The Fall and Rise of the West
Roger C. Altman (FA) Feb 1, 2013
Why America and Europe will emerge stronger from the financial crisis.
Japan's Demographic Disaster
John W. Traphagan (Diplomat) Feb 1, 2013
Japan is faced with an unprecedented population challenge that will have social, economic, and political consequences for years to come.
The Two Rabbits of International Trade
Taeho Bark (Project Syndicate) Feb 1, 2013
If you chase two rabbits at once, the old saying goes, both will escape. This idea matters a lot in trade policy, which must simultaneously seek to harness the economic benefits of greater openness and to ensure that those benefits are distributed fairly.
Europe’s Hidden Stimulus
Eric Labaye (Project Syndicate) Feb 1, 2013
When the European Council next meets, on February 7, it should look at private investment as a means to kick-start Europe’s stagnant economy. With the usual drivers of GDP growth constrained across Europe, the one economic sector able to spend is the non-financial corporate sector.
Is the Euro Crisis Over?
Jean Pisani-Ferry (Project Syndicate) Feb 1, 2013
Three years ago, the euro crisis began when Greece became a cause for concern among policymakers and a cause for excitement among money managers. Does the armistice that has prevailed since the end of 2012 mean that the crisis is over?
Banking and the State
Thorsten Polleit (Mises Daily) Feb 1, 2013
The founder of the Medici banking dynasty, Giovanni di Bicci de' Medici (1360–1429), said to his children on his death bed: “Stay out of the public eye.”[1] His words raise the question, "How much do bankers know about the truth of modern money and banking?" To develop a meaningful answer to this question in the tradition of the Austrian School of economics, one has to start right at the beginning, and that is with the process of civilization.
The Big Mac index: Bunfight
Economist Feb 2, 2013
The burger's verdict on the currency wars.
Northern lights
Adrian Wooldridge (Economist) Feb 2, 2013
The Nordic countries are reinventing their model of capitalism.
World Economy Is Far From Safe, a Canadian Economist
Jeff Sommer (NYT) Feb 2, 2013
A Canadian economist compares the world economy to "a car being driven by a drunk" this is maybe only momentarily staying in the correct lane.
Macroeconomics and the financial cycle: Hamlet without the Prince?
Claudio Borio (VoxEU) Feb 2, 2013
Since the early 1980s, the financial cycle has re-emerged as a major force driving the macroeconomy, but economic analysis has not caught up. This column argues that macroeconomics without the financial cycle is like Hamlet without the Prince. Economic analysis and policies – monetary, fiscal, and prudential – should be adjusted to fully account for the financial cycles, but here more analytic work is needed. The question of how we address the bust and balance-sheet recession that follow the boom deserves special attention.
The eurozone crisis is not finished
Wolfgang Münchau (FT) Feb 3, 2013
The renationalisation of banking means that the monetary union is as unsustainable today as it was in July last year.
How Berlin and Beijing tilted world trade
Stefan Wagstyl (FT) Feb 3, 2013
In pinning the blame on surplus countries’ policies, a bearish analysis of the global economy overlooks the role of history. A review of ‘The Great Rebalancing’ by Michael Pettis.
Emperors of Banking Have No Clothes
Anat Admati and Martin Hellwig (Bloomberg) Feb 3, 2013
There is a pervasive myth that banks are different -- special, somehow -- from all other companies and industries in the economy. n fact, many claims made by leading bankers and banking experts, including academics, have as much substance as the emperor’s new clothes.
Bankers' Arguments on Capital Are Fundamentally Flawed
Anat Admati and Martin Hellwig (Bloomberg) Feb 4, 2013
Wouldn’t it be nice if there was a way to make banks safer, healthier and able to lend more? There is a way, and it’s called equity.
IMF Shows U.S. How to Restrict Foreign Capital
Joseph E. Gagnon (Bloomberg) Feb 4, 2013
The U.S. isn’t expected to return to full employment for at least six more years, and the consensus in Washington seems to be that President Barack Obama’s administration has no options to improve that dreary outlook.
Ethnic inequality
Alberto Alesina, Stelios Michalopoulos & Elias Papaioannou (VoxEU) Feb 4, 2013
A large body of research has shown ethnic diversity to have a negative impact on development. This column suggests that it is the unequal concentration of wealth across ethnic lines that is detrimental for development rather than diversity per se. It shows that ethnic inequality, measured using ethno-linguistic maps and satellite images of light density at night, is associated with lower GDP per capita, worse living conditions, and lower levels of education.
Drugs: the new alternative economy of West Africa
Anne Frintz (La Monde Diplomatique) Feb 4, 2013
West Africa's perfect global positioning between South America and Europe, and its endemic corruption, poverty and disorganisation, have made it the new drug hub. And drugs money is used to fund politics.
The Measurement of Hope
Bill Gates (Project Syndicate) Feb 4, 2013
The lives of the world’s poorest people have improved more rapidly in the last 15 years than ever before, and could improve even more in the next 15 years. The key is innovation in the measurement of governmental and philanthropic performance – setting clear goals, picking the right approach, and then measuring the results.
Blaming the Fed
Kenneth Rogoff (Project Syndicate) Feb 4, 2013
Critics of the Federal Reserve are having a field day with embarrassing revelations of its risk assessments on the eve of the financial crisis. But, while it is legitimate to criticize individual policymakers, their poor judgment does not impugn the entire institution.
Iceland: Under the volcano
Richard Milne (FT) Feb 4, 2013
The economy of the Nordic island is recovering from the financial crisis but its residents bear the scars of four years of hardship.
A crisis needs a firewall not a ringfence
Alistair Darling (FT) Feb 4, 2013
Ringfencing – even with electrification, whereby regulators will have the power to break up a bank – has its limits.
QE takes a toll on emerging economies
Felipe Larrain (FT) Feb 4, 2013
The main burden of quantitative easing is borne by a few developing countries but is globally counterproductive.
Investor appetite for cocos is fragile
Patrick Jenkins (FT) Feb 4, 2013
Barclays’ head start in issuing contingent capital bonds has heightened the keenness of other European banks to follow suit, but problems are brewing.
Brace for a stock market accident
Jamil Baz (FT) Feb 4, 2013
Who can blame the equity bullish consensus? But leverage is the fly in the ointment and the next deleveraging could signal the next major bear market.
Austerity in Small Places
Daniel Gros (Project Syndicate) Feb 5, 2013
Nowadays, Greece, the Baltic states, and Iceland are often invoked to argue for or against austerity. Both sides in these disputes usually omit to mention the key idiosyncratic characteristics and specific starting conditions that can make direct comparisons meaningless.
Euro: Rock Star of the Year?
Axel Merk (Merk Investments) Feb 5, 2013
After we referred to "Draghi's Genius" last August we received pity and ridicule as feedback. It is no longer taboo to be bullish on the euro, but in our 2013 outlook we took it a step further, predicting the euro will be a "rock star." Despite the recent run-up, we may not have seen anything yet. Let me explain.
A Post-Growth World?
Ashoka Mody (Project Syndicate) Feb 5, 2013
Long-term growth considerations, while recognized as crucial, seem distant from the here and now of financial repair and restoration of confidence. But a realistic assessment of growth prospects is precisely what is needed right now to design appropriate and feasible policies.
