The Alchemists: Three Central Bankers and a World on Fire (65 page)

privatization (2011), 309–16

public protests, 210, 217, 284, 285–86, 297, 306, 311, 354, 358–59, 378

quarterly monitoring meetings, 216, 285–86, 297

Trichet’s approach to, 206–8, 211–12, 218–19, 222–23

“troika” of interventionists, 285–86, 297

worsening (2011), 306, 311–12

Greenspan, Alan

end of tenure of, 93–94

on housing bubble, 104

interest rate cuts, 99

legacy of, 94

on low-risk premiums, 107

recessions during tenure, 95, 99

Gregg, Judd, 191

Groupe de Francfort, 326, 345

Group of 20 meeting (2010), 257, 273–74

Group of 20 meeting (2011), 344–47

Group of Seven meeting (2010), 207–8

Guffey, Roger, 95–96

Gurney, Samuel, 26–27

Gustavus Adolphus, king of Sweden, 19

Hamilton, Alexander, 36–37

Hamlin, Charles S., 57

Hankey, Thomson, 34

Hansen, George, 71

Harris, Ethan, 265

Harrison, George L., 56

Harvey, Ernest, 60

Havenstein, Rudolf von, 221

and post–World War I hyperinflation, 47–53

Hayami, Masaru

background information, 89

and Japanese financial crisis (1990s), 87–88, 90–92

Heinze, F. Augustus, 40–41

Heinze, Otto, 40–41

Heline, Oscar, 61

Hemingway, Ernest, 51

Hildebrand, Philipp, 161

Hilsenrath, Jon, 262

Hitler, Adolf, rise of, economic factors in, 11, 52–53, 60

Hoenig, Thomas M.

QE2, objection to, 256, 258, 264, 265, 271, 275–76

U.S. financial reform position, 179–80, 187, 195–96, 199

Holland, Henry Lancelot, 32–33

Hollande, François, initial actions as president, 356

Home mortgages

easy-term products, 99–100

as investment device.
See
Mortgage-backed securities

risk related to, 102

Hoover, Herbert, 58

House Committee on Financial Services, 169–71

Household debt, increase in (2005), 100–101

Housing prices

central bankers fears (2005), 104–8

end of boom, signs of, 106

housing price increase (2005), 99–100, 103–4

Japan, price run-up (1990s), 85–86

Hubbard, Glenn, 117

Hu Jintao, 347, 363

Hurley, John, 158

Hutchinson, Kay Bailey, 196, 198–99

Hyun Song Shin, 107–8, 129

Iceland financial crisis, 284

Ichimada, Hisato, 86

Independent Community Bankers of America, 178–79, 196

Inflation

European countries, varying rates of, 75

German hyperinflation (1914–1918), 47–53

German hyperinflation, pre–Nazi era, 11, 50–53

Great Britain (2010–2011), 245, 251–52, 334

Greece (2000s), 203–4

low, negative effects, 260, 270

low U.S. levels (2010), 260

price increases, self-perpetuation of, 65–66, 134–35

Stockholms Banco creation of, 22–23

United States 1970’s.
See
Inflation (1971–1979)

Inflation (1971–1979), 62–71

Carter-era actions, 67–71

central bank ineffectiveness, 65–67

Ford era actions, 67

gold standard abandoned, 62–64

money supply/interest rate increase as remedy, 69–71

Nixon-era actions, 62–67

price increases, extent of, 65–68

Volker and end of, 67–71

Ingves, Stefan, 152, 161

Insolvency, versus illiquidity, 41

Institute of International Finance (IFF), 287, 312–15

Interest rate charges, Bagehot’s dictum, 33, 149

Interest rate cuts

Bank of Japan (1990s), 86–87

Bernanke options for, 163

ECB under Draghi, 344, 352

end of inflation of 1970s, 71

by Federal Reserve, 128, 163

global coordination of (2008), 161–63

goal-based actions, Fed plan (2012), 385–87

in Great Depression, 56

Greenspan era, 99

ineffectiveness, rationale for, 378–79, 386–87

zero-interest-rate policy, 87–88, 90–91

Interest rate increases

debt dynamics, 205

ECB (2008), 137, 160

ECB (2011), 303–4

to end inflation of 1970s, 69–71

Internal devaluation, 302–3

International Monetary Fund (IMF)

