Hedging PIIGS Risk with ETFs

My main focus on the Greek crisis is how it will impact the global economy, and especially the United States, but nobody covering this issue can avoid the morality lessons.  First, Greece borrowed too much.  That’s bad.  Second, Greece cooked its books to conceal the magnitude of its deficit spending.  That, too, is bad.  Third, other European countries knew that Greece was doing this, but ignored it so as not to embarrass them or weaken the European Monetary Union.  That may have been the worst error of them all.

Via Dana Lyons' Tumblr, The stock markets of the so-called PIIGS are breaking down on an absolute and relative basis – not a positive development for global markets.

The eurozone is supposedly in a state of recovery. However, in spite of that recovery, public debt and debt-to GGP levels are still rising. Austerity is difficult to find in any realistic sense.

Michael Johnston submits:While reports of jobless rates in the U.S. or the pace of inflation in China occasionally pop to the top of the headlines, the last several months have seen the spotlight focused on European markets as the continent continues to battle a debt crisis that has threatened to derail a fragile economic recovery. While the fiscal woes have been felt throughout Europe, the impact has not been felt evenly.

By Caiman Valores:The effects of the European sovereign debt crisis have pushed the European banking industry into crisis with investors fleeing the sector in droves fearful of sovereign debt defaults and high risk loan portfolios. It has also had significant impact on many European economies, particularly those with high government debt leading to a eurozone wide economic slowdown, which has been most sharply felt in those countries on the periphery: Portugal, Ireland, Italy, Greece and Spain (PIIGS).

Article written by Prieur du Plessis, editor of the Investment Postcards from Cape Town blog.This post is a guest contribution by Asha Bangalore, vice president and economist at The Northern Trust  Company.

By Cliff Wachtel: As acceptance of at least a partial Greek default grows among EU leaders, all PIIGS bond rates have been spiking over the past week to reflect increased risk premium now that the assumed EU put is gone.

Elliott R. Morss submits:Introduction The International Monetary Fund is in Ireland working with the European Central Bank to help Ireland get through its financial crisis. This follows negotiations for bailout packages in Greece and Spain. These efforts remind me of standby missions I took for the IMF a while back. What is a Standby?