Asia's Fate in the New World Order
Mark Thirlwell (FEER) Mar 2009
The financial and economic crises could lead to a larger role for Asia in world affairs.
Protectionism Also Rises in Asia
Greg Rushford (FEER) Mar 2009
Despite the hypocritical stance on protectionism of many Asian leaders, Asia has the most to lose if barriers go up.
Global Macroeconomic Cooperation
Jeffrey D. Sachs (Project Syndicate) Mar 2009
The world has yet to achieve the macroeconomic policy coordination that will be needed to restore economic growth following the Great Crash of 2008. In much of the world, consumers are now cutting their spending in response to a fall in their wealth and a fear of unemployment. The overwhelming force behind the current collapse of jobs, output, and trade flows, is even more important than the financial panic that followed Lehman Brothers’ default in September 2008.
Time to Fix the Euro
George Soros (Project Syndicate) Mar 2009
The euro suffers from structural deficiencies. It has a central bank, but it does not have a central treasury, and the supervision of the banking system is left to national authorities. These defects are increasingly making their influence felt, aggravating the financial crisis.
How the Crash Will Reshape America
Richard Florida (Atlantic) Mar 2009
The meltdown will affect more than our economy. It will forever change our geography.
The Path to Financial Re-Regulation
Charlie McCreevy (Project Syndicate) Mar 2009
Today, some people are saying that the storm of the financial crisis is subsiding. I am not so sure. Interbank lending rates are slowly coming down, but they are still far higher than they should be, share prices continue to be volatile, and conditions in global markets remain fragile.
What is the Deficit Endgame?
Kenneth Rogoff (Project Syndicate) Mar 2009
No one yet has any real idea about when the global financial crisis will end, but one thing is certain: government budget deficits are headed into the stratosphere. Investors in the coming years will need to be persuaded to hold mountains of new debt.
Economic Crisis and Regional Integration
Harold James (Project Syndicate) Mar 2009
Everyone now knows that we are in the worst economic crisis since the 1930’s. The protectionist responses are sadly familiar: protests against foreign workers, demands for trade protection, and a financial nationalism that seeks to limit the flow of money across national frontiers.
Confronting the Global Water Crisis
Peter Rogers (Project Syndicate) Mar 2009
Around the world, demand for fresh water doubles every 20 years, owing to increasing population and affluence. Yet pollution, climate change, and seawater intrusion are diminishing supplies of fresh water at similar rates. So, is a global fresh water crisis looming?
Building the Markets We Need
Alfred Gusenbauer (Project Syndicate) Mar 2009
The greatest challenge of the current global financial crisis is the seeming impossibility of comprehending and managing its diversity. Indeed, the way problems are proliferating appears almost uncontrollable. Plans to meet the crisis, in country after country, have been revamped and restructured time and again. The old models about how to understand the economy have had their day. Across the globe, governments are facing fundamental decisions about the future nature of their economies and societies.
Charlie McCreevy (Project Syndicate) Mar 2009
There is no shortage of analyses of what went wrong in the world’s capital markets over the past 18 months. What is clear is that a complex set of relationships, interactions, events, and omissions on the part of many different actors, rather than any single factor, was to blame.
Blame the Economists, Not Economics
Dani Rodrik (Project Syndicate) Mar 2009
As the world economy tumbles off the edge of a precipice, critics of the economics profession are raising questions about its complicity in the current crisis. Rightly so: economists have plenty to answer for.
Winning the Confidence Game
Robert J. Shiller (Project Syndicate) Mar 2009
On April 2, the G-20 will hold a summit in London to discuss what we may hope will be an internationally coordinated plan to address the world economic crisis. But can such a plan really work?
Charity in Hard Times
Peter Singer (Project Syndicate) Mar 2009
As I tour the U.S. promoting my new book, The Life You Can Save: Acting Now to End World Poverty , I am often asked if this isn’t the wrong time to call on affluent people to increase their effort to end poverty in other countries. I reply emphatically that it is not. There is no doubt that the world economy is in trouble. But if governments or individuals use this as an excuse to reduce assistance to the world’s poorest people, they would only multiply the seriousness of the problem for the world as a whole.
The Bourbons of Global Finance
Howard Stein and Claudia Kedar (Project Syndicate) Mar 2009
Today’s International Monetary Fund (and, to a lesser degree, the World Bank) recall Talleyrand’s description of France’s Bourbon kings: it has learned nothing and forgotten nothing. At a time when rich countries like the United States are running deficits of 12% of GDP because of the global financial meltdown, the IMF has been telling countries like Latvia and Ukraine, which did not start the crisis but have turned to the Fund to help combat it, that they must balance their budgets if they want aid.
Public Outrage as a Systemic Risk
Philip I. Levy (AEI) Mar 2009
Without bankruptcy, it is hard to avoid rewarding failure.
Is China the New America?
Harold James (FP) Mar 2009
The Great Depression made the United States the world's unquestioned financial leader. The current crisis can do the same for China.
The Center Cannot Hold
Edward Hugh (FP) Mar 2009
The EU's newest states want its core members to bail them out. But it's the union itself that's broken.
Global policy shortcomings will cost us dear
Wolfgang Münchau (FT) Mar 1, 2009
Speculators, once more, are getting ready to deconstruct a European edifice but this time it will be one on a bigger scale.
Revenge of the Glut
Paul Krugman (NYT) Mar 1, 2009
Remember the good old days, when we used to talk about the “subprime crisis” — and some even thought that this crisis could be “contained”? Oh, the nostalgia!
Mounting US Debt Burden Threatens Poorer Nations
David Dapice (YaleGlobal) Mar 2, 2009
But drying up foreign credit to the US could be bad for all.
The G20, global governance, and the missing “vision”
Barry Eichengreen (VoxEU) Mar 2, 2009
The G20 replaced the G7, but it has its own problems of legitimacy, size, and inconsistence with other governance vehicles. This column argues that the G20 membership should be re-jigged and the G20’s four separate work programmes should be merged to foster a “Grand Bargain”. Most of all, the G20 needs a vision.
Fighting Global Crisis Isn’t Meant to Be Easy
Michael R. Sesit (Bloomberg) Mar 2, 2009
Move quickly and forcefully to reinvigorate global demand and with it world growth, while taking time to carefully peruse the menu of moderate regulatory options.
Protectionism a dirty ASEAN word
Charles McDermid (AT) Mar 2, 2009
The Association of Southeast Asian Nations sent out strong anti-protectionist signals at its annual summit, emphasizing the need for a joint approach and a pooling of resources of the 10-member grouping in response to the global economic downturn. But economists wonder if the slew of feel-good policies and optimistic declarations of togetherness will still resonate when leaders return to face harsh realities at home.
A Risky 'Systemic' Watchdog
Sebastian Mallaby (WP) Mar 2, 2009
Barney Frank, the thoughtful chairman of the House Financial Services Committee, wants to create a new "systemic risk regulator." This general concept has been endorsed by some extremely distinguished economists. Nevertheless, the Frank proposal is dubious.
We need a multilateral consultation on how to avoid global deflation
Olivier Jeanne (VoxEU) Mar 3, 2009
This column proposes the organisation of a round of "multilateral consultation", under the auspices of the IMF, on how to avoid worldwide deflation. Ineffective fiscal and financial policies mean that attention will inevitably return to monetary policy – policymakers should be prepared. Getting the main central banks to agree on a basic set of principles would reduce the fog of Knightian uncertainty prolonging the crisis.
Gold Standard Fans Yearn for Great Depression
Michael R. Sesit (Bloomberg) Mar 3, 2009
If you don’t have faith in central bankers or politicians to ride herd over inflation, why would you trust them to keep a country on a gold standard for more than a short period of time?
Buyers Should Pay for Bond Ratings
Eric Dinallo (WSJ) Mar 3, 2009
The insurance industry is where a new model can best be launched.