Must Financial Reform Await Another Crisis?
Anat Admati and Martin Hellwig (Bloomberg) Feb 5, 2013
We have argued that if banks had much more equity, the financial system would be safer, healthier and less distorted. From society’s perspective, the benefits are large and the costs are hard to find; there are virtually no trade-offs.
Japan can put people before profits
Martin Wolf (FT) Feb 5, 2013
The economy will achieve a better balance by taking surplus earnings away from a corporate sector that has proved unable to use them.
Be afraid, very afraid, of the tech crisis
Andre Geim (FT) Feb 5, 2013
Social media make many people very happy and some very rich but will not save the planet from an incoming cosmic rock.
Mining: Andean concessions
Andres Schipani (FT) Feb 5, 2013
As Peru seeks to challenge Chile’s copper dominance, Lima must soothe disputes between indigenous communities and mining companies.
A New U.S. International Economic Strategy
Robert Zoellick (WSJ) Feb 5, 2013
Taking the lead on trade and open markets can enhance global security, opportunity and the prospects for liberty.
Resolve the Real Greek Crisis
Edward P. Joseph and Anna Triandafyllidou (NYT) Feb 5, 2013
Greeks need to face up to the fact that you can't get something for nothing forever.
How free trade with Europe could ignite the economy
Bill Horan (WT) Feb 5, 2013
U.S. Trade Representative Ron Kirk confirmed recently that he's leaving Washington for the private sector. He deserves praise for the Obama administration's major achievement on trade: final approval of free-trade agreements with Colombia, Panama and South Korea that had been negotiated by President Bush and his trade representatives but languished in Washington for years.
Latvia’s Parliament Votes for the Euro
Anders Åslund (PIIE) Feb 5, 2013
On Febuary 31, the Latvian parliament gave final passage to a law applying for adoption of the euro. The vote was 52 to 40. The Latvian government will now submit an application to the European Union in February, and the European Commission will then prepare a report assessing whether Latvia is ready to join the euro area.
Woeful governance for global issues
Hossein Aghaie (AT) Feb 5, 2013
International migration and global environmental change pose formidable challenges for policymakers the world over and the two issues are inextricably intertwined like never before. Yet a well-coordinated and multi-level system of governance to overcome state-centric approaches is sorely lacking.
Complacency in a Leaderless World
Joseph E. Stiglitz (Project Syndicate) Feb 6, 2013
In the last 25 years, we have moved from a world dominated by two superpowers to one dominated by one, and now to a leaderless, multi-polar world. While we may talk about the G-7, or G-8, or G-20, the more apt description is G-0. We will have to learn how to live, and thrive, in this new world.
Latin America’s Unfinished Quest
Andres Velasco (Project Syndicate) Feb 6, 2013
The Latin American countries that have performed the best in recent decades are those that have steered clear of both right-wing zealotry and left-wing populism. So why haven’t countries like Brazil and Chile become modern, center-left development models for the region?
Questions Linger As EU, US Consider Launching Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
Top officials from both the US and EU have been meeting over the past week to discuss the possibility of launching bilateral trade talks, leaving observers and analysts to speculate whether the long-awaited announcement might soon be on the horizon. However, questions remain over whether the two sides will be able to resolve long-standing differences that have blocked such negotiations in the past.
Services Talks Within WTO Member Group Advance, Eyeing Launch of Formal Negotiations
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
Talks regarding a planned services plurilateral agreement have continued advancing, sources have confirmed to Bridges. Participants of the 21 member group met in Geneva last week to address a series of technical issues relating to the planned trade pact, including ways to schedule commitments, a date for discussing possible legal texts for the deal, and a work plan for 2013.
Monrovia Meeting Stresses Poverty Eradication, Equity for Post-2015 Agenda
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
A UN group tasked with defining a new post-2015 development agenda completed their second substantive meeting last week in Monrovia, Liberia focusing on the theme of "National Building Blocks for Sustained Prosperity." Civil society was also actively present, providing their input to the three-day meeting.
WTO Director-General's Race Ramps Up as Candidates Make Their Pitches to Members
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
The nine candidates in the running to become the next WTO Director-General made their cases to members last week on why they are best suited to lead the global trade body, and their visions for the future of the organisation. This Bridges Special Update, originally published on Monday 4 February, is included here in its entirety for your reference.
Laos Joins WTO; Tajikistan Accession Forthcoming
Bridges Weekly Trade News Digest, Volume 17, Number 4 Feb 6, 2013
The WTO welcomed Laos into its ranks on Saturday, with the landlocked Asian country becoming the 158th member of the Geneva-based trade body. Tajikistan is soon set to follow, with its accession scheduled to take effect on 2 March.
Environment: Frozen frontiers
Pilita Clark (FT) Feb 6, 2013
The melting of Arctic ice has unleashed a surge of diplomatic and commercial activity, and unleashed a scramble to exploit vast oil and gas deposits.
A fine against RBS will not fix Libor
Costas Lapavitsas and Alexis Stenfors (FT) Feb 6, 2013
Guilt has been apportioned and penalties meted out but genuine reform can only come through public scrutiny.
US must avoid shale boom turning to bust
Maria van der Hoeven (FT) Feb 6, 2013
Newly extracted supplies are facing logistical and policy hurdles above ground, something that has to be addressed now.
Commodity prices and growth: A changing relationship?
Lúcio Vinhas de Souza (VoxEU) Feb 7, 2013
Commodity price shocks are frequently considered among the most important potential threats to the global economy. However, since the second half of the 1980s, energy prices have experienced very large changes, with arguably limited effects on global GDP developments. This column presents evidence that oil shocks just aren’t what they used to be when it comes to macroeconomic effects.
The Information Revolution Gets Political
Joseph S. Nye (Project Syndicate) Feb 7, 2013
As computing power has become cheaper and computers have shrunk to the size of a cellphone, the decentralizing effects have been dramatic. But, while the information revolution could, in theory, reduce states’ power and increase that of non-state actors, politics and power are more complex than such technological determinism implies.
The Flight of the European Bumblebee
Indermit Gill and Lúcio V. de Souza (Project Syndicate) Feb 7, 2013
In July 2012, while addressing bankers in London, ECB President Mario Draghi likened the euro to the bumblebee, "a mystery of nature, because it shouldn’t fly but instead it does." In fact, it is well understood how bumblebees fly – and Europe would benefit from applying their method.
Bretton Woods III
Sanjeev Sanyal (Project Syndicate) Feb 7, 2013
Current economic conditions in the US and China imply that the post-crisis global economy will experience a return to large macroeconomic imbalances. Although many economists condemn such imbalances, history shows that they have characterized virtually all periods of global economic expansion.
Egypt’s Economic Siren
Mohamed A. El-Erian (Project Syndicate) Feb 7, 2013
Egypt’s political elite would be well advised to focus on the economic implications of the country's current turmoil. Doing so would lead them to recognize seven compelling reasons why a more collaborative approach to solving Egypt’s problems is in the country’s collective interest, as well as in their own individual interests.
A case to reset basis of monetary policy
Martin Wolf (FT) Feb 7, 2013
The current regime was justified on the basis that it was meant both to stabilise inflation and to help stabilise the economy. It failed.
