Suchergebnisse

Following the 2008 global financial crisis, years of low interest rates provided a rare opportunity for many developing nations to borrow in international markets—whether issuing bonds in their own currencies, securing loans from private-sector banks and commodity traders, or borrowing from China, which emerged as a dominant official creditor. Developing countries' overall external debt rose to a record level during this period. As central banks raise interest rates sharply to counter a global rise in inflation, many of these countries are at risk of default. The mix of public and private creditors and the opacity of many loan terms make it difficult to coordinate restructuring. The key factor may be domestic politics.

The sovereign debt crisis in the Eurozone began with the global economic recession that started in 2008 in the USA, caused by a massive melt down in financial markets. After the crash of 2008, the sovereign debt increased for two main reasons. The first reason was because governments assumed private debt (primarily bank debt). The second reason derived from the automatic stabilizers set in motion by the recession-induced decline in government revenues. In this scenario, there was a drastic increase in the interest rate of government bonds, especially for PIIGS countries (Portugal, Ireland, Italy, Greece, Spain). However it seems very difficult to explain this enormous increase exclusively through the theory of speculative attacks triggered by the worsening of fundamentals, especially if inconsistent macroeconomic policies were not in place. The main goal of this work is to indagate the determinants of the spread increase taking into account the fundamentals deterioration and the self-fulfilling speculative attack on euro currency.

This article calls on the need for scholarly studies to compare and contrast the failure of neo-liberal policies in Eastern Europe and the Balkans in the 1990s in view of the sovereign debt crises in the periphery states of the EU today. It explores the way(s) in which "shock therapy" financial statecraft in former Yugoslavia and elsewhere did not alleviate the debt problem but, quite the opposite, augmented it. The international mechanism in operation in the past, as well as today, has not been and is not real development, modernisation and growth of the countries that suffer from the debt fetter, but rather much-needed depletion of their resources earmarked for the developed capitalist metropolises. This is even more pronounced today vis-a-vis the decline of the Euro-Atlantic socio-economic system and the rise of the "global East" (China, India, Brazil, Russia, South Africa, Indonesia, Turkey). The way to recovery for the periphery, as the case of a number of Eastern European and Latin American states shows, is stimulation of domestic demand via Keynesian instruments while moving away from financialisation and neo-liberal engineering. Adapted from the source document.

This note examines the impact of rising bond yields in certain Euro Area countries on debt sustainability. It concludes that without the financial assistance of the bailout packages, government debt in Greece would clearly have been unsustainable, while Ireland and Portugal would have been extremely vulnerable. We also examine the case of vulnerable countries which have not received bailouts — Italy, Spain and Belgium. We conclude that while they can absorb some temporary rise, as has been seen in recent weeks, a significant further sustained rise — more than 100–200 basis points — would call their solvency into question in the absence of financial assistance.

We study debt mutualisation in the Euro area. Bearing in mind other existing proposals we provide an alternative Blue, Yellow and Red Bonds proposal: blue, would cover debt up to 60% of GDP, yellow would include debt from 60% up to 90% of GDP, and red would cover debt above 90% of GDP. Although not with joint liability, the rationale behind the Yellow Bonds with a joint issuance is the attraction of liquidity, which would be beneficial, especially for the countries with high yields. This could give more room to public authorities.

"This paper presents empirical evidence indicating that German and Spanish government bond yields are cointegrated. Thus, a stable long-term equilibrium relationship among these two variables seems to exist. However, there is also empirical evidence for the existence of a structural break in early 2009. Following Basse, Friedrich and v. d. Schulenburg (2011) we interpret this finding as an indication that financial markets started to see a higher sovereign credit risk in Spain. The structural break may even signal some fears about the return of exchange rate risk. Given that the break date is quite early; our empirical findings could be an indication that bond markets are at least partially efficient." (Author's abstract, IAB-Doku) ((en))