{"product_id":"the-escape-from-balance-sheet-recession-and-the-qe-trap-9781119028123","title":"The Escape from Balance Sheet Recession and the","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003e\u003cb\u003eCompare global experiences during the balance sheet recession and find out what is needed for a full recovery\u003c\/b\u003e  \u003cp\u003e\u003ci\u003eThe Escape from Balance Sheet Recession and the QE Trap\u003c\/i\u003e details the many hidden dangers remaining as the world slowly recovers from the balance sheet recession of 2008. Author and leading economist Richard Koo explains the unique political and economic pitfalls that stand in the way of recovery from this rare type of recession that was largely overlooked by economists. Koo anticipated the current predicament in the West long before others and issued warnings in his previous books: \u003ci\u003eBalance Sheet Recession\u003c\/i\u003e and \u003ci\u003eThe Holy Grail of Macroeconomics\u003c\/i\u003e. This new book illustrates how history is repeating itself in Europe while the United States, which learnt from the Japanese experience, is doing better by avoiding the fiscal cliff. However, because of the liberal dosage of quantitative easing already implemented, the United States, the United Kingdom, and Ja\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTrade Review\u003c\/b\u003e\u003cbr\u003e\u003c\/p\u003e\u003cp\u003e\u003cb\u003ePraise for \u003ci\u003eThe Escape from Balance Sheet Recession and the QE Trap\u003c\/i\u003e\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\"Richard Koo has been a pioneer in recasting macroeconomics for the current era of financial crisis and potential deflation. This book presents his latest thinking in a clear and powerful way. Agree or disagree his work deserves close study if the next decade in the industrial world is going to be better than the last.\"\u003cbr\u003e—\u003cb\u003eLawrence Summers\u003c\/b\u003e, President Emeritus and Charles W. Eliot University Professor, Harvard University; former U.S. Secretary of the Treasury\u003c\/p\u003e \u003cp\u003e\"This is an important, stimulating, exciting and timely book. Guided by the ideas in this book, growing numbers of experts are appreciating the parallels between the current world-wide crisis and the crisis Japan experienced 15 years ago. The basic insight – that in the presence of persistent liabilities, the private sector minimizes debt – is one that needs to be fully appreciated in order for appropriate policies to be devised. This is a must-read for all those seeking to respond to the current economic malaise.\"\u003cbr\u003e—\u003cb\u003eDennis J. Snower\u003c\/b\u003e, President, Kiel Institute for the World Economy; Professor of Economics, Christian-Alberchts University, Kiel\u003c\/p\u003e \u003cp\u003e\"Koo's \u003ci\u003eThe Escape from Balance Sheet Recession and the QE Trap\u003c\/i\u003e provides the most insightful guide to current macroeconomic policy available today. Koo's concept of 'balance sheet recession' adds depth and detail to observations of the 'liquidity trap' and 'zero lower bound' of interest rates. He explains what needs to be done now and how long it could take. Everyone concerned with macroeconomic policy needs to read this analysis to learn how the world economy can be revived.