Debt crisis: the benefits of selective eurozone default

The head of the European Central Bank once again said today that a Greek default "would not happen". Every G20 official - in or outside the eurozone - will tell you the same thing: with markets as fragile as they are, it is unthinkable that a sovereign government would be allowed to default. Investors and experts are thinking about it all the same.

By Simon Johnson The big question of the week in Europe is deceptively simple – will any countries that share the euro as their currency default on their government or bank debts in the foreseeable future?  The answer to this question determines how you regard bonds from countries such as Portugal, Spain, Italy, and Belgium.

My latest Tax Notes column which came out today (subscription-only access here) is basically a recap of my testimony on March 1st before the

By Calafia Beach Pundit:

Steven CA Pincus, James A Robinson, 7 August 2011As financial markets around the world turn in fear of further government defaults, this column asks what lessons can be taken from a fiscal crisis that occurred over 200 years ago.Full Article: An historical view on government defaults: Lessons from the 17th century

Hmmm….. According to a Reuters/Ipsos poll released this week: The U.S. public overwhelmingly opposes raising the country’s debt limit even though failure to do so could hurt America’s international standing and push up borrowing costs…

The euro tumbled on Thursday after Eurogroup chairman Jean-Claude Juncker said that eurozone leaders would not rule out a Greek debt default at their emergency summit in Brussels.In late morning London deals, the single currency sank as low as $1.4139 as it was also hit by downbeat data. It later stood at $1.4168, compared with $1.4212 late in New York on Wednesday."Headlines that an agreement for Greece may involve a selective default sapped the optimism out of the euro this morning," said Rabobank analyst Jane Foley.