Eurozone debt crisis: facing up to the risks of political uncertainty

The eurozone debt crisis requires a political solution, but markets are losing faith in politicians’ ability to provide it. By Alex Monro

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On July 21, European leaders agreed a new bail-out package for Greece, following weeks of wrangling. On August 2, after a period of grandstanding and brinkmanship, US politicians voted through a bill that increased the country’s debt ceiling and averted a default. Those two developments should have been welcomed by the markets, but over the next four trading days, the S&P 500 lost 135 points – or 10.7% – while Germany’s Dax index fell 12.8%. It was the start of a period of heightened volatility

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