\"\u003cbr\u003e—\u003cb\u003ePeter Temin\u003c\/b\u003e, Elisha Gray II Professor Emeritus of Economics, Massachusetts Institute of Technology\u003c\/p\u003e \u003cp\u003e\"I have always liked the Richard Koo style – succinct theories, razor-sharp points, self-sustaining logic, and, more importantly, a set of workable solutions. It’s definitely a worthy read.\"\u003cbr\u003e—\u003cb\u003eGao Xiqing\u003c\/b\u003e, Professor, School of Law, Tsinghua University; former Vice Chairman and President, China Investment Corporation\u003c\/p\u003e \u003cp\u003e\"In the wake of the financial crisis of 2008, governments and financial institutions have instituted a wide range of changes in such areas as risk management, regulation, market organization, and fiscal and monetary policy. Unfortunately, however, these measures have suffered from a lack of a unified recognition of the fundamental problem. In a clear, engaging and penetrating way, Richard Koo has diagnosed the core nature of the challenge and the appropriate response. \u003ci\u003eThe Escape from Balance Sheet Recession and the QE Trap\u003c\/i\u003e is an essential guide for anyone interested in the future of the global economy.\"\u003cbr\u003e—\u003cb\u003eJeffrey E. Garten\u003c\/b\u003e, Juan Trippe professor of international trade and finance and former Dean, Yale School of Management; former Undersecretary of Commerce\u003c\/p\u003e \u003cp\u003e\"When the history of this depression is written, policymakers who ignore Koo's finding will be judged harshly for imposing unnecessary suffering on their societies.\"\u003cbr\u003e—\u003cb\u003eRichard Duncan\u003c\/b\u003e, Author, \u003ci\u003eThe Dollar Crisis\u003c\/i\u003e\u003c\/p\u003e\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003eForeword xix\u003c\/p\u003e \u003cp\u003eAbout the Author xxv\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 \u003c\/b\u003e\u003cb\u003eBalance Sheet Recession Theory—Basic Concepts 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eGDP and Inflation Fueled by Growth in Money Supply, Not Monetary Base 5\u003c\/p\u003e \u003cp\u003eJapan Fell into Balance Sheet Recession in 1990s 10\u003c\/p\u003e \u003cp\u003ePlunging Asset Prices Create Balance Sheet Problems for Businesses 12\u003c\/p\u003e \u003cp\u003eJapanese Firms Rushed to Repair Balance Sheets by Paying Down Debt 13\u003c\/p\u003e \u003cp\u003e“Correct” Private Sector Behavior Tipped Japan into Contractionary Equilibrium 14\u003c\/p\u003e \u003cp\u003eCollapse of Japan’s Bubble Destroyed ¥1,500 Trillion in Wealth 16\u003c\/p\u003e \u003cp\u003eWhy Japanese GDP Did Not Fall after Bubble Burst 18\u003c\/p\u003e \u003cp\u003eFiscal Stimulus Saved Japan’s Economy 21\u003c\/p\u003e \u003cp\u003e“Good” Fiscal Deficits Were Not Perceived as Such 23\u003c\/p\u003e \u003cp\u003eBalance Sheet Recessions and the Limitations of Econometric Models 25\u003c\/p\u003e \u003cp\u003eFiscal Stimulus Works in Two Stages 28\u003c\/p\u003e \u003cp\u003eFDR Made Same Mistake in 1937 28\u003c\/p\u003e \u003cp\u003eReactive Fiscal Stimulus Is Far Less Efficient 30\u003c\/p\u003e \u003cp\u003eFiscal Deficits Are Easily Financed during Balance Sheet Recessions 31\u003c\/p\u003e \u003cp\u003eSelf-Corrective Mechanism for Economies in Balance Sheet Recessions 33\u003c\/p\u003e \u003cp\u003eTwo Types of Fiscal Deficits Require Different Responses 34\u003c\/p\u003e \u003cp\u003eFiscal Deficits Must Be Viewed Relative to Private Savings 36\u003c\/p\u003e \u003cp\u003eConsequences of Leaving Things Up to the Market in a Balance Sheet Recession 37\u003c\/p\u003e \u003cp\u003eGFC Triggered by Insistence on Market Principles 40\u003c\/p\u003e \u003cp\u003eVolcker Understood Systemic Crises 41\u003c\/p\u003e \u003cp\u003eLittle to Be Gained from Bashing Those Who Have Already Come to Their Senses 42\u003c\/p\u003e \u003cp\u003eRecovery from Balance Sheet Recession Takes Time 43\u003c\/p\u003e \u003cp\u003eForward Guidance Important for Fiscal as Well as Monetary Policy 43\u003c\/p\u003e \u003cp\u003eFiscal Consolidation: Better Too Late Than Too Early 45\u003c\/p\u003e \u003cp\u003eThree Points to Consider Regarding Costs for Future Generations 47\u003c\/p\u003e \u003cp\u003eJapan Had a Shot at Full Recovery in 1996 . . . 49\u003c\/p\u003e \u003cp\u003eConflation of Balance Sheet and Structural Problems Extends Recession 50\u003c\/p\u003e \u003cp\u003eDistinguishing Balance Sheet Recessions from Structural Problems and Financial Crises 53\u003c\/p\u003e \u003cp\u003eDemocracies Are Ill-Equipped for Dealing with Balance Sheet Recessions 55\u003c\/p\u003e \u003cp\u003eKeynes Also Overlooked Private-Sector Debt Minimization 56\u003c\/p\u003e \u003cp\u003eThose Who Prevent Crises Never Become Heroes 58\u003c\/p\u003e \u003cp\u003eDemocracy Plus Balance Sheet Recession Equals “Secular Stagnation” 59\u003c\/p\u003e \u003cp\u003eAppendix to Chapter 1: Summary of Yin and Yang Phases of Economy 60\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 \u003c\/b\u003e\u003cb\u003eMonetary Policy and the Quantitative Easing Trap 63\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMonetary Policy Impotent without Demand for Funds 64\u003c\/p\u003e \u003cp\u003eMechanisms for Money Supply Growth 65\u003c\/p\u003e \u003cp\u003eGovernment Borrowing Drove Money Supply Growth in Japan 67\u003c\/p\u003e \u003cp\u003eEconomics Dogged by Incorrect Analysis of Great Depression 68\u003c\/p\u003e \u003cp\u003eJapanese Monetary Policy Has Relied on Fiscal Policy for Past 20 Years 72\u003c\/p\u003e \u003cp\u003eBalance Sheet Recessions Triggered by Borrower-Side Problems, Financial Crises Triggered by Lender-Side Problems 74\u003c\/p\u003e \u003cp\u003eBernanke Himself Says QE2 Unlikely to Have Major Macroeconomic Benefits 75\u003c\/p\u003e \u003cp\u003eReal Aim of QE2: Portfolio Rebalancing Effect 75\u003c\/p\u003e \u003cp\u003eCan Higher Share Prices under QE2 Be Justified on DCF Basis? 77\u003c\/p\u003e \u003cp\u003eQE2 a Big Gamble for Bernanke 77\u003c\/p\u003e \u003cp\u003eQE Undermined U.S. Leadership in G20 78\u003c\/p\u003e \u003cp\u003eQE with No Income Effect Harms Other Countries 79\u003c\/p\u003e \u003cp\u003eDollar-Buying Intervention by U.S. Authorities Would Have Produced Different Outcome 80\u003c\/p\u003e \u003cp\u003eInward Capital Controls Help Keep Bubbles Fueled by Hot Money in Check 80\u003c\/p\u003e \u003cp\u003eQE Represents Government Intervention in Asset Markets 81\u003c\/p\u003e \u003cp\u003eOperation Twist Lowered Long-Term Rates, but to No Effect 81\u003c\/p\u003e \u003cp\u003eOperation Twist Provided Only Limited Economic Boost 83\u003c\/p\u003e \u003cp\u003eBernanke Admits the United States Faces Same Problems as Japan 84\u003c\/p\u003e \u003cp\u003eFed Overestimates Impact of Quantitative Easing 84\u003c\/p\u003e \u003cp\u003e“Lower Long-Term Rates = Higher GDP” Formula Does Not Hold during Balance Sheet