Anne Applebaum (WP) Mar 3, 2009
Recriminations won't help E.U. economies. Living up to their single-market ideals might.
IMF Calls for Urgent Action as Third Wave of Global Crisis Hits Poorest Countries
IMF Mar 3, 2009
The global financial crisis is hitting poor countries hard, including in Sub-Saharan Africa, Managing Director Dominique Strauss-Kahn of the International Monetary Fund (IMF) warned today, and called on the international community to act urgently and generously to avoid the potentially devastating effects of this crisis on the most vulnerable countries.
A trade surplus is not always a sign of strength
Simon Tilford (FT) Mar 3, 2009
It is far from clear that a relatively bigger industrial sector would improve Britain's economic prospects.
One casino too many
Martin Hutchinson (AT) Mar 4, 2009
Of all the Wall Street casinos created over the past generation, the credit default swaps market has been among the most lucrative. The damage it has caused to the global economy justifies at the very least sharply restricting use of this sandbox.
A critical assessment of the de Larosiere report
Viral Acharya (VoxEU) Mar 4, 2009
The de Larosiere report is an important contribution to the future global financial architecture, especially its proposals for reform of EU regulatory supervision and global coordination. There is a surprisingly broad consensus on what needs to be done to fix the global financial system emerging. One hopes that the G20 summit will be a platform to launch key international reforms.
Trade protection: Incipient but worrisome trends
Elisa Gamberoni & Richard Newfarmer (VoxEU) Mar 4, 2009
Trade protection is on the rise around the world and risks pushing the economy into prolonged contraction. Officials have proposed more than 60 new trade restrictions since the beginning of the financial crisis. While a serious outbreak of protectionism has yet to occur, vigilance and leadership are required.
Obama Trade Agenda Cites ‘Imbalance’ in Doha Talks, Urges Focus on Environment, Labour
Bridges Weekly Trade News Digest, Vol. 13 No. 8 Mar 4, 2009
The Obama administration will push to “correct the imbalance” in the Doha Round trade talks at the WTO and strive to incorporate stricter requirements on labour and the environment in pending and future US trade deals, according to a trade agenda that was released by the new US leadership on Monday.
Obama Budget Calls for Deep Cuts to Agribusiness Subsidies
Bridges Weekly Trade News Digest, Vol. 13 No. 8 Mar 4, 2009
US President Barack Obama has called for cutting billions of dollars of farm subsidies over the next decade as part of efforts to rein in growing budget deficits in the face of increased government spending.
ASEAN Pushes for Deeper Integration, Signs FTA with Australia, New Zealand
Bridges Weekly Trade News Digest, Vol. 13 No. 8 Mar 4, 2009
The Association of Southeast Asian Nations signed a free trade deal with Australia and New Zealand and announced plans to accelerate progress toward an EU-style trading bloc at an annual summit in Thailand last week.
Trade finance shrivels, pushing downturn deeper
IHT Mar 4, 2009
Skittish banks are pulling back on financing for international commerce, contributing to the first fall in global trade in decades on top of the drop in demand.
A chance to remake the global financial system
Paul Keating (FT) Mar 4, 2009
International economic policy co-ordination should be conducted by the G20 not by the IMF, which has failed miserably.
Look for onshore, not offshore scapegoats
Avinash Persaud (FT) Mar 4, 2009
Admitting that the crisis was a failure of domestic regulation implies that those in power were out to lunch as the largest financial crash was brewing.
The Crisis at Home and Abroad
NYT Mar 4, 2009
Leaders of industrial nations must quickly work on a plan to provide large-scale financial assistance to avert an economic catastrophe in the developing world.
What Are the Odds of a Depression?
Robert J. Barro (WSJ) Mar 4, 2009
International evidence suggests there is a 20% chance our stock-market crash will lead to much worse.
Manoj Pradhan (MS GEF) Mar 5, 2009
Quantitative easing (QE) is not guaranteed to work, but we are optimistic that it will play an important role in moving the global economy onto the path to recovery eventually. However, central banks may find it difficult to roll back QE as well as policy rate cuts before economic recovery is entrenched, raising the risk of inflation further down the road.
Green Trade War
WSJ Mar 5, 2009
Warming to protectionism.
Stephen S. Roach (Globalist) Mar 5, 2009
How can we make market-based capitalism a safer, more stable and sustainable system?
Affluence and Ethics
William Easterly (WSJ) Mar 5, 2009
Helping the poor: What can be done must be done. So what truly can be done?
How the Fund can help save the world economy
Ted Truman (FT) Mar 5, 2009
A special drawing rights allocation would dramatically build confidence in co-operative solutions to the global recession.
Skilled immigrants boost innovation
Economist Mar 5, 2009
Restricting the immigration of highly skilled workers will hurt America's ability to innovate
IMF Urges Rethink Of How To Manage Global Systemic Risk
IMF Survey Mar 6, 2009
In the first comprehensive study of its nature, the IMF takes stock of the initial lessons learned from the global financial crisis, and urges a rethink of how to manage global systemic risk. Understanding what went wrong is key to restoring stability to the global economy.
What went wrong
Economist Mar 6, 2009
The IMF blames inadequate regulation, rather than global imbalances, for the financial crisis.
The last days of the oligarchs?
IHT/NYT Mar 7, 2009
The men who saw themselves at the Carnegies or Rockefellers of Russia may soon be thrown into the dustbin of history by the economic crisis.
Seeds of its own destruction
Martin Wolf (FT) Mar 8, 2009
Assumptions that prevailed since the 1980s embrace of the market lie in shreds. The era of free-wheeling finance is over. But the current crisis could have consequences that stretch much further.
An L of a recession – reform is the way out
Wolfgang Münchau (FT) Mar 8, 2009
We are nowhere near a solution to the crisis, and judging by the state of preparations, the forthcoming G20 summit is going to be a disaster.
A Rising Dollar Lifts the U.S. but Adds to the Crisis Abroad
NYT Mar 8, 2009
As American investors and foreign central banks flock to safe investments like Treasury bills, poorer countries are having a harder time raising money.
A survival plan for global capitalism
FT Mar 8, 2009
J.K. Galbraith wrote that 1929 stood alongside 1066, 1776, 1914, 1945 and 1989 in its importance. The world today was shaped by the efforts of governments to overcome the economic meltdown of the 1930s – and the consequences of their failures. Even if this economic crisis is not as bad as the Great Depression, it will have epoch-moulding consequences. This week the Financial Times starts a series on the Future of Capitalism. Much, however, depends on the success of next month’s meeting of the Group of 20 in London and how successful governments are at ending this worldwide crisis.
World Bank Says Global Economy Will Shrink in '09
NYT Mar 8, 2009
In a bleaker assessment than those of most private forecasters, the World Bank predicted a shrinking of the global economy for the first time since World War II.
Regulate financial markets while we still can
Willem Buiter (VoxEU) Mar 9, 2009
Financial regulation is a now-or-never proposition as the sector’s lobbying power is greatly diminished. This column argues that we should embrace robust regulation now, risking over-regulation. Correcting mistakes later would be better than risking another era of “self-” or “soft-touch” regulation.
Dealing with the crisis: Policy proposals for the G20
Mathias Dewatripont, Xavier Freixas & Richard Portes (VoxEU) Mar 9, 2009
The crisis is global; the solutions must be cooperative and coherent across countries. This column introduces the recent ebook on the fundamental financial and macroeconomic issues over which the G20 leaders should agree, stressing above all the short-run policy imperatives.
The political economy of financial reform: Effective regulations require effective regulators
Andrea Prat (VoxEU) Mar 9, 2009
Financial regulation was flawed. However, there are signs that regulators could have done much more with the rules and information they had. Even the best rules are useless if regulators are not interested in enforcing them. This column says regulatory bodies should open their books and make their industry connections transparent so we can evaluate and reduce the risk of regulatory capture.
