Don't trust the Greeks. That is the lesson we learned in the past 200 years of debt and default. #Greece pic.twitter.com/cEYL9ZxyxC
— Holger Zschaepitz (@Schuldensuehner) February 22, 2015
What were they thinking? NZ government super fund loses the lot on loan to already failing bank in one of the PIGS.
20 Feb 2015 Leave a comment
in economics of bureaucracy, entrepreneurship, financial economics, politics - New Zealand Tags: active investing, corruption, euro crisis, Index of Economic Freedom, junk bonds, passive investing, Portugal, risk diversification, state owned enterprises
A Portuguese bank on the verge of collapse – what were they thinking?
That would have been the response of many newspaper readers this morning upon learning the New Zealand Superannuation Fund has lost nearly $200 million in taxpayers’ cash on a "risk-free" loan it provided to Lisbon-based Banco Espirito Santo (BES) on July 3.
The loan – part of a US$784 million credit package US investment bank Goldman Sachs put together through its Oak Finance vehicle – was made exactly one month before Portugal’s central bank broke up BES and split the country’s biggest lender into two, with one part holding the good assets and the toxic assets placed in the other.
Unfortunately, the Oak Finance loan is now stranded in the so-called "bad bank" following a retrospective law change by the Bank of Portugal.
Christopher Adams: What were they thinking? – Business – NZ Herald News.
This is what the 2015 index of Economic Freedom has to say about Portugal on the rule of law:
In 2013, the OECD expressed concern over Portugal’s reluctance to crack down on foreign bribery, particularly in regard to its former colonies Brazil, Angola, and Mozambique.
Since 2001, Portugal had officially acknowledged only 15 bribery allegations, and there had been no prosecutions. The judiciary is constitutionally independent, but staff shortages and inefficiency contribute to a considerable backlog of pending trials.
Economic policy uncertainty in the European Union
01 Dec 2014 1 Comment
in Euro crisis, global financial crisis (GFC), great recession, macroeconomics Tags: euro crisis, regime uncertainty
Source: Nicholas Bloom (2014) – all data at www.policyuncertainty.com. Data normalized to 100 prior to 2010.
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Avoiding Lost Decades: European Edition | Econbrowser
29 Nov 2014 Leave a comment
in economic growth, Euro crisis, global financial crisis (GFC), great recession, macroeconomics Tags: euro crisis, Euroland
The Greek great depression
15 Nov 2014 Leave a comment
in Euro crisis, global financial crisis (GFC), great depression, great recession, macroeconomics, politics Tags: euro crisis, Euroland, Greece
Europe has extensive experience with currency union break-ups
15 Jun 2014 Leave a comment
in currency unions, macroeconomics Tags: euro crisis, Euroland
- The Latin Monetary Union (LMU) joined Belgium, Italy, and Switzerland together with France in 1867. The arrangement managed to hold together until the generalized breakdown of global monetary relations during World War I.
- The Scandinavian Monetary Union (SMU) formed in 1873 by Sweden and Denmark and two years later by Norway. This was disrupted by the suspension of convertibility and floating of individual currencies at the start of World War I. the agreement was finally abandoned in 1931.
- The Austro-German Monetary Union was dissolved in less than a decade following Austria’s defeat in the 1866 Austro-Prussian War.
- The only truly successful monetary union in Europe came in 1922 with the birth of the Belgium-Luxembourg Economic Union (BLEU), which remained in force for more than seven decades until 1999.
- Europe in the twentieth century has also seen the disintegration of several monetary unions, usually as a by-product of political dissolutions.
- A celebrated instance is after the Austro-Hungarian Empire was dismembered by the Treaty of Versailles. Almost immediately, in an abrupt and quite chaotic manner, new five currencies were introduced.
- There also have been British and French currency unions with and between colonies.
Since World War II, economies have exited currency unions at an average rate of one per year.
Andrew Rose found
…that countries leaving currency unions tend to be larger, richer, and more democratic; they also tend to experience somewhat higher inflation.
Most strikingly, there is remarkably little macroeconomic volatility around the time of currency union dissolutions, [emphasis added] and only a poor linkage between monetary and political independence.
Indeed, aggregate macroeconomic features of the economy do a poor job in predicting currency union exits.
Rather than saying Euroland cannot fall, the discussion should be dissolutions of currency unions are common, especially when Greece is a member. What happened? How was it done?
HT: Monetary Unions.
Utopia, you are standing in it! 
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