Recession 85\u003c\/p\u003e \u003cp\u003eFed Has Also Underestimated Costs of QE 85\u003c\/p\u003e \u003cp\u003eUnorthodox Monetary Policy Distorts Signals from Bond Market 86\u003c\/p\u003e \u003cp\u003eNeedless QE Acts as Drag on Financial Institutions 87\u003c\/p\u003e \u003cp\u003eWhy Fed Embarked on QE3 Two Months before Presidential Election 88\u003c\/p\u003e \u003cp\u003ePost-Bubble Wage Growth Nearly Identical in the United States and Japan 89\u003c\/p\u003e \u003cp\u003eThe “Inconvenient Truth” of the Real Cost of Quantitative Easing 89\u003c\/p\u003e \u003cp\u003eBOJ’s First Round of QE Was Easy to Wind Down Because It Was Conducted in Money Market 91\u003c\/p\u003e \u003cp\u003eRedemption of Central Bank Bond Holdings Will Not Reduce Commercial Banks’ Current Accounts 92\u003c\/p\u003e \u003cp\u003eGovernment Issue of Refunding Bonds to Private Sector Would Absorb Excess Reserves 92\u003c\/p\u003e \u003cp\u003eRedeeming Fed Bond Holdings Has Same Effect as Issuing Deficit Bonds 93\u003c\/p\u003e \u003cp\u003eStrength of Private Loan Demand Different at Start and End of QE 94\u003c\/p\u003e \u003cp\u003ePaying Interest on Excess Reserves Would Enable Rate Hikes . . . 94\u003c\/p\u003e \u003cp\u003eBut Cost Could Be Prohibitive 95\u003c\/p\u003e \u003cp\u003eCost of Winding Down QE Has Yet to Be Properly Analyzed 97\u003c\/p\u003e \u003cp\u003eDebate over Winding Down QE Sparks “Bad” Rise in Rates 98\u003c\/p\u003e \u003cp\u003e“QE Trap” Appears Increasingly Likely 98\u003c\/p\u003e \u003cp\u003eContinued QE Trap More Likely Than Hyperinflation 101\u003c\/p\u003e \u003cp\u003eBOJ Found Itself in Same Position in 2006 103\u003c\/p\u003e \u003cp\u003eFed Admits That Supply and Demand Matters, Too 103\u003c\/p\u003e \u003cp\u003eFed Changes Course Despite a 1.1 Percent Inflation Rate 104\u003c\/p\u003e \u003cp\u003eTraditional Phillips Curve Relationship No Longer Holds 105\u003c\/p\u003e \u003cp\u003eUpcoming Chapters in QE Saga 106\u003c\/p\u003e \u003cp\u003eCapital Injection Could Also Be Threatened If Blame Shifts to Fed 106\u003c\/p\u003e \u003cp\u003eSales Should Start with Bonds Maturing Soon 107\u003c\/p\u003e \u003cp\u003eFinal Cost of QE Can Be Calculated Only at End of Fourth Chapter 108\u003c\/p\u003e \u003cp\u003eTheoretical Debate on QE Has Focused Entirely on Benefits and Ignored Costs 108\u003c\/p\u003e \u003cp\u003eCentral Banks Should Establish a New Reaction Function to Drain Reserves 110\u003c\/p\u003e \u003cp\u003eEmerging Markets Need Inward Capital Controls to Protect against QE 111\u003c\/p\u003e \u003cp\u003eJapan Should Learn from Pioneers in QE Using Long-Term Bonds 112\u003c\/p\u003e \u003cp\u003eFinancial and Capital Markets during Balance Sheet Recessions 113\u003c\/p\u003e \u003cp\u003eBalance Sheet Recession Brings Special Kind of Liquidity-Driven Market 115\u003c\/p\u003e \u003cp\u003eIs Inflation of 1–2 Percent Too Low? 116\u003c\/p\u003e \u003cp\u003eDoes Inflation Improve People’s Standard of Living? 