Notes
Introduction: Endgame
1. In addition to Zimbardo’s numerous books, there is a particularly well-done illustrated 10-minute lecture at www.wimp.com/secretpowers/. Readers are encouraged to check it out.
2. “Popular Delusions,” June 30, 2010, by Dylan Grice, who is based in London, www.sgresearch.com/publication/en/91FAF3E698AE56F0C12577520027262D.pub?puid=.
Part One: The End of the Debt Supercycle
1. Bank Credit Analyst, “The Debt Supercycle,” November 19, 2007, www.beearly.com/pdfFiles/BCAsep07_05sr.pdf.
Chapter 1: The Beginning of the End
1. Gary Shilling, Insight, November 2010.
2. Board of Governors of the Federal Reserve, www.federalreserve.gov/pubs/fdp/2002/729/default.htm.
3. Paul A. McCulley, “After the Crisis: Planning a New Financial Structure Learning from the Bank of Dad, Based on Comments before the 19th Annual Hyman Minsky Conference on the State of the U.S. and World Economies, April 15, 2010, www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2010/Global+Central+Bank+Focus+May+2010+After+the+Crisis+Planning+a+New+Financial+Structure.htm.
4. Barry Eichengreen, “Competitive Devalution to the Rescue, The Guardian, March 18, 2009, www.guardian.co.uk/commentisfree/2009/mar/17/g20-globalrecession.
Chapter 2: Why Greece Matters
1. John Mauldin, “What Does Greece Mean to Me, Dad?” March 26, 2010, www.johnmauldin.com/newsletters2.html. Note: The remainder of this chapter was originally published in my newsletter.
2. Mark Buchanan, Ubiquity: Why Catastrophes Happen (New York: Broadway Books, 2002).
3. Mark Buchanan, Ubiquity: Why Catastrophes Happen (New York: Broadway Books, 2002).
4. Mark Buchanan, Ubiquity: Why Catastrophes Happen (New York: Broadway Books, 2002).
5. Mark Buchanan, Ubiquity: Why Catastrophes Happen (New York: Broadway Books, 2002).
6. Mark Buchanan. Ubiquity: Why Catastrophes Happen (New York: Broadway Books, 2002).
7. Didier Sornette, Why Stock Markets Crash: Critical Events in Complex Financial Systems (Princeton, NJ: Princeton University Press, 2002), Chapter 1.
Chapter 3: Let’s Look at the Rules
1. Kauffman Foundation Research Series, July 2010, www.kauffman.org/uploadedFiles/firm_formation_importance_of_startups.pdf. Note: Vivek Wadhwa is an entrepreneur turned academic. He is a visiting scholar at the School of Information at the University of California, Berkeley, a senior research associate at Harvard Law School, and director of research at the Center for Entrepreneurship and Research Commercialization at Duke University.
2. John C. Haltiwanger, Ron S. Jarmin, and Javier Miranda, “Who Creates Jobs? Small vs. Large vs. Young?” Working Paper 16300, www.nber.org/papers/w16300.
3. If you have not read Woody Brock’s paper, or would like to read it again, it is at www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/05/18/the-end-game-draws-nigh-the-future-evolution-of-the-debt-to-gdp-ratio.aspx.
4. Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009).
5. GaveKal Research: http://gavekal.com/.
6. From a paper done by Rob Parenteau, editor of The Richebacher Letter, Agora Financial. You can read it in two parts at www.nakedcapitalism.com (www.nakedcapitalism.com/2010/03/parenteau-on-fiscal-correctness-and-animal-sacrifices-leading-the-piigs-to-slaughter-part-1.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29).
7. Martin Wolf, FT.com, “UK Economy Must Perform a Rebalancing Act,” April 13, 2010.
Chapter 4: The Burden of Lower Growth and More Frequent Recessions
1. Gerard Baker, “Welcome to ‘the Great Moderation’: Historians Will Marvel at the Stability of Our Era,” London Times, January 19, 2007, www.timesonline.co.uk/tol/comment/columnists/article1294376.ece.
2. ECRI Institute, www.businesscycle.com/news/press/1870/.
3. Committee on the Fiscal Future of the United States; National Research Council, and National Academy of Public Administration, Choosing the Nation’s Fiscal Future, www.nap.edu/catalog/12808.html.
Chapter 5: This Time Is Different
1. All quoted material from this chapter, unless otherwise noted, has been taken from Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly. (Princeton, NJ: Princeton University Press, 2009).
