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On claims of depositors, subordinated and creditors and central banks in bank resolutions
Regarding Cyprus, recently I heard someone claim that depositors are not creditors of a bank despite the fact that deposits are bank liabilities. This is bollocks. Depositors are indeed creditors, particularly in Europe where they are…
Some thoughts on German politics and the saver’s tax in Cyprus
The latest news out of Cyprus is that the Cyrpiot government has delayed the vote on a bank bailout and savers tax by one day to Monday and that it has also extended the bank holiday from just Monday to Tuesday as well. In my view, the news…
The Cyprus Bank Deposit Bail-in
This morning we learned that after hours of tense negotiation, Europe has hammered out a 10bn euro "bailout" of Cyprus. I put the term bailout in quotes because the key feature of this deal is the bail-in of Cypriot depositors to the tune…
Jeremy Grantham on the government debt problem
the US uses government money as the currency of account, there is no government budget constraint in the short or long run. Though even so-called Keynesians like Paul Krugman act like there is. The reality is that government can spend as…
Is Spain’s economic contraction now self-perpetuating?
The core of the issue is not whether the country could see one, or even two, quarters of positive performance, but whether any faltering recovery will be sustained out into the future, through 2014 and beyond. It is here that all the old…
Excess cash on the balance sheet is wealth destruction
Many of the largest technology companies are making so much money that they are rapidly accumulating cash on their balance sheets. While on could argue that this cash should be stripped off the balance sheet for valuation purposes, I would…
Japan’s Looming Singularity
The rise and rise of Japanese debt is far from benign, and the dynamic, we are convinced, will at some point become unsustainable. Unfortunately by the time we reach that point it will be too late. Indeed, given that we agree with Krugman…
Why the US economic crisis is a depression and not a recession
This is going to be a quick hit. But I thought I should put this out there now that the Platinum Coin idea has been rejected, something that makes this downside scenario more likely. The idea here is that we are in an interregnum period…
Chart of the day: US household debt-to-income versus debt servicing cost ratios
Here's a great chart from Goldman Sachs that I spied as a result of a tweet by finance blogger Conor Sen who is someone to follow on Twitter. It shows the divergence in US household debt-to-income ratios and debt servicing costs as interest…
How Germany can avoid TARGET2 losses if the euro zone breaks up
By Paul De Grauwe, Professor of international economics, London School of Economics, and former member of the Belgian parliament and Yuemei Ji, Economist, LICOS, University of Leuven
This post was first published at VoxEU
Germany’s large…