116\u003c\/p\u003e \u003cp\u003eAbsence of Inflation Concerns May Have Lifted Utility of Consumption in Japan 117\u003c\/p\u003e \u003cp\u003eQE Should Not Be Pursued Any Further Given Difficulty of Winding It Down 118\u003c\/p\u003e \u003cp\u003eQE a Problematic Byproduct of Balance Sheet Recessions 119\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 \u003c\/b\u003e\u003cb\u003eThe United States in Balance Sheet Recession 121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRating Agencies Need to Be More Tightly Regulated 123\u003c\/p\u003e \u003cp\u003eWhy Was Lehman Allowed to Fail? 124\u003c\/p\u003e \u003cp\u003eTARP Prevented Bank Failures but Also Created Turmoil 127\u003c\/p\u003e \u003cp\u003eU.S. Authorities Changed Course with “Pretend and Extend” 129\u003c\/p\u003e \u003cp\u003eFiscal Stimulus Shifts from “Three Ts” to “Three Ss” 131\u003c\/p\u003e \u003cp\u003eObama Has Yet to Disclose the Name of the Disease 132\u003c\/p\u003e \u003cp\u003eBernanke’s “Fiscal Cliff” Warning Saved the U.S. Economy 134\u003c\/p\u003e \u003cp\u003eBernanke Declared Monetary Easing Could Not Offset Impact of Fiscal Cliff 136\u003c\/p\u003e \u003cp\u003eFall from Fiscal Cliff Triggered Japan’s Deflation 137\u003c\/p\u003e \u003cp\u003eU.S. Households Still Repairing Balance Sheets 138\u003c\/p\u003e \u003cp\u003eNonfinancial Corporate Sector Faced Difficult Years in the Wake of GFC 140\u003c\/p\u003e \u003cp\u003eU.S. Companies Hit Far Harder by GFC Than by Collapse of Internet Bubble 141\u003c\/p\u003e \u003cp\u003eCan U.S. Corporate Sector Become Economic Engine? 141\u003c\/p\u003e \u003cp\u003eLong-Term Rate “Conundrum” Kept Housing Bubble Alive 142\u003c\/p\u003e \u003cp\u003ePost-2007 Fed in Similar Position to BOJ in 1990s 143\u003c\/p\u003e \u003cp\u003eFlow-of-Funds Data Suffer from Poor Accuracy 143\u003c\/p\u003e \u003cp\u003eBad Data Were Good for Policy Debate 145\u003c\/p\u003e \u003cp\u003eEstimated Correctly, Private Sector Financial Surplus Continues to Shrink 146\u003c\/p\u003e \u003cp\u003eRecovery in U.S. Private Sector Demand for Funds May Outpace Japan 148\u003c\/p\u003e \u003cp\u003eHousing Market Strength during the First Half of 2013 May Have Contained Temporary Factors 149\u003c\/p\u003e \u003cp\u003eFed’s Reputation Falls to Earth 150\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 \u003c\/b\u003e\u003cb\u003eThe Great Potential of Abenomics 153\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBOJ Already Had a Massive QE Program in Place 155\u003c\/p\u003e \u003cp\u003eWhy Didn’t Japan’s Institutional Investors Follow Their Overseas Counterparts? 157\u003c\/p\u003e \u003cp\u003eYen Fell and Stocks Rose Because Japan’s Institutional Investors Stayed in Bond Market 158\u003c\/p\u003e \u003cp\u003eHoneymoon Altered Japan’s Economic Landscape 159\u003c\/p\u003e \u003cp\u003eBond Market Reaction Ended Abenomics’s Honeymoon 160\u003c\/p\u003e \u003cp\u003ePrivate Sector Continues to Save after One Year of Abenomics 161\u003c\/p\u003e \u003cp\u003eJapan’s Growth over Last Year Attributable to Fiscal Policy 162\u003c\/p\u003e \u003cp\u003eCan the Abe Administration Overcome the Trauma of Balance Sheet Recession? 164\u003c\/p\u003e \u003cp\u003eThe Trauma of the Balance Sheet Recession Will Be the Last Effect to Go 166\u003c\/p\u003e \u003cp\u003eFocus of Structural Reforms Must Shift from Lenders to Borrowers 167\u003c\/p\u003e \u003cp\u003eIs Japan’s Slump Due to Shrinking Population or Balance Sheet Problems? 169\u003c\/p\u003e \u003cp\u003eSlump in Domestic Demand Was Due to Balance Sheet Recession, Not Decline in Working-Age Population 170\u003c\/p\u003e \u003cp\u003ePersonal Financial Assets Have Already Been Invested Somewhere 171\u003c\/p\u003e \u003cp\u003eCorporate Debt Pay-Downs Weighed on Consumption and Investment 171\u003c\/p\u003e \u003cp\u003eReal Bottleneck in Japan’s Economy: Lack of Loan Demand at Private Companies 172\u003c\/p\u003e \u003cp\u003eBalance Sheet Recession Has Taught Japanese How to Be Frugal 173\u003c\/p\u003e \u003cp\u003eIs Japan Really Closed to Immigration? 