This Time Is Different: Eight Centuries of Financial Folly Read online

  on national accounts, 39

  on public debt, 40–41

  Wriston, Walter, 51

  Wynne, William H., 42, 393n1, 394n7, 396n20

  Young, Arthur Nichols, 357t

  Yousef, Tarik M., 40, 308t, 396n15

  Zarazaga, Carlos E. J. M., 349t

  Zumer, Frederic, 296t, 300t, 301t, 307t, 308t, 309t, 314t, 320t, 330t, 331t, 332t, 333t, 334t, 337t, 338t, 341t, 342t, 396n21

  SUBJECT INDEX

  Page numbers for entries occurring in boxes are suffixed by a b; those for entries in figures, by an f; those for entries in notes, by an n, with the number of the note following; and those for entries in tables, by a t.

  academic literature: on banking crises, focus of, xxxii, 141

  data used in, xxvii–xxviii, 279

  domestic public debt ignored in, xxxi, 109b, 110, 119, 124–25, 136–37

  on indicators of crises, 216–17, 279

  on types of capital flows, 30

  on U.S. current account balance, 210–12

  advanced economies: banking crises in, xxvi–xxvii, xxxii, 141–42, 147–55, 167–69, 223–24

  data on public debt in, 40–41

  debt intolerance in, 27

  financial turbulence index for, 253, 254f, 255

  transition from emerging market to, 283. See also specific countries

  Africa: banking crises in, 143, 147, 148t, 151t, 154t

  contagion of crises in, 246–47

  data coverage of, 43, 45t

  domestic public debt in, 105f, 399n2

  external default in (See African external default)

  financial turbulence index for, 257–59, 257f

  graduation in, 287

  inflation crises after 1800 in, 182, 184t, 185, 187, 188f, 189. See also specific countries

  African external default, xxxi

  in 1800s, 91t, 92

  in 1900s and 2000s, 92, 95t

  countries with no history of, 44

  time spent in, since independence, 95–98, 97t

  aftermath, 223–39

  of banking crises, xxxii, 162–71, 223–39

  comparison of episodes of, 225–38

  depth of downturn in, 226–30, 235

  domestic public debt in, 123–24, 123f

  duration of downturn in, 224, 226–30

  of exchange rate crises, 191–93

  external default in, 232–33, 233f

  fiscal legacy in, 231–32, 231t, 232f

  GDP in, 129, 130f

  of Great Depression, 225, 233–38

  of inflation crises, 180, 191–93

  inflation rates in, 129–33, 131f, 132t

  public debt in, 224–25, 231–32, 231t, 232f, 237–38

  shared characteristics of, 224–30

  of U.S. subprime crisis, 222, 405n33

  Albania, banking crises in, 348t

  Algeria: banking crises in, 348t

  Angola: banking crises in, 348t

  inflation crises in, 185

  Annual Reports, League of Nations, 37

  Argentina: banking crises in, 143, 159, 206, 225, 251, 348–50t

  Barings crisis of 1890 in, 242

  Brady bonds in, 83b, 85b

  debt crisis of 1990s and early 2000s in, 19

  debt intolerance of, 28–29

  de-dollarization in, 195–96

  domestic debt in, foreign currency–linked, 64, 108, 109b

  domestic default by, 14, 111, 251, 399n12

  duration of crises in, 235, 237

  exchange rate crises in, xliii, 190

  external debt to GDP ratios in, 22, 28–29

  external default in 2001 by, 10–12, 22, 23t, 250, 251–52, 256, 394n5

  financial turbulence index for, 250, 251–52, 256

  graduation in, 284, 290

  housing prices in, 159

  inflation crises after 1800 in, 187, 403n6

  inflation rate calculation in, 399n12, 403n6

  sovereign risk rating of, 28–29

  Armenia, banking crises in, 350t

  art treasures, 52, 397n1

  Asia: banking crises in, 147, 148t, 151t, 154t, 159, 160t, 206

  contagion of crises in, 246

  data coverage of, 43, 45t

  domestic public debt in, 105f

  exchange rate crises in, 190

  exchange rates in, 18

  external default in (See Asian external default)

