Photo by Saikofish

The latest phase of the Euro crisis

10th October 2011 Socialist Action 0

By Tom O’Donnell

The foolish vanity that the current crisis in the European economy and financial markets was confined to the so-called ‘peripheral’ economies of the Euro Zone has been exposed as complacent self-delusion. Among the recent development the large Belgian-French-Luxembourg bank Dexia is threatened with bankruptcy despite already having been bailed out by the governments. Crucially, yields on French and Belgian government debt have climbed to reflect the increased risk of taxpayer funds being used for further bank bailouts. Their yield premia over Germany is now equivalent to the premium paid by Irish and Greek governments as the crisis began to unfold. The crisis has migrated from the ‘periphery’ to the ‘core’.

Photo: apαs

Who will pay the cost of Europe’s defaults?

23rd May 2011 Socialist Action 0

By Nicky Dempsey

Open disagreements have broken out between the EU Commission and the European Central Bank on the issue of whether Greek government debt should be ‘restructured’  or ‘reprofiled’ in some way.  Debt restructuring would require that the bondholders, mainly European (including British) banks, take some losses on their bonds by having their value written down. ‘Reprofiling’ is a much more modest proposal which may involve little more than extending the life of the bonds, so that interest and capital repayments are drawn out over time.