European Financial Stability Facility funding, 230

and Greek bailout, 205–6, 211–12, 215–17, 285–86, 310–11

and Greek debt restructuring, 312–16

Ireland bailout, 283–84, 294

Strauss-Kahn resignation, 308

Investment bank failures

Bear Stearns, 133–34

emergency 13(3) provision, 133–34

Lehman Brothers, 139–42

Ireland, economic success, era of, 283

Ireland financial crisis, 283–84, 292–95

bailouts, 283–84, 287, 294–96

banks, government guarantee (2008), 158–59, 283

deficit reduction, 284–85, 294, 353

elements of, 217, 292–94

Irish Nationwide Building Society, 294

Issing, Otmar, 74

Italy

Berlusconi successor.
See
Monti, Mario

central bank.
See
Banca d’Italia

Italy financial crisis, 316–23

deficit reduction, 319, 321, 346

deficit reduction failure, 321–22

ECB bond buying program, 319–22, 347–48

inflation rate (1980s), 75

Monti, positive steps by, 353

worsening (2011), 347–48

Jackson, Andrew, 38–39, 45

Jackson, James “Left Eye,” 36–37

Jackson Hole conference, 95–98

creation of, 95–96

purpose of, 95, 97–98

traditions/folklore of, 97

Jackson Hole conference (2005), 93–101

on end of Greenspan tenure, 93–94

on Great Moderation, 94–95, 98–99, 106–7

housing bubble, economists’ fears about, 104–8

Jackson Hole conference (2007), 111–12

crisis management at, 111–12, 123–24

housing bust warnings, 112, 124

Jackson Hole conference (2010), Bernanke speech, 265–66, 268

Jackson Hole conference (2012), 377–79

Bernanke speech, 384–85

Woodford principles, 378–79, 386, 390

Jaffee, Dwight, 117

Japan

central bank.
See
Bank of Japan

economic boom (1980s), 85–86

economic decline (1990s), 84–92

real estate price run-up, 85–86

zaitech
, 85–86

Jaspers, Karl, 77

Jay Cooke & Co., 39

Jekyll Island, First Name Club meeting (1910), 35–36, 43–44

Jiang Zemin, 367, 368

John Paul II, pope, 68–69

Johnson, Tim, 329

J.P. Morgan, 134

Juncker, Jean-Claude, 306–7, 345

Karl X Gustav, king of Sweden, 19, 21

Kennedy, Ted, 188

Keynes, John Maynard, 25, 388

on German reparations, 49–50

on Great Depression policy errors, 60

King, Mervyn.
See also
Bank of England

background information, 6–7, 120–23

bailouts, negative view of, 6, 126–27

beginning crisis, view of, 7, 128

-Blanchflower conflicts, 138–39, 239, 250–51

and Conservatives, 235, 242–47

on coordination of remedies, 162–63, 349

-Darling conflict, 121, 233–35, 238, 242

on deficit reduction, 237–38, 241–47, 246–47

economic orientation of, 121–22

economic stability, view of, 6–7, 387–89

end of term (2012), 388

on first day of crisis, 1, 6–7

government endorsement statement controversy, 249–51

housing bubble, fears about, 104

inflation, approach to, 253, 334–36

Labour criticism by, 234–35, 237–39, 242

Mansion House Dinner speech (2009), 233

Mansion House Dinner speech (2010), 247

Mansion House Dinner speech (2012), 232

quantitative easing amount, outvoted on, 238–41

successor to.
See
Carney, Mark

Klobuchar, Amy, 198–99

Knickerbocker Trust Co., 41

Kocherlakota, Narayana, 196, 264–65, 330, 332, 385

Kohl, Helmut, and European unity negotiations, 76–77, 82, 288

Kohn, Donald, 5, 97, 111, 133, 140, 193, 264

Koo, Richard, 88

Krugman, Paul, 80, 96, 116, 329

Labour Party, King criticism of, 234–35, 237–39, 242

Lacker, Jeffrey, 196, 264, 275, 385

Lagarde, Christine, 229, 289

Lamont, Norman, 73

Lamont, Thomas W., 42

Large-scale asset purchases.
See
Quantitative easing

Laws, David, 244

Lazear, Edward P., 147

Lehman Brothers

collapse, 139–41, 205

no bailout for, 141–42, 143–45, 151–52

Lehnert, Andreas, 104, 105

Lender of last resort, 3, 127.
See also
Central bank

Fed as global lender, 153–55

Lenihan, Brian, 152, 158

Liar loans, 100

Liberal Democrat Party, 244, 253

Li Bo, 371

Liikanen, Erkki, 114, 300

Lipsky, John, 308, 310

Liquidity

central bank cash infusions.
See
Bailouts

and highly rated securities, 2