  financial turbulence index for, 257, 258f, 259

  housing prices in, 159, 160t

  inflation crises in, 182–85, 183t, 184t, 187, 188f

  this-time-isdifferent syndrome in, 18–19. See also specific countries

  Asian crises of 1997–1998 (Big Six crises): compared to other crises, 206, 225

  contagion of, 246

  exchange rate crash in, 190

  in financial turbulence index, 256

  housing prices in, 159, 160t

  list of countries involved in, 159, 225

  this-time-isdifferent syndrome in, 18–19

  Asian external default, xxx–xxxi

  in 1900s and 2000s, 92, 95t

  countries with no history of, 45t, 44

  time spent in, since independence, 95–98, 97t

  asset prices: in aftermath of crises, 224

  and banking crises, 158–62, 160t, 216–17, 217f

  bursting of bubbles in, 7–8

  Australia: banking crises in, 350t

  trade during global crises, 264

  Austria: banking crises in, 171, 226, 350–51t

  currency debasement in, 177, 178f

  duration of crises in, 235, 237

  equity prices in, 226

  external default by, xxx, 87, 87t, 92, 98

  Azerbaijan, banking crises in, 351t

  bailout costs: in banking crises, 142, 163–64, 164t, 170, 224

  difficulty of measuring, 163–64, 224

  Bangladesh, banking crises in, 351t

  bank(s): confidence in, xl–xli, 145

  deposit insurance for, xl–xli, 143, 144–45

  failures of, 144–45, 172–73

  in financial repression, 66

  indicators of crises in, 8, 9–10

  investment, 210, 214

  nonperforming loans of, 9–10

  number of, before and after crises, 162, 163f

  trade financed by, 57. See also central banks

  bank holidays, 251–52

  banking crises, 141–73

  in advanced versus emerging economies, xxvi–xxvii, xxxii, 141–42, 147–55, 167–69, 223–24

