Gregg Easterbrook

How nations go bankrupt, one sliver at a time

Jul 7, 2011 16:08 UTC

Governments in Greece, Portugal, the United States and elsewhere are borrowing, and often wasting, money at a reckless pace. Why do banks and financial markets cooperate? Because there’s something in it for them.

They keep a little slice of the public money being borrowed or wasted. Only a sliver. But the more that is borrowed, the larger the sliver becomes.

This is the Sliver Strategy, and it underlies the ways many of the Western world’s wealthy institutions relate to government.

Here’s how the Sliver Strategy works. If government spends a moderate sum and an interest group gets a large share, this will be noticed and denounced. If government spends a gigantic amount  and the interest group gets a sliver, this won’t be noticed. But a sliver of a gigantic amount may be more than a large share of a moderate sum.

Many sovereign bonds and similar securities, for instance, are accompanied by credit-default swaps, which may amount to around half a percent of the amount borrowed. That’s just a sliver. But the more borrowed, the larger the sliver.

On top secrets and climate change

Jul 23, 2010 15:37 UTC


The Washington Post has done a great job with its series showing that in the wake of 9/11, hundreds of private companies and nearly 854,000 people have gone to work in classified areas. Are they doing a great job? Maybe. There hasn’t been another 9/11. Are they trampling civil liberties? Maybe.

From years of observing Washington, my worry is that the new security bureaucracies are just like other bureaucracies — featherbedded with five people for each one who’s needed, groaning under the weight of senior managers who do little but fight over the signing of memos, dedicating 75 percent of daily time and effort to the staff’s own comforts and sinecure.

But we’re not allowed to question them because everything they do is secret! Set aside that federal agencies long have stamped TOP SECRET on newspaper articles or commercial airline itineraries. Federal personnel love the word “secret,” and all its variations, because it makes them seem more important.