Greece’s ‘Unpleasant Arithmetic’ Containing the Threat to the Global Economy

13 Pages Posted: 20 Oct 2011

See all articles by James R. Barth

James R. Barth

Auburn University; Milken Institute

Tong Li

Milken Institute

Apanard Penny Prabha

University of Illinois at Springfield

Date Written: October 18, 2011

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.

This timely report from the Milken Institute examines the exposure of banks around the world to Greek debt, and calls for swift and decisive action by policymakers to head off a global banking crisis.

Keywords: Sovereign Debt Crisis, Bank Exposure

Suggested Citation

Barth, James R. and Li, Tong and Prabha, Apanard Penny, Greece’s ‘Unpleasant Arithmetic’ Containing the Threat to the Global Economy (October 18, 2011). Available at SSRN: https://ssrn.com/abstract=1945937 or http://dx.doi.org/10.2139/ssrn.1945937

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Tong Li

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States
310-570-4655 (Phone)
310-570-4625 (Fax)

Apanard Penny Prabha (Contact Author)

University of Illinois at Springfield ( email )

Springfield, IL 62703
United States

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