The Alchemists: Three Central Bankers and a World on Fire
Page 54
9: Federal Reserve photo, Britt Leckman
10: Federal Reserve photo, Britt Leckman
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13: Bloomberg/Getty Images
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15: AP Photo/Remy de la Mauviniere
16: AP Photo/Virginia Mayo
17: © European Central Bank, Frankfurt am Main, Germany
18: © European Central Bank, Frankfurt am Main, Germany
19: © European Central Bank, Frankfurt am Main, Germany
20: AP Photo/Phillippe Wojazer, Pool, File
21: John Stillwell/PA Wire
22: AP Photo/The Canadian Press, Fred Chartrand
23: AP Photo/The Canadian Press, Fred Chartrand
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25: © European Central Bank, Frankfurt am Main, Germany
26: © European Central Bank, Frankfurt am Main, Germany
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INDEX
The page numbers in this index refer to the printed version of this book. To find the corresponding locations in the text of this digital version, please use the “search” function on your e-reader. Note that not all terms may be searchable.
Ackermann, Josef, 314
Ahamed, Liaquat, 164
Akerlof, George, 96
Alchemists, 24–25
Aldrich, Nelson, 35–36, 42–44
Aldrich-Vreeland Act (1908), 43
Alvarez, Scott, 140, 193
American International Group (AIG)
bailout inquiry, 170–71, 177
collapse and bailout of, 145–47
Anglo Irish Bank, 294
Asmussen, Jörg, 228, 290, 323, 380
Assange, Julian, 250
Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), 150
Audit the Fed, 175–76, 185–86, 193–94, 197
Austerity programs. See Deficit reduction
Auto industry bailout, 151
Axelrod, David, 189
Axilrod, Stephen, 64–65
Bachmann, Michele, 170
Bagehot, Walter, 10, 28–30
Bagehot’s dictum, 33, 149
Bailouts
AIG, 145–47
Bear Stearns, 133–34, 139
Bernanke defense of, 170–71, 176–77, 181–82
Bernanke/Geithner analysis for, 147–49
in European crisis. See European Central Bank (ECB) remedies
first, by Bank of England (1866), 27–28, 32–34
historical basis of, 42
postcrisis opposition to, 172–81
Texas S&Ls (1980s), 79
Wall Street crash (1929), 56
Banca, 19
Banca d’Italia
head of. See Draghi, Mario
political control of, 75
Bank, origin of word, 19
Bank failures
Black Friday (1866), 10, 26–28
Continental Illinois National Bank and Trust (1982), 179
England (1866), 10, 26–28
and financial crisis (2007–2012). See Investment bank failures
Great Depression (1870s), 39–40
and recessions, 3, 23, 33–34, 39–40, 42–43
remedies. See Bailouts
Stockholms Banco (1668), 17–18, 23–24
Texas S&Ls (1980s), 79
Bank for International Settlements (BIS), 59, 223–25
Global Economy Meeting (2010), 223–32
Banknotes
history of, 20–21, 29
value and national stability, 29–30
Bank of Canada, 130, 153, 388
eurozone interventions by, 349–50
Bank of England
Bank Rate cuts, 238–39
creation of, 27
eurozone interventions by, 349–50
governors. See Carney, Mark; King, Marvyn; Norman, Montagu
Great Depression actions, 55, 60
imperialism, connection to, 10, 28–31
inflation, differing views of, 252–53
interest rate cuts (2009), 162–63
under Labour, limited powers, 234–35, 237–38, 242
location of, 30–31
MPC, King leadership of, 123, 239
MPC meetings, structure of, 239–40, 246
Northern Rock PLC crisis and bailout, 125–28
Osborne, new role proposed by, 247–48
Panic of 1866 bailout by, 27–28, 32–34
political independence, 121–22
quantitative easing (2009), 238–41
quantitative easing (QE2), 334–36, 340
Soros/Druckenmiller and devaluation of pound, 72–74
strong action, lack of, 138–39, 387–88
value of pound sterling (1992), 72
Bank of Greece, governor. See Provopoulos, George
Bank of Japan, 86–94
Bernanke on, 84–85, 88–89
currency swaps with ECB (2011), 349–50
Hayami as governor, 87, 89–92
post–World War II power of, 86
quantitative easing by, 90–91, 255
zero-interest-rate policy, 87–88, 90–92
Bank of the Estates of the Realm, 24
Bank of the United States (1791), 37
Banque de France, 55, 115
Barclays, 154
Barker, Kate, 7, 122, 243, 247, 250
Barwell, Richard, 122
Bastasin, Carlo, 316–17
Bater, Jeff, 254
Bean, Charles, 97, 124, 142, 240–41
Bear Stearns
bailout, 133–34, 139
collapse of, 132–33
Beck, Glenn, 256, 276
Beer Hall Putsch, 52–53
Benton, Thomas Hart, 38
Bérégovoy, Pierre, 77
Berlin Wall, end of, 76–77
Berlusconi, Silvio
bombastic remarks of, 223, 299, 319–20
and ECB bailout conditions, 319–21, 346
successor to. See Monti, Mario
Bernanke, Ben
background information, 7–8, 115–20
beginning crisis, view of, 7–8, 128
defends Fed actions during crisis, 170–71, 176–77, 181–82
on financial accelerator, 7, 58, 119, 132
financial crisis leadership. See Federal Reserve remedies
on first day of crisis, 1, 4–6
on global savings glut, 101–2
goal-based Fed actions, statement on (2012), 385–87
as Great Depression scholar, 7–8, 116, 119–20, 149–50
Jackson Hole (2007), 111–12, 123–24
Jackson Hole (2010), 265–66, 268
Jackson Hole (2012), 384–85
on Japanese economic decline (1990s), 84–85, 88–89
nominal GDP targeting, interest in, 338–39
-Obama relationship, 181, 183
personal traits, 116–17, 118–19, 176, 200
as “Person of the Year,” 151, 184
public statement, first, 5–6
and quantitative easing (QE2), 259–61, 264–76, 279–80
reappointment (2010), 181–84, 189–93
and TARP, 156–57, 160
Teal Book, 262
on tight money approach, 208–9
and tipping point theory, 267–68
Besley, Tim, 162, 241
Biddle, Nicholas, 37–39
Bills of exchange, 31
Bini Smaghi, Lorenzo, 293–94
BIS. See Bank for International Settlements
Black Friday (1866). See Panic of 1866 (England)
Blackstone, Brian, 318
Blair, Tony, 81–82
Blanchard, Oliver, 116
Blanchflower, David “Danny”
on interest rate cuts, 162–63
-King conflict, 123, 138–39, 239, 250–51
Blankfein, Lloyd, 190
Blinder, Alan, 91, 94, 97, 119
BNP Paribas, crisis and bailout, 1–4, 111
Bois, William, 26, 31
Bonds
ECB bond purchases. See Outright Money Transactions (OMT); Securities Markets Programme (SMP)
federal, as war financing, 37
government bonds, large-scale purchase. See Quantitative easing
market, economic importance of, 370
rating AAA as safe, 103
Boxer, Barbara, 189
Boyle, Andrew, 59
Brainard, Lael, 346
Bretton Woods (1944), 63
Bridgewater Associates, 5
Brown, Gordon, 82, 238, 242
Brown, Scott, 188
Buck, Pearl S., 51
Bullard, James, 188, 265, 272, 385
Bundesbank
ECB actions, opposition to, 229–32, 351, 381–84
ECB actions approved by, 231, 384
on longer-term remedies (2011), 351
as model for ECB, 77
presidents. See Weber, Axl; Weidmann, Jens
prohibitions of, 221–22
public trust in, 75
Bunning, Jim, 184
Burns, Arthur, 11, 252
bullied by Nixon, 63–65
inflation, approach to, 63–67
Cameron, David, 243, 251, 291
Canada, central bank. See Bank of Canada
Carney, Mark, 161
as Bank of England governor, 388
Carter, Jimmy, inflation, approach to, 67–71
Central bank. See also banks under specific countries
Bagehot influence on, 28, 33
history of. See European banking history; U.S. banking history
interventions and public resentment, 34, 70–71, 172–81, 278–80
missteps by. See Central bank ineffectiveness
power of, 8–11, 106–7
war financing by, 37
Central bankers
annual meetings for, 12
close relationship of, 12–13
comments, impact on markets, 9
multiple roles of, 235
power of, 8, 91, 265
Central bank ineffectiveness
Bank of England passivity, 138–39, 387–88
Bank of Japan economic boom, 86–87
ECB errors and fiscal crisis, 135–37, 212–13, 303–5
ECB and Greek bailout, 212–13
financial panic as result, 31–32
Franco-German Declaration, 291–92
gold standard abandoned, Nixon era, 63–64
and Great Depression, 11, 60–61, 84–85, 132
housing bubble (2005), lack of understanding, 104–7
and inflation (1970s), 63–67
Ireland, bank guarantees, 283
Reichsbank, paper money mass issuance (1914–1918), 47–53
societal impact of, 11, 60–61
Stockholms Banco rise and fall, 17–24
Central Bank of Ireland, 284–85, 292
China
central bank. See People’s Bank of China
economic issues, 375–76
economic success of, 361
during Great Moderation, 94–95
paper money, origin of, 22
Western collapse, impact on, 364–66
Chirac, Jacques, and European unity negotiations, 81–82
Chopra, Ajai, 283–84
Civil War, 39
Clay, Henry, 38
Clearinghouses, first, 40
Clegg, Nick, 247
Clinton, Hillary, 189
Coakley, Martha, 188
Code Pink, 169–70
Cœuré, Benôit, 380
Cohen, Norma, 249
Colson, Charles, 65
