How will sovereign debt risk in southwest coastal countries impact other European Union Companies?
One way to answer this question is to look for patterns of correlation in public payments data. Mark Twain said it best, "history doesn't repeat itself, but it does rhyme." At macro scales, economic systems behave a bit like a giant ship; it's hard to change course and you can fairly easily predict the direction of trends on a quarterly basis even from the Bank for International Settlements delayed data.
Here is a link to a few select 'postcards' into Quantum4D's "Metaverse" for interbank payment managers (part of our Global Capital Compass Solution for cash managers). Here at Quantum4D, we've made a hobby out of anticipating (see our blog post back in 2010) and then watching the fleet of countries tied together by the Euro sail onward on what has been an almost pre-determined course. While you don't need to tell a Captain on one of these ships what is viscerally obvious in the tug and pull of their daily business, factoring these into internal models can illuminate tidal vs. elastic forces in debt flows.
To the extent that Germany 'felt' the Greek debt crisis, you can expect it will also feel the effects. But, counter intuitively, it looks like the impact of any problems with Sovereign Debt in Italy won't be as bad. If you live in Austria, Netherlands or Belgium you can see your own future position by keeping an eye on Germany (forget Greece or Italy since it seems Germany absorbs the brunt of those waves from the coast.
Things are different if you focus on corporate or financial contagion pathways between countries shown in the above links. If you enter these spaces using QUantum4D's free knowledge exploring software, you'll be able to modify thresholds and filter to focus on these above mentioned knock on secondary and tertiary networks of forces. You'll also be able to spot the inversely correlated motions. Identifying such opportunities or 'safe harbors’ is more satisfying than worrying about risks. But with either focus, the captains and crew of your enterprise can sleep better at night knowing they can see the weather on across the horizon.
Have your own model or view? Join in on one of our training calls and we'll help you build and publish your insights.