Some Myths About Banks
Kenneth D. Lewis (WSJ) Mar 9, 2009
Nationalization would undermine confidence in the financial system.
Obama and his magic lamp
Spengler (AT) Mar 9, 2009
President Barack Obama was expected to adjust United States foreign policy to the constraints of rising foreign debt and existing entanglements. Instead, Obama has strode forth with a magic lamp in hand, namely the US's bottomless capacity to borrow. Struggling countries - such as Turkey - will smile and nod and take American checks, at least for the moment, while there still are functioning governments to take American checks.
Economist Mar 9, 2009
India's latest trade-promotion plans have disappointed exporters.
To Halt Slide, Apply Debt or Control?
NYT Mar 9, 2009
Powerful interests in the United States are expected to oppose European and Japanese pressure for international financial regulation.
Despite U.S. woes, dollar is riding high
IHT Mar 9, 2009
With lending and investment dysfunctional around the world, the tilt of money toward the U.S. appears to be exacerbating the crisis in other countries.
Why did US trade grow? The role of trade liberalisation
Matthew Adler & Gary Clyde Hufbauer (VoxEU) Mar 10, 2009
This column shows that 25% of US merchandise trade growth since 1980 was due to policy liberalisation. But as the financial crisis has taken hold, policymakers seem more likely to accept new episodes of protection than to energetically seek trade liberalisation. Protectionist initiatives on top of crisis losses would be a colossal mistake.
The euro’s impact on European firms’ competitiveness
Filippo di Mauro, Gianmarco I.P. Ottaviano & Daria Taglioni (VoxEU) Mar 10, 2009
This column analyses the impact of the euro’s adoption upon European firm’s productivity and international competitiveness. The euro produced significant competitiveness gains for relatively small economies such as Finland, Belgium, and Austria. If Denmark and Sweden had joined the euro area in recent years, they would have enjoyed gains equivalent to a 5% across-the-board reduction in trade frictions.
Trading Up To Global Recovery
Charlene Barshefsky (WP) Mar 10, 2009
A former U.S. trade envoy offers a strategy for boosting the global economy.
Why the G20 must focus on sustaining demand
Martin Wolf (FT) Mar 10, 2009
The right thing to do is 'more than enough'. It will always be possible to withdraw stimulus a year or two hence. It will be far more difficult to make action effective if depression, both economic and social, takes hold
A G-20 Insurance Solution for Global Imbalances
Eswar Prasad (Brookings) Mar 10, 2009
I propose the creation of an insurance pool for the G-20 economies. The pool would help economies reduce incentives for reserve buildups and help focus policymakers on the international consequences of domestic actions.
Lessons from a 1930s rebound that petered out
John Kay (FT) Mar 10, 2009
This year we will probably see the largest reduction in dividends since 1938. But 1938 is not generally remembered as a remarkable year in economic history. What happened?
Mr. Obama's Trade Agenda
NYT Mar 10, 2009
Vigorous trade will help the world recover. For that to happen, the United States will have to provide strong leadership and a clear commitment to fighting protectionism.
Lost through destructive creation
Gillian Tett (FT) Mar 10, 2009
Six years ago, Ron den Braber was working at Royal Bank of Scotland in London when he became worried that the bank's models were underestimating the risk of credit products. But when the Dutch statistical expert alerted his bosses to the problem, he faced so much disapproval that he eventually left.
It's a Terrible Time to Reject Skilled Workers
Paul Danos, Matthew J. Slaughter and Robert G. Hansen (WSJ) Mar 11, 2009
Don't we want the world's brightest fixing our banks?
Modelling financial turmoil through endogenous risk
Jon Danielsson, Hyun Song Shin & Jean-Pierre Zigrand (VoxEU) Mar 11, 2009
By incorporating endogenous risk into a standard asset-pricing model, this column shows how banks’ capacity to bear risk seemingly evaporates in the face of market turmoil, pushing the financial system further into a tailspin. It suggests that risk-sensitive prudential regulation, in the spirit of Basel II, makes systemic financial crises sharper, larger, and more costly.
How to get the Doha Round back on track
Robert E. Baldwin (VoxEU) Mar 11, 2009
The WTO talks broke down last year over a highly technical issue – the Special Safeguard Mechanism in agriculture. This column highlights a flaw in the proposed mechanism. It also argues that fear of a retaliatory process in today’s recessionary climate should drive leading developed and developing trading countries to negotiate new rules aimed at preventing such an outcome. Within this larger framework, the technical sticking points holding up Doha negotiations may be settled quickly.
The Fed Didn't Cause the Housing Bubble
Alan Greenspan (WSJ) Mar 11, 2009
Any new regulations should help direct savings toward productive investments.
One crunch after another
Economist Mar 11, 2009
The financial crisis is battering public finances on several fronts.
With China We Trade
Dave Wang (AT) Mar 11, 2009
President Barack Obama, in making Beijing a priority destination for Secretary of State Hillary Clinton, was following advice and interest dating back to George Washington and the Founding Fathers. Even in its earliest and most fragile days as a nation, the United States turned to China as a lifeline of trade.
Fight over Generic Drug Seizure Takes Centre Stage at TRIPS Council Meeting
Bridges Weekly Trade News Digest Volume 13, Number 9 Mar 11, 2009
Developing countries ramped up their criticisms of the EU last week, saying that its recent seizure of a shipment of generic drugs en route from India to Brazil violated trade rules on intellectual property and had significant implications for the availability of affordable medicines in poor countries.
World Bank Predicts Steepest Drop in Trade in 80 Years
Bridges Weekly Trade News Digest Volume 13, Number 9 Mar 11, 2009
World trade is set to register its first drop since 1982 and its biggest decline in 80 years, the World Bank said in a report released this week.
Kings of Cash: The Impact of the Global Financial Crisis on Sovereign Wealth Funds
K@W/Khaleej Times Mar 11, 2009
The worldwide financial crisis has raised many questions about the efficacy and role of sovereign wealth funds (SWFs), the large, state-controlled investment funds typically carrying a mix of assets. Some of the largest funds reside in the Middle East, and in the wake of the financial meltdown, many of them have become risk-averse and are turning inward to stimulate their own slumping economies. Knowledge@Wharton asked Wharton faculty and other experts discuss this change in SWF strategy and what it means for long-term economic stability.
A Tsunami of Excuses
William D. Cohan (NYT) Mar 11, 2009
It's been a year since Bear Stearns collapsed, kicking off Wall Street’s meltdown, and it’s more than time to debunk the myths that many Wall Street executives have perpetrated about what has happened and why.
Tax havens in the dock
Paul Betts (FT) Mar 11, 2009
The global recession and efforts to raise cash for state coffers have turned into a lethal cocktail.
Trade Rules and Climate Change Policy: Part I
Kevin M. Dempsey (Globalist) Mar 11, 2009
How do international trade rules and the WTO affect climate change policy?
Consumers Can Still Spot Value in a Crisis
Amar Bhidé (WSJ) Mar 12, 2009
The personal computer took off in the bleak economy of the early 1980s.
Trade Rules and Climate Change Policy: Part II
Kevin M. Dempsey (Globalist) Mar 12, 2009
How much leeway do governments have in handing out free carbon allowances?
How Low Can The Stock Markets Go?
Nouriel Roubini (Forbes) Mar 12, 2009
The answer: Lower... much lower.
Needed: A Global Response to the Global Economic and Financial Crisis
C. Fred Bergsten (PIIE) Mar 12, 2009
The financial and economic crisis is a global phenomenon. No country has been spared. The downturn has been, and continues to be, rapidly transmitted across borders through both trade and financial channels (table 1 indicates the different degrees of exposure to the crisis among the G-20 countries).
A Plan B for global finance
Dani Rodrik (Economist) Mar 12, 2009
Stronger national regulation, not the global sort.
For Sweden, tiny Latvia, Lithuania and Estonia are too big to fail
IHT Mar 12, 2009
A deep sense of ownership of the Baltic success story is driving Sweden to spend ever-more money in the name of preventing a financial collapse.
Wanted: global politics to rescue global capitalism
Philip Stephens (FT) Mar 12, 2009
As with much else, the pace of progress will depend on the US – the insufficient but still indispensable power.
It seems not all recessions are created equal
Samuel Brittan (FT) Mar 12, 2009
The authors of an IMF working paper found one out of six recessions was associated with a credit crunch, one in four with a house price bust and one in three with an equity crash.
As Indian Growth Soars, Child Hunger Persists
NYT Mar 12, 2009
Malnutrition is worse in India than in many sub-Saharan African countries, a paradox in a proud democracy.
China 'Worried' About Safety of U.S. Treasuries
NYT Mar 12, 2009
China, the biggest holder of U.S. government debt, expressed concern about the safety of those assets.
How the recession is hurting the poor
Economist Mar 12, 2009
A downturn that began in the rich world is hurting those who can least afford it.
International Cooperation Is the Way Out of the Financial Crisis
Alistair Darling (WSJ) Mar 13, 2009
The G-20 represent 80% of the global economy.
Climate Change Competitiveness: Part III
Kevin M. Dempsey (Globalist) Mar 13, 2009
How can the United States work within the WTO framework to limit carbon emissions?
Doom, gloom and hope for Asia
Al Labita (AT) Mar 13, 2009
Asia lost at least US$10 trillion in financial assets last year and the red ink is deepening. Yet if it gets to grip with the global financial infrastructure that will develop from the ashes, the region could be stronger than before, claims former International Monetary Fund chief Michel Camdessus.
Murky Protectionism Threatens Global Economic Recovery
Richard Baldwin and Simon Evenett (YaleGlobal) Mar 13, 2009
The G20 must act in concert to endorse free trade and stabilize the global financial system
A dangerous balance
Henry C K Liu (AT) Mar 13, 2009
Trade and currency values have long been a contentious issue at the heart of the relationship between China and the West. Yet the appreciation required to close China's balance of payment surplus would cause instability for the whole global economy - including collapse of the US retail trade.
Global: Show Me the Money
Joachim Fels & Manoj Pradhan (MS GEF) Mar 13, 2009
We think that money supply is a key indicator to gauge whether monetary policy action will find traction. Conventional and unconventional monetary easing has in fact started to lift money supply growth in major economies. We see this as an important intermediate step towards economic stabilisation later this year and recovery in 2010.
G-20 Asks IMF to Track, Assess Global Crisis Response
IMF Survey Mar 14, 2009
Ministers from leading industrialized and emerging market economies in the G-20 ask the IMF to assess the policy responses taken so far by governments and central banks to combat the world economic crisis and back a substantial boost in the Fund's lendable resources.
Before the stampede
W Joseph Stroupe (AT) Mar 14, 2009
The risk aversion that is driving demand for US government bonds is creating a bubble that will burst when investors finally evaluate the safety of Treasuries based on the disintegrating fundamentals of the US economy. China is already leading the way ahead of the eventual stampede.
A proposal to the members of the G20
Biagio Bossone (VoxEU) Mar 14, 2009
The crisis has revealed many gaps in global economic governance – problems that G20 leaders should address at the London Summit. This column describes a proposal by the “Group of Lecce”, which argues that global economic decision-making should take place within the IMF and World Bank transformed by more responsible, representative, and powerful “Governing Councils”.
Collective action on the crisis is our best hope
Wolfgang Münchau (FT) Mar 16, 2009
I sense that European leaders are again hoping for an American miracle. Only this time, it is not going to happen.
Let fairness triumph over corporate profit
Trevor Manuel (FT) Mar 16, 2009
Can Ulysses bind himself again to the deck, having succumbed for so long to the sirens’ allure?
Capitalism needs a revived Glass-Steagall
Nigel Lawson (FT) Mar 16, 2009
There are, inevitably, costs of globalisation; but they are hugely outweighed by the benefits. So resistance to protection must be rigorously maintained.
A Continent Adrift
Paul Krugman (NYT) Mar 16, 2009
Europe is facing at least as severe a slump as the United States, yet has failed to respond effectively to the downturn.
Rated F for Failure
Jerome S. Fons & Frank Partnoy (NYT) Mar 16, 2009
Why, more than a year into the global financial crisis, do regulators and investors continue to rely on ratings? No one has been more wrong than Moody's and S.&P.
Washington Starts Another Trade War
WSJ Mar 16, 2009
The evidence shows Mexican trucks are safe.
A lot of bucks, but how much bang?
Richard Clarida Mar 16, 2009
Policymakers have committed substantial sums to addressing the global recession and the global financial crisis, but there is real doubt about their effectiveness. This column explains why the fiscal stimulus might fail.
China likely to be stronger after crisis
IHT Mar 16, 2009
The global economic downturn, and efforts to reverse it, will probably make China an even stronger economic competitor than it was before the crisis.
The Teamsters War
WSJ Mar 17, 2009
Mexico fights back with tariffs.
China's Role in the Origins of and Response to the Global Recession
Nicholas R. Lardy (PIIE) Mar 17, 2009
China is the gold standard in terms of its response to the global economic crisis. If you look at the magnitude of what they are doing in several domains, it is very substantial, and among the economies that matter, at least according to the International Monetary Fund (IMF), China's stimulus program relative to the size of its economy is larger than that of any other country including the United States, and I think the United States may have underestimated what China is doing.
The protectionist temptation: Lessons from the Great Depression for today
Barry Eichengreen & Douglas Irwin (VoxEU) Mar 17, 2009
What do we know about the spread of protectionism during the Great Depression and what are the implications for today’s crisis? This column says the lesson is that countries should coordinate their fiscal and monetary measures. If some do and some don’t, the trade policy consequences could once again be most unfortunate.
Transatlantic divergence in tackling the crisis
Charles Wyplosz (VoxEU) Mar 17, 2009
We should not expect much global fiscal policy coordination, this column warns. The G20 will not be able to paper over the deep transatlantic divergences in the way economic policies are prepared and understood. While the US, UK, Japan, and China want a significant fiscal response, European nations are fixated on overhauling financial regulation.
The limits to offshoring: Technological complexity and information transfers
Wolfgang Keller & Stephen Yeaple (VoxEU) Mar 17, 2009
What jobs are headed overseas? This column emphasises that the feasibility of offshoring tasks is heavily influenced by the costs of transferring technology and managing complex tasks. Offshoring may be less about lower factor costs and more about the race between technology transfers and trade costs.
The not-so-safe haven
W Joseph Stroupe (AT) Mar 17, 2009
Official and popular analysis of the predicament facing the US dollar has for the most part been distinctly unwilling to come fully to grips with the stark truth about the real nature of this deepening crisis and the escalating risks that are surfacing. Far too much optimism and wishful thinking, and scarce courageous realism, is a recipe for an even worse disaster than the one we're suffering at present.
China inoculates itself against dollar collapse
W Joseph Stroupe (AT) Mar 18, 2009
Any publicly recognized effort by the Chinese government to reduce its heavy exposure to US dollars could bring about the very collapse in dollar value that it fears. Beijing is fully aware of the risks - and is acting accordingly.
The baleful Bretton Woods legacy
Martin Hutchinson (AT) Mar 18, 2009
The US call for a trebling of the International Monetary Fund's lending power ignores the dismal history and recent actions of the Bretton Woods institution. A better international financial architecture would appear if the IMF merely disappeared.
Reform the architecture of regulation
Henry Paulson (FT) Mar 17, 2009
The current system of overlapping regulatory jurisdictions has allowed non-bank institutions to create risky mortgages, and permitted AIG to become a 'huge and essentially unregulated hedge fund'.
