Sebastian Mallaby, Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics, says Greece is nearing a turning point in its debt crisis. Mallaby predicts that "Greece is going to have to default, it's going to have to be restructured in its debt," and argues that policy-makers need to "prevent the fire from spreading out of Greece and causing trouble all across the eurozone."
Despite a German parliamentary vote to boost the eurozone's bailout mechanism, Greek sovereign debt levels appear unsustainable and a default may be inevitable. Most economists think the question now is how to make the process orderly.
Despite the Greek parliament's approval of an austerity package, the country's enormous debt and EU countries' tortured debate over solutions raise concerns among some experts that default is unavoidable.
Greece's government escaped a no-confidence vote, but the crisis over its massive sovereign debt continues to shake the eurozone. CFR's Sebastian Mallaby says there are no easy solutions and matters may be coming to a head.
Though Standard and Poor's ranks Greece as the world's lowest-rated economy, calling into question the eurozone's future, economist Iain Begg says the debt crisis will paradoxically have the effect of deepening EU integration.
Greece will undoubtedly receive a second bailout from the EU and IMF. But expert Daniel Gros says it remains to be seen whether default is inevitable and if banks and other private bondholders will also take a hit.
European Union Commissioner for Economic and Monetary Affairs Olli Rehn expects negotiations on a new Greek aid plan between the EU, IMF, and Greek government will conclude "in the coming days," ahead of the EU finance ministers' meeting scheduled for June 20.
As Wall Street hangs on the question "Will Greece default?," Vanity Fair's Michael Lewis heads for riot-stricken Athens, and for the mysterious Vatopaidi monastery, which brought down the last government, laying bare the country's economic insanity.
Authors: Rebecca M. Nelson, Paul Belkin, and Derek E. Mix
Over the past decade, Greece borrowed heavily in international capital markets to fund government budget and current account deficits. The profligacy of the government, weak revenue collection, and structural rigidities in Greece's economy are typically cited as major factors behind Greece's accumulation of debt.
At the center of market upheaval over Europe's debt crisis is Greece, which faces daunting challenges despite a pending bailout. But it should be counted on to muddle through with reforms, writes CFR's Marc Levinson.
Nouriel Roubini and Arnab Das of Roubini Global Economics warn that the IMF and EU should abandon their Greece bailout plans. It's too late; officials are being stubborn; time to move on and restructure Greece's debt and cut interest rates.
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The authors argue that the United States has responded inadequately to the rise of Chinese power and recommend placing less strategic emphasis on the goal of integrating China into the international system and more on balancing China's rise.
Campbell evaluates the implications of the Boko Haram insurgency and recommends that the United States support Nigerian efforts to address the drivers of Boko Haram, such as poverty and corruption, and to foster stronger ties with Nigerian civil society.
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