Liquidity transformation, 30

Loans

home loans.
See
Home mortgages

securities created from, 102–3.
See also
Mortgage-backed securities

Lockhart, Dennis, 385

Lomax, Rachel, 7, 121

Lombard Street: A Description of the Money Market
(Bagehot), 28

Low-risk premiums, 107

Lubbers, Ruud, 77

Luther, Hans, 53

Great Depression, actions during, 58–60

Maastricht Treaty, 77, 114, 217, 318

McAndrews, Jamie, 141

McCarthy, Callum, 126

McConnell, Mitch, 191–92

McFall, John, 139

Madigan, Brian, 4, 111

Madison, James, 37

Maizière, Thomas de, 228

Major, John, 73

Malekan, Omid, 257

Mankiw, Greg, 271–72

Mansion House Dinner

King’s speech (2009), 233

King’s speech (2010), 247

King’s speech (2012), 232

Manzullo, Donald, 171

Marchioni, Dina, 277–78

Marsh, David, 114

Masuch, Klaus, 284

Maturity Extension Program (Operation Twist), 331–32, 340

Mayer, Thomas, 2

Meltzer, Allan, 94

Mencken, H.L., 53

Merkel, Angela

approval ratings, high, 356

bondholders pay bailouts decision, 289–92

on coordination of remedies, 160

and Greek financial crisis, 210–12, 288–89

-Sarkozy relationship, 287–92, 356

Mersch, Yves, 300

Miles, David, 241

Millennium Bridge, 107–8

Miller, G. William, 67

Mitterrand, François, 76–77

Monetary policy, and economic stability, 98

Monetary Policy Committee.
See
Bank of England

Money

excessive printing, and hyperinflation, 48–53

printing, Bernanke on, 279

value, basis of, 22

Money market contact group, 2

Money market funds

emergency relief, 150–51

near collapse (2008), 147–48

Money Market Investor Funding Facility (MMIFF), 151

Money supply

decreasing, and inflation of 1970s, 69–71

quantitative easing goals, 263

Monti, Mario

positive steps by, 353

as prime minister, 342, 347, 348

Moreau, Émile, 55

Morgan, John Pierpont

First Name Club meeting (1910), 35–36, 43–44

U.S. Treasury bailouts by, 41

Mors, Matthias, 285

Mortgage-backed securities

collapse, beginning of, 2

creation as investment vehicle, 101–2

European exposure, extent of, 129, 145, 159

Fed QE1 purchase of, 263

inventor of, 5

Northern Rock sale of, 126

rating AAA as safe, 102, 103

size of portfolio estimates (2011), 263–64

Mortgage brokers, 103

Moskow, Michael, 105

MoveOn.org, 191

National Banking Act (1863), 39

National Monetary Commission (1908), 43

National Reserve Association, 43

New Democracy, 203, 310, 341–42, 354, 357–58

Newton, Sir Isaac, 24–25

Nixon, Richard

Fed chairman bullied by, 63–65

gold standard abandoned, 62–64

inflation, approach to, 62–67

Nominal GDP targeting, 338–39

Nominal wage rigidity, 302–3

Norinchukin, 154

Norman, Montagu, Great Depression actions by, 11, 55, 59, 60

Northern Rock PLC, crisis and bailout of, 125–28

Obama, Barack

Bernanke reappointment, 181–84, 189–93

-Bernanke relationship, 181, 183

debt limit, raising, 317

Group of 20 meeting (2010), 257

Group of 20 meeting (2011), 345–46

and QE2 criticisms, 257

Recovery Summer, 259

O’Donnell, Gus, 244

Office of Thrift Supervision, 146

Oil prices

decline (2008), 161

increases in 1970s, 66

Olson, Mark, 105

Operation Twist, 331–32

Operation Twist 2, 340

Optimal currency area, and euro, views of, 79–80

Organization of Petroleum Exporting Countries (OPEC), oil price hikes of 1970s, 66

Osborne, George, 238, 242

deficit reduction agenda, 245–49

Outright Money Transactions (OMT), 382–84

Overend, Gurney & Co. collapse (1866), 10, 26–28, 31.
See also
Panic of 1866 (England)

Overend, John, 26–27

Oxenstierna, Axel, 19

Palmstruch, Johan, Stockholms Banco innovations/failure, 17–24

Panhellenic Socialist Movement (PASOK), 203, 310, 341, 354, 357–58

Panic of 1866 (England), 10, 26–28, 31–34

Bagehot’s analysis of, 28

Bank of England bailout, 32–34

economic impact of, 33–34

Overend & Gurney collapse, 10, 26–28, 31

Panic of 1907 (U.S.), 40–43

Papaconstantinou, George, 202, 205, 209–10, 215, 287, 310