Why saving the world economy should be affordable
Martin Wolf (FT) Mar 17, 2009
Is there good reason to expect huge increases in public sector indebtedness across the globe? Yes. But this does not guarantee defaults.
Securitisation undermined financial stability
Hyun Song Shin (VoxEU) Mar 18, 2009
Did securitisation disperse risks? This column argues that it undermined financial stability by concentrating risk. Securitisation allowed banks to leverage up in tranquil times while concentrating risks in the banking system by inducing banks and other financial intermediaries to buy each other’s securities with borrowed money.
Troubles in the credit rating industry
Xavier Freixas (VoxEU) Mar 18, 2009
Credit rating agencies played a significant part in the financial meltdown, failing (sometimes intentionally) to properly estimate complicated products’ risk. This column summarises the problems plaguing the industry – conflicts of interest, “shopping” for ratings, and informational issues. It concludes that regulators must reshape the agencies and their role.
The G20 and sustainable IMF reform
Daniel D. Bradlow (VoxEU) Mar 18, 2009
Will the G20 agree to the reforms needed to make the IMF an effective part of international financial governance? The prospects are grim because it would require difficult political compromises or amendments to the IMF’s Articles of Agreement. Yet reforms are needed to address the IMF’s coordination with other international institutions, the scope of the financial regulatory regime, and its representative legitimacy. This column some initial steps the G20 might take.
Mr. Wen's Debt Bomb
WSJ Mar 18, 2009
China has a big stake in America's fiscal free-for-all.
Congress Doesn't Respect Nafta
Arturo Sarukhan (WSJ) Mar 18, 2009
Why Mexico is imposing retaliatory tariffs on U.S. goods.
Whistling Past the Graveyard
Simon Johnson (PIIE) Mar 18, 2009
Expectations were low for this weekend's G-20 meeting of finance ministers and central bank governors. Despite that, we should be disappointed with the outcome.
Trade Barriers Could Threaten Global Economy
WP Mar 18, 2009
World Bank finds protectionist trend.
The Middling Kingdom
Daniel W. Drezner (National Interest) Mar 18, 2009
China has had an active month in foreign policy.
BRICs Show New Influence at G20 Finance Ministers Meeting
Bridges Weekly Trade News Digest Volume 13, Number 10 Mar 18, 2009
Emerging economies displayed a new level clout at a gathering of finance ministers from the Group of 20 old and new economic powers over the weekend, winning pledges for increased funding from international financial institutions, as well as a greater say in how those institutions are run.
US, EU, Quizzed on Farm Subsidies, Other Trade Measures
Bridges Weekly Trade News Digest Volume 13, Number 10 Mar 18, 2009
The latest US farm bill and the reintroduction of EU export subsidies were among the controversial issues discussed at a 12 March meeting of the WTO’s regular agriculture committee. Officials took advantage of the deadlock in the Doha Round talks to scrutinise the trade measures that countries must notify regularly to the WTO, trade sources said.
Trade Issues Emerge as Climate Policy Hits US Agenda
Bridges Weekly Trade News Digest Volume 13, Number 10 Mar 18, 2009
With a new administration in power and a major international conference on the horizon, climate change policy has re-emerged on the agenda in the US Congress. But as the much-anticipated issue takes centre stage, some politicians are already calling for trade barriers to help US industry cope with anticipated challenges if a cap-and-trade scheme is introduced.
After Dodging Many Bullets, Hedge Funds Are Back in Regulators' Sights
K@W Mar 18, 2009
The hedge fund industry's long history of avoiding tougher regulation may be coming to an end, as the Obama administration and Congress look for ways to avoid another financial meltdown. Although it is not clear that hedge funds actually played much of a role in the current crisis, the industry's sagging performance, combined with investors' and regulators' heightened demand for transparency, will likely cause big changes in the way these secretive investment pools operate, according to several Wharton faculty members.
Lessons for the west from Asian capitalism
Kishore Mahbubani (FT) Mar 18, 2009
When this storm is over, an Asian mix of capitalism, not the western formula, will become the dominant form and the 'invisible hand' of free markets will be balanced by the 'visible hand' of good governance
The quest for a global solution is misguided
Razeen Sally (FT) Mar 18, 2009
Much will depend on unilateral measures to put domestic houses in order around the world, and the effect that has.
Avoiding a Global Trade War
Catherine Ashton (CEIP) Mar 18, 2009
As the financial crisis deepens, policymakers are facing growing pressures to close their nation’s borders to the international economy. Resisting these pressures is imperative, not just for long-term economic health, but for near-term recovery.
Punter of last resort
Christopher D. Carroll (VoxEU) Mar 18, 2009
The financial meltdown that shifted into high gear last September has flushed into public view many surprising facts. One of the strangest is the existence, in the economics profession, of a bizarre religious cult.
G-20 fritters as crisis deepens
Hossein Askari and Noureddine Krichene (AT) Mar 19, 2009
Preparations for the Group of 20 economic summit next month have so far failed to recognize the cause of the financial crisis it is supposed to resolve, even as governments continue the reckless, easy-cash policies that brought it about. This summit is risking failure, and that too will carry a cost.
China sees an opportunity in failure
AT Mar 19, 2009
Beijing has invested substantial effort in preparing for April's global summit in London, even though it is most likely the talks will not come up with a formula to restore the world's economic growth. Such a failure could open the door for China to advance its aspirations for the creation of a new financial order.
‘Aid Addict’ Africa Should Just Say No
Bloomberg Mar 19, 2009
Telephones ring on the desks of finance ministers across Africa with news of a pioneering aid initiative: The West plans to halt all low-interest lending and grants to the continent within five years. That scenario is anathema to the African aid lobby led by the likes of Bono and Bob Geldof. Yet it’s precisely what Africa needs, says Zambian economist Dambisa Moyo in her provocative book, “Dead Aid.”
A Small and Dangerous Spat
NYT Mar 19, 2009
Protectionist measures against our trading partners could drive the world into an even worse economic slump.
China Toys With Biting Hand Feeding Its Surplus
John M. Berry (Bloomberg) Mar 19, 2009
If Chinese Premier Wen Jiabao is so worried about the safety of China’s investment in U.S. Treasury securities, he can order the money be moved elsewhere.
WSJ Mar 19, 2009
The U.S. violated NAFTA last week. Now Americans will pay for the Dems' war on trade.
Emerging Markets Face Growing Capital Account Pressures
IMF Survey Mar 19, 2009
Emerging market countries are facing increasing difficulties around the world because of the spreading economic crisis, with demand falling for their exports, investment slumping, and cross-border lending drying up, according to an assessment by the IMF.
Advanced Economies to Contract Sharply in 09, Upturn Next Year
IMF Survey Mar 19, 2009
Despite major stimulus packages announced by advanced economies and several emerging markets, trade volumes have shrunk rapidly, while production and employment data suggest that global activity continues to contract in the first quarter of 2009, the IMF says in a new assessment of the global economy.
IMF criticises US stability plan
FT Mar 19, 2009
The Obama administration's plans to stabilise the financial system lack "essential details" and have left the markets uncertain about how it intends to recapitalise the teetering US banking sector, says the International Monetary Fund.
Do not let the ‘cure’ destroy capitalism
Gary Becker and Kevin Murphy (FT) Mar 19, 2009
In devising reforms to reduce the likelihood of future severe contractions, capitalism's accomplishments should be appreciated. Governments should not so hamper markets that they are prevented from bringing growth to poor economies.
What developing countries need from the G20 summit: Liquidity, fiscal support, and humanitarian aid
Kemal Dervis Mar 19, 2009
What policy measures might reduce the economic damage developing countries suffer from the global crisis? This column says that developing economies should seek emergency liquidity, IMF reforms, greater fiscal support, and more humanitarian development assistance at the London summit next month.
