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The Modern Greek Tragedy Follows a Classical Script

Jamus Lim's picture

Although the crisis that is currently playing itself out in Greece may seem novel to many observers of developed markets, it follows, in many ways, a well-worn script of capital account liberalization followed by crisis, one that has been seen many times in emerging markets. In fact, that crises almost inevitably follow major capital account liberalization episodes is somewhat accepted as a stylized fact in international finance. Think of the Latin American debt crisis of the early 1980s, which came after many of them opened their capital accounts in the mid-1970s.

Greek contagion: who is susceptible?

Hans Timmer's picture

As Greece’s debt crisis escalated, analysts and the media have so far mostly focused on possible spillovers to countries in Southwestern Europe and on weakening of the euro.

It is striking that for weeks, financial markets have not been exceptionally worried about strong contagion to emerging economies, even though there are vulnerabilities in emerging Eastern Europe and European banks are heavily invested in emerging economies all around the world.