. Retrieved 25 May 2011.
  261. ^ Demetriades, Panicos (19 May 2011). “It is Germany that should leave the eurozone”Financial Times. Retrieved 25 May 2011.
  262. ^ Joffe, Josef (12 September 2011). “The Euro Widens the Culture Gap”New York Times. Retrieved 2 October 2011.
  263. ^ Rogers, Jim (26 September 2009). “The Largest Creditor Nations Are In Asia”. Jim Rogers Blog. Retrieved 1 June 2011.
  264. ^ Mattich, Alen (10 June 2011). “Germany’s Interest Rates Have Become a Special Case”The Wall Street Journal. Retrieved 17 June 2011.
  265. ^ Evans-Pritchard, Ambrose (17 July 2011). “A modest proposal for eurozone break-up”. London: The Telegraph. Retrieved 18 July 2011.
  266. ^ Czuczka, Tony (4 February 2011). “Merkel makes Euro Indispensable Turning Crisis into Opportunity”.Bloomberg Businessweek. Retrieved 9 December 2011.
  267. ^ MacCormaic, Ruadhan (9 December 2011). “EU risks being split apart, says Sarkozy”Irish Times. Retrieved 9 December 2011.
  268. ^ “Spanish commissioner lashes out at core eurozone states”. EUobserver. 9 September 2011. Retrieved 15 September 2011.
  269. ^ Fraher, John (9 September 2011). “Trichet Loses His Cool at Prospect of Deutsche Mark’s Revival in Germany”. Bloomberg. Retrieved 2 October 2011.
  270. ^ “Greek aid will go to the banks”. presseurop. 9 March 2012. Retrieved 12 March 2012.
  271. ^ Whittaker, John (2011). “Eurosystem debts, Greece, and the role of banknotes”. Lancaster University Management School. Retrieved 2 April 2012.
  272. ^ Robert Reich (10 May 2011). “Follow the Money: Behind Europe’s Debt Crisis Lurks Another Giant Bailout of Wall Street”. Social Europe Journal. Retrieved 2 April 2012.
  273. ^ Kevin Featherstone (23 March 2012). “Are the European banks saving Greece or saving themselves?”Greece@LSE. LSE. Retrieved 27 March 2012.
  274. ^ Ronald Janssen (28 March 2012). “The Mystery Tour of Restructuring Greek Sovereign Debt”. Social Europe Journal. Retrieved 2 April 2012.
  275. ^ Nouriel Roubini (7 March 2012). “Greece’s Private Creditors Are the Lucky Ones”The A-List. FT.com. Retrieved 28 March 2012.
  276. ^ “How the Euro Zone Ignored Its Own Rules”Der Spiegel. 6 Oct 2011. Retrieved 6 Oct 2011.
  277. ^ Verhelst, Stijn. “The Reform of European Economic Governance : Towards a Sustainable Monetary Union?”. Egmont – Royal Institute for International Relations. Retrieved 17 October 2011.
  278. ^ Lowenstein, Roger (27 April 2008). “Moody’s – Credit Rating – Mortgages – Investments – Subprime Mortgages – New York Times”New York Times. Retrieved 2 May 2010.
  279. ^ Kirchgaessner, Stephanie, and Kevin Sieff. “Moody’s chief admits failure over crisis”. Financial Times. Retrieved 2 May 2010.
  280. ^ “Iceland row puts rating agencies in firing line | Business”. Retrieved 2 May 2010.
  281. ^ “BBC NEWS”BBC News. 28 January 2009. Retrieved 2 May 2010.
  282. a b Waterfield, Bruno (28 April 2010). “European Commission’s angry warning to credit rating agencies as debt crisis deepens – Telegraph”The Daily Telegraph (London). Retrieved 2 May 2010.
  283. ^ Wachman, Richard (28 April 2010). “Greece debt crisis: the role of credit rating agencies”The Guardian(London). Retrieved 2 May 2010.
  284. ^ “Greek crisis: the world would be a better place without credit rating agencies – Telegraph Blogs”The Daily Telegraph (UK). 28 April 2010. Retrieved 2 May 2010.