2. You can read the whole report at the McKinsey web site. The 10-page summary is also there: www.mckinsey.com/mgi/publications/debt_and_deleveraging/index.asp.
3. FT, Lex, “Deleveraging,” January 14, 2010.
4. Andrew Smithers, Wall Street Revalued: Imperfect Markets and Inept Central Bankers (Hoboken, NJ: John Wiley & Sons, 2009).
Chapter 6: The Future of Public Debt: An Unsustainable Path
1. All quoted material from this chapter, unless otherwise noted, has been taken from Stephen G. Cecchetti, M. S. Mohanty, and Fabrizio Zampolli, “The Future of Public Debt: Prospects and Implications.” BIS Working Papers #300, Bank for International Settlements, March 2010. The full paper is available here: www.bis.org/publ/work300.pdf?noframes=1. We highly recommend reading it.
2. Jean-Claude Trichet, President of the ECB, and Lucas Papademos, Vice President of the ECB, Lisbon, May 6, 2010.
3. Carmen M. Reinhart and Kenneth Rogoff. This Time Is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, 2009).
4. John Hussman’s Newletter, www.hussmanfunds.com/weeklyMarketComment.html.
5. Morgan Stanley Research, Arnaud Marès, “Sovereign Subjects: Ask Not Whether Governments Will Default, but How,” August 25, 2010.
6. Morgan Stanley Research, Arnaud Marès, “Sovereign Subjects: Ask Not Whether Governments Will Default, but How,” August 25, 2010.
Chapter 7: The Elements of Deflation
1. R. A. Radford, “The Economic Organisation of a P.O.W. Camp.” Economica 12, no. 48, November 1945.
2. You can read the speech at: www.federalreserve.gov/BoardDocs/speeches/2002/20021121/default.htm.
Chapter 8: Inflation and Hyperinflation
1. Translation by Peter Bernholz in Inflation and Monetary Regimes: History, Economic and Political Relationships (Northampton, MA: Edward Elgar, 2006), 98.
2. Athanasios Orphanides and Simon van Norden, “The Reliability of Output Gap Estimates in Real Time,” 1999, www.neumann.hec.ca/pages/simon.van-norden/wps/realgap.pdf.
3. Charles I. Plosser, “Output Gaps and Robust Policy Rules,” 2010 European Banking & Financial Forum, Czech National Bank, Prague, March 23, 2010, www.philadelphiafed.org/publications/speeches/plosser/2010/03-23-10_european-banking-forum.cfm.
4. Ricardo Caballero, “A Helicopter Drop for the Treasury,” August 30, 2010, www.voxeu.org/index.php?q=node/5449.
5. Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationships (Northampton, MA: Edward Elgar, 2006).
6. “Values of the most important German Banknotes of the Inflation Period from 1920–1923,” www.sammler.com/coins/inflation.htm.
7. Max Shapiro, The Penniless Billionaires. (New York: New York Times Book Co., 1980), 203.
8. Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationships (Northampton, MA: Edward Elgar, 2006), 23.
9. Peter Bernholz, Monetary Regimes and Inflation: History, Economic and Political Relationships (Northampton, MA: Edward Elgar, 2006).
10. See Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2010 to 2020, Appendix C.
11. Peter Bernholz, “How Likely Is Hyperinflation?” The American, December 15, 2009, www.american.com/archive/2009/december-2009/how-likely-is-hyperinflation/.
Part Two: A World Tour: Who Will Face the Endgame First?
1. Frederic Mishkin and Tryggvi Thor Herbertsson, “Financial Stability in Iceland,” May 2006.
2. Michael Lewis, “Wall Street on the Tundra,” Vanity Fair.
3. Michael Pettis, “Do Sovereign Debt Ratios Matter?” China Financial Markets, July 20, 2010, http://mpettis.com/2010/07/do-sovereign-debt-ratios-matter/. We also highly recommend reading The Volatility Machine by Michael Pettis. You will be a much wiser reader if you read his book.
Chapter 9: The United States: The Mess We Find Ourselves In
1. Pew Center for People and the Press, “Gloomy Americans Bash Congress, Are Divided on Obama,” March 18, 2010, http://people-press.org/report/598/healthcare-reform.
