Author: Jacob Kierkegaard, PIIE

The G20 Summit in Cannes probably made its most important contribution to global financial stability and economic growth before it even commenced.

The summit, held 3–4 November, became a deadline for European leaders to deal decisively with the economic and financial crises in the euro zone. Read more…

Author: Barry Eichengreen, UC Berkeley

How serious is the risk of a double dip recession in the US and Europe? Why did global stock markets fall so dramatically last week? How worried should Asia be? The answers, I submit, are: we don’t know, we don’t know, and very.

Start with the stock market. Read more…

Author: Arvind Subramanian, PIIE

With the United States throwing its support behind Christine Lagarde for the post of Managing Director of the International Monetary Fund, the search for a new chief is all over.

Although the French magistrate’s continuing investigating of Lagarde’s role in the Bernard Tapie affair is unfortunate. Read more…

Author: Andrew Sheng, China Banking Regulatory Commission and Qatar Financial Centre Regulatory Authority

If a pack of wolves stalk a herd of buffalo, the herd can guard the weaker buffaloes. But if the wolves stampede the herd, they are able to take down the weakest buffaloes.

Financial crises behave similarly. The market speculators are like wolves that attack the weakest or most vulnerable economy. During the Asian crisis, the markets attacked Thailand first, because it had the highest external debt. This time, the markets attacked Greece, the most vulnerable economy in the EU. Greece may be the 27^th largest economy in the world, but with a GDP of US$352 billion, it is only 3.1 per cent of the size of the EU. Read more…

Author: Suman Bery, NCAER

What is at the heart of the Greek crisis? What are the important lessons for India? Based on a fairly close reading of the international press, it has been surprisingly hard to answer the first of these questions, in a way that helps address the second.

The crisis first erupted in late 2009, when the incoming socialist government revealed that its predecessor had understated the country’s fiscal deficit. Read more…

Author: Peter Drysdale

The past week has seen the Europe Union put together a massive US$1 trillion rescue package for the embattled Greek economy. The IMF played a useful role in providing the framework for cobbling it all together. Greece was exposed more than most of the European economies, because of its heavy reliance on shipping and tourism, both of which were hit hard by the global financial crisis. The package saw a rebound on world stock markets and stabilisation of the emerging Europe-wide crisis, and the slide in the European currency. Protecting Greece from the market wolves is critical to protecting the rest of the European herd from the market wolves — the much larger economies of Spain, Ireland and Italy were all vulnerable, as too was the smaller economy of Portugal.

David Vines this week draws on experience with recovery from the Asian financial crisis to argue that the rescue package is only the first act of the unfolding tragedy in Greece and that Europe remains afflicted by deeper system problems that threaten the euro and European Monetary Union itself. Read more…

Author: David Vines, Oxford University

The Asian financial crisis of 1997-98, and the financial crises in Russia and in Argentina, all happened in emerging-market economies. Little did we think that the next sovereign debt crisis would be in an advanced country, or even in Europe. These earlier crises taught us three crucial things. Understanding them is vital to dealing with the Greek crisis.

First, the Asian financial crisis showed that the way for a country to recover from a financial crisis is to devalue its currency – to a very large extent– and then to go for export-led growth. We learned this from Thailand, Korea, Malaysia and Indonesia. Read more…