What happens next?
OF LATE, Greece’s current account has come close to registering, but has not yet equalled, surpluses achieved by her comparators at the time their crises abated. Against this, Greek public external debt remains much larger. Continue reading “Fixing Greece: Part III”
IT’S PERHAPS the greatest irony of all: just as euro area crisis appears consigned to history, should the European Central Bank (ECB) meet its 2 percent inflation target peripheral stress could return!
How so? In short: rapid unwinding of the ECB’s Asset Purchase Program (APP) due to building inflation pressure would rekindle balance of payments pressures in TARGET2 (T2) debit countries—triggering a rise in yields, slowdown in growth, and fears once more for debt sustainability. Continue reading “The ECB’s TARGET2 challenge”