Finance holds fast to tooth fairy faith
Gary Silverman (FT) Feb 7, 2013
The childhood belief in magical payments in return for discarded teeth appears to linger in financial circles.
African foundations aim for catalytic effect
William Wallis (FT) Feb 7, 2013
It is important to assess whether the work carried out by unaccountable philanthropic groups, and their growing influence, is reliable and effective.
Finance: Buried treasure
Sam Jones (FT) Feb 7, 2013
Frustrated investors are pushing the Cayman Islands, home to most of the world’s hedge funds, for greater transparency but few expect rapid change.
Stop ignoring the online thieves
Richard A. Clarke (WP) Feb 7, 2013
Well-meaning nations should react to cybercriminals who threaten to damage the global economy.
Trade policy and macroeconomic shocks: New evidence from emerging economies
Chad P Bown & Meredith Crowley (VoxEU) Feb 8, 2013
For most of the postwar period, rich nations had much lower average tariffs than developing nations, but they frequently applied variable protection – dumping duties etc. – in reaction to business cycles and exchange-rate movements. Massive, unilateral tariff-cutting by developing nations since the 1990s evened out the averages. This column presents new evidence that emerging economies are now tying variable protection more closely to business cycles and exchange rates – just like the high-income economies.
Making a future for manufacturing in advanced economies
Richard Dobbs (VoxEU) Feb 8, 2013
Surprisingly, manufacturing in some advanced economies is experiencing something of a renaissance. This column argues that the renaissance will unfold in new, unexpected ways. Manufacturing value added will continue to rise, but the impact on jobs will be muted – particularly for the unskilled. A range of innovations has opened a once-in-a-generation opportunity to build new platforms, but better skills and new strategies will be needed.
The Tyranny of Political Economy
Dani Rodrik (Project Syndicate) Feb 8, 2013
An excessive focus on the role of vested interests can easily divert us from the critical contribution that policy analysis and political entrepreneurship can make. The possibilities of economic change are limited not just by the realities of political power, but also by the poverty of our ideas.
Unconventional Policies and Capital Flows
Ben Emons (PIMCO) Feb 8, 2013
Although quantitative easing has grabbed the headlines, a number of central banks around the world have enacted other extraordinary measures in attempts to manage their economies. The Swiss National Bank (SNB), for example, adopted an exchange rate peg versus the euro while increasing its foreign exchange reserves to almost 80% of Swiss GDP. Sweden’s central bank, the Riksbank, established explicit policy rate guidance more than five years ago. The Reserve Bank of New Zealand (RBNZ) has an inflation target range and has applied “flexible inflation targeting”’ for quite some time. And the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) use exchange-rate management to set monetary policy.
India in the Slow Lane
NYT Feb 9, 2013
Reviving the economy requires New Delhi to make hard regulatory reforms.
The economy: Deficit-reduction disorder
Economist Feb 9, 2013
Austerity and economic recovery are bringing down the deficit, but the long-term problem has not been fixed
In India, a Clash of Globalizations Sinks a Litfest
Pankaj Mishra (Bloomberg) Feb 10, 2013
Every Febuary these past few years, some of the world’s leading novelists, historians, philosophers, and sociologists have been drawn to the DSC Jaipur Literature Festival. Quickly outgrowing its modest beginnings in 2006, the event now sets the standard for the many new literary festivals from Brazil to Bali that illustrate what David S. Grewal calls “network power” -- the basic means of emulation and convergence through which cultural and economic globalization proceeds.
Fix Finance by Shedding Light on Its Complexities
Mark Buchanan (Bloomberg) Feb 10, 2013
Economists teach us that a financial market is a powerful technology for processing information. It brings everyone’s knowledge and greed into play, devouring every available scrap of information to achieve optimal risk sharing and put resources to the best possible use.
Arab world: Underfunded renaissance
Roula Khalaf (FT) Feb 10, 2013
Inexperienced Islamist leaders in Egypt and Tunisia are struggling to manage economic grievances that have persisted post-revolution.
What Monte dei Paschi says of banking
Lucrezia Reichlin (FT) Feb 10, 2013
The drama at the Italian lender has broader significance as regards the state of European banking and the financial crisis.
Few bargains to be found in Europe
John Authers (FT) Feb 10, 2013
The cash spent on buybacks and dividends combined comes to much the same yield on either side of the Atlantic.
Our Children’s Economics
Barry Eichengreen (Project Syndicate) Feb 11, 2013
Many analysts today believe that economics will not change significantly in the next 20 years, despite the flaws revealed by the recent financial crisis. This presumption is almost certainly mistaken, for it reflects the same error made by scholars of technology who argue that all of the radical breakthroughs have already been made.
The Battle of the Bond Benchmarks
Jeffrey Frankel (Project Syndicate) Feb 11, 2013
Some prominent institutional bond investors are shifting their focus from traditional benchmark indices, which weight countries’ debt issues by market capitalization, toward GDP-weighted indices. But there is a risk that some investors could lose sight of the purposes of a benchmark index.
The conundrum for the world’s central bankers
Mohamed A. El-Erian (FT) Feb 11, 2013
A simple observation last week by the Bank of England’s Monetary Policy Committee speaks volumes to the historic evolution of modern central banking – a process that is consequential, unprecedented and inadequately covered in traditional “money and banking” texts.
No such thing as a global currency war
Philipp Hildebrand (FT) Feb 11, 2013
Accusations over exchange rates are misplaced because central banks are simply setting monetary policy as per their remits.
Productivity is Europe’s ultimate problem
Nemat Shafik (FT) Feb 11, 2013
Closer integration is needed to build on the often painful progress that has been made.
Fix exchange rates to revive growth
Komal Sri-Kumar (FT) Feb 11, 2013
When currencies are established at realistic values, investors and exporters will see the exchange rates as durable.
Markets: With the volume down
Ralph Atkins (FT) Feb 11, 2013
Jaded traders are hanging back from markets as they seek clues that the world’s biggest economies are returning to solid growth.
Strike a European Trade Agreement
Edward Glaeser (Bloomberg) Feb 11, 2013
President Barack Obama can join the pantheon of free-trade heroes if, in his State of the Union address, he forcefully advocates the cause of a trade union with Europe. The potential benefits for U.S. companies and consumers are enormous.
Strike a Global Trade Agreement
Clive Crook (Bloomberg) Feb 11, 2013
President Barack Obama should renew the U.S.’s historic commitment to a liberal order of global trade by announcing two main priorities in his State of the Union address. First, bring currency manipulation under effective multilateral oversight. Second, promote global (as opposed to regional) trade liberalization by developing a bold post-Doha Round strategy.
Don't Be Afraid of China
Simon Johnson (Bloomberg) Feb 11, 2013
China is rising. Income per capita is climbing steadily, and within 20 years, its share of world income will rival that of the European Union. We shouldn’t be afraid -- or shrink from the economic opportunities this will present.
Tap Into the European Economy
Megan Greene (Bloomberg) Feb 11, 2013
President Barack Obama should make it clear in his speech that wrapping up a new U.S.-European Union trade deal will be a foreign policy priority for his second term.