Why the Turner report is a watershed for finance
Martin Wolf (FT) Mar 19, 2009
Yet even this radicalism is limited: the report rejects division of the financial system into utilities and a casino.
Off With the Bankers
Simon Johnson & James Kwak (NYT) Mar 19, 2009
The Asian financial crisis offers lessons to solving our own -- when insiders have broken a financial institution, the most direct remedy is to kick them out.
Global: Still Sinking and Synching
Joachim Fels (MS GEF) Mar 20, 2009
Recent forecast revisions around the globe take our 2009 global GDP growth forecast down from -0.3% last month to -1.2%. These revisions take on board the continued vertiginous drop in global trade and its knock-on effects on output, capex and employment.
Microfinance and the credit crunch
Economist Mar 20, 2009
Lending to the poor has held up well but it is not as safe from the credit crisis as its champions hoped.
Quantitative easing v credit easing
Economist Mar 20, 2009
Today's fattened central-bank balance-sheets evoke fears of inflation. Deflation is the bigger worry.
Ballots and Bullets
Kenneth Roth (NYT) Mar 20, 2009
These days no self-respecting government wants to present itself on the world stage without the legitimacy of a democratic mantle. Elections are now de rigueur, even if many a despot rejects the idea of actually abiding by voter preferences. The result is an embrace of “democracy” by such authoritarian leaders as Vladimir Putin of Russia, Robert Mugabe of Zimbabwe, Meles Zenawi of Ethiopia, Islam Karimov of Uzbekistan, Umaru Yar’Adua of Nigeria and Mwai Kibaki of Kenya. They all have used some combination of violence, fraud and repression to ensure that elections do not threaten their grasp on power.
Globalisation promotes peace
Jong-Wha Lee & Ju Hyun Pyun (VoxEU) Mar 21, 2009
This column claims that bilateral trade interdependence reduces the probability of inter-state military conflict. Moreover, global trade openness lowers the probability of conflict with the bilateral trade partner by a larger magnitude than bilateral trade does alone.
What did not cause the global crisis
Michael Dooley & Peter Garber(VoxEU) Mar 21, 2009
This column argues that current account imbalances, easy US monetary policy, and financial innovation are not the causes to blame for the global crisis. It says that attacking Bretton Woods II as a major cause of the crisis is an attack on the world trading system and a sure way to metastasise the crisis in the global financial system into a crisis of the global economic system.
Reorganise the banks by focusing on the liabilities, not the assets
Jeremy Bulow & Paul Klemperer (VoxEU) Mar 21, 2009
Fixing the banks is an absolute priority in G7 nations. Doing this by buying toxic assets is costly, inefficient, and risky. This column proposes creating a “bridge” bank as a way to re-establish a healthy banking system.
Renewed strength of euro threatens economy
IHT Mar 21, 2009
The euro's latest surge could help push the European Central Bank into taking radical steps similar to those that are weakening the dollar, pound and Swiss franc.
E.U. comes together on emergency funding
IHT Mar 21, 2009
Overcoming internal divisions, the European Union pledged an additional ?75 billion to finance loans by the I.M.F. and to double a credit line for its stricken eastern economies.
Nobel Economist Gary Becker: Now Is No Time to Give Up on Markets
Mary Anastasia O'Grady (WSJ) Mar 21, 2009
The winner of the 1992 Nobel Prize in Economic Sciences says now is not the time to give up on the markets.
The Recession, for Fun and Profit
Eduardo Porter (NYT) Mar 21, 2009
Some new financial strategies from the bankers who brought us the collateralized debt obligation and the credit default swap.
No Safety in Numbers
Roger Lowenstein (NYT) Mar 22, 2009
Is there such a thing left as a safe investment?
When the Economy Really Did 'Fall Off a Cliff'
Jean Strouse (NYT) Mar 22, 2009
A look back at the handling of another financial crisis a full century ago underlines the point about decisive action.
Strike faster on death-wish finance
Clive Crook (FT) Mar 22, 2009
AIG's business model, which involved insuring risks taken by other financial groups on an insupportable scale, had moral hazard written all over its transactions. Intervene early or risk having to choose between Lehman and its consequences in 2008 and AIG and its consequences in 2009.
Peripheral care should be the central concern
George Soros (FT) Mar 22, 2009
Institutions such as the IMF face a novel task: to protect the periphery countries from an economic storm created in the developed world.
Revival requires a broad spread of demand
Kemal Dervis (FT) Mar 22, 2009
A relatively quick economic recovery is possible. If politics allow four things to be accomplished in time to avoid a catastrophe then growth may resume some time in 2010.
Brazil Shouldn't Count on Washington
WSJ Mar 23, 2009
The U.S. continues to mishandle the financial crisis.
Establishing a global lender of last resort
Guillermo Calvo (VoxEU) Mar 23, 2009
Fiscal stimulus and financial regulation cannot restore credit availability. This column argues that we need a global lender of last resort to restore liquidity. In the short run, it presses for large liquidity facilities to protect emerging market economies from the risk of damaging sudden stops of capital inflows.
The importance of empty words
Gideon Rachman (FT) Mar 23, 2009
It will be tempting to laugh, if and when the communiqué from the London G20 summit contains the familiar pledges to avoid protectionism. But it is probably important that world leaders at least promise to follow the path of virtue – even if they know that they may sin.
The threat posed by ballooning Federal reserves
John Taylor (FT) Mar 23, 2009
These extraordinary measures have the potential to change permanently the role of the Fed in harmful ways.
Elasticity optimism: Foreign and domestic goods are more substitutable than you think
Jean Imbs & Isabelle Mejean (VoxEU) Mar 23, 2009
Estimates of the elasticity of substitution between domestic and foreign varieties are small in macroeconomic data and substantially larger in disaggregated studies. This column reconciles those facts by taking into account the heterogeneity of goods. A better estimate of the aggregate elasticity of substitution is twice the conventional value – suggesting that the US dollar need not depreciate as much as usually thought to reduce the US current account deficit.
One Way to Stop Bear Raids
George Soros (WSJ) Mar 23, 2009
Credit default swaps need much stricter regulation.
Nafta's Promise, Unfulfilled
NYT Mar 23, 2009
Fifteen years after the North American Free Trade Agreement took effect, the pact, in some cases, has produced results that were exactly opposite of what was promised.
Reform the International Monetary System
Zhou Xiaochuan (People's Bank of China) Mar 23, 2009
The outbreak of the current crisis and its spillover in the world have confronted us with a long-existing but still unanswered question,i.e., what kind of international reserve currency do we need to secure global financial stability and facilitate world economic growth, which was one of the purposes for establishing the IMF? There were various institutional arrangements in an attempt to find a solution, including the Silver Standard, the Gold Standard, the Gold Exchange Standard and the Bretton Woods system. The above question, however, as the ongoing financial crisis demonstrates, is far from being solved, and has become even more severe due to the inherent weaknesses of the current international monetary system.
No One Model for New Global Economy
Yoichi Funabashi (YaleGlobal) Mar 23, 2009
The US, Japan and China should build a tripartite vision, not a new Bretton Woods
Successful bank rescue still far away
Martin Wolf (FT) Mar 24, 2009
With the IMF expecting world output to shrink by up to 1 per cent this year and the economies of the advanced countries to shrink by between 3 and 3.5 per cent, this is the worst global economic crisis since the 1930s. So far the congressional response has been a disaster.
Does exporting improve firm performance?
Dean Yang (VoxEU) Mar 24, 2009
Many emphasise the importance of export growth in economic development, but does exporting increase economic growth or does growth increase exports? This column presents evidence from a natural experiment – demand shocks experienced by Chinese exporters due to the Asian financial crisis – suggesting that exporting improves firm performance.
Regional Voices in Global Governance: A Natural Progression (Part I)
Lex Rieffel (Globalist) Mar 24, 2009
How will forums such as the G-20 and the G-8 evolve to become more inclusive?
