Solvency crises don't depend on multiple equilibria, but on changing fundamentals. And fundamentals can change slowly and predictably over time. But solvency depends on expectations of those fundamentals -- whether people expect Greece will be able to pay bonds coming due in 2021. And those expectations should not change slowly and predictably over time.Canadian Initiative
Investors have a finite set of alternative investments. They may think Greece is doomed, but they cannot escape. California is doomed, Congress is nearly broke, and my own county, Fresno is on the brink. If the requirement is a sovereign bond investment, then all sovereign investments will approach the same risk/price ratio.
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