Sovereign Debt: A Modern Greek Tragedy
May 8, 2012
Part 1: Welcoming Remarks, Julie Stackhouse (5:44)
Christopher Waller, senior vice president and director of Research, led the presentation and discussion on "Sovereign Debt: A Modern Greek Tragedy" on May 8, 2012, as part of the St. Louis Fed's Dialogue with the Fed" series. Waller and economists Christopher Neely and Fernando Martin then took questions from the audience, as moderated by Julie Stackhouse, senior vice president of Banking Supervision & Regulation. "Dialogue with the Fed" is a public discussion series focused on the important financial and economic situations facing Americans today.
Part 1: Welcoming Remarks, Julie Stackhouse (5:44)
Part 2: The Ability vs. the Willingness To Repay Debt (14:45)
Part 3: Why Is Europe Having a Sovereign Debt Crisis Now? (8:19)
Part 4: Waking Up to the Great Shocks (6:20)
Part 5: Insuring Against Default and Higher Rollover Risk (4:54)
Part 6: Austerity Measures and the Real Default Threats (8:55)
Part 7: The Moral of the Tragedy (8:29)
Part 8: Q&A Part 1 (14:25)
Part 9: Q&A Part 2 (18:18)
Julie Stackhouse: We're really, really pleased to welcome you here to the Federal Reserve Bank of St. Louis and to welcome those that are watching us through webcast as well. For those of you that have not met me, I'm Julie Stackhouse. I'm a senior vice president here at the Federal Reserve Bank of St. Louis, and have been fortunate to have the opportunity to moderate several of the Dialogue with the Fed sessions. We started these sessions last fall in response to what was a common theme in the outreach efforts that we do here at the St. Louis Fed. And that theme was, there is a lot happening in our financial system and in our economy that we don't understand. And if we can't understand it as citizens of St. Louis, citizens of the United States, then how can we make good quality decisions? We need it in our language. And so we thought, well, we'll give this a shot. We'll start this program and take what are very complicated topics like the financial crisis, the unemployment situation, the federal budget deficit, and tonight the very difficult situation in Europe, and try to bring down the discussion into the form of both a presentation that is interesting and easy to understand, but also to provide you with a chance to ask questions of the experts.
And that is I think what is just a great aspect of this program is that there is no bounds on the questions you can ask. Well, maybe there are bounds. You know, we don't want to go too far with this, we are in the Federal Reserve. But certainly we want to take those questions and let you feel like you've had a chance to truly get the ideas or misunderstandings or lack of understandings addressed so that you can make better decisions in your life.
So tonight and in a minute I'm going to introduce our speaker. And then following the presentation we'll assemble a panel of experts who will be here to address your questions. But, of course, like any good moderator I have to do the housekeeping matters as well. So the first thing is to let you know that you have in front of you a clicker. It's that little white rectangular thing. In a minute I'm going to ask you some questions, and that will set the stage for what you think now. And then at the end of our program we'll come back and see what you think, having been given the background we're going to cover. So hold onto those.
Second, if tonight you do have a question, you have a microphone in front of you, and all you need to do is flip the little switch on the microphone to ask the question. And that way we can both be sure that our speakers and our panelists hear it, but we are, as you can see, taping the session. And we'll put that session on our website following tonight's presentation because there are many people who couldn't be here tonight, and we want to be sure they have the same opportunity to listen to our experts as you have tonight. So that helps us by using the microphones.
And last but not least, we do measure here at the Federal Reserve Bank of St. Louis. You'll receive an evaluation after you leave, and we would love it if you would fill out the evaluation. It will be short. But it will help us both in terms of answering the question we ask ourselves: Are we doing a good job? And second, to help us plan for what might be in the fall series. So your thoughts would be very much appreciated.
Okay. So let's go to the clickers. How concerned are you about the impact of the European debt crisis on the United States and world economies? We made it easy. There's just three choices. Wow, now we're at 109. This is pretty cool. Okay, let's go ahead and see what we have. Just about everybody is concerned, and a good 2/3 of the group here is very concerned. So there is a good reason that you're here tonight.
So tonight we are going to learn about a modern Greek tragedy. I pulled the definition of tragedy today, and the one I found was, a form of drama based on human suffering. And maybe that is a good way to think about what's happening in Europe as we read the news stories about austerity measures, challenges being faced in governmental, financial and political systems.
And tonight we have a very knowledgeable individual to explain it all to you. It's my pleasure to introduce Chris Waller. Chris is a senior vice president here at the Federal Reserve Bank of St. Louis, and he is our director of Research. That's a very important position because he is the key individual who briefs President Jim Bullard on economic matters. So it's great that you have the chance to meet Chris and hear from him. Chris started his post-high school education at Bemidji State University. I like to say, Go Beavers. See? I know what that is. And then he went on from there to Washington University where he was—or Washington State University, excuse me—where he achieved his master's and PhD. Before coming to the St. Louis Fed, Chris worked at the University of Notre Dame where he served as a professor in the Gilbert Schaefer Chair of Economics. So, of course, that's a set of credentials that is very, very high, and we're so pleased that Chris has joined the Federal Reserve Bank of St. Louis. So please join me in welcoming Chris Waller.
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