Analyst Timothy Ash today explains how despite the languishing problems associated with Greece and Dubai, the global recovery is finally beginning to take shape, due in part to the amount of cheap money being tossed around:
RBS: As the global real economy has begun to respond to easy money, and fiscal stimuli globally the focus on cleaning up after the crisis has begun, with Dubai and Greece in this latter camp, as both are arguably unfinished business.
In the heat of the crisis, almost everyone was too big to fail, and the sovereign support umbrella was wide, now as recovery suggests that systemic risks are more manageable, there is an incentive to address moral hazard plays more aggressively, and closing the umbrella of sovereign support is part of this process.
Indeed, this is part of the medicine for countries like Greece, which need to be weaned off the belief that they can always rely on support from the centre in the EU.
Ultimately we doubt that Greece will default, but allowing that greater degree of uncertainty as to whether the EU/EC/ECB and big wealthy EU member states will step in to help Greece is part of the solution.