Commercial paper, origin of, 31
Commercial Paper Funding Facility, 150–51
Commodity prices
high, financial crisis (2007–), 134–35, 137
increase, impact of, 65–66, 134–35
Connally, John, 62
Conservative Party, King alignment with, 235, 242–47
Continental Illinois National Bank and Trust, 179
Control theory, 367–68
Conway, Edmund, 242
Copper-based currency, 20–22
Corker, Bob, 177, 190, 329
Cowen, Brian, 294–95
Coyne, Joe, 69
Credit-Anstalt, 58
Currency. See Dollar; Euro; Gold standard; Money
Currency swaps
by China, 371–72
by Fed during crisis, 130, 153–55, 227, 229, 349–50
Dale, Spencer, 241, 334
Daler plates, 20
Dalio, Raymond, 5
Dallara, Charles, 312–15
Darling, Alistair
and eurozone bailout, 245
on Irish bank guarantees, 158
-King conflict, 121, 233–35, 238, 242
and Mansion House speech, 233–35
and Northern Rock crisis, 125–28
Davis, Tom, 95–96
Debt restructuring, Greece, 312–16
Deficit reduction
Great Britain, 237–38, 241–49
Greece, 209–10, 286, 302, 353–54
Ireland, 284–85, 294
Italy, 319, 321–22, 346, 353
Portugal, 220, 353
as risk management, 242, 248–49
state pay/pension cuts, 302–3, 309–10
tight money approach, 208–9
Deflation, Japan (1990s), 84–92
De Grauwe, Paul, 80
Delors, Jacques, 75
DeMint, Jim, 191
Democrats
and Bernanke reappointment, 189, 189–91, 192
unpopularity of (2010), 188–89
Denmark, outside the eurozone, 77
Depression. See also Great Depression
Eurozone countries, 292, 303, 341, 389
Great Depression (1870s), 39–40
Deroose, Servaas, 285
Dexia, 154, 159
Dimon, Jamie, 190
Dodd, Christopher, 173–74, 177, 197. See also Dodd-Frank Act
as Bernanke supporter, 183–84
Dodd-Frank Act, 194–200. See also U.S. financial reform
emergency lending limits, 349
original proposals, 185–88
passage of, 199
revisions to, 194–99
Dollar
gold standard abandoned, Nixon era, 62–64
as single national currency, benefits of, 75
Dombret, Andreas, 231, 323
Donohue, Tom, 190
Dorgan, Byron, 189
Dornbusch, Rudiger, 78
Dot-com bubble, 98, 149
Draghi, Mario
background information, 116, 300–301
on coordination of remedies, 226–27
diplomatic tasks of, 380, 382
ECB selection as pr
esident, 300–301
euro preservation, statement on, 358, 380–81
first days at ECB, 342–44
interest rate cuts (2011), 344, 352
and Italy bailout, 319
leadership style, 343–44
Outright Money Transactions (OMT), 382–84
policy change as emphasis of, 350, 355, 379–80
positive steps by, 344, 350–53
Weidmann opposition to policies, 381–84
Druckenmiller, Stan, 72–74
Dudley, Bill, 133, 140, 257, 263, 269–70, 275, 385
global effort leadership, 152–53
Duisenberg, Wim, 81–82
Duke, Betsy, 264
Duke, Elizabeth, 385
Durbin, Dick, 190–91
Economic Consequences of the Peace, The (Keynes), 49–50
Economic crisis. See entries under Financial crisis
Economic stability
Great Moderation ingredients, 98
Jackson Hole Consensus on, 98
and low-risk premiums, 107
Ehrlichman, John, 64–65
Eichengreen, Barry, 79
Elizabeth II, queen of England, 236
Emanuel, Rahm, 172–73, 189
Emigration, within U.S. versus Europe, 79
Employment gains, goal-based Fed actions based on (2012), 385–87
Employment losses. See Unemployment
English, Bill, 265
Euro
establishment of, 75–77, 82–83
Greek adoption of, 203
nations on currency. See Eurozone
value fixation (1999), 82
Eurobonds, 228, 230, 323–24
Europe
European Union (EU), 78–80
financial crises. See European financial crisis (2007–2012)
history of banking in. See European banking history
European banking history
Bank for International Settlements (BIS), 59
Bank of England, creation of, 27
euro, launch of, 75–77, 82–83
European Central Bank (ECB) established, 77, 81–82
European Economic Community, 74–75
first central bank (Sweden), 24
Maastricht Treaty, 77
Overend, Gurney & Co. collapse, 10, 26–34
Panic of 1866 bailout, 27–28, 32–34
Reichsbank, creation of, 47
Stockholms Banco rise and fall, 17–24
European Central Bank (ECB)
Bundesbank as model for, 77
chief economist. See Stark, Jürgen
English as language of, 135–36
establishment of, 77, 81–82
first president, conflict over, 81–82
Global Economy Meeting (2010), 223–32
Governing Council meetings, 135–37
location in Frankfurt, 81
nationalist protests against, 297