Public Debt Dynamics of Europe and the U.S.

Public Debt Dynamics of Europe and the U.S.

1st Edition - October 19, 2013

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  • Author: Dimitris N. Chorafas
  • eBook ISBN: 9780124200272

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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.”

Key Features

  • 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


Researchers and practitioners working on economics, public health economics and public administration

Table of Contents

  • Preface

    Part One: The West Today

    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

    End Notes

    2. Kingdoms of Debt

    2.1 Debt and Growth

    2.2 Debt and Decline

    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

    End Notes

    3. Options for this Decade

    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

    3.7 Conclusions

    End Notes

    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

    End Notes

    5. Impact of Bailouts on the Economy of a Sovereign

    5.1 Bailout Fatigue

    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

    5.6 Using CDSs as Predictors

    End Notes

    6. Drachmageddon: Exit from Euroland and Bankruptcy? Or Bankruptcy Within Euroland?

    6.1 Drachmageddon

    6.2 Exit from Euroland?

    6.3 Cost of an Uncontrolled Exit

    6.4 Parallel Currencies

    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?

    End Notes

    Part Three: Case Studies with Teetering Sovereigns

    7. Spain in Free Fall

    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

    End Notes

    8. Italy Tries a U-Turn on the Road to Nowhere

    8.1 Public Debt Is Mounting, Growth Is Elusive, and the Country Has Been 124 Days Without a Government

    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

    End Notes

    9. France Is Not Italy. True or False?

    9.1 The French Balancing Act

    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

    End Notes

    Part Four: Who Killed the Golden Eagle?

    10. Public Health Care Is the No. 1 Suspect

    10.1 Sequester

    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

    End Notes

    11. Public Debt, Balanced Budgets, and Current Accounts

    11.1 The Debt Ceiling

    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

    End Notes

    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

    End Notes

    Part Five: Returns are Not Rising Forever

    13. Storm Clouds over the BRICs

    13.1 The Rise of Emerging Markets

    13.2 The Ascent of China

    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?

    End Notes

    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

    End Notes

    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

    End Notes

    Case Study and Conclusion


    The Trickery Associated to the Birth of the Euro

Product details

  • No. of pages: 388
  • Language: English
  • Copyright: © Elsevier 2013
  • Published: October 19, 2013
  • Imprint: Elsevier
  • eBook ISBN: 9780124200272

About the Author

Dimitris N. Chorafas

Dr Chorafas has served on the faculty of the Catholic University of America and as visiting professor at Washington State University, George Washington University, University of Vermont, University of Florida, and Georgia Institute of Technology. Also, the University of Alberta, Technical University of Karlsruhe, Ecole d'Etudes Industrielles de l'Université de Genève, Ecole Polytechnic Fédérale de Lausanne, Polish Academy of Sciences and Russian Academy of Sciences.

More than 8,000 banking, industrial and government executives have participated in his seminars in the United States, England, Germany, Italy, other European countries, Asia and Latin America.

Financial institutions which sought his assistance include the Union Bank of Switzerland, Bank Vontobel, CEDEL, the Bank of Scotland, Credit Agricole, Österreichische Länderbank (Bank Austria), First Austrian Bank, Commerzbank, Dresdner Bank, Demir Bank, Mid-Med Bank, Banca Nazionale dell'Agricoltura, Istituto Bancario Italiano, Credito Commerciale and Banca Provinciale Lombarda.

Dr Chorafas is the author of 161 books, translated into several languages.

Affiliations and Expertise

Independent Financial Consultant and Scholar

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