Recently, debates about the economics of debt have been dominated by issues related to the global financial crisis. In this edited volume, the relationships between this crisis and Eurozone sovereign debt, debt mechanics, the Greek economic decline, European budget rules, debt obligations, convertible bonds, household indebtedness, financial guarantees as well as proposed Basel III leverage and liquidity regulation is explored. The sovereign debt crisis and weak European economic growth has damaged the European and Monetary Union and the Euro itself. Among the causes of this crisis is rapid government debt level growth, trade imbalances, monetary policy inflexibility and loss of confidence. Moreover, the consequences involve disrupted bond markets and the banking sector, depreciation of the Euro, reduced economic growth, loss of confidence, reduced remittances, tight fiscal measures and politics. Initial crisis cures included the creation of the European Financial Stability Facility, the European, Financial Stabilization Mechanism and the Brussels Agreement. In particular, the book investigates which economic mechanisms of the currency union have managed to turn the European political and cultural heterogeneity into such severe external imbalances between the Northern and Southern Eurozone. Another problem addressed is the extent to which the external debt accumulation of Southern EMU countries can be attributed to Euro capital market integration. Also, we employ the most recent data on money, credit, industrial production and productivity to show that the Greek drama is an almost ideal application of the Austrian ideas. A reinforced budget rule, according to which structural budget balances must be virtually zero, has been adopted. In this edited volume, we argue that such a target can make fiscal and monetary policies pro-cyclical.
Preface; Causes, Consequences & Cures of the Eurozone Sovereign Debt Crisis; Modeling the Debt Mechanics of the European Monetary Union; The Greek Economic Drama: An Almost Perfect Austrian Application; On the Unfeasibility of the New European Budget Rule; On the Impact of CDO Rating Announcements on the Banks Share Price; Convertible Bonds: Funding Strategies, Pricing, Liquidity & Market Observations; The Financial Crisis & Household Indebtedness in South Africa; Financial Guarantees & Other Fiscal Risks in South Africa: An Econometric Approach; Basel III & Leverage; Basel III & Liquidity; References; Index.
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