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Feature: Greek drama forces policy rethink
02 April 2010
The Greek crisis, which is threatening to repeat itself across Europe, has pushed sovereign risk centre stage, forcing the markets into a review of investment policy
It was perhaps inevitable that commentators on the Greek crisis should ransack the classics for their imagery. Thus, the Greek economy has been described as a tragedy, with a country described as the ‘Achilles heel’ of the European Union, and flying too close to the sun, like Icarus. The tragedy is that Greece has focused attention on the fault lines of the European project, pushing sovereign risk front stage before an audience more accustomed to dealing with, for example, interest rate risk.
But even within the sovereign bonds sector events are moving fast, forcing investors to rethink their investment approach. Until recently, investors wanting sovereign debt had the luxury of choosing from a number of candidates, after the US Treasuries had fallen out of favour. The situation has changed radically, so much so that the US is now enjoying a reprise in its role as the safe haven for investments.
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