In Venezuela, Plenty of Oil, Not Enough Food
Otto J. Reich (WSJ) Feb 11, 2013
It's the old story: Socialist government interferes with the marketplace, and the result is scarcity.
An Alternative to the Ratings Agencies
Donald J. Johnston (NYT) Feb 11, 2013
It may be time for an intergovernmental agency to rate sovereign debt.
Misplaced concerns about central-bank independence
Marco Annunziata (VoxEU) Feb 12, 2013
Economists and policymakers are increasingly concerned that central-bank independence is being threatened. This column argues that central banks are not losing their independence, but that their room for manoeuvre is being eroded by a lack of structural reforms and fiscal adjustment. The financial crisis has caused mission creep, pushing central banks well beyond their comfort zones and as the time comes to pull back, independent monetary policy could still be powerless against fiscal dominance.
The case for helicopter money
Martin Wolf (FT) Feb 12, 2013
I fail to see any moral force to the idea that fiat money should only promote private, not public, spending.
India looks to strengthen banking sector
Henny Sender (FT) Feb 12, 2013
The Reserve Bank of India, at the behest of the government, intends to give out new banking licences soon, to inject more competition into the sector
The Economic Windfall of Immigration Reform
Giovanni Peri (WSJ) Feb 12, 2013
From 1990-2010, scientists and engineers admitted by the H-1B visa program added $615 billion to the economy.
Don't Count on China to Bail Out the U.S.
Timothy Beardson (WSJ) Feb 12, 2013
Beijing's net investment in U.S. Treasurys over the past two years is essentially zero.
The world economy: Cliffs avoided, mountains ahead
Olivier Blanchard (VoxEU) Feb 13, 2013
The new year has provided cheer for macroeconomic optimists. This column by Olivier Blanchard, one of the world’s leading economists, argues that important progress has been made in putting the crisis behind us, but that recovery continues to be hampered by the need for fiscal consolidation and a weak financial system.
IEG finds declining impact at Bank, IFC
Bretton Woods Update No. 84 Feb 12, 2013
An annual Independent Evaluation Group (IEG) report on the Results and performance of the World Bank Group 2012 showed declining effectiveness at the Bank Group, with its worst ratings in the areas where its lending is increasing the fastest or it is prioritising work, such as infrastructure and public-private partnerships (PPPs). Read More.
IFC investments "rarely touch the poor"
Bretton Woods Update No. 84 Feb 12, 2013
Criticism of the International Finance Corporation's lack of poverty focus has again caught the spotlight, as the IFC continues to fund projects that stretch the interpretation of development.
IMF accused of anti-China bias
Bretton Woods Update No. 84 Feb 12, 2013
The IMF's Independent Evaluation Office (IEO) published a late December evaluation that was critical of IMF concerns and advice relating to international reserves, especially the accumulation by countries of large quantities of US dollar assets.
Finance: Entangled in Tuscany
Rachel Sanderson (FT) Feb 13, 2013
Repercussions of the Monte dei Paschi bank scandal are resonating far beyond Siena.
Venezuela’s move to devalue is desperate
Moisés Naim (FT) Feb 13, 2013
The decision was driven by a mix of bad policies and ideological necrophilia.
Giants, but Not Hegemons
Zbigniew Brzezinski (NYT) Feb 13, 2013
There is no need for conflict between America and China now that global dominance is no longer achievable.
Preventing a Currency War
NYT Feb 13, 2013
The way to revive stagnant economies is with stimulus, not by manipulating exchange rates.
Rumors of (Currency) War
WSJ Feb 13, 2013
G-7 finance ministers lament the rise of the monetary nationalism they all practice.
Pope Benedict on Globalization
Globalist Feb 13, 2013
What did Pope Benedict view as the responsibilities of the world's rich countries to the poor?
G-7 Currency Confusion
Mohamed A. El-Erian (PIMCO/CNBC) Feb 13, 2013
Within the last 24 hours, G-7 officials issued a currency statement, "clarified" it and then criticized the clarification! Here, in summary terms, are three possible reasons for this muddle, as well as what it may mean for investors.
US, EU Formally Announce Decision to Launch Trade Talks
Bridges Weekly Trade News Digest, Volume 17, Number 5 Feb 13, 2013
Washington and Brussels have decided to begin negotiations for a trans-Atlantic trade and investment agreement, the two sides announced this week, bringing to a close months of speculation on whether the EU and US would indeed commit to the initiative.
China to Intensify Farm Subsidies in Grain Self-Sufficiency Drive
Bridges Weekly Trade News Digest, Volume 17, Number 5 Feb 13, 2013
China will "intensify" farm subsidy spending in the country's ongoing bid to promote self-sufficiency in grains, Beijing has announced in its flagship annual policy statement, known simply as 'policy document no. 1'.
Root causes of currency wars
Simon J Evenett (VoxEU) Feb 14, 2013
Discussion of currency wars has broken out again in the run-up to this week’s G20 finance ministers' meeting in Moscow. This column points to the underlying policy choices responsible for the recurring currency disputes and the feeble ex-post rationalisations for them.
The technical competence of economic policymakers
Mark Hallerberg & Joachim Wehner (VoxEU) Feb 14, 2013
The appointments of Papademos in Greece and Monti in Italy in 2011 are examples of leadership changes meant to bring more competent people into government. This column aims at understanding why governments sometimes appoint economic policymakers with economics training but often do not. It suggests that levels of economics education among finance ministers are substantially higher in new democracies than in old ones and that the appointment of an economics PhD as a central bank president is 22% more likely during a banking crisis.
Breaking China’s Investment Addiction
Zhang Monan (Project Syndicate) Feb 14, 2013
Faced with sluggish external demand and weak domestic consumption, China depends on investment to drive economic growth – leading to overproduction, inflation, soaring real-estate prices, and rising debt among enterprises and local governments. To reach the next stage of development, China must break its reliance on investment.
Building a Chinese Rechtsstaat
Andrew Sheng and Xiao Geng (Project Syndicate) Feb 14, 2013
A consensus is rapidly emerging within China that the rule of law is the single most important precondition for inclusive, sustainable, and long-term peace and prosperity. But can China establish the rule of law as it is understood and practiced in the West and elsewhere in Asia?
Nuclear energy: Flexible fission
Sylvia Pfeifer (FT) Feb 14, 2013
The atomic industry is shifting its focus to smaller reactors to meet surging demand from emerging economies undeterred by the Fukushima disaster.
Oligarchy at the core of Spain’s scandals
Angel Pascual-Ramsay (FT) Feb 14, 2013
A corporatist establishment is blocking the nation’s creative energy and the EU must act to break its grip.
A Very Greek Depression
Kostas Tsapogas (NYT) Feb 14, 2013
Like an overwhelming number of Greeks, we are fighting to keep our dignity and avoid the despair enveloping our country.
Don't Fear the Migrants
Frank Jacobs (FP) Feb 14, 2013
What America really needs to worry about is when they stop coming.
A Golden Rice Opportunity
Bjørn Lomborg (Project Syndicate) Feb 15, 2013
Finally, after 12 years of delay caused by opponents of genetically modified foods, so-called “golden rice” with vitamin A will be grown in the Philippines. Over those 12 years, about eight million children worldwide died from vitamin A deficiency, but the resistance to GM crops continues unabated.