  285. ^ “Are the ratings agencies credit worthy?”. CNN.
  286. a b [|Luke, Baker] (2011-07-06). “UPDATE 2-EU attacks credit rating agencies, suggests bias”Reuters
  287. ^ http://www.moodys.com/research/Moodys-downgrades-ANA-Aeroportos-de-Portugal-to-Baa3-from-A3?lang=en&cy=global&docid=PR_222253
  288. ^ http://www.moodys.com/research/Moodys-downgrades-EDPs-rating-to-Baa3-outlook-negative?lang=en&cy=global&docid=PR_222082
  289. ^ http://www.moodys.com/research/Moodys-downgrades-RENs-rating-to-Baa3-keeps-rating-under-review?lang=en&cy=global&docid=PR_221992
  290. ^ http://www.moodys.com/research/Moodys-downgrades-BCR-to-Baa3-under-review-for-further-downgrade?lang=en&cy=global&docid=PR_222177
  291. ^ Larry Elliott and Phillip Inman (2012-01-14). “Eurozone in new crisis as ratings agency downgrades nine countries”. Guardian. Retrieved 2012-01-14.
  292. ^ Nicholas Watt and Ian Traynor (2011-12-07). “David Cameron threatens veto if EU treaty fails to protect City of London”. Guardian. Retrieved 2011-12-07.
  293. ^ M. Nicolas J. Firzli, “A Critique of the Basel Committee on Banking Supervision” Revue Analyse Financière, Nov. 10 2011/Q1 2012
  294. ^ “EUROPA – Press Releases – A turning point for the European financial sector”Europa (web portal). 1 January 2011. Retrieved 24 April 2011.
  295. ^ “ESMA”Europa (web portal). 1 January 2011. Retrieved 24 April 2011.
  296. ^ “EU erklärt USA den Ratingkrieg”. 23 June 2011. Retrieved 24 June 2011.
  297. ^ Matussek, Katrin (23 June 2011). “ESMA Chief Says Rating Companies Subject to EU Laws, FTD Reports”.Bloomberg. Retrieved 24 June 2011.
  298. ^ “FT.com / Europe – Rethink on rating agencies urged”Financial Times. Retrieved 2 May 2010.
  299. ^ “EU Gets Tough on Credit-Rating Agencies”.BusinessWeek. Retrieved 2 May 2010.
  300. ^ “European indecision: Why is Germany talking about a European Monetary Fund?”. Retrieved 2 May 2010.
  301. ^ Eder, Florian (2012-01-20). “Bonitätswächter wehren sich gegen Staatseinmischung”. Retrieved 2012-01-20.
  302. ^ “Non-profit credit rating agency challenge”. Retrieved 16 April 2012.
  303. ^ Firzli, M. Nicolas, and Bazi (2011). “Infrastructure Investments in an Age of Austerity : The Pension and Sovereign Funds Perspective”Revue Analyse Financière 41 (Q4): 19–22.
  304. ^ “euro zone rumours: There is no conspiracy to kill the euro”The Economist. Retrieved 2 May 2010.
  305. ^ “Greek Debt Crisis Worsens”. Retrieved 2 May 2010.
  306. ^ Larry Elliot (28 January 2010). “No EU bailout for Greece as Papandreou promises to “put our house in order””The Guardian (London). Retrieved 13 May 2010.
  307. ^ Barbara Kollmeyer (15 February 2010). “Spanish secret service said to probe market swings”.MarketWatch. Retrieved 13 May 2010.
  308. ^ Gavin Hewitt (16 February 2010). “Conspiracy and the euro”. BBC News. Retrieved 13 May 2010.
  309. ^ “A Media Plot against Madrid?: Spanish Intelligence Reportedly Probing ‘Attacks’ on Economy”Der Spiegel. Retrieved 2 May 2010.
  310. ^ Roberts, Martin (14 February 2010). “Spanish intelligence probing debt attacks-report”. Retrieved 2 May 2010.
  311. ^ Cendrowicz, Leo (26 February 2010). “Conspiracists Blame Anglo-Saxons, Others for Euro Crisis”Time. Retrieved 2 May 2010.
