The Doomsday Cycle

Peter Boone and Simon Johnson believe that the next financial crisis could lead to economic disaster

Reevaluating the modernization hypothesis

Statement of responsibility reads: Daron Acemoglu, Simon Johnson, James A. Robinson, Pierre YaredAugust 200

The consequences of radical reform : the French Revolution

Statement of responsibility on t.p. reads: Daron Acemoglu, David Cantoni, Simon Johnson, James A. RobinsonMarch 19, 200

Entering the Door

How do physical limitations affect the mind, and how can you overcome them? Imagine one day you wake up bound by physical limitations. What can you do? My research helps someone realize that having limitations isn’t the end of the world.I myself have restrictions, yet I am defying the odds.My art became integral to helping me overcome limitations; because of this, my thesis research educates others on the reality of living with limitations by helping them connect with their own struggles

Books that are noteworthy

The Crisis of Democratic Capitalism, by Martin Wolf, Penguin Press, 496 pp., 2023 Power and Progress: Our Thousand-Year Strug-gle Over technology and Prosperity, by Daron Ace-moglu and Simon Johnson, 2023 The Avoidable War: The Dangers of a Cata-strophic Conflict between the US and Xi Jinping's China Hardcover, by Kevin Rudd, 2022 Voluntary Insurance in the Process of Service Quality Improvement Jarosław Wenancjusz Przybytniowski, Wydawnictwo Rys: Poznan, Po-land (2023). ISBN: 978-83-67287-74-

Europe on the Brink

Europe’s efforts to stabilize its finances are failing, and the region needs to prepare for widespread restructuring of sovereign and bank debt. Peter Boone and Simon Johnson argue that Europe’s financial system has relied on a policy of protecting creditors from default and has thus spread pervasive moral hazard—a presumption by creditors that they will not take losses on their loans to Greece and other ailing countries. The authors argue that this situation is no longer tenable and examine three possible scenarios for the coming months as the sovereign debt crisis evolves. Under the first scenario, the euro area would try to reassert its commitment to avoid defaults and inflation. This continuation of the moral hazard regime would require severe austerity for Greece and other countries on the periphery of the euro area. The second scenario involves elimination of the moral hazard regime. The euro area would admit that some sovereigns have too much debt. A series of debt restructurings would follow. The final scenario would be for policymakers to continue to contradict themselves by promising selective defaults or restructurings of some countries’ debts while maintaining that they can ensure the stability of the rest of the euro area. But the authors argue that it is an illusion to believe that selective restructuring would not introduce contagion. Such an approach would result in panic, massive capital flight, and disorderly defaults. The ensuing chaos would in turn lead to a negatively charged political atmosphere that would make consensus nearly impossible.

The European Crisis Deepens

Successive plans to restore confidence in the euro area have failed. A combination of misdiagnosis, lack of political will, and dysfunctional politics across 17 nations have all contributed to the failure so far to stem Europe's growing crisis. Proposals currently on the table also seem likely to fail. Boone and Johnson say the euro area faces two major problems: First, the introduction of sovereign credit risk has made nations and subsequently banks effectively insolvent unless they receive large-scale bailouts. Second, the ensuing credit crunch has exacerbated difficulties in the real economy, causing Europe's periphery to plunge into recession, thus increasing the financing needs of troubled nations well into the future. Five measures are needed to enable the euro area to survive: (1) an immediate program to deal with excessive sovereign debt, (2) far more aggressive plans to reduce budget deficits and make peripheral nations "hypercompetitive" in the near future, (3) supportive monetary policy from the European Central Bank, (4) the introduction of mechanisms that credibly achieve long-term fiscal sustainability, and (5) institutional change that reduces the scope for excessive leverage and consequent instability in the financial sector.