Institutional reform: Good for both the short and long run
John Williamson (VoxEU) Mar 24, 2009
This column says that institutional reform is unique in that it could simultaneously address the short-run agenda of combating the collapse of aggregate demand and the long-run agenda of building a global economy fit for the 21st century. IMF reform has to be at the forefront of such an initiative.
To Help Countries Face Crisis, IMF Revamps its Lending
IMF Survey Mar 24, 2009
As part of moves to support countries during the global economic crisis, the IMF beefs up its lending capacity and approves a major overhaul of how it lends money by offering higher amounts and tailoring loan terms to countries' varying strengths and circumstances.
Liberalise now! – The only chance for emerging economies to become a major player
Andreas Freytag & Sebastian Voll (VoxEU) Mar 25, 2009
The crisis offers an opportunity for emerging countries to use their increased economic weight and take the lead in international trade policy, putting the industrialised countries’ own reforms and global initiatives under pressure. This column argues that emerging markets should take this opportunity to liberalise their external policies.
A Crisis Calls for a "Crisis Round"
Arvind Subramanian and Aaditya Mattoo (PIIE/WSJ) Mar 24, 2009
Protectionism is steadily mounting, but not only through the usual tariffs and quotas and the like. Instead, countries are skirting World Trade Organization rules and erecting new kinds of trade barriers. It's time to find new solutions to this new problem.
WTO sees 9% global trade decline in 2009 as recession strikes
WTO Mar 25, 2009
The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down by roughly 9% in volume terms in 2009, the biggest such contraction since the Second World War, WTO economists forecast today (25 March 2009). “Trade can be a potent tool in lifting the world from these economic doldrums. In London G20 leaders will have a unique opportunity to unite in moving from pledges to action and refrain from any further protectionist measure which will render global recovery efforts less effective,” said Director-General Pascal Lamy.
An imbalanced summit
Oscar Ugarteche (AT) Mar 25, 2009
When seven highly indebted and crisis-hit rich countries assemble with some of their creditors in London next month, those not present include most of the countries to which the "rich" are indebted. This imbalanced summit marks the crumbling of an era.
A new era of accountable capitalism
Karl-Theodor zu Guttenberg (FT) Mar 24, 2009
The financial crisis has shown that capitalism needs rules but governments should be careful not to impose public control outside the financial sector.
The world needs an unbiased risk assessor
Nicholas Stern (FT) Mar 24, 2009
The new plans for an early warning system cannot be based in any of the existing international institutions.
The fallacy of equating economic power with clout
John Kay (FT) Mar 24, 2009
In the modern world, there is no observable relationship between the size of a country and its standard of living.
Toxic Assets Were Hidden Assets
Hernando de Soto (WSJ) Mar 25, 2009
We can't afford to allow shadow economies to grow this big.
Not so fast! There’s no reason to regulate everything
Jon Danielsson (VoxEU) Mar 25, 2009
Many are calling for significant new financial regulations. This column says that if the “regulate everything that moves” crowd has its way, we will repeat past mistakes and impose significant costs on the economy, to little or no benefit. The next crisis is years away – we have time to do bank regulation right.
The export trap
Economist Mar 25, 2009
Asia's failing export-led growth model.
Falling exports in Japan hit small companies hardest
IHT Mar 25, 2009
Small firms, withering in the downturn, employ almost 90 percent of workers in Japan's manufacturing sector.
Dollar will remain dominant currency, Geithner says
IHT Mar 25, 2009
The Treasury secretary, Timothy F. Geithner, said Wednesday that the dollar would remain the world's dominant reserve currency for some time to come, clarifying earlier remarks that sent the dollar tumbling.
We need to share the bill for bail-outs
John Gapper (FT) Mar 25, 2009
One thing we have learnt in the past year is that some banks are definitely too big to fail. We may yet discover something even more disturbing: that some are too big to save.
Daddy, tell me, what exactly is a derivative?
James Carville (FT) Mar 25, 2009
It is not that Obama is not communicating well; it is that what he is communicating is too complex to put in words.
U.S. to Detail Plan to Rein In Finance World
NYT Mar 25, 2009
Hedge funds and traders of exotic financial products could be under stricter governmental supervision, officials said.
Regional Voices in Global Governance: The Role of Advocacy (Part II)
Lex Rieffel (Globalist) Mar 25, 2009
How do powerful members of the G-8 advocate for smaller countries in their region?
Mexico Slaps Tariffs on US Goods in Trucking Spat; Obama Vows Swift Response
Bridges Weekly Trade News Digest, Volume 13, Number 11 Mar 25, 2009
Mexico has imposed retaliatory tariffs on US$ 2.4 billion worth of US exports in response to Washington’s recent termination of a pilot programme that allowed Mexican long-haul trucks to cross into US territory. The tariffs took effect 19 March, just one day after Mexico City announced the measures.
While Economic Turmoil Grabs Headlines, Food Crisis lingers
Bridges Weekly Trade News Digest, Volume 13, Number 11 Mar 25, 2009
The combined effects of the financial crisis, increased protectionist policies, continued rich country subsidies, and climate-induced changes in patterns of agricultural production are likely to hit developing country farmers hardest. Thanks to the confluence of these factors, a long-term solution to the global food crisis has not been reached, experts agreed at two recent summits on agriculture.
A “legacy-equity” mechanism to recapitalise the banks
Is China Having It Both Ways?
Arvind Subramanian (PIIE) Mar 25, 2009
China made headlines across the globe this week with its call for the establishment of a new currency to replace the dollar as the world's reserve currency. The impeccable timing, just prior to the London G-20 summit, has allowed China to articulate the concern as a systemic one.
China and the Dollar
WSJ Mar 26, 2009
Markets don't like Treasury talking down the dollar's status.
Economist Mar 26, 2009
Trade is collapsing and protectionism is on the rise. Time for the G20 to get going.
China's Role in the Origins of and Response to the Global Recession
Trevor Houser (PIIE/FP) Mar 26, 2009
Barack Obama's mild-mannered energy secretary, Steven Chu, made news last week when he signaled his openness to carbon tariffs as a "weapon" in the incipient US war on climate change. The tariffs, as the argument goes, would address two reoccurring fears: that cutting US emissions won't stop global warming unless China and India follow suit, and that pricing carbon at home will induce US industry to move to less-regulated countries. "If country X doesn't [apply a cost to carbon] then I think we should look at considering perhaps duties that would offset that cost," Chu explained.
The macroeconomics debate: A guided tour
Philip Lane (VoxEU) Mar 26, 2009
This column provides a tour of the main ideas discussed in the Macroeconomic theme of the Global Crisis Debate on VoxEU.org. Bottom line: fighting the current crisis and preventing future crises requires a holistic approach that tackles both short-term macroeconomic policy imperatives and longer-term institutional reforms. It is a false choice to argue that the upcoming summit should focus on one or the other. Fixing this crisis without redressing global imbalances may be setting the stage for the next crisis – a dollar collapse.
Ricardo Caballero (VoxEU) Mar 26, 2009
After unloading toxic assets, many banks will need new capital. This column proposes raising private capital to invest in distressed banks’ new equity using a mechanism similar to the Legacy Assets Program recently announced by Geithner. Since equity markets are more liquid, the leverage ratio and the public-equity participation in this new plan would be much smaller, e.g. the leverage ratio capped at two and the public-capital participation at 30%.
We need a better cushion against risk
Alan Greenspan (FT) Mar 26, 2009
It is hard for central banks to deflate bubbles pre-emptively, and investors in the liabilities of banks may require an additional 3-4 percentage points in their equity capital-to-asset ratios in order to foster normal lending.
Capitalism Beyond the Crisis
Amartya Sen (NYRB) Mar 26, 2009
2008 was a year of crises. First, we had a food crisis, particularly threatening to poor consumers, especially in Africa. Along with that came a record increase in oil prices, threatening all oil-importing countries. Finally, rather suddenly in the fall, came the global economic downturn, and it is now gathering speed at a frightening rate. The year 2009 seems likely to offer a sharp intensification of the downturn, and many economists are anticipating a full-scale depression, perhaps even one as large as in the 1930s. While substantial fortunes have suffered steep declines, the people most affected are those who were already worst off.
As Chinese investments in Africa drop, so does hope
IHT Mar 26, 2009
As commodity prices fall and several African partners falter, Beijing is backing away, seeking political stability.
Geithner proposes sweeping changes to financial system
IHT Mar 26, 2009
The Obama administration intends to overhaul regulation by subjecting hedge funds and traders of exotic financial instruments to potentially strict new government supervision.
Rising Fear of a Future Oil Shock
NYT Mar 26, 2009
Sharp reductions in investments and low oil prices could curb future supplies, leaving the world to face a new energy shock when the economy picks up, according to a new study.
Re-emerging as an Emerging Market
Desmond Lachman (AEI) Mar 26, 2009
The United States is coming to resemble Argentina, Russia, and other emerging markets, both in what led to this crisis and in how we are trying to fix it.
Regional Voices in Global Governance: Changing the G-8? (Part III)
Lex Rieffel (Globalist) Mar 26, 2009
What does the future hold for the G-8 and its membership?
The origin of bias in credit ratings
Vasiliki Skreta & Laura Veldkamp (VoxEU) Mar 27, 2009
Understanding the origins of the crisis requires understanding the failures of the market for ratings. This column explains how conflicts of interest and shopping for the best rating produced biased assessments of complex assets, whereas these bad incentives had not plagued ratings of simpler assets. We need to rethink how ratings are provided, lest the next bout of financial innovation trigger another round of ratings inflation and subsequent financial market turmoil.
How Korea Solved Its Banking Crisis
Lee Myung-bak (WSJ) Mar 27, 2009
The world can learn from our experience in the late '90s.
Less cash for Treasuries
David Goldman (AT) Mar 27, 2009
With Japan's exports almost halved year on year, the country has a current account deficit - which means it is net importing savings, as is the case of for the rest of Asia. That means fewer reserves with which to buy US Treasuries.
Regional Voices in Global Governance: Looking to 2010 (Part IV)
Lex Rieffel (Globalist) Mar 27, 2009
What countries will be included in a new global summit system?
Global: QE2 – Size Matters
Manoj Pradhan (MS GEF) Mar 27, 2009
The large size of the QE programmes increases the potential policy traction but also increases risks. Losses could be greater with such large sums, and rolling back these programmes would imply a substantial contractionary monetary policy shock. Central banks have to worry not just about domestic inflation, but inflation elsewhere as well.
World trade shrivels
Economist Mar 27, 2009
As global demand contracts, trade is slumping and protectionism rising.
In praise of the Nano
Economist Mar 27, 2009
The financial crisis may have strengthened the hand of the developing world's emerging giants.
Explaining the dramatic slump in world trade
Economist Mar 27, 2009
Why world trade is falling faster than global output.
Needed: A global response to the global economic and financial crisis
Fred Bergsten (VoxEU) Mar 28, 2009
The financial crisis is a global phenomenon. The downturn continues to be rapidly transmitted across borders through trade and financial channels. A global policy response to provide fiscal stimulus, avoid protectionism and help developing countries is imperative. The G20 summit in London provides a unique opportunity to mobilise the needed cooperation.
Dealing with the crisis: Lessons from Latin America
Eduardo Cavallo & Alejandro Izquierdo (VoxEU) Mar 28, 2009
This column examines the lessons of Latin America’s experience with sudden stops in capital inflows during the 1990s and applies them to the current crisis. While it is most important to be well prepared, today’s policy reactions will determine how well countries handle the crisis.
The IMF Matters
Simon Johnson (PIIE/TNR) Mar 28, 2009
At this week's G-20 summit, at long last, the IMF will step out into the limelight. Indeed, what the member countries choose to do with the IMF is absolutely critical to the success of the summit, and, more broadly, to the chances of a global economic recovery.
World Bank Responsibility
WSJ Mar 28, 2009
$500 million for companies suspected of corruption.
Eastern Europe and the Financial Crisis
David Roche (WSJ) Mar 28, 2009
Easy credit fueled a boom in the ex-Communist world too.
Developing nations and capital flows: The IMF's new facility
Richard Baldwin (VoxEU) Mar 29, 2009
As the crisis evolves, capital will flow out of emerging countries. The IMF's new facility may help with short term shocks. It is also a useful step towards risk pooling and away from self-insurance with large currency reserves and should thus help reduce global imbalances in the long run.
A new plan needed as the cycle grows vicious
Wolfgang Münchau (FT) Mar 29, 2009
The main problem is that the feedback loops between the real economy and the banking sector are truly scary. The sector must be allowed to shrink while we recapitalise.
Wanted: A Truly International Monetary Fund
Devesh Kapur and Arvind Subramanian (Forbes/PIIE) Mar 29, 2009
Increasing the resources of the International Monetary Fund (IMF) is probably the one issue on which there is some possibility of agreement at the upcoming G-20 summit. And in preparation for handing this money out to potential borrowers, the IMF announced last week that it will make borrowing easier, cheaper, and with fewer strings attached. But there are few takers for IMF money because there is a basic problem: Many countries don't see the International Monetary Fund as very "international."
Mexico's Dinosaurs Exploit the Crisis
WSJ Mar 30, 2009
A cautionary tale for those who see an opportunity to take over key elements of the economy.
A crisis round of trade negotiations?
Aaditya Mattoo & Arvind Subramanian (VoxEU) Mar 30, 2009
This column proposes the launch of a WTO Crisis Round at the G20 summit. Unlike the Doha round’s liberalising agenda, such a crisis round would simply aim to “hold the line on protectionism” and prevent a retreat from current levels of trade openness. This column that says that such action is necessary for the global trading system to survive these “potentially perilous times.”
Sovereign wealth funds and financial stability
Heiko Hesse & Tao Sun (VoxEU) Mar 30, 2009
The present financial crisis has placed financial stability at the forefront of policy discussions. At the same time, sovereign wealth funds have become much more significant players over the past two years. This column summarises the results of some recent studies about sovereign wealth funds and their implications for financial stability. Overall, the existing research on SWFs suggests that they can be a stabilising force in global financial markets.
We modernised ourselves into this ice age
Eric Dinallo (FT) Mar 30, 2009
What we decided was old fashioned and in need of modernisation was, in fact, an effective check on an activity that for 100 years had been illegal, for good reason.
The Real Geithner Plan, a ‘Nuclear Option’
Peter Boone and Simon Johnson (WSJ) Mar 31, 2009
The Obama administration is seeking broad new resolution authority for banks, and the powers should be approved by Congress and used quickly and decisively.
Why G20 leaders will fail to deal with the big challenge
Martin Wolf (FT) Mar 31, 2009
The G20 summit is dealing with the short-term symptoms of chronic global excess. The world economy cannot be safely balanced by a small number of countries spending themselves into bankruptcy. Finding a longer-term cure for the illness still lies ahead.
From the fat cats to long tails: when all is not normal
John Kay (FT) Mar 31, 2009
Extreme adverse events happen much more often than they are supposed to in the world of classical statistics. This explains why it is so damaging to be out of the market even for a few days, if they happen to be the wrong days.
Asia is the victim if the bond bubble bursts
Yu Qiao (FT) Mar 31, 2009
If a guarantee scheme were created, Asian savers might invest directly in capital-hungry US industries.
The G-20 and the Future of Capitalism - Part I
Jeffrey E. Garten (YaleGlobal) Mar 31, 2009
Vacuous talk of international cooperation while countries chart their narrow course does not bode well