Impatient South Africa
Ian Bremmer and Mark Y. Rosenberg (Project Syndicate) Feb , 2013
The African National Congress, which has governed South Africa since the end of apartheid, is in serious trouble. Unfortunately, the country may not be far behind.
The Squeeze: Reassessing the Japan/Korea/China Manufacturing Nexus
John Longhurst (PIMCO) Feb 15, 2013
The marked weakening of the yen could benefit Japanese exporters but raise questions about the continued ability of some Korean rivals to thrive. If the yen settles between 95 and 100 to the dollar, it could be a game changer for Japanese companies which have restructured to become profitable at 75 yen to the dollar. Some Korean companies, especially those in heavy industry, may be squeezed by intensified Japanese and Chinese competition. We expect Korean firms to fish in profit pools in businesses related to their core competencies, chiefly to the detriment of Asian and European competitors.
A tantalising prospect
Economist Feb 16, 2013
Exotic but useful metals such as tantalum and titanium are about to become cheap and plentiful.
South Africa: A faded rainbow
William Wallis and Andrew England (FT) Feb 17, 2013
Protests and disaffection threaten the ANC’s hegemony but President Zuma insists the ruling party is not to blame.
Europe’s budget deal is flawed
Martin Schulz (FT) Feb 17, 2013
It is misguided not to shift investment towards the areas where European added value are at their greatest.
Making the European Monetary Union
Harold James (VoxEU) Feb 17, 2013
Recent policy and academic debates have begun to influence Eurozone reform. But how sound is the advice we give out? This column argues that calls for a Eurozone or full-fledged EU superstate are overstated. Yes, developing an adequate system of European banking supervision is a matter of urgency if we hope to tackle the threat posed by an overdeveloped and opaque financial system. But calling for a superstate misunderstands the reasons politicians introduced the euro in the first place.
Designing a federal bank
Harold James (VoxEU) Feb 17, 2013
Do economists and policymakers know how to design a federal bank for Europe? Is there a template? This column explores the history of the US Federal Reserve, gleaning lessons for the future of the European banking system. Getting to grips with the historical and empirical details shows how different the two really are. Overall, evidence suggests that the mechanism of the TARGET system might well create demand for Europe to move further towards fiscal federalism.
Greece May Get Cruel Reward for Its Success
Megan Greene (Bloomberg) Feb 17, 2013
Greece reported recently that it has reached a primary budget surplus, the Holy Grail of austerity, meaning that once you exclude interest payments on the country’s massive debts, the government is finally taking in more revenue than it spends.
A Valuable U.S. Export: Banking Regulations
Simon Johnson (Bloomberg) Feb 17, 2013
By this point in the economic recovery, the biggest U.S. banks had expected the pressure from regulators to abate. In the aftermath of a major financial crisis, there is usually a turn toward tighter rules, and banks naturally build up their equity buffers after near-death experiences.
India’s Growth Crossroads
Haruhiko Kuroda (Project Syndicate) Feb 18, 2013
Unlike China since mid-2012, there is no clear evidence of economic recovery in India yet, as delay in implementing necessary reforms, among other factors, has weakened competitiveness. While recent measures should boost economic revival, an additional challenge is that growth must be made sustainable and more inclusive.
Quest for profit can make banks safer
Tom Braithwaite (FT) Feb 18, 2013
‘The Bankers’ New Clothes’ and its cheerleaders gloss over the transformation that is under way; there is more capital in the system than in 2007.
Abe needs to show he can walk the talk
Peter Tasker (FT) Feb 18, 2013
Mere anticipation of a reflationary regime shift has done the trick for Japan’s equities, but there are reasons for more optimism.
The End of Brand Putin?
Fiona Hill and Clifford G. Gaddy (Globalist) Feb 18, 2013
Can Russia ever become a modern, economically competitive, democratic society as long as Putin is in charge?
Europe’s Green Recovery
Connie Hedegaard (Project Syndicate) Feb 18, 2013
Europe’s major competitors are turning climate change into an opportunity to encourage growth and create high-quality jobs in rapidly innovating economic sectors. If EU leaders hesitate to take action on climate change, they will be sabotaging their own economy’s prospects for sustainable recovery.
The Collateral Damage of Europe’s Rescue
Hans-Werner Sinn (Project Syndicate) Feb 18, 2013
Europe’s rescue policy has stabilized government finances and delivered lower interest rates for the over-indebted economies. But it has also led to currency appreciation, and thus to lower competitiveness for all eurozone countries, which may yet turn into a debacle for the southern eurozone and France – and for the euro itself.
Break Up the Ratings Oligopoly!
Jeffrey Manns (Bloomberg) Feb 18, 2013
The Justice Department’s landmark lawsuit against Standard & Poor’s has captured headlines and broken the facade of rating-company immunity. But the threat to bludgeon, if not bankrupt, S&P through litigation masks the failure of the Securities and Exchange Commission to reform the raters.
The exchange rate disconnect and international supply chains: Firm-level evidence
Mary Amiti, Oleg Itskhoki & Jozef Konings (VoxEU) Feb 19, 2013
Why is it that large movements in exchange rates have small effects on international prices? What does this mean for a crisis-stricken Eurozone? Using firm-level data, this column presents new research that investigates this exchange rate ‘disconnect’. Evidence suggests that the prices of the largest firms – with their disproportionately large share of trade – are insulated from exchange rate movements. The international competitiveness effects of a euro devaluation are therefore likely to be modest, given major exporters’ reliance on global supply chains.
Lords of Finance: The Backroom World of Central Banking
Dan O'Connor (Mises Daily) Feb 19, 2013
The Pulitzer Prize-winning book Lords of Finance: The Bankers Who Broke the World reveals the destructive, surreptitious, incestuous, and highly corrupt nature of central banking. Although the author, Liaquat Ahamed, exposes the current financial system for all of its evils, this book is by no means a critique of central banking. Ahamed’s views are very much representative of status-quo economists of the past 100 years. He references John Maynard Keynes frequently without mentioning Nobel Prize-winner F.A. Hayek once, even though Hayek was Keynes’s greatest intellectual opponent during this period. Despite its mainstream focus the book is interesting and well-written. One of the jewels here is the rare look into the lives of the powerful men, the “lords of finance,” who were behind the solidification of modern central banking in the US and Europe during the years 1910 to 1935.
Why the euro crisis is not yet over
Martin Wolf (FT) Feb 19, 2013
If all eurozone members would rejoin today, they would be extreme masochists. It is debatable whether even Germany is better off inside.
India needs to grab more FDI
James Crabtree (FT) Feb 19, 2013
Investors balk at the country’s unfortunate mix of slowing growth and bureaucratic dithering.
Packaged loans to fill EU banking void
Ralph Atkins (FT) Feb 19, 2013
Businesses in the eurozone are increasingly tapping capital markets for their funding needs as bank loans remain scarce.
Markets: In search of a fast buck
After disrupting the equity markets, high-speed trading is moving rapidly into bonds, currencies and derivatives.
Is Currency War Breaking Out in Tokyo?
Clive Crook (Bloomberg) Feb 19, 2013
The G-20 finance ministers’ meeting ended on Feb. 16 with the obligatory note of amity on exchange rates. “We will not target our exchange rates for competitive purposes, will resist all forms of protectionism and keep our markets open,” read the communiqué.