  aftermath of, xxxii, 162–71, 223–39

  asset prices and, 158–62, 160t, 216–17, 217f

  bailout costs for, 142, 163–64, 164t, 170, 224

  bank runs in, 10, 144–45

  capital flows bonanzas and, 157–58, 158t

  capital mobility and, 155–56, 156f

  contagion of, 241–42, 243–44t

  corporate defaults linked with, 251, 252f

  data on, 10, 141–42, 344–92

  dating of, 8–10, 11t, 344–47t, 407n26

  definition of, xxvi, 8–10, 11t

  duration of, 162, 166

  economic theory on, 143–47

  equity prices and, 161–62, 161f, 218, 218f, 226, 228f

  external default linked with, 73–75, 74f, 232–33, 233f

  in financial turbulence index, 251, 255–56

  fiscal effects of, 142, 162–71

  focus of studies on, xxxii, 141

  global impact of, 204

  graduation from, 139, 141, 147, 153, 171, 283–84

  in Great Depression, xliv, 146, 204–5

  Great Depression versus postwar, 225, 233–38

  historical summaries of, 348–92t

  housing prices around, 142, 158–62, 160t, 172, 226, 227f

  incidence of, xxvi–xxvii, 141, 147–55, 148–54t, 204–6, 205f

  indicators of, 8–10, 216–22, 279, 280t

  liberalization and, 155�
��56, 206, 270–71

  public debt before, 219–20, 221f

  public debt after, xxxii, 142, 163, 169–71, 170f, 224–25, 231–32, 231t, 232f

  recessions associated with, 145–47, 172–73

  recommendations on responses to, 289–90

  in repressed systems, 143, 205

  sequencing of, 270–73, 271f

  serial, 141, 150

  types of, 11t, 143–44

  U.S. subprime crisis versus postwar, 215–22, 216t, 225–30

  weighted by share of GDP, 204, 205f

  Bank of America, 210

  bank runs: bank holidays and, 251–52

  in banking crises, 10, 144–45

  crises of confidence in, xl–xli

  definition of, 144

  bankruptcies: corporate, 52, 59

  as indicators of banking crises, 9–10

  rights of creditors in, 52

  sovereign, 52

  bankruptcy court, international, 57

  bank stocks, as indicators of crises, 8

  Bardi Bank, 70b

  Barings crisis of 1890, 109b, 242. See also Argentina

  Barro-Ursúa stock market collapse, 250, 252, 253f, 254f, 407n7

  base money. See monetary base

  BCDI index, 249, 253f, 254f, 255. See also financial turbulence index

  Belarus, banking crises in, 351t

  Belgium, banking crises in, 171, 351–52t

  Benin, banking crises in, 352t

  Bernanke-Gertler model, 146

  Big Five crises: bailout costs in, 164

  equity prices in, 218, 218f

  GDP growth after, 165, 165f, 219

  housing prices in, 159, 160t, 217, 217f

  list of countries involved in, 159, 225

  revenue after, 167–69, 168f

  U.S. subprime crisis versus, 215, 216t, 217–20, 225

  Big Six crises. See Asian crises of 1997–1998

  Black Monday crash of October 1987, 250

  bloodletting, 87

  Bolivia: banking crises in, 352–53t

  de-dollarization in, 196, 403n10

  inflation in domestic default by, 400n3

  bond(s): Brady, 83b–85b, 259

  Carter, 400n5

  in Latin American debt crises, 17, 19

  in this-time-is-different syndrome, 17, 19

  booms: appearance versus reality of threats posed by debt in, xxv

  this-time-is-different syndrome during, xxxiv

  borrowers: after debt intolerance graduation, 28–33

  reputation of, 55–58

  Bosnia and Herzegovina, banking crises in, 353t

  Botswana, banking crises in, 353t

  Brady bonds, 83b–85b, 259

  Brazil: banking crises in, 353–54t

  Brady bonds in, 83b, 85b

  currency conversions in, 6

  debt crisis of 1990s and early 2000s in, 19

  domestic debt in, 109b, 125, 400n10

  duration of crises in, 235

  exchange rate crises in, 190

  external default by, 94

  financial crisis of 2002 in, 53

  foreign currency–linked domestic debt in, 109b

  inflation in, 125, 400n10

  presidential elections in, 53

  Bretton Woods, 206, 248

  Bretton Woods II, 211

  bridge loans, 60, 61, 64

  Britain: confidence in, xliv

  in Egypt’s external default, 81, 83b

  enforcement of debt repayment by, 54, 81, 81b–83b

  in Newfoundland’s external default, 81b–83b

  recession of 1970s in, 230. See also England; United Kingdom

  broad money, in de-dollarization, 193–96, 194f

  Brunei, banking crises in, 354t

  bubbles: IT, xlv, 162, 171

  South Sea, 88b, 93b

  U.S. financial industry, 162. See also asset prices; housing prices

  Bulgaria: banking crises in, 354–55t

  Brady bonds in, 83b

  current account balance in, 244

  de-dollarization in, 195

  Burkina Faso, banking crises in, 355t

  Burundi, banking crises in, 355t

  businesses: bankruptcies in, 52, 59

  default by, 251, 252f, 406n1

  impact of banking crises on, 146

  Cameroon, banking crises in, 355t

  Canada: banking crises in, 355–56t, 355t

  duration of crises in, 235, 237

  inflation crises in, 185

  Newfoundland under, 81, 81b–83b

  trade during global crises, 264

  Cape Verde, banking crises in, 356t

  capital controls, 38, 66, 94, 205, 271f, 403n4

  capital flow(s): global cycle of, in external default, 78–81, 79f

