{"id":5810,"date":"2015-02-18T06:34:04","date_gmt":"2015-02-18T11:34:04","guid":{"rendered":"http:\/\/olduvai.ca\/?p=5810"},"modified":"2015-02-18T06:34:04","modified_gmt":"2015-02-18T11:34:04","slug":"the-catastrophic-costs-of-extend-and-pretend-are-about-to-crush-europe","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=5810","title":{"rendered":"The Catastrophic Costs of Extend-and-Pretend Are About to Crush Europe"},"content":{"rendered":"<h3><a href=\"http:\/\/www.oftwominds.com\/blogfeb15\/consequences-EU2-15.html\" target=\"_blank\"><span class=\"Apple-style-span\"><i><b>The Catastrophic Costs of Extend-and-Pretend Are About to Crush Europe<\/b><\/i><\/span><\/a><\/h3>\n<p><span class=\"Apple-style-span\"><i>Like a star which has expanded and now cannot maintain its grand state, Europe&#8217;s extend-and-pretend economy is now poised to experience a supernova implosion.<\/i><\/span><\/p>\n<p><b>The costs of ill-conceived policies are always paid by someone&#8211;usually those with the least political power.<\/b>\u00a0In ill-conceived wars, the costs are paid by the soldiers on the ground and their families, and the civilians who suffer\u00a0<i>collateral damage<\/i>.<\/p>\n<p>&nbsp;<\/p>\n<p><b>The costs of ill-conceived financial policies end up being paid by taxpayers, savers, borrowers and those who lose their jobs in the inevitable bust.<\/b>\u00a0Those who conjured up the disastrous policies slink away to plush villas or defend their stubborn addiction to failed ideologies in the media (see Keynesian Cargo Cult and Paul Krugman).<\/p>\n<p><b>The most ill-conceived financial policy of all is\u00a0<i>extend-and-pretend<\/i>:<\/b>\u00a0<i>extend-and-pretend<\/i>\u00a0means if a debtor is bankrupt, then extend him more loans to maintain the illusion of solvency.<\/p>\n<p><b>Here&#8217;s how\u00a0<i>extend-and-pretend<\/i>\u00a0works in the real world:<\/b><\/p>\n<p>&#8212; If a homebuyer has defaulted, give him new loans, or shift his loan off the books into<i>zombie mortgage<\/i>\u00a0status.<\/p>\n<p>&#8212; If a student defaults on student loans, shift the loans into\u00a0<i>forbearance<\/i>, i.e. mask the default by putting the defaulted debt into zombie mode.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Catastrophic Costs of Extend-and-Pretend Are About to Crush Europe Like a star which has expanded and now cannot maintain its grand state, Europe&#8217;s extend-and-pretend economy is now poised to experience a supernova implosion. The costs of ill-conceived policies are always paid by someone&#8211;usually those with the least political power.\u00a0In ill-conceived wars, the costs are [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[195,200,281,284,3630,690],"class_list":["post-5810","post","type-post","status-publish","format-standard","hentry","category-economics","tag-debt","tag-default","tag-europe","tag-european-union","tag-extend-and-pretend","tag-risk"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5810","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5810"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5810\/revisions"}],"predecessor-version":[{"id":5811,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/5810\/revisions\/5811"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5810"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5810"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5810"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}