The Saver’s Dilemma
Michael Pettis (Project Syndicate) Feb 19, 2013
For nearly a decade prior to the eurozone crisis, capital from high-savings countries like Germany flowed to low-savings countries like Spain. If the rebalancing that is now necessary occurs only in Spain and other low-savings countries, the result, as John Maynard Keynes warned 80 years ago, must be much higher unemployment.
Salt: Mineral of Tyrants, Explorers and Revolutionaries
Lesley Jacobs Solmonson (Bloomberg) Feb 19, 2013
Scientifically, salt is an innocuous substance created when a sodium atom bonds with a chloride atom: NaCl. This simple definition belies the influence of a mineral that has substantially affected global economics, exploration and politics for centuries.
The Defense Dividend
Anders Fogh Rasmussen (Project Syndicate) Feb 19, 2013
The fact is that without security and stability, investment withers, employment collapses, and economies shrink. In these tough economic times, we must not forget that the cost of insecurity is unacceptable, and that defense is our essential insurance policy in a complex and unpredictable world.
An Economist Who Made the Science Less Dismal
David Henderson (WSJ) Feb 19, 2013
Armen Alchian never won a Nobel Prize in economics. But no less than Friedrich Hayek said he 'deserved' one.
‘Fight Club’ Is Morphing Into Currency Club
William Pesek (Bloomberg) Feb 20, 2013
If life imitates art, so can the workings of high finance. The foreign-exchange markets are a timely case in point as policy makers and traders alike obsess over a return to the “Currency Wars” that so bewildered markets in 2010.
U.S. to “Win” Currency Wars?
Axel Merk (Merk Investments) Feb 20, 2013
Currency Wars will most importantly play out at the heart of investors’ portfolios rather than in the blogosphere or on TV. While the focus may currently be on Japan’s efforts to weaken the yen, U.S. investors might be particularly vulnerable. Let me explain.
Global "Currency War" Debate Approaches Fever Pitch
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
Tensions among the world's major economies over currency values and export competitiveness came to a head last week, with G-20 finance ministers and central bank chiefs meeting in Moscow this past weekend with the hopes of dispelling growing fears of an international "currency war." However, despite the high-level meeting, questions on what effects developed country monetary policy and ensuing exchange rate movements will have on trade are expected to linger.
WTO: Food Stockpiling Talks Begin as Bali Beckons
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
Farm trade officials met today in Geneva to exchange information and views on food stockpiling, against the backdrop of a proposal from some developing countries to modify WTO rules on the issue at the organisation's ministerial conference in Bali, Indonesia this December.
EU, India Hoping to Clinch Trade Deal by April, Officials Say
Bridges Weekly Trade News Digest, Volume 17, Number 6 Feb 20, 2013
The European Union and India are hoping to complete their nearly six-year trade talks by April of this year, French and Indian trade officials said last week. The proposed deal, if completed, would cover a market encompassing 1.7 billion people.
Zombie banks must not derail recovery
Gene Frieda (FT) Feb 20, 2013
Disposing of bad assets is the only way for good banks to make a clean start and Europe could pool resources to address a common problem.
Middle East: The strong arm of the law
Borzou Daragahi (FT) Feb 20, 2013
Egypt is becoming more volatile as emboldened people increasingly stand up to security forces.
Panic-driven austerity in the Eurozone and its implications
Paul De Grauwe & Yuemei Ji (VoxEU) Feb 21, 2013
Eurozone policy seems driven by market sentiment. This column argues that fear and panic led to excessive, and possibly self-defeating, austerity in the south while failing to induce offsetting stimulus in the north. The resulting deflation bias produced the double-dip recession and perhaps more dire consequences. As it becomes obvious that austerity produces unnecessary suffering, millions may seek liberation from ‘euro shackles’.
The Coming Atlantic Century
Anne-Marie Slaughter (Project Syndicate) Feb 21, 2013
The pervasive narrative of Western decline and Asia's rise is quickly reversing itself. While the major emerging countries, including those along the Pacific Rim, will continue to grow and prosper, the US will benefit enormously from domestic energy production, and the threat of an EU collapse will be resolved once and for all.
Are Stock Markets Really Becoming More Short Term?
Mark Roe (Project Syndicate) Feb 21, 2013
Investors’ rapid moves from one sector to another, it is argued, press managers to pay too much attention to immediate financial results. But, even if managers focus excessively on quarterly results, and even if median stock-holding periods have decreased, it is difficult to know whether stock-market trading has become more rapid.
The Food Threat to Human Civilization
Paul R. Ehrlich and Anne H. Ehrlich (Project Syndicate) Feb 21, 2013
Humanity faces a growing complex of serious, highly interconnected environmental problems, including much-discussed challenges like climate change, biodiversity loss, and epidemics. But the most serious threat to global sustainability in the next few decades will be the growing difficulty of avoiding large-scale famines.
EU-US free trade deal could be costly
Marcel Fratzscher (FT) Feb 21, 2013
The proponents of a bilateral agreement are sending the world the wrong signal at the wrong time.
The Economic—and Demographic—Case for Immigration Reform
Sol Trujillo and César Melgoza (WSJ) Feb 21, 2013
The challenges of the aging population will be greatly mitigated by an expanding, young, immigrant workforce.
India’s corruption fight
Anne Applebaum (WP) Feb 21, 2013
Can six decades of bad habits be broken?
Demand for Tech-savvy Workers Fuels Inequality
IMF Survey Feb 22, 2013
Over the past several decades, advanced economies have seen a striking rise in inequality. In the United States, the top 0.1 percent of households receive more than 10 percent of national income—more than double the figure of 30 years ago.
Financial Regulators’ Global Variety Show
Howard Davies (Project Syndicate) Feb 22, 2013
In the early phases of the financial crisis, it was fashionable to argue that the US system of regulation needed a fundamental structural overhaul. But there is no clear evidence that one particular model of financial regulation is more effective than others.
Mobility, talent and capital
Reuven Brenner (AT) Feb 22, 2013
Creative sparks ignite wealth when freed from the stifling interventions of big government and linked to financial markets sophisticated enough to match capital with diverse talent. The inevitable dispersion of power in such circumstances is evident in economic history, from the merchants of Venice to Deng Xiaoping's reforms in China.
China’s economy: Served in China
Economist Feb 23, 2013
Services are poised to become the country’s biggest sector.
India’s public finances: A walk on the wild side
Economist Feb 23, 2013
Government borrowing generates inflation, widens the external deficit and crowds out much-needed investment. Can India now overcome its debt addiction?
How Mexico Got Back in the Game
Thomas L. Friedman (NYT) Feb 23, 2013
Who knew our North American neighbor might one day become an economic rival to India and China?
The WTO and global supply chains
Richard Baldwin (EAF) Feb 24, 2013
The cross-border flows of goods, investment, services, know-how and people associated with international production networks — call it ‘supply chain trade’ for short — has transformed the world. But the WTO has not kept pace.
20,000 miles to the plate
Louise Lucas, Patti Waldmeir and Neil Munshi (FT) Feb 24, 2013
The horsemeat scandal in Europe has led to promises of more testing, but monitoring the global supply chain will be harder.