174\u003c\/p\u003e \u003cp\u003eJapanese Economy Would Cease to Function without Foreigners 175\u003c\/p\u003e \u003cp\u003eAgricultural Reforms a Major Step for LDP Government 176\u003c\/p\u003e \u003cp\u003eStructural Reforms Are Microeconomic Policies That Take Years to Work 177\u003c\/p\u003e \u003cp\u003eScale of Structural Reform Is Also Important 177\u003c\/p\u003e \u003cp\u003eWe Should Not Expect More Good Fortune 178\u003c\/p\u003e \u003cp\u003eKuroda May Be Trying to Close Gap between Expectations and Reality … 180\u003c\/p\u003e \u003cp\u003eBOJ and Government Must Stress That Inflation Overshoot Will Not Be Tolerated 182\u003c\/p\u003e \u003cp\u003eBOJ Had Weapon to Prevent JGB Crash during Balance Sheet Recession 183\u003c\/p\u003e \u003cp\u003eNo One Has Criticized Japan for Currency Manipulation 184\u003c\/p\u003e \u003cp\u003eJapan Supported Global Economy for Four Years after Lehman Collapse 185\u003c\/p\u003e \u003cp\u003eReal Effective Exchange Rate Does Not Fully Express Japanese Firms’ Pain 187\u003c\/p\u003e \u003cp\u003eRising Fiscal Deficits Caused by Change in Corporate Behavior 188\u003c\/p\u003e \u003cp\u003eHow Should Japan’s Tax System Be Reformed? 190\u003c\/p\u003e \u003cp\u003eFiscal Stimulus Introduced to Offset Consumption Tax 191\u003c\/p\u003e \u003cp\u003eCurrent Corporate Earnings Based on Massive Fiscal Deficits 192\u003c\/p\u003e \u003cp\u003eWorking Down Public Debt Will Require Bold Policies to Lift Japan’s Growth Rate 192\u003c\/p\u003e \u003cp\u003eIncentives Needed to Restore Japan’s Economic Vitality 194\u003c\/p\u003e \u003cp\u003eMore Effective Land Utilization Could Propel Growth 194\u003c\/p\u003e \u003cp\u003eJapan Needs Bold Tax Reforms Modeled on U.S. and Hong Kong Systems 195\u003c\/p\u003e \u003cp\u003ePolicies Need to Change Perceptions of Japan at Home and Abroad 196\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 \u003c\/b\u003e\u003cb\u003eEuro Crisis—Facts and Resolution 199\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eEuro’s Adoption Lowered Interest Rates Sharply 200\u003c\/p\u003e \u003cp\u003eMaastricht Treaty Acted as Constraint on Credit Risk 201\u003c\/p\u003e \u003cp\u003eGreece Was Spoiled by Euro, and Germany Reacted Violently 203\u003c\/p\u003e \u003cp\u003eGermans Believed Structural Reforms Required a Crisis 204\u003c\/p\u003e \u003cp\u003eGerman Balance Sheet Recession Eight Years before GFC Started the Crisis 205\u003c\/p\u003e \u003cp\u003eGerman IT Bubble Brought about Euro Crisis 209\u003c\/p\u003e \u003cp\u003eECB’s Rate Cuts Create Bubbles outside Germany 210\u003c\/p\u003e \u003cp\u003eMisunderstandings Regarding Lack of Competitiveness in Southern Europe 213\u003c\/p\u003e \u003cp\u003eMoney Supply Growth Much Lower in Germany 214\u003c\/p\u003e \u003cp\u003eGerman Reforms Responsible for Only Half of Competitive Gap 214\u003c\/p\u003e \u003cp\u003eGermany Benefited Most from Euro 216\u003c\/p\u003e \u003cp\u003eOne More Mutual Dependency between Germany and Eurozone Periphery 217\u003c\/p\u003e \u003cp\u003eSpain’s Vicious Balance Sheet Recession 219\u003c\/p\u003e \u003cp\u003eIreland’s Household Sector Forced to Pick Up Pieces after Massive Housing Bubble 220\u003c\/p\u003e \u003cp\u003eIrish Businesses Remain Net Savers 222\u003c\/p\u003e \u003cp\u003ePortugal’s Balance Sheet Recession Began Quite Recently 224\u003c\/p\u003e \u003cp\u003eItaly Is in Same Position as Portugal 225\u003c\/p\u003e \u003cp\u003eWhy the Polarization of Eurozone Government Bond Yields? 