[...] The cost of bailing, recapitalizing, and otherwise saving the global banking system has been, depending on, as we shall see later, how you count it, between 3 and 13 trillion dollars. Most of that has ended up on the balance sheets of governments as they absorb the costs of the bust, which is why we mistakenly call this a sovereign debt crisis when in fact it is a transmuted and well-camouflaged banking crisis.

[...] we cannot all cut our way to growth at the same time. For someone to benefit from a reduction in wages (becoming more cost-competitive), there must be someone else who is willing to spend money on what that person produces. John Maynard Keynes rightly referred to this as "the paradox of thrift": if we all save at once there is no consumption to stimulate investment.

[...] as financial markets became more deregulated in the 1980s, large corporations began to use their own cash reserves, lending them to one another directly--they disintermediated--bypassing banks and squeezing bank profits. [...]

[...] who should get, for example, a tax cut? The Keynesian wants to give it to the poor so they will consume now to boost demand and consumption. Meanwhile, the neoliberal wants to give it to the rich to invest wisely. [...]

[...] the dumping of other (non-Greek) assets to cover their (Greek) losses, which then lowers the value of the unrelated assets, eventually leading to a fire sale of good assets as a whole [...]

[...] This is ordoliberalism gone mad, as well as the logic behind the euro [...] those rules only ever apply to sovereigns. [...] there was never much attention paid to the possibility that private actors, such as banks, would behave badly. Yet this is exactly what happened, and the EU is still blaming sovereigns, tying them down with new rules [..]

The Treasury's argument, echoing Hume and Smith, was that to borrow money to finance spending, the government would have to offer better terms than those available elsewhere. This would have the effect of reducing overall investment by
"crowding out" private capital while increasing the debt for what would offer only a temporary respite rather than a full-blown cure. [...]

[...] what economists call moral hazard is what normal people call trust. You cannot eliminate the former without destroying the capacity for generating the latter. Without some degree of rule ambiguity and norms of reciprocity, trust cannot emerge. The EU's political project was built on trust, not the elimination of moral hazard. That's why it worked. Its monetary project is based on opposite principles. Yet at the end of the day, how can you run an economy, especially a pan-European monetary economy, without trust as its basis? [...]

[...] in the absence of any significant liquidity-constraint, "when spending cuts are perceived as permanent, consumers anticipate a reduction in the tax burden and a permanent increase in their lifetime disposable income." This leads them to spend and invest more today because they perceive that "previously expected large tax increases will not be necessary in the future," which is especially true at higher rates of taxation. When such policies are followed in periods of "fiscal stress," the results are better because the signal that the cuts will be permanent is more credible. [...]

[...] the German government's deliberate policy, designed to make the payment of reparations, especially after the French occupation of the Ruhr, all but impossible. [...] As Albrecht Ritschl put it succinctly, "Inflation proved to be a formidable weapon against reparations creditors, at least in the short run. It helped insulate Germany from the international slump of 190/21, improving her export position and fueling internal demand ... It also exploited Germany's remaining foreign creditors, largely neutral countries, by depreciating the paper mark reserves they had accumulated during the stabilization period ... Above all, it paralyzed the financial system that would have been needed to organize an orderly transfer of reparations."