BU Now » euro

German trading ban roils markets

Dick Taffe — Wed, 19 May 2010 19:29:18 +0000

Because no one followed suit, Germany’s unlateral ban on “naked” short selling of European government bonds - speculative bets that prices will fall on borrowed assets which then can be sold back to the lender with the speculator pocketing the difference –rocked global markets. Mark Williams, who teaches finance at the BU School of Management and is author of “Uncontrolled Risk” about the lessons to be learned from the fall of Lehman Brothers, says this shows that systemic risk remains high in our global financial market.

“Short sellers are a symptom not the cause of our fragile financial system. The action that will be most effective is coordinated efforts by G-20 powers to enact a global financial reform. Efforts being made in the U.S. will not solve the systemic risk that Greece has reminded us still exists.”

Contact Mark Williams, 617-358-2789, williams@bu.edu

Greeks deal with debt

Dick Taffe — Fri, 05 Mar 2010 21:04:23 +0000

Greece has announced austerity measures to rein in the country’s debt that threatens the European Union’s euro currency — and in the process triggered public outrage and demonstrations. International Relations Professor William Keylor, an authority on U.S.-European relations, says the Greek government seems to playing a game of chicken with the EU.

“By hinting that it might approach the International Monetary Fund for an emergency loan, it is threatening the eurozone with a huge embarrassment if it does not come to Greece’s aid. No developed country has gone hat in hand to the IMF since Britain had to do so thirty four years ago.”

Contact William Keylor, 617-358-0197, wrkeylor@bu.edu

Saving Greece’s economy

Dick Taffe — Fri, 26 Feb 2010 16:23:42 +0000

Greece is preparing a bond issue aimed at restructing its economy as the European Union is pushing the country to adopt new austerity measures to cut its crippling budget deficit. Economics Professor Laurence Kotlikoff, as he explains in his blog, says there’s a way in his view for Greece to to devalue without devaluing.

“The government can implement wage and price controls for, say, the next three months, with these controls covering not just the growth in wages and prices over the next three months, but also their initial levels … [then] the German and French governments could commit to servicing some fraction (say 30 percent) of Greece’s current public and private external debt with the understanding that this servicing ceases if Greece misses it’s spending and tax rate targets.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

EU seeks Greece economic rescue

Dick Taffe — Wed, 10 Feb 2010 17:23:55 +0000

European Union governments are grappling how to manage the debt crisis in Greece that threatens to undermine the shared euro currency. Economics Professor Laurence Kotlikoff, who a decade ago in Foreign Affairs magazine predicted the euro’s collapse, says Greece’s debt woes are a precursor to what may happen in the U.S.

“Greece is where the United States is heading. Indeed, there is strong reason to believe that the U.S. is in much worse fiscal shape than is Greece.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu