EuroZone Crisis a Case Study

7/31/2019 EuroZone Crisis a Case Study

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Vinee t Mishra (82)

Shailesh Pat el (109)

Mayuri Pot dar (117)

Abhishek Raj e (120)

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,

det erm ine or aff ect t he abi l i t y and wi l l ingness of a sovereign st at e or borrowerf rom a par t icu lar count ry t o fu l f i l l t he i r obl igat ions t owards one or m ore fore ignlender s and / or invest ors.

The analysis of count ry r isk consist s of t he assessm ent of t he pol i t ical, econom icand f inancial f act ors of a borrow ing count ry or FDI1 host . These f act ors give an

.

Tw o f orecast s are p roduced f or each t im e per iod a Worst Case Forecast (WCF)and a Best Case Forecast (BCF).

The WCF is produced by ext rapolat ing t he w orst -case t rend f or each r iskcomponent in each r i sk cat egory t o produce a WCF f or Poli t ical, Econom ic, and

.

The BCF is produced by ext rapolat ing t he best -case t rend f or each r i skcomponent in each r i sk cat egory t o produce a BCF f or Poli t ical, Economic, and

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nanc a s .


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Macroeconomy

Economic RiskProspects

Inter nat ional Transact ions

Government Finance

Economic PolicyBusiness Environment

Government St abi l i t y

Social Stability

Int ernat ional Diplomacy

Legal Syst em

Non-Insurance Financial Syst em Risk:

Bank in g Syst em

Vulnerabi l i ty

Financial System Risk

Report ing St andards & Regulat ions

Sovereign Debt

Insur ance Financ ial Syst em Risk:

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over nm ent e g s at on

Supervisory aut horit y

Insurer Account abil i t y


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The r isk i n count r ies can be cat e gor ized l oosel y t o pr ovi de a basi s of com par ison,

- - . ,can be cl assi f i ed, i n a t ypi cal scenar io, by t h e f ol low ing:

Predict able and t rans arent le al envi ronm ent le al s st em and

CRT-1b usi ness i nf r ast r u ct ur e; sop hi st i cate d f i nanci al syst em r egul at i on w i t hd eep cap it al m ar ket s; m atu r e i nsur ance i nd ust r y f r am ew or k.

Predict able and t ransparent legal envi ronm ent , l egal syst em and

CRT-2

busi ness i nf r ast r uct u re; suf f i ci ent f i nanci al syst e m r egul at i on; m at u rei nsur ance i ndust r y f r am ew or k. r egul at i on; m at u re i nsur ance i ndust r y

f ramework .

CRT-3

,

w it h developing capi t al m arket s; developing insurance regulat orystructure.

Relat ivel un redict able and nont rans arent ol i t ical , l e al and

CRT-4b usi ness envi r onm ent w i t h und er devel op ed capi t al m ar ket s; p ar t i al l y t ofu l l y i nadequat e regulat or y st ruct ure.

4CRT-5

npre ct a e an opaque po t ca , ega an us ness env ronm entw it h l im it ed or nonexist ent capi t al m arket s; low hum an devel opm entand soc ial inst ab i l i t y ; nascen t insurance indust ry.


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Some Rat ing agencies:Moody's

St andar d & Poor 'sFi t ch Rat i n s

Som e Rat ing agenci es (Indi a):CRISIL (Cred it Rat ing & Inform at ion Servi ces of India Lt d. )

nves m en n orm a on re a ng gency o n a .

CARE (Credi t Analysis & research Lt d. )

Rat i n S m bol s:High Invest m ent Grades:

9AAA& AA Highest saf et y.

9A Adequat e safet y.

Speculative Grades:9BB - inadequat e safet y

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9B high r isk

9C subst ant ia l r isk9D - defau lt


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e s a cover e o ow ng ssues:

1- A reminder: the cr isis is the result of a nave const ruct ion

2- c rono ogy o t e rescue pac ages an t e t ree

problem-countr ies so far: Greece, Ireland and Portugal

- -

How was this crisis management made possible?

Is the rescue total amount enough?

4- How to deal wi th the st ructural solvency problem?

5- A necessary reassessment of Sovereign r isk in advancedcountries

6- EURO The Road Ahead

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The governance regime of Euroland resulted from the lowest

an independent Central Bank in the sole name of pr ice stabi l ity

and fiscal discipline to be covered by the Euro Stabilit y and

row ac w c se e amous ce ng or e annua

budget deficit.

In other words a rather loose const ruct ion bent on nat ional

interests with a lot of loopholes.

The con unction of a common

monetary policy with uncoordinatednat ional budgetary policies was theoriginal sin. No wonder t hat at thestart of Euro, it was like in a dream:

e e cr s s o e uro reais caused for a good part by the misplaced

fait h by the Euro founding fathers in

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the Bundesbank t ransferred it scredibility to the Frankfurt-based ECB

and everyone behaved as if a freelunch had been served!

a convergence process o e

members economies and by the

genet ic f laws of the EMU


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In 1999, t h e Eur o becam e t h e of f i ci al cur rency of t h e Eur ozone .

Essent i al l y w hen an econom i c pow er house l ike Ger m any shar es a cur rency w i t ha m uch sm al l er econom y, such as Greece or Por t ugal , t he sm al l er count ryinevi t abl y f aces a l ot of t r oubl e com pet i ng i n t h e w or ld m ar ket p lace.

When a sm al l econom y f inds i t sel f unable t o t rade i t s goods w it h t he rest of t hew or ld, t hei r cur rency nat ural ly decreases in value, m aking t hei r goods cheaper

.

Essent ial l y, count r ies l ike Greece, Por t ugal , and Ireland w ere f orced by t he

com mon cur rency t o f ight above t hei r w eight class and t he f undam ent als of t hei reconomies suf f ered.

Addi t ional l y, t he adopt ion of t he euro al low ed count r ies l ike Ireland, Greece,and Por t u al t o bor row m one at unnat ural l l ow int erest rat es.

Hence t hey developed a dependence on def ici t spending f unded by low -rat ebor row ing as a m eans of m aint aining a high st andard of l i ving f or t hei r

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popu a ons.


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The rules re ulat in overnm ent s endin cont ained in t he Maast r ichtagr eem ent w ere f lout ed by nat i ons l ike Gr eece; t he f act t hat f undam ent al r ul es,l i ke t he one al low ing no m em ber t o exceed i t s year ly budget def ici t by t heequi val ent of 3% of GNP, w er e br oken l i t e ral l y hundr eds of t i m es.

Secondly in 2008, t he col lapse of t he Am er ican housing bubble led t o a globalrecession , h i t t i ng European economies par t i cu lar l y hard .

Gover nm ent budget def i ci t s expl oded w or ldw i de as w i despr ead unem pl oym entcaused t ax r evenues t o dr op of f and spendi ng t o i ncr ease.

.

Lar ge Eur opean banks f ound t h em sel ves w oef ul ly under -capi t al ized, as Dol lar,st i l l t he w or lds m ost usef ul reserve cur rency becam e expensive in relat ion t o

Euro.

Lar ge bai lout s of Por t ugal , Gr eece, and Ir el and w er e execut e d by t h e Eur ozone s

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2011 saw t he Eurozones sovereign debt cr isis blow up int o a f ul l -on bankingcrisis.

The IMFs st r ess t est s of Europes banks revealed t hat t hey w ere st i l l w oef ul lyunder -capi t al ized, and heavi l y exposed t o losses due t o large sovereign debt

hol di n s.

The st o ck pr ices of l ar ge Eur opean banks l ike Soci t Gnr al e, Cr edi t Agr icol e,

and BNP Par ibas t u m bl ed by as m uch as 50 per cent i n Sept e m ber.

In an unprecedent ed m ove, t he European Cent ral Bank enl ist ed t he help of

several ot her cent ral banks, including t he Am er ican Federal Reserve, t o helppum p Dol l ar s & not Eur os i nto st um b li ng Eur op ean b anks.

The Eur opean Union now f aces t w o ver y dist i nct cr ises: a Eur ozone plagued bysover ei gn debt and a banki ng syst e m st u ck w i t h t o o m any over val ued gover nm ent

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.


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Beyond the question of credibility of guaranteeing a

world-class reserve currency , Jean-Claude Trichet

and t he Board of ECB want Euro to play a leadershipat a t ime when the Dollar and the US economy are

less convincing and when the Yuan is not ready yet

to assume the leading role that it wi ll eventually

have in the lon run

In percent US $ Yen SF Euro Others

SHARE OF CURRENCIES IN THE WORLD S INTERNATIONAL FX RESERVES

(Euro birth) % % % % % %

2010 (source IMF) 61.3% 4.0% 3.7% 0.1% 26.9% 4.0%

Provided the US Dollar pursues its descent and Euro its ascent, we could

2020 54% 3% 2% 0.5% 34% 6.5%

Dollar / Euro exchange rate since 1999

,full status at near equali t y wi th the US Dollarwill provide the Euro Zone wit h that verypriv ilege that the Unit ed States has quit e alone

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,namely t hat of refinancing it s def icit s in i t s own

money!


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2- A chronology of the rescue packages and the threeproblem-countr ies so far: Greece, Ireland and Portugal

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STEP 1 May 2010

Greek Bail-Out (Loan

110b. at 5.2% (4.5yave.maturity)*

IMF

30b

U.E.

80b

* ext ended to 7.5years at 4.2% on March 2011

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STEP 1 May 2010 STEP 1bis May 2010

Greek Bail-Out (Loan

-110b. at 5.2% (4.5y

ave.maturity)*

Facility

Off icial lending capacit y:In fact availablecapacit y under

IMF

30b

U.E.

80b

470b

EFSM

IMF

250b

EFSF

440b

IMF

155bEFSF

255b

EFSM

60b

* ext ended to 7.5years at 4.2% on March 2011

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2- A chronology of the rescue packages and the three


-


The role of Germany and France - their fear of another bank crisis

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Chancellor Angela Merkel looks like holding the

u ure o urope n er an s.

However, when she t r ies to convince the stubborn and resentful German opinion that tofinancially assist Greece, Ireland and now Portugal is not only an European necessity but

n ermany s n eres oo.

FOR TWO REASONS:

1- One way or another, the country t hatruns up external surpluses must eit herlend or grant t ransfers to the deficitcountries that make its own surpluses

2- Besides, Germans have accepted tobail -out countr ies when they got aware oftheir own banks exposure t o the publicand private debts of Greece, Ireland and

Lets have a look at the potential banks losses

possible! Portugal.

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related to Greece, Ireland, Portugal and Spain


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But the global picture (EXPOSURE) must take into account the credit or banks nominal

total exposure vis--vis the GROSS EXTERNAL DEBT (public and private) of

GREECE PORTUGAL IRELAND and SPAIN

German French Other Total Other BIS

BIS reporting banks at end 2010

n ons en an s an s uro one uro one or ota

Exposure to GREECE 52 69 31 153 58 210Exposure to PORTUGAL 37 34 104 175 68 243

= TOTAL 3 PROBLEM COUNTRIES 246 162 217 625 442 1,067

(% of respective Capital & reserves) (63.5%) (34.1%) (17.9%) (30.1%) na na

+ Ex osure to SPAIN 183 170 167 520 309 829

= TOTAL 4 COUNTRIES 429 332 384 1,145 751 1,896

(% of respective Capital & reserves) (110,7%) (69.9%) (31.7%) (55.2%) na na

Some related ratios:

% of BIS assets on Euro Zone 22.6% 17.5% 20.3% 60.4% 39.6% 100%% of the respective national creditorexposure vis--vis non residents

30.8% 23.8% 7.8% 14.8% 6.4% 8.1%

% of total assets of creditor banks 5.3% 4.2% 2.4% 3.6% na na

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Sources: BIS (May 2011), Bundesbank, Banque de France,

E.C.B., Eurost at .


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Chancellor Angela Merkel looks like holding the

uture o urope n er an s.

However, we must also back her when she tries to convince the stubborn and resentfulGerman opinion that to financially assist Greece, Ireland and now Portugal is not only an

uropean necess y u n ermany s n eres oo.

FOR TWO REASONS:

1- One way or another, the country t hatruns up external surpluses must eit herlend or grant t ransfers to the deficitcountries that make its own surpluses

2- Besides, Germans have accepted tobail -out countr ies when they got aware oftheir own banks exposure t o the publicand private debts of Greece, Ireland and

possible Portugal.

In other words, compared with the potential costs of a full-blown default by Greece,

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,and paid-in capital for EFSF and ESM look like a much better deal...


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-


The role of Germany and France - their fear of another bank crisis


Yes, in terms of l iquidit y needs, it seems

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All figures GDP Public debt Fiscal Interest 2011

Euro Zone: an at tempt to measure the financial requirements (1)

WHO HOLDS THE PUBLIC DEBT?

in Euros () 2010

billion %

Euro Zone 9107 100%

2011 deficit % / fiscal

%/GDP 2011/GDP receipts

87% -5.2% 5.2%90%

100%

Residents Non-residents

- ermany .

- France 1954 21.5%- Italy 1558 17.1%

- . .

87% -6.4% 6.0%119% -4.6% 10.1%

-

70%

80%

.

I reland 156 1.7%

G reece 236 2.6%

. .

102% -11.2% 8.5%

139% -7.8% 15.8%

Total PIG 563 6.2% 113% -9.3% 11.2%40%

50%

S pain 1052 11.7%

Total PIGS 1615 17.8%

70% -6.9% 6.6%

84.9%

(average)

-7.3%

(average)

8.3%

(average)10%

20%

30%

- U.K. 1705b. -

- U.S.A 11037b -

- -

82% -8.6% na

99% -9.8% na

-

0%

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Sources: IMF (April

2011)

. .


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Financing needs*

Source: IMF (April 2011)

Euro Zone: an at tempt to measure the f inancial requirements(2)

All figuresGDP Public debt Fiscal Interest 2011

2 years=2011+2012

%/GDP = billion

17.5% 1640 b

in Euros () 2010

billion %

Euro Zone 9107 100%

2011 deficit % / fiscal

%/GDP 2011/GDP receipts

87% -5.2% 5.2%

11.1% 575 b.

20.0% 805 b.

23.0% 730 b.

- Germany 2528 27.8%

- France 1954 21.5%

- Italy 1558 17.1%

77% -2.9% 3.6%

87% -6.4% 6.0%

119% -4.6% 10.1%

21.4% 78 b.

18.8% 58 b.

25.8% 118 b.

P ortugal 171 1.9%

I reland 156 1.7%

G reece 236 2.6%

87% -5.8% 7.0%

102% -11.2% 8.5%

139% -7.8% 15.8%. . . .

S pain 1052 11.7%

Total PIGS 1615 17.8%

. .

70% -6.9% 6.6%

84.9%

(average)

-7.3%

(average)

8.3%

(average)

. .

19.0% 392 b.

20.2%

(average)

646 b.

Other OECD- U.K. 1705b. -

- U.S.A 11037b -

82% -8.6% na

99% -9.8% na

2011 only14.7% 260 b.

27.2% 3240 b.

27Not e: * mat ur ing debt + int erest on debt + pr imary def ici t =t otal f inancing needs

- Japan 4069b. - 234% -10.0% na 54.2% 2280 b.


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Spain, we should not forget it , has been t he good pupil of t he Euro classfor years. Its public debt to GDP was and still is significantly lower than thatof Germany. Its fiscal deficit was on average near nil from 2004 to 2008.

But Spain share several of the weaknessesof Greece, Ireland and Portugal:

Like Portugal and Greece, it is not competitive

On the other hand, Spain is quite different:

Spain is a much bigger (the Euro Zonefourt h GDP), more diversif ied and thus more

Like Ireland, Spain had a run-away realestate boom that may translate into a pile ofsour propert y loans.

res en economy an e ree o ers.

Its debt market is far more liquid. Everyoneis scared nowadays by the shaky f inancialsit uat ion of t he Caj asbut r elat ive to the size

CURRENT ACCOUNT DEFICITS(percent of GDP)

-2

0

of t he overall economy, their losses, bothactual and potent ial, remain manageable.

After some ini t ial hesit at ions, Prime

-3,7

-7,6-7,4

-5,2

-4,5

-9,0-8

-6

-4

tough st ructural measures and wi ll not standin next year elect ion.

-11,3

-9,7

-10,3

-12,6

-9,4

-10,0-9,5

- ,

-10,5-11,0

-14,5

-9,6

-10,0

-14

-12

-10

28

-14,7

-16

2005 2006 2007 2008 2009 2010 2011p

Portugal Greece Spain


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All fi ures NPL / total loans

Source: E.C.B. (March 2011)

Euro Zone: an at tempt to measure the financial requirements (RECAP)

Financin needs*

Source: IMF (April 2011) 254 b.

in Euros ()

Euro Zone

2011 (est)

%/loans = billion

>4.5% >1500b.

2 years=2011+2012

%/GDP = billion

17.5% 1640 b

+ 280 b. 534 b. without Spain=

+ 592 b. Spain- Germany

- France

- Italy

3.2% 185

4.3% 240

6.9% 220

11.1% 575 b.

20.0% 805 b.

23.0% 730 b.

> 1,100

billion=So Spain appears for themoment out of t he dan er zone.

P ortugal

I reland

G reece

5.7% 30

16.5% 170

9.8% 80

21.4% 78 b.

18.8% 58 b.

25.8% 118 b.

Given i ts European partners

resolut ion, Spain is neit her t oo

big t o fail nor t oo big to

o a . . .

S pain

Total PIGS

. .

6.8% 200

9.7% 480b.

. .

19.0% 392 b.

20.2% 646 b.

As seen earlier, wit h some 375 bil lion lendingcapacit y provided by t he sole AAA-rated Euro

members, the current EFSF-EFSM facilities up to mid-

2013 is uite sufficient with arallel financin and

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monit oring) from IMF ( 155-250 bil lion), t o cover

Greece, Ireland and Portugals f inancing needs dur ing

this two-year per iod


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A REASSESSMENT OF SOVEREIGN RISKS IN ADVANCEDCOUNTRIES

Sit uation at Dec.2008 2009 2010 2011

It ought to take rat ing agencies back on earth!

S&Ps D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M

AAA

AA+

AAAA-

A+

A

A-

(- 4 notches in 4months!)

BBB+

BBB-

BB+

BB

BB-

notches in 2 months!)

GREECE (downgraded to j unk bond status!)

B+

as w el l as m arket sent im ent s

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In basis point

b

5-yr CDSPrices

Five-year Sovereign CDSThe P.I.G.S. are now worse off t han

S&Ps

Range Apr. 2011

Venezuela 1019-1042

Argentina 553-598

most poor ly rat ed Developing count r ies

In basis point

(bp)

5-yr CDSPrices

S&Ps

May 2011

BB-

B

Nigeria > 500

Russia 124-135

Ukraine 412-436

ange pr.

Greece 1090-1140Ireland 510-670

ay

BB-BBB+

B+

BBB

B+

Mexico 98-115

Brazil 100-105

South Africa 110-118

Portugal 579-675

Spain 201-250

BBB-

AA

BBB

BBB-

BBB+AAAU.S.A. 40-46Turkey 115-135

Egypt 280-354

BB

BB

AA-

AAA

AAA Philippines 128-137 BB

Japan 76-86

U.K. 49-59

Germany 43-46

Vietnam 284-327Indonesia 131-142

Thailand 105-117

BB-BB+

BBB+

AAA

A+

France 63-79

Italy 125-159

Bel ium 115-150AA+

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South Korea 95-105 A

Hungary 239-255

Poland 139-150 A-

B+


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- -


Is the rescue total amount enough?4- How to deal wi th the st ructural solvency problem?

The Haircut option, plea for a voluntary debt Reprofiling or Exit ofGreece from Euro.

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Deprived of t he opt ion of a currency devaluat ion and, so far, of the extreme Euro exit option,

THE OPEN DEBATE ABOUT THE HAIRCUT OPTION

THE PROS and THE CONS

1- With Greece and t o a lesser ext ent Port ugaland Irel and, w e are facing a solvency crisis,

1- In a si t uat ion wide ly le f t t o t he marketsentiment, the front ier between a solvency

not a liquidit y crisis. crisis and a l iquidity one is particularly

b lurred!

-(amount s and resolut ion) of t he bail-outf inancial packages off ered t o distr essed Euromembers.

- ,poli t icians have not been credibl e enough! Inaddit i on t he IMF/ European medicat ion t hroughst r ingent budget reduct ions are ki l l i ng growt hand em l o m en r os ec s f or he f or eseeabl efut ure whi le debt ra t ios wi l l w orsen rat herthan improve

3- That is t rue, Euro Area problem count r iesand t heir populat i on are suff ering. But priort o t he crisis, t hey had enj oyed t he dangerous f ree lunch o f f ered by t he creat ion of Euro3- For al l t h is, i t would cert a inly have beenand t he f inancial euphor ia that came w i t h i t !

4- A defaul t o f t he i r publ ic debt wouldbrut al ly cut -off market access t o def ault ing

w iser t o push Greece and Port ugal at t he onsetof t heir cr ises t o declare a debt morat orium inorder t o purge t he pat ient !

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, .addi t ion, a defau l t wi l l imm ediat e ly t r ansmitint o a domest ic bank and insurance companiescrisis

- ,The aim ought t o be an impr ovement in debtratio sustainabil i ty. Haircut is inevitable!


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THE REPROFILING OPTION

It is not per sea debt rest ructur ing (debt write-off) following a debtors moratorium

.

It is based upon safeguarding the par-valueof the pr incipal of t he debt , j ust extendingmaturit ies to more sustainable levels.

GREECE PERFECTLY FITS THE CASE FOR REPROFILING

(after all most of its debt was issued under Greek laws)

Giving prior it y to Greeces liquidit ysqueeze:

If m atu r it i es ar e ext end ed b sa 5

Giving priority to Greeces long termsolvency. Then, t he obj ect ive is t o

years (l ike i n t he case of Uruguay in2003), t he result ing NPV ef f ect on t he

debt wi l l not be signi f icant . But Greece

aim ing at reaching a sizeable reduct ionin t he NPV of t he count ry s nat ional

debt : 30-40% at least in t he case of

by sw apping f i xed-rat e bonds f orf loat ers, w it h a more reasonable r iskspr ead over Eur ib or.

reece roug a - -year ex ens onof mat ur i t ies (on average).

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ADVANTAGES OF EXIT DISADVANTAGES OF EXIT

Cont rol on Monet ary Pol icy. It would lead t o a considerabledevaluat ion of t he new (Greek)

domest ic curr ency against t he euro,

Cont rol cr i t ical int erest rat es. Greece's nat ional def ici t would r ise t o200 percent of gross domestic productaft er such a devaluat ion.

Freedom t o pr in t & c i rcu lat e i t s own

currency.

The wi t hdrawal of a count ry f rom t he

common currency union would"f unct i oning of t he euro zone

The Greek expor t s because t hey wi l l be It would impar t ser ious impl icat ions f or,

more compet i t ive t hey wi l l se l l bet t er.

.

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. o unve non-s an ar qu y measures

2. The ECB wil l offer loans of 12 or 13 months to banks, inaddit ion to shorter-t erm facili t ies already available,ma ng t eas er or urope s t rou e en ers to access

funding.3. ECB wi ll also resume its purchases of covered bonds -

debt issued by lenders and backed by their loan books pledging to spend 40bn (35bn).

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- -





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A REASSESSMENT OF SOVEREIGN RISKS IN ADVANCEDCOUNTRIES

economies of t he worldis get t ing aware, albeit

with astonishment, that

e a os are now ar

worse in t heir nat ions thanin emerging and poor

countries

The quest ion here is not to

hide this painful reali t y, but

to oint out essential

features of this kind of

Sovereign Risks like:

First , a Sovereign Risk i snot a normal credit r isk.

