The Greek debt trap: an escape plan. Bruegel Policy Contribution 2012/19, 7 November 2012

Without corrective measures, Greek public debt will exceed 190 percent of GDP, instead of peaking at the anyway too-high target ratio of 167 percent of GDP of the March 2012 financial assistance programme. The rise is largely due to a negative feedback loop between high public debt and the collapse in GDP, and endangers Greek membership of the euro area. But a Greek exit would have devastating impacts both inside and outside Greece. A small reduction in the interest rate on bilateral loans, the exchange of European Central Bank holdings, buy-back of privately-held debt, and frontloading of some privatisation receipts are unlikely to be sufficient. A credible resolution should involve the reduction of the official lending rate to zero until 2020, an extension of the maturity of all official lending, and indexing the notional amount of all official loans to Greek GDP. Thereby, the debt ratio would fall below 100 percent of GDP by 2020, and if the economy deteriorates further, there will not be a need for new arrangements. But if growth is better than expected, official creditors will also benefit. In exchange for such help, the fiscal sovereignty of Greece should be curtailed further. An extended privatisation plan and future budget surpluses may be used to pay back the debt relief. The Greek fiscal tragedy highlights the need for a formal debt restructuring mechanism

Household Debt in Europe’s Periphery: The dangers of a prolonged recession. ECRI Commentary No. 12, 22 November 2012

The second-dip recession in Europe’s periphery has created a poisonous mix, which risks threatening further the financial system and the economy. Against this background, this ECRI Commentary argues that time matters in the household deleveraging cycle and that a swift recovery is one of its most vital parts. The paper also assesses the extent to which self-feeding phenomena related to household debt have already materialised and evaluates the risks for countries that have so far been spared their full effects. It also offers a theoretical policy response towards a more sustainable household credit sector and overall economic recovery.

Extinction processes in hotspots of avian biodiversity and the targeting of pre-emptive conservation action

Hot spots of endemism are regarded as important global sites for conservation as they are rich in threatened endemic species and currently experiencing extensive habitat loss. Targeting pre-emptive conservation action to sites that are currently relatively intact but which would be vulnerable to particular human activities if they occurred in the future is, however, also valuable but has received less attention. Here, we address this issue by using data on Endemic Bird Areas (EBAs). First, we identify the ecological factors that affect extinction risk in the face of particular human activities, and then use these insights to identify EBAs that should be priorities for pre-emptive conservation action. Threatened endemic species in EBAs are significantly more likely to be habitat specialists or relatively large-bodied than non-threatened species, when compared across avian families. Increasing habitat loss causes a significant increase in extinction risk among habitat specialists, but we found no evidence to suggest that the presence of alien species/human exploitation causes a significant increase in extinction risk among large-bodied species. This suggests that these particular human activities are contributing to high extinction risk among habitat specialists, but not among large-bodied species. Based on these analyses, we identify 39 EBAs containing 570 species (24% of the total in EBAs) that are not currently threatened with severe habitat loss, but would be ecologically vulnerable to future habitat loss should it occur. We show that these sites tend to be poorly represented in existing priority setting exercises involving hot spots, suggesting that vulnerability must be explicitly included within these exercises if such sites are to be adequately protected.

Immigration, species radiation and extinction in a highly diverse songbird lineage: white-eyes on Indian Ocean islands

Molecular phylogenetic hypotheses of species-rich lineages in regions where geological history can be reliably inferred may provide insights into the scale of processes driving diversification. Here we sample all extant or recently extinct white-eye (Zosterops) taxa of the southwest Indian Ocean, combined with samples from all principal continental lineages. Results support a high dispersal capability, with at least two independent continental sources for white-eyes of the region. An early (within 1.8 million years ago) expansion into the Indian Ocean may have originated either from Asia or Africa; the three resulting lineages show a disparate distribution consistent with considerable extinction following their arrival. Africa is supported as the origin of a later expansion into the region (within 1.2 million years ago). On two islands, a pair of Zosterops species derived from independent immigrations into the Indian Ocean co-occur or may have formerly co-occurred, providing strong support for their origin by double-island colonization rather than within-island (sympatric or microallopatric) speciation. On Mauritius and La Reunion, phylogenetic placement of sympatric white-eyes allow us to rule out a scenario in which independent within-island speciation occurred on both islands; one of the species pairs must have arisen by double colonization, while the other pair is likely to have arisen by the same mechanism. Long-distance immigration therefore appears to be responsible for much of the region's white-eye diversity. Independent immigrations into the region have resulted in lineages with mutually exclusive distributions and it seems likely that competition with congeneric species, rather than arrival frequency, may limit present-day diversity.