  312. ^ Tremlett, Giles (14 February 2010). “Anglo-Saxon media out to sink us, says Spain”The Guardian(London). Retrieved 2 May 2010.
  313. ^ “Spain and the Anglo-Saxon press: Spain shoots the messenger”The Economist. Retrieved 2 May 2010.
  314. ^ “Spanish Intelligence Investigating “Anglo-Saxon” Media”. The Washington Independent. Retrieved 2 May 2010.
  315. ^ “Spanish intelligence probe ‘debt attacks’ blamed for sabotaging country’s economy”Daily Mail (UK). 15 February 2010. Retrieved 2 May 2010.
  316. ^ “Britain’s deficit third worst in the world, table”The Daily Telegraph (London). 19 February 2010. Retrieved 29 April 2010.
  317. ^ Samuel Jaberg (2011-04-16). “Dollar faces collapse”Current Concerns (Swiss Broadcasting Corporation). Retrieved 2011-12-11.
  318. ^ “When Will The Bond Vigilantes Attack The U.S. And U.K.?”Seeking Alpha. 2011-12-04. Retrieved 2011-12-11.
  319. ^ “Euro crisis and deconstruction of the European Union”Current Concerns (Zurich). July 2010. Retrieved 2011-12-11.
  320. ^ Elwell, Craig K.; Labonte, Marc; Morrison, Wayne M. (23 January 2007). (see CRS-43 on page 47) “CRS Report for Congress: Is China a Threat to the U.S. Economy?”. Congressional Research Service. Retrieved 8 November 2011.
  321. ^ Larry Elliot (28 January 2009). “London School of Economics’ Sir Howard Davies tells of need for painful correction”The Guardian (London). Retrieved 13 May 2010.
  322. ^ “Euro area balance of payments (December 2009 and preliminary overall results for 2009)”European Central Bank. 19 February 2010. Retrieved 13 May 2010.
  323. ^ Irvin, George; Izurieta, Alex (March 2006). (page 3) “European Policy Brief: The US Deficit, the EU Surplus and the World Economy”. The Federal Trust. Retrieved 8 November 2011.
  324. ^ Sean O’Grady (2 March 2010). “Soros hedge fund bets on demise of the euro”The Independent (London). Retrieved 11 May 2010.
  325. ^ Alex Stevenson (2 March 2010). “Soros and the bullion bubble”. FT Alphaville. Retrieved 11 May 2010.
  326. ^ Donahue, Patrick (23 February 2010). “Merkel Slams Euro Speculation, Warns of ‘Resentment'”.BusinessWeek. Retrieved 11 May 2010.
  327. a b c d Pulliam, Susan; Kelly, Kate; Mollenkamp, Carrick (26 February 2010). “Hedge funds are ganging up on weaker euro”Wallstreet Journal. Retrieved 7 November 2011. “Some heavyweight hedge funds have launched large bearish bets against the euro . . . In Manhattan, a small group of all-star hedge-fund managers argued that the euro is likely to fall to “parity” . . . with the dollar. . . . There is nothing improper about hedge funds jumping on the same trade—unless it is deemed by regulators to be collusion. Regulators haven’t suggested that any trading has been improper.”
  328. ^ “USD vs. EUR”. European Central Bank. 7 November 2011. Retrieved 7 November 2011.
  329. ^ “Kevin Connor: Goldman’s Role in Greek Crisis Is Proving Too Ugly to Ignore”Huffington Post (USA). 27 February 2010. Retrieved 2 May 2010.
  330. ^ Clark, Andrew, Heather Stewart, and Elena Moya (26 February 2010). “Goldman Sachs faces Fed inquiry over Greek crisis”The Guardian (London). Retrieved 11 May 2010.
  331. ^ Wearden, Graeme (19 May 2010). “European debt crisis: Markets fall as Germany bans ‘naked short-selling'”The Guardian (UK). Retrieved 27 May 2010.
  332. ^ “Greece must deny to pay an odious debt”. CADTM.org. 11 June 2011. Retrieved 7 October 2011.