Africa counts the cost of miscalculations
Andrew Jack (FT) Feb 24, 2013
A tendency to issue doubtful data is rooted in colonial days and still creates problems for the continent, according to a study.
Wanted: A Balanced Approach to Shale Gas Exports
Andrew Liveris (WSJ) Feb 24, 2013
Rushing to sell natural gas to Europe and Asia risks damage to the U.S. economy.
Is ASEAN the New BRICS?
Asia Sentinel Feb 25, 2013
On a wide range of economic pointers, Southeast Asia is gaining fast.
IMF lending and banking crises
Luca Papi, Andrea F Presbitero & Alberto Zazzaro (VoxEU) Feb 25, 2013
The IMF’s role in past systemic banking crises has been hotly debated. Indeed, prominent intellectuals have criticised the Fund for creating or exacerbating crises. This column discusses new evidence showing that IMF lending programmes are in fact associated with a lower probability of banking crises occurring in future.
Transatlantic Trade-Offs
Robin Niblett (Project Syndicate) Feb 25, 2013
Many observers have high hopes for the Transatlantic Trade and Investment Partnership, which the US and the EU announced last week. But the High-Level Working Group on Jobs and Growth, which was tasked with identifying the policies and measures that should define the negotiations, has rightly recommended a conservative approach.
Lee Kuan Yew’s China
Graham Allison, Robert D. Blackwill & Ali Wyne (Project Syndicate) Feb 25, 2013
On the question of how the evolving relationship between the US and China will influence the international order, there are few individuals whose observations receive equal attention on both sides of the Pacific. That is why the views of Singapore’s founding father, Lee Kuan Yew, deserve careful consideration.
The Cacophony of the World
Dominique Moisi (Project Syndicate) Feb 25, 2013
Can something like the Concert of Europe, which produced a century of peace between the Napoleonic Wars and World War I, be globalized? Unfortunately, in today's rapidly fragmenting world, global cacophony seems more probable
Currency wars and the paradox of global thrift
John H. Makin (AEI) Feb 25, 2013
Since the beginning of the recent global economic crisis, G20 economies have combined fiscal austerity measures with expansionary monetary policy, and the austerity measures have made quantitative easing (QE)--the printing of money--the only pro-growth policy. The resulting currency weakness amounts to export of deflation pressures, threatening a currency war since every country, by definition, cannot have a weaker currency. Finance ministers and central bankers must reduce debt growth by reforming tax systems, moderating growth of government health and retirement programs, and phasing in binding spending cuts over the next decade while pursuing enough quantitative easing to avoid deflation.
Is There a Shortage of Safe Assets? A Blog Review
Martin Kessler (PIIE) Feb 25, 2013
Safe assets—often called information insensitive assets—are those debt securities that do not suffer from financial frictions characteristic of other financial assets. They play a major role in the strategies of institutional investors. But as we have learned recently, they can quickly lose their safety status at times of financial crises. In the past few months, the Federal Reserve and the Bank of England have raised doubts about the future of monetary easing—the issuing of large volumes of new safe assets—based on the concern that those policies were spurring investors to 'search for yield' and move their money to other assets, creating the danger of an asset bubble. As a result, there has been a renewed discussion in the blogosphere about the role of safe assets and whether there is a dangerous shortage of them.
Equities: A sentimental wager
James Mackintosh (FT) Feb 25, 2013
Investors are starting to think that timing the peaks and troughs of the market depend on spotting when fear or greed are dominant.
West complacent over why nations fail
Gideon Rachman (FT) Feb 25, 2013
Political debate in the US is too often captive to procedures and principles that get in the way of pragmatic solutions.
Fate sealed on pound’s loss of haven status
Mansoor Mohi-uddin (FT) Feb 25, 2013
Tight fiscal policy and sluggish growth will continue to encourage loose monetary policy.
China Has Its Own Debt Bomb
Ruchir Sharma (WSJ) Feb 25, 2013
Not unlike the U.S. in 2008, China is at the end of a credit binge that won't end well.
The Inexorable End of the Africa Story
Jonathan Anderson (Globalist) Feb 25, 2013
Are U.S. sanctions against Iran strengthening the economic and financial position of its competitors, especially China?
Investigating the effect of exchange-rate changes in Japan, China, east Asia, and Europe
Willem Thorbecke (VoxEU) Feb 26, 2013
Policymakers everywhere are concerned about currency wars. Are quantitative easing and managed exchange rates bad for the global economy? This column looks at the hard empirical evidence, arguing that, in fact, Japan is behaving rather responsibly and that other strong economies have themselves benefited from undervalued currencies. That said, it is true that politicians’ short time horizons often lead to stealthy policy and large swings in exchange rates. Economists should therefore aim to promote longer-run cosmopolitan interests rather than shorter-run nationalistic agendas where possible.
Mutualisation and constitutionalisation
Harold James & Hans-Werner Sinn (VoxEU) Feb 26, 2013
Can the euro exist without fiscal or political union? This column draws on the history of the US – especially its assumption of states’ debt after the War of Independence – to investigate which path might best serve the Eurozone. History tells us that unions require a well-constitutionalised system of restraint on fiscal behaviour, both at the federal level and at that of individual states.
The European-American Dream
Javier Solana (Project Syndicate) Feb 26, 2013
If Europe wants to maintain its welfare states, it must generate economic growth in order to pay for them, which means raising productivity and strengthening competitiveness – and asserting its place in the world. Europeans have a new reason for hope as they seek to achieve these goals: a transatlantic free-trade agreement with the US.
Will Programmers Rule?
Raghuram Rajan (Project Syndicate) Feb 26, 2013
Two attributes of software creation allow a few talented programmers to corner the market and take all the associated profits: first, software with a slight edge tends to get a significantly greater share of the available market; and, second, the available market is global. So, will anything prevent inequality from widening?
Italy Votes for Chaos and the Euro Crisis Is Back
Megan Greene (Bloomberg) Feb 26, 2013
Italy’s parliamentary election could not have gone worse for the country or the euro area.
Getting Cities Right
Mahmoud Mohieldin and Zoubida Allaoua (Project Syndicate) Feb 26, 2013
The developing world is experiencing rapid urbanization, with the number of city dwellers set to reach four billion in 2030 – double its 2000 level. By managing urbanization as it occurs, rather than struggling to fix cities later, policymakers can support social and economic development, while minimizing environmental damage.
The sad record of fiscal austerity
Martin Wolf (FT) Feb 26, 2013
The ECB could have prevented the panic that drove the spreads that justified the austerity. Millions are suffering unnecessary hardship.
Gap widens in China’s property market
Simon Rabinovitch (FT) Feb 26, 2013
Smaller cities are falling behind booming metropolises not only in prices but in the amount of development being undertaken.
Why There Will Be No New Bretton Woods
Benn Steil (WSJ) Feb 26, 2013
Unlike the United States in the 1940s, China is in no position to refashion the global monetary architecture.
Is Mexico the Comeback Kid?
Thomas L. Friedman (NYT) Feb 26, 2013
Despite its problems, our neighbor to the south is an unlikely hub of innovation.
