Countries in crisis
Commentaries
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Government failures in Iceland: Entranced by banking
Jon Danielsson, Gylfi Zoega, 9 February 2009
Iceland underwent a systemic crisis in October last year, the only developed economy to do so in recent decades. The fate of Iceland is sometimes taken as an indication of what might happen to other countries with an outsized financial sector, such as the UK. However, the main factors in Iceland’s downfall can be explained by its unique history, inappropriate policy responses, and...
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European government bailouts: Should we let one go broke?
Charles Wyplosz, 21 February 2009
A few months ago, we were anxiously discussing whether governments should bail out banks. They did. And then they went into the business of bailing out car companies, just as central banks – a branch of government – started to lend directly or indirectly to the private sector. And now we start discussing whether governments should bail out… governments within the euro area....
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Saving Eastern Europe before the contagion starts
Daniel Gros, 25 February 2009
As if core Europe did not have enough problems of its own, a new threat has arisen – collapse of the European periphery. The deteriorating foreign exchange and financial conditions of satellite countries in the euro area – from the Baltic region to Eastern Europe, Turkey and Ukraine, not to mention the imploded Icelandic financial system – add yet another source of uncertainty....
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What EU leaders must do to avoid banking crisis in Eastern Europe
Erik Berglöf, 28 February 2009
The leaders of Europe will meet this weekend to respond to the rapid deterioration of the economic situation in Emerging Europe. The situation varies a great deal; some countries have been more prudent in their policies than others. But all are joined, more or less strongly, through the deeply integrated European banking system. Western banks and the Eastern economies This relationship between...
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Ireland: How to fix the looming banking and public finance crises
Patrick Honohan, Philip Lane, 28 February 2009
The increase in secondary-market spreads on Irish government debt in the past five months is symptomatic of the sudden emergence of a twin crisis in the banking sector and in the public finances. Ireland’s exposure: Blessing in the 1990s, curse in the global crisis It was always to be expected that Ireland would be particularly exposure to a global downturn, considering the exceptionally...
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Switzerland’s vulnerability: Foreign exposure
Cédric Tille, 11 March 2009
One can expect Switzerland to be highly exposed to the ongoing global turmoil, as it is a small economy with extensive linkages to the rest of the world through trade and financial channels. Indeed, its growth performance has weakened substantially, with GDP contracting by 1.2% on an annualised basis in the fourth quarter. This column argues that further weaknesses could be in store from trade,...
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The Irish financial system in crisis
John Cotter, 19 May 2009
As in other economies, housing and finance have been the two sectors of the Irish economy most seriously affected by the global crisis. The health of the whole financial system has been seriously questioned. Irish banks were highly leveraged on property, and collapsing property values have put further pressure on the banking system. While some mistakes are inevitable during crises, the Irish...
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Indian Rupee in Crisis
Abhishek Kumar University of Delhi, 22 May 2012
Recent fall in Rupee Vs Dollar exchange rate is quite problematic for India Rupee and I myself found it very disturbing for Indian Economy. The first image shows the recent Rupee Vs Dollar Exchange rate and one can easily see that Rupee has depreciated a lot. Surprised by the above finding I tried to dig it further. I took US and Indian CPI monthly data and tried to get some insight...
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Too-Small-To-Survive: The need for further economic integration
Georg Erber DIW Berlin, 20 April 2012
There has been much talk about the Too-big-to-fail issue of commercial banks after the global financial and economic crisis. Systemic relevant banks could not go bankrupt because of the severe systemic consequences for the whole global economy. The default of Lehmann Brothers has become the example why large banks need a guarantee that they would be saved in case of a major financial market...
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The North Korean military threats are not feared
6 April 2009
From Kim Byung-Yeon and Gerard Roland. The launch of a multi-stage rocket by the North is yet another episode in the build-up of tension by the North Korean regime. The regime of Kim Jong-Il has showed its willingness to establish a nuclear program and there have been multiple episodes in recent years of military provocations by the North Korean regime. Adding to that is their tough stance...
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Albania and the Global Crisis
1 April 2009
It’s not an April’s fool joke! Lack of financial markets can be a blessing in disguise. Contrary to common knowledge among academics and practitioners, being less diversified might not always work against the investor, at least that’s what Albanian case shows. This small and not sophisticated economy appears to be relatively isolated from the global financial meltdown. But can...
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Re-shaping Capitalism: The Time of Negotiators
18 March 2009
In 1981 I co-authored a book called The Crisis in South Africa, which argued that the confluence of economic decline and political upheaval in South Africa since the mid-70s had imposed the need for a change in the form of South African capitalism. But the attempt to transform placed capitalism itself (at least locally) in some jeopardy: its survival depended upon its de-racialisation, but de-...
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Too-Small-To-Survive: The need for further economic integration
Georg Erber DIW Berlin, 20 April 2012
There has been much talk about the Too-big-to-fail issue of commercial banks after the global financial and economic crisis. Systemic relevant banks could not go bankrupt because of the severe systemic consequences for the whole global economy. The default of Lehmann Brothers has become the example why large banks need a guarantee that they would be saved in case of a major financial market...
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Indian Rupee in Crisis
Abhishek Kumar University of Delhi, 22 May 2012
Recent fall in Rupee Vs Dollar exchange rate is quite problematic for India Rupee and I myself found it very disturbing for Indian Economy. The first image shows the recent Rupee Vs Dollar Exchange rate and one can easily see that Rupee has depreciated a lot. Surprised by the above finding I tried to dig it further. I took US and Indian CPI monthly data and tried to get some insight...
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Re-shaping Capitalism: The Time of Negotiators
18 March 2009
In 1981 I co-authored a book called The Crisis in South Africa, which argued that the confluence of economic decline and political upheaval in South Africa since the mid-70s had imposed the need for a change in the form of South African capitalism. But the attempt to transform placed capitalism itself (at least locally) in some jeopardy: its survival depended upon its de-racialisation, but de-...
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The North Korean military threats are not feared
6 April 2009
From Kim Byung-Yeon and Gerard Roland. The launch of a multi-stage rocket by the North is yet another episode in the build-up of tension by the North Korean regime. The regime of Kim Jong-Il has showed its willingness to establish a nuclear program and there have been multiple episodes in recent years of military provocations by the North Korean regime. Adding to that is their tough stance...
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Comment on Wyplosz's column
25 February 2009
With the benefit of hindsight, it is easy to criticize the decision to let Lehman Brothers go down. The decision triggered a costly near-meltdown of the global financial system, which in turn caused, or contributed to, an extremely sharp global economic downturn. Even if one accepts the internal logic of that decision, it would still have been better and cheaper to have nationalized Lehman, and...
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