  types of, 30–32

  capital flow bonanzas: and banking crises, 157–58, 158t

  definition of, 157, 401–2n18, 405n31

  as indicators of crises, 217

  in Second Great Contraction, 244

  in U.S., 405n31

  capital inflows: and banking crises, 157–58, 158t

  data on, 42

  and debt intolerance, 31–32

  in external default, 79–80, 89, 398n15

  as indicators of crises, 217

  procyclical, 31, 77

  types of, 31–32. See also specific types

  capital market integration: and consumption volatility, 30, 395n11

  and debt intolerance, 30–31

  definition of, 30

  risk-sharing benefits of, 30–31

  capital markets, domestic, repression in, 66–67

  capital markets, international: benefits of access to, 55

  in Latin America in 1800s, 92, 93b–94b

  reputation of borrowers in, 55–58

  capital mobility: and banking crises, 155–56, 156f

  data on, 344–47t

  Carter bonds, 400n5

  Case-Shiller housing price index, 207, 226, 404n6, 404n7, 405n29

  Catholic Church, 89

  Central African Republic, banking crises in, 356t

  central banks: definition of debt of, 9b

  in foreign exchange interventions, 394n12

  in sequencing of banking crises, 271–72

  this-time-is-different syndrome in, 291

  Chad, banking crises in, 356t

  children, transfer of debt to, 63

  Chile: banking crises in, 356–57t

  duration of crises in, 235, 237

  foreign direct investment in, 58

  graduation in, 287

  liberalization in, 271

  China: banking crises in, 204, 357t, 403n4

  currency conversions in, 6–7

  domestic debt in, 66, 124, 124f

  external default by, xxx, 94, 98, 124, 124f

  financial turbulence index for, 259

  graduation in, 287

  inflation crises after 1800 in, 182, 183t

  Christianity, 69b

  Citibank, 210

  Civil War, American, 185

  club, debtors’, 27–29, 29f, 284–87

  clustering, xxvi, 145

  of external defaults, 92, 94, 100

  regional or global, 248

  coercion, in domestic default, 175

  coin currency. See metallic currency

  Colombia: banking crises in, 159, 206, 225, 226, 228, 357–58t

  duration of crises in, 235

  external default by, 92

  housing prices in, 159, 226

  unemployment in, 228

  colonies: enforcement of debt repayment in, 54

  in financial turbulence index, 255

  inflation crises in, 182, 183t

  Spanish, 71b, 93b. See also independence

  commercial real estate prices, 408n2. See also housing prices

  commodity price(s): boom of 1970s in, 17–18

  data on, 36

  in external defaults, 77–78, 78f
/>   this-time-is-different syndrome in, 17–18

  as variable in data analysis, 42–43

  different syndrome in, 17–18

  as variable in data analysis, 42–43

  confidence: in banking sector, xl–xli, 145

  fickle nature of, xxxix–xlv

  in repayment of debts, 58–59, 60–61

  in this-time-is-different syndrome, xxxix, 15

  Congo, Democratic Republic of the, banking crises in, 358t

  Congo, Republic of the: banking crises in, 358t

  inflation crises in, 185

  construction industry, in global financial crises, 266–68, 268t

  consumer price(s), before and after debt default, 131f

  consumer price indexes: data on, 35–36, 296–301t

  methodology for compiling, 36

  consumption volatility, capital market integration and, 30, 395n11

  contagion, international: of banking crises, 75

  definition of, 241

  future of, 246–47

  high-velocity versus low-velocity, 201, 241

  historical episodes of, 241–42, 243–44t

  and partial default, 62

  of U.S. subprime crisis, 240–47

  contraction, definition of, 393n7. See also Great Contraction

  corporate bankruptcies, 52, 59

  corporate default, 251, 252f, 406n1

  Costa Rica: banking crises in, 358t

  Brady bonds in, 83b

  external default by, 92, 98

  cost-of-living indexes, data on, 35, 296–301t

  Côte d’Ivoire: banking crises in, 358t

  Brady bonds in, 85b

  creditors: domestic versus external, incidence of default with, 133–36, 134f, 135t

  French execution of, 87

  rationality of, 62–63

  reschedulings’ impact on, 90

  rights of, in bankruptcies, 52

  crisis transmission, 248. See also contagion

  Croatia, banking crises in, 358t

  cross-country synchronicity, of global financial crises, 260, 265–69

  currency: of domestic public debt, 64, 106–8

  seignorage revenues from, 119, 125, 174, 175, 400n7. See also foreign currency; metallic currency; paper currency

  currency conversions/reforms, definition of, 6–7, 7t

  currency crashes. See exchange rate crises

  currency debasements, 174–79

  of coins, 6, 7t, 174–79

  data on, 36–37

  definition of, xxvi, 6–7, 7t, 35, 175

  early history of, xxvi, 87, 88b, 174–79

  in financial turbulence index, 406n2

  inflation and, 35, 174–79

  during wars, 6, 177, 178f

  current account balance: definition of, 404n8

  as indicator of crises, 218, 219f

  in Second Great Contraction, 244

  before U.S. subprime crisis, debate over, 200, 208–15