Abstract
I argue that the origin of the Eurozone crisis lies neither in unsustainable borrowing nor in arbitrary demands of creditors. Rather, its origin lies in the effects of seemingly arcane technicalities to which sovereign debt issuance is subject. To show this, I propose a set of terms equipped to analyze the effects of these minuscule technicalities. I propose to replace the notion of country fundamentals with that of a fundamental to show that a country is not subject to market assessment when borrowing, but rather subject to market lending pressures forcing it to adopt certain policies even in the absence of outright imposition. Moreover, I propose the notions of flow-stock conversion and liquidity-solvency conversion. The former allows the conversion of sovereign debt as a fiscal instrument to sovereign debt as an asset, thus embedding it into sovereign debt market dynamics. These, in turn, play out as pressure upon the country through the liquidity-solvency conversion turning portfolio restructurings into fiscal solvency shortages. Finally, I propose to analyze countries as intra-market hedges and extra-market hedges to illustrate the extent of market pressures upon countries: to recapitalize banks, countries need to issue more debt, doubling down on the pressure from the liquidity-solvency conversion.
Highlights
With the recent troubles facing Greece, threatening its membership in the Eurozone, it has come to be reinforced that the Eurozone crisis is here to stay (Wearden and Fletcher 2015)
Its origin can be found in the effects of minuscule and seemingly arcane technicalities to which sovereign debt issuance is subject
I have proposed to replace the notion of country fundamentals with that of a fundamental to show that a country is not subject to market assessment of its independent policies when it is being lent to, but rather subject to market lending pressures forcing it to adopt certain policies even in the absence of outright imposition
Summary
With the recent troubles facing Greece, threatening its membership in the Eurozone, it has come to be reinforced that the Eurozone crisis is here to stay (Wearden and Fletcher 2015). It is only because this asset class is issued by a sovereign entity that markets can assume this sovereignty to be exercised to guarantee debt repayment, allowing the projection of this payment flow as a stock This means that the country’s sovereignty is structured by an operationalization of the country by creditors. The solvency of a government remains its national fiscal responsibility (Lane 2012: 49-50; cf Holman 2004: 728) As explained above, this has its origin not in national sovereignty per se, but rather in the technical feature of sovereign bond issuance discussed above as flow-stock conversion: the country’s sovereignty is harnessed as a repayment guarantee. There is no standard, there is no aberration; there is no normality and no crisis
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
