Greece’s fiscal profligacy has increased uncertainty in financial markets worldwide and the eurozone sovereign debt crisis has only heightened concerns for investors. Commentators and economists are busy airing their views on what has caused the situation to escalate so quickly and how it can be resolved. Last week it was the turn of Baring Asset Management.
“The problem has been leverage,” said Marino Valensise, chief investment officer at Baring Asset Management. The reason for this, he explained, is that the extra leverage needed to generate an additional $1 million in profit has increased from $1.37 million in the 1950s to $5 million in 2007, due to fewer arbitrage opportunities. In...
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