227\u003c\/p\u003e \u003cp\u003eEurozone Allows Investors to Buy Government Bonds of Member Countries with No Currency Risk 229\u003c\/p\u003e \u003cp\u003eEurozone-Specific Fund Flows Amplify Economic Swings 230\u003c\/p\u003e \u003cp\u003eMeaning of “Fiscal Space” Differs Inside and Outside Eurozone 231\u003c\/p\u003e \u003cp\u003eMaastricht Treaty Is Defective and Should Be Revised Immediately 232\u003c\/p\u003e \u003cp\u003eIn Practice, Fiscal Stimulus Requires EU and ECB Approval 233\u003c\/p\u003e \u003cp\u003eBan on Buying Other Nations’ Debt Ideal Way to Stabilize Eurozone 234\u003c\/p\u003e \u003cp\u003eEfficiency Gains from Single Currency Remain Intact 235\u003c\/p\u003e \u003cp\u003eDifferent Risk Weights Should Be Applied to Domestic and Foreign Government Debt 237\u003c\/p\u003e \u003cp\u003eNext-Best Alternative to Risk Weights Already in Place? 238\u003c\/p\u003e \u003cp\u003eSeparation of Sovereign Risk and Banking Risk a Rejection of self-Corrective Mechanism 238\u003c\/p\u003e \u003cp\u003eJoint Issue of Eurobonds Would Only Solve Half of Eurozone’s Structural Defects 240\u003c\/p\u003e \u003cp\u003eDraghi Unaware That There Are Two Kinds of Recessions and Fiscal Deficits 241\u003c\/p\u003e \u003cp\u003eOutside of Greece, Capital Flight Is the Problem 243\u003c\/p\u003e \u003cp\u003eExplaining Balance Sheet Recessions to the German Public 244\u003c\/p\u003e \u003cp\u003eEven Germans Understand Need for Fiscal Stimulus If Properly Explained 245\u003c\/p\u003e \u003cp\u003eExcessive Focus on Fiscal Deficits While Ignoring Growth in Private Savings 246\u003c\/p\u003e \u003cp\u003eLack of Private Loan Demand Biggest Problem for Germany 247\u003c\/p\u003e \u003cp\u003eGermany Unlikely to Announce Stimulus Package 247\u003c\/p\u003e \u003cp\u003eDisadvantages of Euro Exit for Greece 248\u003c\/p\u003e \u003cp\u003eArgentina’s Experience Also Suggests Euro Exit Would Have Few Merits for Greece 249\u003c\/p\u003e \u003cp\u003eGermany’s Competitive Gap with Other Countries Will Also Disappear in a Few Years 251\u003c\/p\u003e \u003cp\u003eDraghi’s LTROs Prevented Collapse of Eurozone Financial System 252\u003c\/p\u003e \u003cp\u003e“Grand Bargain” with ECB Is an Empty Promise 254\u003c\/p\u003e \u003cp\u003eDouble-Dip Recessions and the Eurozone’s Bad Loan Problem 255\u003c\/p\u003e \u003cp\u003eEBA’s Lack of Understanding of Systemic Crises Leads to Rash Actions 256\u003c\/p\u003e \u003cp\u003eCypriot Bank Resolution Could Worsen Financial System Jitters 257\u003c\/p\u003e \u003cp\u003eVicious Cycle of Creating New Bubbles to Paper over Old Ones 258\u003c\/p\u003e \u003cp\u003eEU Election Results the Result of Economic Policy Errors 259\u003c\/p\u003e \u003cp\u003eEuropean Policymakers Mistake Balance Sheet Problems for Structural Problems 260\u003c\/p\u003e \u003cp\u003ePolicymakers Need to Ask Why Eurosceptics Made Such Gains 262\u003c\/p\u003e \u003cp\u003eDisappointment with Established Parties Led to Rise of Nazis and World War II 262\u003c\/p\u003e \u003cp\u003eContinued Disregard for People’s