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Euro debt crisis : any good books or in-depth articles?
Old 09-29-2011, 11:43 AM   #1
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Euro debt crisis : any good books or in-depth articles?

Have you read a book or an in-depth article on the Euro debt crisis that you would like to share?

I want to know more details like the size of the debt, who the investors are, any little know side effects, anything like CDOs hiding in the wings etc.

btw, I am reading Reckless Endangerment which addresses our financial crisis in 2008 with a focus (at least so far) on the policies that enabled it. Good writing & content.
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Old 09-29-2011, 11:54 AM   #2
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I'm only halfway thru it, but I am finding Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin and Jonathan Pepper to be enlightening and sobering - got it from our local library.

Just published, the first half of the book makes the case for why kicking the can down the street again is very quickly becoming a non-option. Lots of discussion re: Europe, the USA, Japan and the UK including what's happening in Greece (there's a chapter named 'Why Greece Matters').

The second half of the book is chapters on the specific challenges in each country or region. There are no easy choices, each country can do this the hard way or just let nature take it's course which will probably be much worse. Again, so far it's a sobering read...
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Old 09-29-2011, 12:00 PM   #3
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Moderator, Please correct my typo in the title. Should be 'debt', not deb.
Thank you.
And here I thought we would be discussing debutantes.... Fixed it. Don't have a good book to recommend, though, so I'll be interested in reading this thread.
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Old 09-29-2011, 03:06 PM   #4
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Thanks Midpack.

Scott Burns mentions the book in this post
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Old 09-29-2011, 03:17 PM   #5
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I'm only halfway thru it, but I am finding Endgame: The End of the Debt Supercycle and How It Changes Everything by John Mauldin and Jonathan Pepper to be enlightening and sobering - got it from our local library.

J
Mauldin stuff is almost always worth reading. I'll check it out.
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Old 09-29-2011, 09:56 PM   #6
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Michael Lewis is a great writer, and his new book on the Greece/euro crisis comes out 10/3. It will be a must read.

If You're Outraged By Greece Now, Wait Till You Read Michael Lewis' New Book
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Old 09-29-2011, 10:45 PM   #7
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Mauldin stuff is almost always worth reading. I'll check it out.
I'm not surprised to see that Mauldin has a co-author. I can't remember when he last wrote a column without someone's guest-writing or extensive quoting.
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Old 09-30-2011, 12:30 AM   #8
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Michael Lewis is a great writer, and his new book on the Greece/euro crisis comes out 10/3. It will be a must read.

If You're Outraged By Greece Now, Wait Till You Read Michael Lewis' New Book
Thanks for letting us know. I missed the review in the ny times, but love reading his financial books.
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Old 09-30-2011, 01:36 AM   #9
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I want to know more details like the size of the debt, who the investors are, any little know side effects, anything like CDOs hiding in the wings etc.
The fear in the markets currently is due to the obvious fact that nobody actually has the details right now. There's a lot of decent synopses from various sources but the following is a fair recap as Boskin touches on all the problems and solutions in a tight manner: Europe

IMO, the first question to ask is whether the European banks have a liquidity problem or an insolvency problem.

Simple bank balance sheet: A (loans and sovereign bonds) = L (deposits) + E (equity)

1) If the write-down to A - in their bad loans (i.e. PIIGS bonds) - is enough to keep E positive then the EU and ECB have a liquidity problem which is simple enough in theory to fix with various levels of pain for equity and preferred bank owners.
2) If, however, the write-down is big enough to make E immediately negative, then the banks are insolvent and the fix is not so simple. Pain will be broad with equity holders totally wiped out and potential effects perhaps affecting global economies for awhile depending on market fear.

The second question is then to ask, if the banks are in trouble, how should the EU and ECB manage the situation to limit the contagion. Two basic and general theories: 1) Borrow money using it's good credit (i.e. ECB, etc.) to make the banks' write-downs whole. EFSF, like TALF, takes this route. The ECB would be "bailing out" the banks like the US Trsy did but the reality is that the ECB would, like the US Trsy did with TALF, be simply bailing itself out since equity holders would pretty much get a value that's a paltry percentage of the total assets (A).
2) The other route to take is the nuclear Swedish option: The EU and ECB wipes out all equity holders and injects its own cash into the banks as equity stakes. This option is, in economic terms, the most efficient path to take but the Prisoner's Dilemma for the EU and ECB is that the wiping out of equity would potentially create such market panic that the financial system freezes. Unfortunately, if the banking system is indeed insolvent rather than facing a liquidity problem, then the Swedish option is the only solution. Throwing money into an insolvent bank is inherently faulty and doomed to fail as depositors would smartly run on the bank until the the thrown money is wasted and no equity remains.
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