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Public Debt Dynamics of Europe and the U.S.

Book Description

Public Debt Dynamics of Europe and the U.S., provides the evidence and implications of current policies by sovereigns and central banks, in dealing with the debt abyss.  It brings in perspective the diversity of opinion reigning in modern economics and finance and outlines the themes which, among themselves, are defining the society in which we live.

Our epoch has accepted the theory that leveraging is good for a person, a company or even a nation. This has led to the debt syndrome and its disastrous aftereffects. Throughout the book evidence emerges that piling up public debt can lead to an unmitigated disaster. This is demonstrated through case studies on Greece, Spain, Italy, France and the United States – in short, those western countries that nowadays have lost control of their senses and of their economy.

This book uses real life examples, using case studies as evidence of good and bad approaches to social, economic and financial life. Live events also help as undisputable demonstrators of successes and failures in the search for solutions in getting out of the hole western governments find themselves. As Denis Healey, a former British chancellor of the Exchequer, once said: “The first law of holes is that if you are in one stop digging.”



  • Provides insight and implications on the current policies of sovereigns and central banks
  • Uses real life practical examples and case studies on Greece, Spain, Italy, France and the United States
  • Examines developing countries, particularly BRICS, and their exposure to debt
  • Focuses on public health and the effects it has on the economy

