Greece's "Unpleasant Arithmetic" Containing the Threat to the Global Economy

James Barth, Tong Li and Prabhavivadhana Apanard ()
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Prabhavivadhana Apanard: Milken Institute
Authors registered in the RePEc Author Service: Apanard Penny Angkinand Prabha

Global Economy Journal, 2011, vol. 11, issue 4, 15

Abstract: Greece's debt-to-GDP ratio is reaching unsustainable levels. But why should the debt load of such a small country cause such outsized tremors in global financial markets?Greek debt may be relatively small, but a sufficient amount is held by a few major banks in Europe to cause disruptions to the credit system. This effect is magnified because other banks from around the world are exposed to these European banks, making the problem global.In this article we examine the exposure of banks around the world to Greek debt, and call for swift and decisive action by policymakers to head off a global banking crisis.

Keywords: sovereign debt crisis; euro zone crisis; bank bailouts (search for similar items in EconPapers)
Date: 2011
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DOI: 10.2202/1524-5861.1829

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