Voice Puts Democracy in Jeopardy 263\u003c\/p\u003e \u003cp\u003eU.S. Voters Had Policy Choices, Unlike Their European Counterparts 263\u003c\/p\u003e \u003cp\u003eThe Euro Can Be Saved with Two Repairs 264\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 \u003c\/b\u003e\u003cb\u003eChina’s Economic Challenges 267\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eChina’s Local Governments Began Borrowing en Masse 268\u003c\/p\u003e \u003cp\u003eDecoupling Would Not Have Been Possible in Ordinary Democracy 269\u003c\/p\u003e \u003cp\u003eChina’s Remaining Problems Include Overcapacity and Income Inequality 270\u003c\/p\u003e \u003cp\u003eChina Understands Political Ramifications of Inflation 270\u003c\/p\u003e \u003cp\u003eChina’s Shadow Banking Sector: Misunderstandings and Realities 272\u003c\/p\u003e \u003cp\u003eProblem: Sharp Growth in Lending to Local Governments Post-Lehman 273\u003c\/p\u003e \u003cp\u003eDecoupling of China and Developed Economies to Continue 274\u003c\/p\u003e \u003cp\u003eProblems Facing China’s Economy 274\u003c\/p\u003e \u003cp\u003eChina Has Already Passed the Lewis Turning Point 276\u003c\/p\u003e \u003cp\u003eRapid Economic Growth Continues until Lewis Turning Point 277\u003c\/p\u003e \u003cp\u003eU.S.-Led Free Trade Regime Enabled the Emergence of Asia 278\u003c\/p\u003e \u003cp\u003eEconomy Starts to Mature Only after Passing the Lewis Turning Point 279\u003c\/p\u003e \u003cp\u003eLocal and Global Lewis Turning Points and Inequality 280\u003c\/p\u003e \u003cp\u003eChina Increasingly Tolerant of RMB Appreciation as Transition to Consumption-Led Economy Proceeds 281\u003c\/p\u003e \u003cp\u003eThe West Is Conflating Problems of Trade Imbalance and Financial Crisis 282\u003c\/p\u003e \u003cp\u003eLiberalized Financial Sector and Capital Flows Could Weaken RMB 283\u003c\/p\u003e \u003cp\u003eChina Could Fall into the “Middle-Income Trap” If It Neglects to Advance Its Industrial Base 284\u003c\/p\u003e \u003cp\u003eJapan, Korea, and Taiwan Escaped from Middle-Income Trap 284\u003c\/p\u003e \u003cp\u003eLabor Disputes Increase Sharply after the Lewis Turning Point Is Reached 287\u003c\/p\u003e \u003cp\u003eThe Dilemma of Patriotism with an External Enemy 289\u003c\/p\u003e \u003cp\u003eWorking-Age Population Peaked Just as the Lewis Turning Point Was Reached 290\u003c\/p\u003e \u003cp\u003eWill China Grow Old before It Grows Rich? 291\u003c\/p\u003e \u003cp\u003eThe Next 15 to 20 Years Are Critical 292\u003c\/p\u003e \u003cp\u003eUncertainty Due to Corruption and Lack of Legal Infrastructure Must Be Removed . . . 293\u003c\/p\u003e \u003cp\u003eAppealing to Patriotism without Creating External Enemies 294\u003c\/p\u003e \u003cp\u003eChina Could Become a World-Class Nation for the First Time in Two Centuries 295\u003c\/p\u003e \u003cp\u003eChinese Ambition and Industry Must Be Steered in Right Direction 296\u003c\/p\u003e \u003cp\u003eAfterword 299\u003c\/p\u003e \u003cp\u003eBibliography 301\u003c\/p\u003e \u003cp\u003eIndex 305\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default Title","offer_id":49406969381207,"sku":"9781119028123","price":24.79,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1739\/5799\/files\/9781119028123.jpg?v=1730497733","url":"https:\/\/bookcurl.com\/products\/the-escape-from-balance-sheet-recession-and-the-qe-trap-9781119028123","provider":"Book Curl","version":"1.0","type":"link"}