For Transatlantic Trade, This Time Is Different
Tyson Barker (FA) Feb 26, 2013
In the past, U.S. and European negotiators have tried and failed to create a unified transatlantic market. But the trade talks that President Obama announced this month have a much better chance of succeeding, thanks to a greater need for economic growth on both sides, the threat of China's illiberal economic behavior, and the desire to give U.S.-European relations a new purpose.
Winners of a European banking union
Dirk Schoenmaker & Arjen Siegmann (VoxEU) Feb 27, 2013
So far, discussions around Europe’s prospective banking union have focused only on the supervision of banks. This column argues that policymakers must also think about the resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority could incorporate domestic and cross-border effects. A cost-benefit analysis of a hypothetical resolution of the top 25 European banks shows that the UK, Spain, Sweden, and the Netherlands would be the main winners.
America’s Strategy Vacuum
Stephen S. Roach (Project Syndicate) Feb 27, 2013
As the quintessential laissez-faire system, the US outsources strategy to the invisible hand of the market, with the government locked into a reactive approach to unexpected problems. Thus, both monetary and fiscal policy have been focused on cleaning up after a crisis rather than on how to avoid another one.
China pushes lending into the shadows
David Pilling (FT) Feb 27, 2013
Capital, like water, is wont to find the path of least resistance. Banks and non-banks are adept at circumventing regulations.
Sell currencies of serial QE offenders
William H. Gross (FT) Feb 27, 2013
Fighting central banks’ determination to devalue currencies and reflate economies is dangerous and investors should sell the most serial offenders.
Debunking the Myths About Central Banks
Gerald O'Driscoll (WSJ) Feb 27, 2013
Does an economy need a lender of last resort? Is the Fed really independent? It's time for some rethinking.
Our Debt, Ourselves
Robert M. Solow (NYT) Feb 27, 2013
Six facts about the federal debt that many Americans need to be aware of.
Interest Rises in Islamic Bonds
Sara Hamdan (NYT/IHT) Feb 27, 2013
As economies in European and other advanced countries struggle, a growing pool of investors is considering alternative investments in emerging markets.
EU-Canada Hurdles Remain, as Brussels Ramps Up for Washington Talks
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
Trade talks between the EU and Canada are still struggling to reach resolution, though officials from both sides have insisted that the negotiations remain on track and could soon be completed. The process of building additional buy-in within the EU for another set of trade talks – specifically, those that Brussels has announced with Washington – is meanwhile currently underway.
Lamy: WTO Members Must "Run Faster" to Reach Bali Finish Line
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
WTO members must "run faster" if they hope to achieve a set of relevant deliverables in time for December’s ministerial conference in Bali, Director-General Pascal Lamy cautioned on Monday at a meeting of the global trade body's General Council.
Obama-Abe Meeting Sends Signals on Possible Japan TPP Entry
Bridges Weekly Trade News Digest, Volume 17, Number 7 Feb 27, 2013
Tokyo will not be required to unilaterally eliminate all tariffs as a condition of entering the Trans-Pacific Partnership (TPP) talks, Japanese Prime Minister Shinzo Abe and US President Barack Obama said after meeting in Washington last Friday. The affirmation has been widely seen by trade observers as a sign that Japan may soon begin to formally pursue entry into the 11-country negotiations.
America's Consumer Democracy Versus China's Modern Mandarinate
Nicolas Berggruen and Nathan Gardels (Globalist) Feb 27, 2013
Are the consumer democracies of the West becoming ungovernable, while authoritarian China moves into the future?
Putting Finance Back in the Box
Thomas I. Palley (Globalist) Feb 28, 2013
What can be done to make finance serve interests of the real economy?
Another look at Ricardian equivalence: The case of the European Union
Thomas Grennes & Andris Strazds (VoxEU) Feb 28, 2013
Can European countries share their debts? This column argues that higher government indebtedness means larger household net financial assets. Thus, any pooling of European legacy debt would be considered unacceptable by countries with less government debt unless it also involved the pooling of households’ financial assets. Yet, this would be legally and technically insurmountable. The EU must face forced Ricardian equivalence: the countries with the largest legacy-debt burdens must reduce them by increasing the tax burden or, alternatively, reduce their budget expenditure.
A Better Way to Fight Climate Change
Jeffrey D. Sachs (Project Syndicate) Feb 28, 2013
Of all major world regions, Europe has worked the hardest to implement policies aimed at countering human-caused climate change. Yet the cornerstone of Europe’s approach – a continent-wide emissions trading system for the greenhouse gases that cause climate change – is in trouble.
The China challenge
Fareed Zakaria (WP) Feb 28, 2013
The U.S. has no choice but to work with China and all its insecurities.
Two Dollar Fallacies
Martin Feldstein (Project Syndicate) Feb 28, 2013
One frequently hears two key arguments from economists who dismiss the fear of a run on the dollar: the dollar is a reserve currency, and it carries fewer risks than other currencies. Unfortunately, neither argument is persuasive.
Ten QE Questions
Nouriel Roubini (Project Syndicate) Feb 28, 2013
Most observers regard unconventional monetary policies such as quantitative easing as necessary to jump-start growth in today’s anemic economies. But questions about the effectiveness and risks of such policies have begun to multiply as well.
The Pope of Japanese Finance
Yuriko Koike (Project Syndicate) Feb 28, 2013
While the world focuses on the gathering of cardinals in Rome to choose a successor to Pope Benedict XVI, a similar conclave is underway in Tokyo to choose the Bank of Japan’s next governor. And, as with the deliberations at the Vatican, politics, not doctrinal debate, is underpinning the decision-making process in Japan.
Arab Countries in Transition Seek Path to Strong, Inclusive Growth
IMF Survey Feb 28, 2013
Region pursues economic and political stability in aftermath of historic uprising. Comprehensive political, social, and financial reform critical to economic success. Middle-class aspirations to boost inclusive growth
Benjamin Graham’s Clever Idea for Averting Currency Wars
Joe Carlen (Bloomberg) Feb 28, 2013
Benjamin Graham is remembered primarily as the father of value investing, and as the former professor, employer, friend and investing mentor of Warren Buffett. Yet Graham did a lot more than dispense sound investment advice.
No Honeymoon for Japan’s New Central Banker
William Pesek (Bloomberg) Feb 28, 2013
As president of the Manila-based Asian Development Bank, Haruhiko Kuroda spent the past seven years confronting the challenges posed by 48 diverse, dynamic and complex Asia-Pacific economies. If he thought that was hard work, consider what awaits him in Tokyo as he prepares to lead the Bank of Japan.
Emerging Europe airlines head for hangar
Neil Buckley (FT) Feb 28, 2013
Poland’s Lot is among lossmaking carriers that appear to be following Hungary’s Malev into the aviation history books.
A not-so-secret sterling devaluation ploy
Samuel Brittan (FT) Feb 28, 2013
The antics of a rating agency are merely a sideshow to the adventures of the pound.
Finance: An inequitable divide
Anne-Sylvaine Chassany and Henny Sender (FT) Feb 28, 2013
US private equity groups have weathered the financial storm by diversifying, in contrast to European firms.
Return of the euro crisis
Robert J. Samuelson (WP) Feb 28, 2013
Italy’s latest election quashes optimism.