One of the key problems in understanding debt obligations is the relationship between the interest rate and the financial obligations. Compound interest is among the most commonly used phrases, yet least understood.
The question of how currency unions break down has come to the forefront of the European debt crisis. The particular concern is Greece ceding from the Eurozone.
I have been following the Greek crisis and have posted a significant number of the news articles regarding Greece to my Twitter feed (which is linked on this page).
is reporting that the EU is nearing a deal to have members of the Eurozone either bail out Greece or provide loan guarantees.
The BBC is reporting that an Ex-IMF economist, Simon Johnson, believes
the UK should be added to the list of European countries that are at risk of insolvency.
The government of Portugal has voted against an austerity bill, according to an article titled “
Portugal debt vote likely to rattle markets” by The Globe & Mail.
News | Tagged austerity, democracy, formula, future going burden, GDP, Greece, legislation, Portugal, prediction, Spain, UK
In its efforts to stave off further reductions in the ratings on its credibility as a debtor, and stabilize its finances going forward, the government of Greece has voted to
reduce its spending, and increase taxes (specifically a 90% tax on bonuses for bankers).
According to the BBC,
Greece has unveiled major spending cuts. In my commentary below, I hypothesize a way to calculate a “future going burden” for countries based on data in the BBC article (i.e. based on debt as a percentage of GDP and deficit as a percentage of GDP).
Commentary, News | Tagged anti-cyclical, compound interest, cuts, cyclical, Eurozone, fiscal policy, future going risk, Germany, Greece, Ireland, Italy, monetary policy, prediction, prevention, pro-cyclical, Spain, spending, taxes, UK, United Kingdom
According to the BBC, investors are concerned that Greece
may default on its debt. From the article:
This week two-year bond yields have surged to 3.09% from 1.9%. Ten-year Greek bonds had their worst weekly decline since January, with the yield up to 5.3% from 4.99%.