What Greece means for the stability of the U.S. Financial System
"Since the collapse of the financial system after the failure of Lehman Brothers, the nightmare of another 'black swan' appearing has kept investors up at night," says Adolfo Laurenti, deputy chief economist of Mesirow Financial. He tells us where not to look, dismissing risks from U.S.-European trade relationships, and pointing instead to less obvious financial linkages, in his March issue of Themes on the Global Markets.
Laurenti lists the biggest worries:
- American money market mutual funds are "exposed to very large sums, in very short-term debt instruments, to European financial institutions, many of them suffering from questionable capitalization and heavy exposure to European sovereign risk."
- "We have just closed the most recent chapter in the never-ending saga of the Greek sovereign debt crisis, but we are confident that this will not be the final word on that issue… In our view, Greece is insolvent and will eventually be forced into default."
- Despite those serious warnings, Laurenti reminds us that, "Exposure, i.e., having money at risk, does not imply that all of that money would be lost in the case of something going wrong in the euro area." He adds that the European Central Bank has bought European sovereign debt and lent money to European banks, committing billions in its attempts to backstop the region's economy.
To learn more, the March issue of Themes on the Global Markets, as well as archived issues, can be found at mesirowfinancial.com.
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Celebrating its 75th anniversary this year, the firm remains independent and employee-owned with approximately 1,200 employees globally. With expertise in Investment Management, Global Markets, Insurance Services and Consulting, Mesirow Financial strives to meet the financial needs of institutions, public sector entities, corporations and individuals. For more information about Mesirow Financial, visit its website at mesirowfinancial.com.
Karen Nye, 312.595.7147