debt deflation

If you are a debtor who wants to cut your debt load for fear of a liquidity-induced insolvency, there are two ways to make your debt metrics improve. One is to increase revenue and the other is to shrink the debt. Think of it this way:…

This post describes how austerity works in the European Monetary System where the euro is used as a currency. I will start by framing the difference between currency users and currency creators, then move to how central banks and government…

Liquidity crises are always solvency crises. The question is about determining which company, nation, or debtor is insolvent in a world of incomplete information. This leads to panic and a wider liquidity crisis that stresses the balance…

Below is the leaked Greek bailout document that everyone has been talking about. Yesterday, the Financial Times first revealed this analysis' existence. Here is Rob Parenteau's understanding of what the Troika analysis demonstrates about…

Cornell University professor Robert Hockett explains his paper with Nouriel Roubini and Daniel Alpert on “Moving From the Post-Bubble, Post-Bust Economy to Growth”. His prescription is one part credit writedowns, one part debt rebalancing,…

Here are the important extracts from a recent paper in terms of the causes of the crisis. I have also embedded the full pdf version, which has suggested policy prescriptions as well.