Table of Contents

  1. Cover image
  2. Title page
  3. Table of Contents
  4. Copyright
  5. Preface
  6. Part One: The West Today
    1. 1. Globalization of a Casino Society
      1. 1.1 “My Lord,” Answered Solon to King Croesus, “You Are Asking Me What I Think of Human Life”
      2. 1.2 Globalization Worked As Long As It Worked
      3. 1.3 The Web of Debt Has Led to Slavery
      4. 1.4 Policies That Brought Us to a Mess
      5. 1.5 Leveraging and Getting Deeper into Debt
      6. 1.6 Tic, Tac, Tic, Tac … The New Bubble Builds Up
      7. End Notes
    2. 2. Kingdoms of Debt
      1. 2.1 Debt and Growth
      2. 2.2 Debt and Decline
      3. 2.3 The Debt Reduction Pact for Europe, Real or Fancy?
      4. 2.4 Outright Monetary Transactions Mean Debt to Infinity
      5. 2.5 The End of ECB As We Knew It
      6. 2.6 Still, the Big Short Is Europe
      7. End Notes
    3. 3. Options for this Decade
      1. 3.1 Three Main Options for the Next Years
      2. 3.2 “The Worst Is Over” Is a Defeatist Slogan
      3. 3.3 The Italian Government’s Daisy-Chain
      4. 3.4 Banks Did Not Deserve the Bailout
      5. 3.5 Political Backing for Financial Stability Has Declined
      6. 3.6 Reinventing Personal and Collective Irresponsibility
      7. 3.7 Conclusions
      8. End Notes
  7. Part Two: Destiny in the Land of Homer
    1. 4. The Greek Economy Pays the Price of Drift
      1. 4.1 “My Lord,” Said Demaratus to King Xerxes, “Do You Want Me to Tell You the Truth or Flatteries?”
      2. 4.2 The Target Should Be Competitiveness
      3. 4.3 Fakelakia and the Wages of Corruption Buy Yachts
      4. 4.4 Coming Up from Under Is a Tough Job
      5. 4.5 Private Sector Involvement in Downsizing the Greek Debt
      6. 4.6 The PSI’s 73.5 Percent Writedown Did Not Really Help Greece
      7. 4.7 Credit Events and Bonanzas for Speculators
      8. End Notes
    2. 5. Impact of Bailouts on the Economy of a Sovereign
      1. 5.1 Bailout Fatigue
      2. 5.2 Aristophanes, Euroland, and Greece Today
      3. 5.3 State of Politics and of Sovereign Debt
      4. 5.4 Restructuring Efforts Don’t Necessarily Provide Expected Results
      5. 5.5 Rescue Funds Can Turn into Monkey Money
      6. 5.6 Using CDSs as Predictors
      7. End Notes
    3. 6. Drachmageddon: Exit from Euroland and Bankruptcy? Or Bankruptcy Within Euroland?
      1. 6.1 Drachmageddon
      2. 6.2 Exit from Euroland?
      3. 6.3 Cost of an Uncontrolled Exit
      4. 6.4 Parallel Currencies
      5. 6.5 Myths and Realities About Sovereign Bailouts
      6. 6.6 Bankruptcy Is No More a Dirty Word
      7. 6.7 The Difficulties Greece Encounters Are Extreme, Not Unique
      8. 6.8 Conclusion: Oedipus at Colonus?
      9. End Notes
  8. Part Three: Case Studies with Teetering Sovereigns
    1. 7. Spain in Free Fall
      1. 7.1 Spain Is in the Danger Zone
      2. 7.2 Internal Devaluation Would Have Been the Better Solution
      3. 7.3 The Spanish Government Is Not in Charge
      4. 7.4 Investors Fear Spain Will Battle Against Austerity
      5. 7.5 Spanish Banks and Euroland’s Taxpayers
      6. 7.6 In Financial Terms Spanish Banks Wounded Their Clients
      7. 7.7 Bad Banks and Wanting Spanish Fiscal Policies
      8. End Notes
    2. 8. Italy Tries a U-Turn on the Road to Nowhere
      1. 8.1 Public Debt Is Mounting, Growth Is Elusive, and the Country Has Been 124 Days Without a Government
      2. 8.2 Italian Premium and Spanish Premium
      3. 8.3 The Public Debt Will Not Be Paid by Santa Klaus
      4. 8.4 Italian Parliamentarians Could Ask: “Austerity? Which Austerity?”
      5. 8.5 Italy’s Balancing Act and The Labor Unions’ Rearguard Action
      6. 8.6 It’s Time to Stop Gambling and Deliver on Economic Change
      7. 8.7 Wrong-Way Policies Lead to Beleaguered Governments
      8. End Notes
    3. 9. France Is Not Italy. True or False?
      1. 9.1 The French Balancing Act
      2. 9.2 Creative Destruction and the Limits of Socialist Policies
      3. 9.3 When the Government Tries to Be Everything to Everybody, Public Debt Is King
      4. 9.4 The French Dilemma: Cutting Entitlements or Going Bust
      5. 9.5 The French State Spends Too Much. Its Debt Is a Timebomb
      6. 9.6 The French Banks’ Fragility as Lenders
      7. 9.7 Efforts to Stabilize the French Banking Industry
      8. End Notes
  9. Part Four: Who Killed the Golden Eagle?
    1. 10. Public Health Care Is the No. 1 Suspect
      1. 10.1 Sequester
      2. 10.2 Don’t Let Grandparents Steel the Young Generation’s Money
      3. 10.3 Case Study on Health Care Expenditures and Their Incoherence
      4. 10.4 A Bankrupt America Needs an Age of Austerity, Says Mort Zuckerman
      5. 10.5 Sweden’s Near Bankruptcy in 1993 Provides Food for Thought
      6. 10.6 Everybody Will Suffer from Currency Wars
      7. End Notes
    2. 11. Public Debt, Balanced Budgets, and Current Accounts
      1. 11.1 The Debt Ceiling
      2. 11.2 US Public Debt Is Over $16 Billion. Who Is to Blame?
      3. 11.3 Balanced Budgets Do Not Come As a Matter of Course
      4. 11.4 The Current Account Balance Has Much to Do with Discipline and Competitiveness
      5. 11.5 “Too Big to Jail” Has Become the New Moral Code
      6. 11.6 Faculties Should Give the Example, and Students Must Put Up Their Best Effort
      7. End Notes
    3. 12. The Merger of Quantitative Easing and Politics Is the No. 2 Suspect
      1. 12.1 “Bernanke Should Show Humility at the Fed,” Says Senator Bob Corker
      2. 12.2 Employment and Unemployment Are Political Issues, Not the Central Bank’s Remit
      3. 12.3 Money Is Always Invested, but There May Be Bad Investments
      4. 12.4 Twisting the Treasury’s Refinancing and QE3.5 Releveraging
      5. 12.5 An Unwarranted Worst-Case Scenario
      6. 12.6 Financial Stability and Systemic Risk
      7. End Notes
  10. Part Five: Returns are Not Rising Forever
    1. 13. Storm Clouds over the BRICs
      1. 13.1 The Rise of Emerging Markets
      2. 13.2 The Ascent of China
      3. 13.3 China Faces Important but Not Unprecedented Challenges
      4. 13.4 The Japanese Economy—A Comparison
      5. 13.5 “Abenomics,” the Falling Yen and Longevity Risk
      6. 13.6 Japan and China. Is There an East-Asia Syndrome?
      7. 13.7 The First Letter in BRICs: Brazil
      8. 13.8 Is India’s Economy Another Falling Star?
      9. End Notes
  11. Part Six: Which Therapy? Where are the Doctors?
    1. 14. Iceland, Latvia, Ireland, Britain, Germany, and a Taste of Fantasy Economics
      1. 14.1 Iceland Comes Up from Under
      2. 14.2 Contrarian Opinions on Iceland’s Escape from the Abyss
      3. 14.3 Latvia Is Much Better-Off than Argentina
      4. 14.4 Ireland Is in its Way to Win the Battle of Austerity
      5. 14.5 Britain Tries to Put its House in Order
      6. 14.6 Germany and the Policy of Fiscal Discipline
      7. 14.7 Mervyn Le King, Mark De Carney, and Fantasy Economics
      8. End Notes
    2. 15. Ineptocracy and the New Policy of Grabbing
      1. 15.1 Is Public Debt Good or Bad?
      2. 15.2 Ineptocracy Increases the Complexity of Sovereign Bankruptcy
      3. 15.3 Western Living Standards Have Become Unsustainable
      4. 15.4 Lack of Ethics and Ineptocracy Lead to a Dark End
      5. 15.5 Bail-In Is Blessed by the Masters of Indecision
      6. 15.6 The Parliament Votes in Favor of Democratic Cleptocracy
      7. End Notes
  12. Case Study and Conclusion
    1. Abstract
    2. The Trickery Associated to the Birth of the Euro