2. Chairman Ben S. Bernanke, “Current Economic and Financial Conditions and the Federal Budget,” before the Committee on the Budget, U.S. House of Representatives, Washington, DC, June 3, 2009, www.federalreserve.gov/newsevents/testimony/bernanke20090603a.htm.
3. International Monetary Fund United States, Staff Report for the 2010 Article IV Consultation, prepared by the Western Hemisphere Department (in consultation with other departments). Approved by Nicolás Eyzaguirre and Tamim Bayoumi. July 2, 2010, www.imf.org/external/pubs/ft/scr/2010/cr10249.pdf.
4. Committee on the Fiscal Future of the United States, National Research Council, and National Academy of Public Administration, Choosing the Nation’s Fiscal Future, www.nap.edu/catalog/12808.html.
5. Jon Hilsenrath. “Quarterbacks Get Out ‘Hail Mary’ Economy Passes,” Wall Street Journal, http://online.wsj.com/article/SB10001424052748703988304575413320663573414.html.
6. Congressional Budget Office, “Federal Debt and the Risk of a Fiscal Crisis,” July 27, 2010, www.cbo.gov/ftpdocs/116xx/doc11659/07-27_Debt_FiscalCrisis_Brief.pdf.
7. Niall Ferguson, “Empires on the Edge of Chaos,” Foreign Affairs, February 26, 2010, www.foreignaffairs.com/articles/65987/niall-ferguson/complexity-and-collapse.
8. Dennis Cauchon, “Federal Workers Earning Double Their Private Counterparts,” USA Today, August 13, 2010, www.usatoday.com/money/economy/income/2010-08-10-1Afedpay10_ST_N.htm.
9. Elizabeth McNichol, Phil Oliff, and Nicholas Johnson, “Recession Continues to Batter State Budgets; State Responses Could Slow Recovery,” Center on Budget and Policy Priorities, www.cbpp.org/cms/index.cfm?fa=view&id=711.
10. David Wilson, “Soaring Federal Aid Bails Out U.S. States, Cities: Chart of Day,” August 11, 2010. Quoted at www.ritholtz.com/blog/2010/08/bailout-nation-states-municipalities/.
11. Mary Williams Walsh, “State Debt Woes Grow Too Big to Camouflage,” New York Times, March 29, 2010, www.nytimes.com/2010/03/30/business/economy/30states.html?_r=1&pagewanted=1.
12. Laurence Kotlikoff, “The US Is Bankrupt and We Don’t Even Know It,” Bloomberg News, August 11, 2010, www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html.
13. Martin Feldstein, “The ‘Tax Expenditure’ Solution for Our National Debt,” Wall Street Journal, July 20, 2010, http://online.wsj.com/article/SB10001424052748704518904575365450087744876.html.
14. Edmund Conway, “Geithner Insists Chinese Dollar Assets Are Safe,” The Telegraph, June 1, 2009, www.telegraph.co.uk/finance/financetopics/financialcrisis/5423650/Geithner-insists-Chinese-dollar-assets-are-safe.html.
15. David Stockman, “‘Game Over’ for the 30-Year Fiscal Wars,” Politico, February 24, 2010, www.politico.com/news/stories/0210/33412.html.
16. www.dagongcredit.com/dagongweb/uf/Sovereign%20Credit%20Rating%20Report%20of%2050%20Countries%20in%202010.
Chapter 10: The European Periphery: A Modern-Day Gold Standard
1. Barry Eichengreen, “The Euro: Love It or Leave It?” May 4, 2010, http://Voxeu.Org/Index.Php?Q=Node/729.
2. Michael Lewis, “Beware of Greeks Bearing Bonds,” Vanity Fair, October 1, 2010, www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010.
3. We highly recommend reading the following piece by Robert Parenteau, a research associate with the Levy Economics Institute: www.creditwritedowns.com/2010/03/leading-piigs-to-slaughter.html. The article is on the longer side, but it captures very clearly the debt deflationary dynamic in the Eurozone area.
Chapter 11: Eastern European Problems
1. Barclay Capital, The Emerging Market Weekly, www.scribd.com/doc/34764289/BarCap-The-EM-Weekly.
Chapter 12: Japan: A Bug in Search of a Windshield
1. Justin McCurry, “Japan Prime Minister Naoto Kan Warns of Greek-Style Public Debt Problems,” Guardian, June 11, 2010, www.Guardian.co.uk/Business/2010/Jun/11/Japan-Naoto-Kan-Debt-Warning.