Table of Contents
1. Globalization of a Casino Society
1.1 “My Lord,” Answered Solon to King Croesus, “You Are Asking Me What I Think of Human Life”
1.2 Globalization Worked As Long As It Worked
1.3 The Web of Debt Has Led to Slavery
1.4 Policies That Brought Us to a Mess
1.5 Leveraging and Getting Deeper into Debt
1.6 Tic, Tac, Tic, Tac … The New Bubble Builds Up
2.3 The Debt Reduction Pact for Europe, Real or Fancy?
2.4 Outright Monetary Transactions Mean Debt to Infinity
2.5 The End of ECB As We Knew It
2.6 Still, the Big Short Is Europe
3.1 Three Main Options for the Next Years
3.2 “The Worst Is Over” Is a Defeatist Slogan
3.3 The Italian Government’s Daisy-Chain
3.4 Banks Did Not Deserve the Bailout
3.5 Political Backing for Financial Stability Has Declined
3.6 Reinventing Personal and Collective Irresponsibility
Part Two: Destiny in the Land of Homer
4. The Greek Economy Pays the Price of Drift
4.1 “My Lord,” Said Demaratus to King Xerxes, “Do You Want Me to Tell You the Truth or Flatteries?”
4.2 The Target Should Be Competitiveness
4.3 Fakelakia and the Wages of Corruption Buy Yachts
4.4 Coming Up from Under Is a Tough Job
4.5 Private Sector Involvement in Downsizing the Greek Debt
4.6 The PSI’s 73.5 Percent Writedown Did Not Really Help Greece
4.7 Credit Events and Bonanzas for Speculators
5. Impact of Bailouts on the Economy of a Sovereign
5.2 Aristophanes, Euroland, and Greece Today
5.3 State of Politics and of Sovereign Debt
5.4 Restructuring Efforts Don’t Necessarily Provide Expected Results
5.5 Rescue Funds Can Turn into Monkey Money
6. Drachmageddon: Exit from Euroland and Bankruptcy? Or Bankruptcy Within Euroland?
6.3 Cost of an Uncontrolled Exit
6.5 Myths and Realities About Sovereign Bailouts
6.6 Bankruptcy Is No More a Dirty Word
6.7 The Difficulties Greece Encounters Are Extreme, Not Unique
6.8 Conclusion: Oedipus at Colonus?
Part Three: Case Studies with Teetering Sovereigns
7.1 Spain Is in the Danger Zone
7.2 Internal Devaluation Would Have Been the Better Solution
7.3 The Spanish Government Is Not in Charge
7.4 Investors Fear Spain Will Battle Against Austerity
7.5 Spanish Banks and Euroland’s Taxpayers
7.6 In Financial Terms Spanish Banks Wounded Their Clients
7.7 Bad Banks and Wanting Spanish Fiscal Policies
8. Italy Tries a U-Turn on the Road to Nowhere
8.2 Italian Premium and Spanish Premium
8.3 The Public Debt Will Not Be Paid by Santa Klaus
8.4 Italian Parliamentarians Could Ask: “Austerity? Which Austerity?”
8.5 Italy’s Balancing Act and The Labor Unions’ Rearguard Action
8.6 It’s Time to Stop Gambling and Deliver on Economic Change
8.7 Wrong-Way Policies Lead to Beleaguered Governments
9. France Is Not Italy. True or False?
9.2 Creative Destruction and the Limits of Socialist Policies
9.3 When the Government Tries to Be Everything to Everybody, Public Debt Is King
9.4 The French Dilemma: Cutting Entitlements or Going Bust
9.5 The French State Spends Too Much. Its Debt Is a Timebomb
9.6 The French Banks’ Fragility as Lenders
9.7 Efforts to Stabilize the French Banking Industry
Part Four: Who Killed the Golden Eagle?
10. Public Health Care Is the No. 1 Suspect
10.2 Don’t Let Grandparents Steel the Young Generation’s Money
10.3 Case Study on Health Care Expenditures and Their Incoherence
10.4 A Bankrupt America Needs an Age of Austerity, Says Mort Zuckerman
10.5 Sweden’s Near Bankruptcy in 1993 Provides Food for Thought
10.6 Everybody Will Suffer from Currency Wars
11. Public Debt, Balanced Budgets, and Current Accounts
11.2 US Public Debt Is Over $16 Billion. Who Is to Blame?
11.3 Balanced Budgets Do Not Come As a Matter of Course
11.4 The Current Account Balance Has Much to Do with Discipline and Competitiveness
11.5 “Too Big to Jail” Has Become the New Moral Code
11.6 Faculties Should Give the Example, and Students Must Put Up Their Best Effort
12. The Merger of Quantitative Easing and Politics Is the No. 2 Suspect
12.1 “Bernanke Should Show Humility at the Fed,” Says Senator Bob Corker
12.2 Employment and Unemployment Are Political Issues, Not the Central Bank’s Remit
12.3 Money Is Always Invested, but There May Be Bad Investments
12.4 Twisting the Treasury’s Refinancing and QE3.5 Releveraging
12.5 An Unwarranted Worst-Case Scenario
12.6 Financial Stability and Systemic Risk
Part Five: Returns are Not Rising Forever
13. Storm Clouds over the BRICs
13.1 The Rise of Emerging Markets
13.3 China Faces Important but Not Unprecedented Challenges
13.4 The Japanese Economy—A Comparison
13.5 “Abenomics,” the Falling Yen and Longevity Risk
13.6 Japan and China. Is There an East-Asia Syndrome?
13.7 The First Letter in BRICs: Brazil
13.8 Is India’s Economy Another Falling Star?
Part Six: Which Therapy? Where are the Doctors?
14. Iceland, Latvia, Ireland, Britain, Germany, and a Taste of Fantasy Economics
14.1 Iceland Comes Up from Under
14.2 Contrarian Opinions on Iceland’s Escape from the Abyss
14.3 Latvia Is Much Better-Off than Argentina
14.4 Ireland Is in its Way to Win the Battle of Austerity
14.5 Britain Tries to Put its House in Order
14.6 Germany and the Policy of Fiscal Discipline
14.7 Mervyn Le King, Mark De Carney, and Fantasy Economics
15. Ineptocracy and the New Policy of Grabbing
15.1 Is Public Debt Good or Bad?
15.2 Ineptocracy Increases the Complexity of Sovereign Bankruptcy
15.3 Western Living Standards Have Become Unsustainable
15.4 Lack of Ethics and Ineptocracy Lead to a Dark End
15.5 Bail-In Is Blessed by the Masters of Indecision
15.6 The Parliament Votes in Favor of Democratic Cleptocracy