In particular, it should not

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be compared to otherf inancial r isks such as

Corporate risks


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Overall , the 17-nat ion EuroZone is one of the f inancially healthiest partof the OECD club when viewed as a whole:

. . . .Budget deficit/GDP -6.3% -11.3% -10.5% -9.2%

Public debt/GDP 92% 92% 79% 215%

Current Act deficit/GDP -0.4% -3.2% -2.2% +3.4%

But due to the Sovereign debt crisis at its periphery, the comparison

Thence, at the exception of Germany and some t iny Nort herneconomies of the area, all Euro countries are suffering from some

,debt burdens.

The Good, t he Bad and t he Ugly

2010 Budget deficit/GDP -3.4% -7.6% -4.4% -9.2% -32.5% -7.0% -9.6%

2011-12 Growth forecast +2.3% +1.8% +1.0% +1.1% +1.0% -0.5% -2.0%

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2010 Public Debt/GDP 81,3% 84.6% 119.3% 60.4% 95.4% 81.7% 142.7%


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- -





It oug t to ta e mar et sent iments ac on ear t !

6- EURO The Road Ahead

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Euro e i s ent e r in a c r it i cal week ahead of a euro-zone summi t Sunda t hat i s

expect ed t o del i ver a new plan t o address t he r egion's grow ing sovereign debtcrisis.

-t he euro zone, i ncludi ng st eps m aximi zing t he f ir epower of t he euro zone's bai loutf und, rei nf orcing t he region's banks and t ackl ing Greece's debt at a summ it in

Brussel s Oct . 23.

Meanwhil e, a mi ssion of of f ic ials f rom t he European Union, European Cent ralBank and Int ernat ional Monet ary Fund said af t er concludi ng t alks in At hens t hat

ear ly next mont h af t er t he euro zone and t he Int ernat ional Monet ary Fund

approve t heir f i f t h review of t he Greek economy.

The know n w orry l ist cont inues:

Tuesday, Oct. 18: Spanish and Greek T-bill auctions.

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Wednesday, Oct . 19-Thursday, Oct . 20: General st ri ke in Greece. Port ugueseT-bi l l auct ion.


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Thursday, Oct. 20: Spanish and French bond auctions. Greek parliament votes

Fri day, Oct . 21: EUR1.625 bi l l ion of Greek T-bi l ls m at ure. Troika expect ed t ocompl et e 10-day visit t o review Ireland's bai lout program. EU Finance Minist ers

m ee ng a ea o sum m .

Saturday, Oct. 22: EUR1.059 bil l ion of Greek bond interest payments due.

Sunday, Oct, 23: EU Council meeting, euro-zone summit.

Monday, Oct . 24: Troi ka m ay issue r epor t on Greece. EU and Chinese l eaders, .

Tuesday, Oct. 25: Spanish T-bill auction.

Fri day, Oct . 28: It al ian bond auct ion.

Sat urday, Oct . 29: Three m ont hs since Moody's Invest ors Service put Spain's Aa2

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.2-3 months.

Monday, Oct . 31: Belgian bond auct ion.


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Tuesday, Nov. 1: Mario Draghi repl aces Jean-Claude Tri chet as president of t he

ECB.

Wednesday, Nov. 2: Portuguese T-bill auction.

Thur sday, Nov. 3: ECB pol icy meet ing. Spani sh and French bond auct ions.

Thur sday, Nov. 3-Fri day, Nov. 4: Meet ing of G20 leader s in Cannes.

Monday, Nov. 7: Meet ing of Eurogroup f inance m inist ers.

Tuesda Nov. 8: Greek T-bi l l auct ion.

Thursday, Nov. 10: Italian T-bil l auction.

, . . - .

Monday, Nov. 14: It ali an bond auct ion.

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, . - .

Wednesday, Nov. 16: Portuguese T-bill auction.

Thur sday, Nov. 17: Spani sh and French bond auct ions.

Fri day, Nov. 18: EUR1.3 bil l i on of Greek T-bil ls m at ure.

Sunday, Nov. 20: Spain hol ds general el ect ion.

Fri day, Nov. 25: It al ian T-bi l l / bond auct ion.

Tuesday, Nov. 29: Italian bond auction.

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M an y t h a n k s f o r y o u r k i n d at t en t i on M an y t h a n k s f o r y o u r k i n d at t en t i on

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EuroZone Crisis a Case Study

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