Public Debt Dynamics of Europe and the U.S.

Public Debt Dynamics of Europe and the US......Page 2
Copyright......Page 3
Preface......Page 4
1.1 “My Lord,” Answered Solon to King Croesus, “You Are Asking Me What I Think of Human Life”......Page 9
1.2 Globalization Worked As Long As It Worked......Page 11
1.3 The Web of Debt Has Led to Slavery......Page 15
1.4 Policies That Brought Us to a Mess......Page 18
1.5 Leveraging and Getting Deeper into Debt......Page 21
1.6 Tic, Tac, Tic, Tac … The New Bubble Builds Up......Page 24
End Notes......Page 27
2.1 Debt and Growth......Page 29
2.2 Debt and Decline......Page 32
2.3 The Debt Reduction Pact for Europe, Real or Fancy?......Page 35
2.4 Outright Monetary Transactions Mean Debt to Infinity......Page 38
2.5 The End of ECB As We Knew It......Page 42
2.6 Still, the Big Short Is Europe......Page 45
End Notes......Page 49
3.1 Three Main Options for the Next Years......Page 51
3.2 “The Worst Is Over” Is a Defeatist Slogan......Page 53
3.3 The Italian Government’s Daisy-Chain......Page 57
3.4 Banks Did Not Deserve the Bailout......Page 61
3.5 Political Backing for Financial Stability Has Declined......Page 64
3.6 Reinventing Personal and Collective Irresponsibility......Page 68
3.7 Conclusions......Page 71
End Notes......Page 72
4.1 “My Lord,” Said Demaratus to King Xerxes, “Do You Want Me to Tell You the Truth or Flatteries?”......Page 74
4.2 The Target Should Be Competitiveness......Page 77
4.3 Fakelakia and the Wages of Corruption Buy Yachts......Page 80
4.4 Coming Up from Under Is a Tough Job......Page 84
4.5 Private Sector Involvement in Downsizing the Greek Debt......Page 87
4.6 The PSI’s 73.5 Percent Writedown Did Not Really Help Greece......Page 91
4.7 Credit Events and Bonanzas for Speculators......Page 93
End Notes......Page 96
5.1 Bailout Fatigue......Page 98
5.2 Aristophanes, Euroland, and Greece Today......Page 101
5.3 State of Politics and of Sovereign Debt......Page 104
5.4 Restructuring Efforts Don’t Necessarily Provide Expected Results......Page 108
5.5 Rescue Funds Can Turn into Monkey Money......Page 112
5.6 Using CDSs as Predictors......Page 115
End Notes......Page 118
6.1 Drachmageddon......Page 120
6.2 Exit from Euroland?......Page 123
6.3 Cost of an Uncontrolled Exit......Page 126
6.4 Parallel Currencies......Page 129
6.5 Myths and Realities About Sovereign Bailouts......Page 132
6.6 Bankruptcy Is No More a Dirty Word......Page 135
6.7 The Difficulties Greece Encounters Are Extreme, Not Unique......Page 137
6.8 Conclusion: Oedipus at Colonus?......Page 140
End Notes......Page 143
7.1 Spain Is in the Danger Zone......Page 145
7.2 Internal Devaluation Would Have Been the Better Solution......Page 148
7.3 The Spanish Government Is Not in Charge......Page 151
7.4 Investors Fear Spain Will Battle Against Austerity......Page 154
7.5 Spanish Banks and Euroland’s Taxpayers......Page 157
7.6 In Financial Terms Spanish Banks Wounded Their Clients......Page 160
7.7 Bad Banks and Wanting Spanish Fiscal Policies......Page 163
End Notes......Page 167
8.1 Public Debt Is Mounting, Growth Is Elusive, and the Country Has Been 124 Days Without a Government......Page 169
8.2 Italian Premium and Spanish Premium......Page 171
8.3 The Public Debt Will Not Be Paid by Santa Klaus......Page 174
8.4 Italian Parliamentarians Could Ask: “Austerity? Which Austerity?”......Page 177
8.5 Italy’s Balancing Act and The Labor Unions’ Rearguard Action......Page 180
8.6 It’s Time to Stop Gambling and Deliver on Economic Change......Page 183
8.7 Wrong-Way Policies Lead to Beleaguered Governments......Page 186
End Notes......Page 190
9.1 The French Balancing Act......Page 192
9.2 Creative Destruction and the Limits of Socialist Policies......Page 195
9.3 When the Government Tries to Be Everything to Everybody, Public Debt Is King......Page 198
9.4 The French Dilemma: Cutting Entitlements or Going Bust......Page 201
9.5 The French State Spends Too Much. Its Debt Is a Timebomb......Page 204
9.6 The French Banks’ Fragility as Lenders......Page 207
9.7 Efforts to Stabilize the French Banking Industry......Page 210
End Notes......Page 213
10.1 Sequester......Page 215
10.2 Don’t Let Grandparents Steel the Young Generation’s Money......Page 218
10.3 Case Study on Health Care Expenditures and Their Incoherence......Page 222
10.4 A Bankrupt America Needs an Age of Austerity, Says Mort Zuckerman......Page 226
10.5 Sweden’s Near Bankruptcy in 1993 Provides Food for Thought......Page 229
10.6 Everybody Will Suffer from Currency Wars......Page 232
End Notes......Page 235
11.1 The Debt Ceiling......Page 237
11.2 US Public Debt Is Over $16 Billion. Who Is to Blame?......Page 240
11.3 Balanced Budgets Do Not Come As a Matter of Course......Page 245
11.4 The Current Account Balance Has Much to Do with Discipline and Competitiveness......Page 248
11.5 “Too Big to Jail” Has Become the New Moral Code......Page 252
11.6 Faculties Should Give the Example, and Students Must Put Up Their Best Effort......Page 255
End Notes......Page 261
12.1 “Bernanke Should Show Humility at the Fed,” Says Senator Bob Corker......Page 262
12.2 Employment and Unemployment Are Political Issues, Not the Central Bank’s Remit......Page 265
12.3 Money Is Always Invested, but There May Be Bad Investments......Page 268
12.4 Twisting the Treasury’s Refinancing and QE3.5 Releveraging......Page 271
12.5 An Unwarranted Worst-Case Scenario......Page 274
12.6 Financial Stability and Systemic Risk......Page 278
End Notes......Page 281
13.1 The Rise of Emerging Markets......Page 283
13.2 The Ascent of China......Page 286
13.3 China Faces Important but Not Unprecedented Challenges......Page 289
13.4 The Japanese Economy—A Comparison......Page 293
13.5 “Abenomics,” the Falling Yen and Longevity Risk......Page 296
13.6 Japan and China. Is There an East-Asia Syndrome?......Page 298
13.7 The First Letter in BRICs: Brazil......Page 301
13.8 Is India’s Economy Another Falling Star?......Page 305
End Notes......Page 309
14.1 Iceland Comes Up from Under......Page 311
14.2 Contrarian Opinions on Iceland’s Escape from the Abyss......Page 313
14.3 Latvia Is Much Better-Off than Argentina......Page 315
14.4 Ireland Is in its Way to Win the Battle of Austerity......Page 318
14.5 Britain Tries to Put its House in Order......Page 321
14.6 Germany and the Policy of Fiscal Discipline......Page 324
14.7 Mervyn Le King, Mark De Carney, and Fantasy Economics......Page 327
End Notes......Page 331
15.1 Is Public Debt Good or Bad?......Page 333
15.2 Ineptocracy Increases the Complexity of Sovereign Bankruptcy......Page 335
15.3 Western Living Standards Have Become Unsustainable......Page 338
15.4 Lack of Ethics and Ineptocracy Lead to a Dark End......Page 341
15.5 Bail-In Is Blessed by the Masters of Indecision......Page 344
15.6 The Parliament Votes in Favor of Democratic Cleptocracy......Page 347
End Notes......Page 351
The Trickery Associated to the Birth of the Euro......Page 353