  333. ^ Michael Simkovic, Paving the Way for the Next Financial Crisis, Banking & Financial Services Policy Report, Vol. 29, No. 3, 2010
  334. ^ “Greece not alone in exploiting EU accounting flaws”. Reuters. 22 February 2010. Retrieved 20 August 2010.
  335. ^ “Greece is far from the EU’s only joker”Newsweek. 19 February 2010. Retrieved 16 May 2011.
  336. ^ “The Euro PIIGS out”Librus Magazine. 22 October 2010. Retrieved 17 May 2011.
  337. ^ “‘Creative accounting’ masks EU budget deficit problems”Sunday Business. 26 June 2005. Retrieved 17 May 2011.
  338. ^ “Step Aside Greece: How Gustavo Piga Exposed Europe’s Enron In 2001”Zerohedge. 28 February 2010. Retrieved 10 September 2010.
  339. ^ “UK Finances: A Not-So Hidden Debt”eGovMonitor. 12 April 2011. Retrieved 16 May 2011.
  340. ^ Butler, Eamonn (13 June 2010). “Hidden debt is the country’s real monster”The Sunday Times (London). Retrieved 16 May 2011.
  341. ^ Newmark, Brooks (21 October 2008). “Britain’s hidden debt”The Guardian (London). Retrieved 16 May 2011.
  342. ^ “The Hidden Debt Bombshell”Pointmaker. October 2009. Retrieved 16 May 2011.
  343. ^ Wheatcroft, Patience (16 February 2010). “Time to remove the mask from debt”The Wall Street Journal. Retrieved 16 May 2011.
  344. ^ “Brown accused of ‘Enron accounting'”BBC News. 28 November 2002. Retrieved 16 May 2011.
  345. ^ Littlejohn, Richard (11 January 2011). “Need a lesson in economics, Alan? Try starting with Mr Micawber”.MailOnline (London). Retrieved 16 May 2011.
  346. ^ “IMF calls for bank guarantees to be included in the national debt”Gold made simple News. 6 April 2011. Retrieved 5 June 2011.
  347. ^ “‘Hidden’ debt raises Spain bond fears”Financial Times. 16 May 2011. Retrieved 16 May 2011.
  348. ^ “The Hidden American $100 Trillion Debt Problem”.Viable Opposition. 4 April 2011. Retrieved 16 May 2011.
  349. ^ Goodman, Wes (30 March 2011). “Bill Gross says US is Out-Greeking the Greeks on Debt”Bloomberg. Retrieved 17 May 2011.
  350. ^ “Botox and beancounting Do official statistics cosmetically enhance America’s economic appearance?”Economist. 28 April 2011. Retrieved 16 May 2011.
  351. ^ “Germany’s enormous hidden debt”PressEurop. 23 September 2011. Retrieved 28 September 2011.
  352. ^ Vits, Christian (23 September 2011). “Germany Has 5 Trillion Euros of Hidden Debt, Handelsblatt Says”.Bloomberg. Retrieved 28 September 2011.
  353. ^ “Finland Collateral Demands Threaten Bailout Solidarity”The Wall Street Journal. 19 August 2011.
  354. ^ Schneeweiss, Zoe, and Kati Pohjanpalo, “Finns Set Greek Collateral Trend as Austria, Dutch, Slovaks Follow Demands”Bloomberg, Aug 18, 2011 9:41 AM ET.
  355. ^ “Finland and Greece agree on collateral”. 2011-08-17. Retrieved 2012-02-24.
  356. ^ “Finnish win Greek collateral deal”. European Voice. 4 Oct 2011. Retrieved 4 Oct 2011.
  357. ^ Marsh, David, “German OK only small step in averting Greek crisis”MarketWatch, 3 Oct. 2011, 12:00 am EDT. Retrieved 3 October 2011.
  358. ^ “The second Greek bailout: Ten unanswered questions”Open Europe. 2012-02-16. Retrieved 2012-02-16.

[edit]External links

Advertisements
Categories: EU Observation Tags: , ,
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: