South African mining: Stuck in the past
Andrew England (FT) Apr 1, 2014
Critics warn that the migrant labour system at the core of the industry threatens the stability of important gold and platinum producers.
Debt Troubles Within the Great Wall
Martin Wolf (FT) Apr 1, 2014
Credit cannot outgrow gross domestic product forever, even in China. The question is not whether it will stop, but how.
Paradox awaits a Prime Minister Modi
Arvind Subramanian (FT) Apr 1, 2014
Success in steering the Indian economy will depend on a readiness to wield power.
A currency union would be best for all
Anton Muscatelli (FT) Apr 1, 2014
The rest of the UK stands to benefit far more than the newly independent nation.
Property crash risk to China shadow banks
Henny Sender (FT) Apr 1, 2014
A combination of capital outflows and a drop in property values could create cascading losses in the country’s shadow banks.
Clifford S. Asness and Michael Mendelson (WSJ) Apr 1, 2014
Beware of critics who are 'talking their book' about trading that lowers costs.
'Bail-in' deal raises risk to bank deposits
Ellen Brown (AT) Apr 1, 2014
European Union officials recently reached an agreement to create a single agency to handle failing banks. On the surface a positive, the authorization of both bailouts and "bail-ins" means depositors face a heightened threat that their funds will be confiscated.
India a nation failing to emerge
Meena Degala (AT) Apr 1, 2014
India's main political parties are presenting the electorate with contrasting nationalist models ahead of this year's general election. While the ruling Congress party bases its message on Mahatma Gandhi's teachings, the opposition Bharatiya Janata Party forwards the "Undivided India" concept. Since both are elitist models, neither addresses the caste problem that continues to limit India's development.
Why China can grow without democracy
Lisbeth Moeller (AT) Apr 1, 2014
Under the strict Western dichotomy of authoritarianism versus democracy, China should open up politically as incomes grew. This ignores a historic belief in the benefits of benevolent dictatorship, and a prioritization of economic development over accountability rooted in ancient ideals of hierarchy and collectivism.
Geopolitics at a Beijing Teahouse
Robert D. Kaplan (Globalist) Apr 1, 2014
Different worldviews informed by different geographical points of reference.
The Two Mexicos
Jaana Remes and Luis Rubio (Project Syndicate) Apr 1, 2014
Mexico is looking more attractive to investors, especially as they become increasingly jittery about other emerging markets. But Mexico has a large productivity problem, which can be resolved only by bridging the gap between what are, in effect, two economies.
European banks' results: The long and winding road
Jan Schildbach (DB Research) Apr 1, 2014
The fundamental transformation of the European banking sector into a leaner, less profitable, low-growth but also more stable industry in the “new normal” continues to make progress. Banks are shedding assets, reducing costs and raising capital ratios, with revenues in 2013 having declined for the third consecutive year. Legacy assets and litigation remained an additional, significant burden. Nonetheless, profitability has improved somewhat from its extremely low levels and may well rise further this year.
The equity tranche and the mortgage-backed securities markets
Taylor Begley & Amiyatosh Purnanandam (VoxEU) Apr 1, 2014
The recent financial crisis was followed by discussions about that went wrong in the securitisation markets. This column describes some empirical work in the area of informational problems in the securitisation markets. In particular, it examines the tranche structure of deals in the private-label residential mortgage-backed securities (RMBS) markets. The role the equity tranche played in mitigating the information problems in the period up to the crisis is discussed. A larger equity tranche is related to superior ex-post default performance, as predicted by some models of contracting under asymmetric information.
China Under Attack
K. Philippa Malmgren (TIE) Apr 1, 2014
An economy amazingly vulnerable to bad news.
Nicholas Borst (TIE) Apr 1, 2014
How shadow banks in emerging markets have become the global economy’s greatest threat.
Improving the Euro
Various (TIE) Apr 1, 2014
If you could roll back the clock to the late 1990s, what if anything would you do differently with the introduction of monetary union and the euro?
Paul Kagame (FA) Apr 1, 2014
A conversation with Paul Kagame.
America's Energy Edge
Robert D. Blackwill and Meghan L. O'Sullivan (FA) Apr 1, 2014
The geopolitical consequences of the shale revolution
How China and America See Each Other
Minxin Pei (FA) Apr 1, 2014
And why they are on a collision course.
Goldman performs a high-speed retreat
John Gapper (FT) Apr 2, 2014
The rush to enter a business that is highly profitable for those with an edge has gone into reverse.
Corruption has ravaged Russia’s economy
Sergei Guriev (FT) Apr 2, 2014
The looting of state coffers has spawned an aggressive foreign policy to which western leaders are now struggling to respond.
China craves global trade club membership
Shawn Donnan (FT) Apr 2, 2014
Beijing wants to learn how to translate economic power into a seat at the table where the new rules of global commerce are being drafted.
Rate rise pattern is different this time
Charles Goodhart (FT) Apr 2, 2014
This pattern is the opposite of the 2004-06 tightening, when the Fed funds rate rose by 525 basis points but the long-term rate barely moved.
China property: In search of shelter
Simon Rabinovitch and Josh Noble (FT) Apr 2, 2014
A stuttering housing market outside the country’s biggest cities represents the greatest threat to the economy – and has exposed foreign investors who lent billions of dollars to developers.
Book Review: 'The Road to Global Prosperity' by Michael Mandelbaum
Tod Lindberg (WSJ) Apr 2, 2014
The globalization establishment remains steadfast in its belief that the sole purpose of the modern state is economic growth.
Robert J. Samuelson (WP) Apr 2, 2014
The Russian invasion of Crimea is a consequence of globalization.
Blame the Fed for high food prices
Noureddine Krichene (AT) Apr 2, 2014
Rising grocery bills around the world have little to do with drought. In fact, we've seen plenty of rain since 2008, in the shower of dollars from the US Federal Reserve into the global economy. This, along with ultra-low rates and President Obama's profligate spending, has caused massive inflation, higher food prices and declining standards of living.
High-Speed Trading Used to Mean Carrier Pigeons
Stephen Mihm (Bloomberg View) Apr 2, 2014
High-frequency trading is far from the first innovation to arouse indignation.
High-Frequency Trading May Be Too Efficient
Matt Levine (Bloomberg View) Apr 2, 2014
I suspect, but cannot prove, that there is a financial blogging analogue of the Grossman-Stiglitz paradox that proves that no one should write anything.
The Trading Floor Isn't Dead Yet
Paula Dwyer (Bloomberg View) Apr 2, 2014
Why it's premature to announce the death of the NYSE floor, which still holds value, even if it's dwindling.
Capitalism Is Messy. Let's Keep It That Way.
Mark Buchanan (Bloomberg View) Apr 2, 2014
The success of free-market capitalism might have more to do with creative chaos than with efficiency.
How to Reform Ukraine's Economy
Heidi Crebo-Rediker and Douglas A. Rediker (Fortune/PIIE) Apr 2, 2014
After weeks of urgent negotiations with Ukraine's interim government, the International Monetary Fund (IMF) last week agreed to provide up to $18 billion to prevent the country's default. The loan, spread over two years, represents Ukraine's best chance to finally transition its economy and institutions away from its past and open a new chapter in its history.
Reforming China’s State-Market Balance
Joseph E. Stiglitz (Project Syndicate) Apr 2, 2014
Many of China’s problems today stem from too much market and too little government. Or, to put it another way, while the government is clearly doing some things that it should not, it is also not doing some things that it should.
Deflating the Deflation Myth
Chris Casey (Mises Daily) Apr 2, 2014
The fear of deflation serves as the theoretical justification of every inflationary action taken by the Federal Reserve and central banks around the world. It is why the Federal Reserve targets a price inflation rate of 2 percent, and not 0 percent. It is in large part why the Federal Reserve has more than quadrupled the money supply since August 2008. And it is, remarkably, a great myth, for there is nothing inherently dangerous or damaging about deflation.
How Much Poverty Should a Rich Nation Allow?
Christopher Flavelle (Bloomberg View) Apr 2, 2014
Canada's Conservatives are seeking re-election as sound economic managers. Can they claim success if more people are poor?
Global Economy Turning Corner of Great Recession, But Obstacles Ahead
IMF Survey Apr 2, 2014
The global economy is turning the corner of the Great Recession, although overall growth remains too slow and weak.
The credit cycle and LatAm vulnerabilities
Julián Caballero, Ugo Panizza & Andrew Powell (VoxEU) Apr 2, 2014
In recent years credit growth in Latin America has been very strong, and countries have become more reliant on foreign bond issuances. This column argues that these phenomena are linked, and may have led to vulnerabilities which domestic and international supervisors are not well-equipped to assess. There is no systematic information on firms’ currency mismatches and hedging activities, and none that includes those of subsidiaries that may be located in other jurisdictions, preventing an accurate analysis of the true risks.
Managing the exchange rate
Atish R Ghosh, Jonathan D Ostry & Mahvash Saeed Qureshi (VoxEU) Apr 2, 2014
In a world of volatile capital flows, emerging markets are increasingly resorting to managing their exchange rates. But does this strategy increase their susceptibility to crisis? This column argues that while intermediate regimes as a class are the most susceptible to crises, ‘managed floats’ – a subclass within such regimes – behave much more like pure floats, with significantly lower risks and fewer crises. ‘Managed floating’, however, is a nebulous concept; a characterisation of more crisis prone regimes suggests that it is not the degree of exchange rate management alone, but the way the exchange rate is managed, that matters. Greater against-the-wind intervention by the central bank to prevent currency overvaluation reduces, while greater intervention to defend an overvalued currency raises, the crisis likelihood.
Orderly debt reduction rather than permanent mutualisation is the way to go
Vesa Vihriälä & Beatrice Weder di Mauro (VoxEU) Apr 2, 2014
The EZ debt overhang needs to be fixed. This column argues that making market discipline credible requires an orderly debt restructuring mechanism combined with a strictly regulated temporary mutualisation scheme or a well-designed debt conversion scheme. This combination could reduce the current debt overhang in an orderly fashion and cement strong incentives against over-borrowing in the future.
The ECB should eschew easing
Michael Heise (FT) Apr 3, 2014
Quantitative easing is not a sensible option against the background of economic recovery.
EMs increasingly unstable amid taper fallout
Ralph Atkins (FT) Apr 3, 2014
As the Fed scales back asset purchases, emerging markets have looked distinctly unstable, with wobbles spreading from Argentina to Turkey and Brazil.
ECB addresses the zero lower bound
Gavyn Davies (FT) Apr 3, 2014
The risk of prolonged inaction by the central bank in the face of low inflation or mild deflation for the eurozone has now been sharply reduced.
'Global' Internet Governance Invites Censorship
Julius Genachowki and Gordon M. Goldstein (WSJ) Apr 3, 2014
If the U.S. surrenders Web oversight, firm steps must be taken to protect free speech and commerce.
China Runs Into Natural-Resources Pushback
Michael Levi and Elizabeth Economy (WSJ) Apr 3, 2014
A ruling by the World Trade Organization eases fears of Beijing's power to corner markets.
China, EU Pledge to Consider Bilateral Trade Pact
Bridges Weekly Trade News Digest, Volume 18, Number 12 Apr 3, 2014
The EU and China agreed on Monday to consider the possibility of a bilateral trade pact, should their current negotiations for an investment deal prove fruitful. The announcement came as part of Chinese President Xi Jinping's high-profile visit to Brussels, which also saw the EU publicly support Beijing's bid for joining talks on a plurilateral deal in services trade.
Farm Trade: WTO Members Spar over Doha Direction
Bridges Weekly Trade News Digest, Volume 18, Number 12 Apr 3, 2014
WTO members clashed on Friday over whether draft Doha texts tabled six years ago should remain the basis for future talks on farm trade, ahead of a December deadline for agreeing on a work programme to resolve the outstanding issues in the round.
West Africa Endorses EU Trade Pact, Despite Lingering Concerns
Bridges Weekly Trade News Digest, Volume 18, Number 12 Apr 3, 2014
West African leaders endorsed "in principle" their Economic Partnership Agreement (EPA) with the EU last Saturday, two months after the negotiations were completed. However, divisions linger over some outstanding technical issues, particularly as some African countries – most vocally Nigeria – raise questions over the deal's potential economic impact.
EU Launches Public Consultation on T-TIP Investment Provisions
Bridges Weekly Trade News Digest, Volume 18, Number 12 Apr 3, 2014
The European Commission has launched its public consultation on the investment protections and investor-state dispute settlement (ISDS) mechanisms that it hopes to include in an EU-US trade pact, as part of a larger effort to respond to the growing debate over the trade deal's merits.
IMF chases wrong targets in China
James A Dorn (AT) Apr 3, 2014
The International Monetary Fund is targeting unsound banking practices in China, despite the fact that Chinese Communist Party influence virtually nullifies the threat of bankruptcy for state-owned entities. The real issue is financial repression and a lack of private ownership - problems that require more than piecemeal reforms.
Interest Rates to Increase But Modestly as Global Economy Normalizes
IMF Survey Apr 3, 2014
Real interest rates are expected to increase modestly with the normalization of global economic conditions, reversing the decline into negative numbers after the financial crisis, predicts a new study by the IMF’s Research Department.
World Population Trends Signal Dangers Ahead
Barry Mirkin (YaleGlobal) Apr 3, 2014
Demographers are often called upon to predict the future by extrapolating from population statistics and trends. The United Nations has revised population projections upward, and demographer Barry Mirkin suggests the warning signs are clear: The globe can anticipate a billion more people in a decade and another 2 billion by the end of the century for a total of 10.9 billion.
Culture of Corruption
Jamila Trindle (FP) Apr 3, 2014
How one company's alleged bribes illustrate Ukraine's endemic graft problem.
Draghi Dances Around QE
Mark Gilbert (Bloomberg View) Apr 3, 2014
Mario Draghi has finally dropped to his knees in the Church of Quantative Easing. Unlike the priests from the Federal Reserve,, he can't quite bring himself to offer up his prayers -- but he's getting closer.
(Mis)measuring prices in an era of globalisation
David Byrne, Brian Kovak and Ryan Michaels (VoxEU) Apr 3, 2014
When the law of one price is violated it can be difficult to determine a product’s contribution to the CPI. Does a low price competitor discount also on quality, or are market frictions at play? This column examines key product characteristics to separately identify these effects. Chinese firms discount both on price and quality, while Taiwanese firms use their productivity advantage to dynamically take advantage of market frictions.
Seeking Silver Linings in Emerging Markets
Paul J. Lim (NYT) Apr 4, 2014
The slowing Chinese economy and tensions with Russia were among the reasons for a disappointing first quarter in emerging-market funds. But some managers see opportunities.
Michael Lewis's Crusade
Joe Nocera (NYT) Apr 4, 2014
An imperfect tale of high-frequency trading provides a much needed spark.
Give the Castros a Dose of Free Trade
Raul Gallegos (Bloomberg View) Apr 4, 2014
The U.S. needs a smarter way to achieve regime change in Cuba. It might start by exporting its best weapon -- capitalism.
Is Spain AAA?
Mark Gilbert (Bloomberg View) Apr 4, 2014
For the first time since 2007, investors are willing to lend five-year money to Spain at less than they charge the U.S. government.
Turkey’s Hot-Money Problem
Bilge Erten and Jose Antonio Ocampo (Project Syndicate) Apr 4, 2014
Financial volatility in emerging economies is fueling debate about whether they should be viewed as victims of advanced countries’ monetary policies or victims of their own excessive integration into global financial markets. To answer that question requires examining the differences in their policy responses to monetary expansion.
Transmission of Fed tapering news to emerging markets
Joshua Aizenman, Mahir Binici and Michael M Hutchison (VoxEU) Apr 4, 2014
In 2013, policymakers began discussing when and how to ‘taper’ the Federal Reserve’s quantitative easing policy. This column presents evidence on the effect of Fed officials’ public statements on emerging-market financial conditions. Statements by Chairman Bernanke had a large effect on asset prices, whereas the market largely ignored statements by Fed Presidents. Emerging markets with stronger fundamentals experienced larger stock-market declines, larger increases in credit default swap spreads, and larger currency depreciations than countries with weaker fundamentals.
Economist Apr 5, 2014
Reducing Europe's dependence on Russian gas is possible—but it will take time, money and sustained political will
How rich nations benefit from EU membership
Nauro F Campos, Fabrizio Coricelli & Luigi Moretti (VoxEU) Apr 5, 2014
One concern with EU enlargement is that relatively poorer countries benefit more from becoming members. This column uses data from the 1973 and 1995 enlargements to show that richer countries also benefited a lot from joining the EU. Per capita incomes would have been considerably lower had these countries not joined the EU when they did. Yet, the difference between the estimated benefits for 1973 and 1995 enlargements is large, and thus, should not be attributed to differences in per capita incomes at the time of joining.
Banks’ disclosure and financial stability
Rhiannon Sowerbutts, Ilknur Zer and Peter Zimmerman (VoxEU) Apr 5, 2014
Inadequate disclosure by banks increased funding costs and contributed to the recent crisis. This column presents quantitative indices to measure progress of disclosure between banks and over time. Internationally, disclosure has improved since 2000. However, more information alone is not sufficient to solve the problem. More needs to be done to ensure that the information provided is useful to investors, and that investors are incentivised to use this information. The ongoing reform agenda aims to address this.
Before you talk about 'Lessons from Rwanda', read this
Aidan Hartley (Spectator) Apr 5, 2014
I saw what happened. I will never forget the smell of death. And I don't trust anyone who says 'never again'
What is needed to kickstart growth
Lawrence Summers (FT) Apr 6, 2014
The post-financial crisis panic might be subsiding at last but medium-term prospects for the global economy are problematic.
Catastrophic vision of financial collapse
James Mackintosh (FT) Apr 6, 2014
An entertaining prophesy of the end of the dollar and the banking system that will convert few non-believers.
The Case for High-Information Trading
Gordon Crovitz (WSJ) Apr 6, 2014
The SEC can help level the playing field by letting companies release more details about their operations in real time.
Economic History: Warfare and the Invention of GDP
Diane Coyle (Globalist) Apr 6, 2014
Quite contrary to current efforts to reflect happiness, GDP was invented to prepare nations better for warfare.
Here's How to Unlock Africa's Economic Potential
Jim O'Neill (Bloomberg View) Apr 6, 2014
Nigeria and much of the rest of Africa really do have the potential to be spectacular economic successes.
The impact of bank capital requirements during an upswing
Joseph Noss & Priscilla Toffano (VoxEU) Apr 6, 2014
The impact of tighter regulatory capital requirements during an economic upswing is a key question in macroprudential policy. This column discusses research suggesting that an increase of 15 basis points in aggregate capital ratios of banks operating in the UK is associated with a median reduction of around 1.4% in the level of lending after 16 quarters. The impact on quarterly GDP growth is statistically insignificant, a result that is consistent with firms substituting away from bank credit and towards that supplied via bond markets.
Global value chains in the current trade slowdown
Michael J Ferrantino & Daria Taglioni (VoxEU) Apr 6, 2014
Recent growth in trade has decelerated significantly since its sharp recovery in 2010. This column discusses the role of global value chains in international trade and their contribution to the trade slowdown. Trade in complex products organised by global value chains, in particular motor vehicles, has been more sensitive to global downturn than has trade in simple products. Thus, either focusing on simpler products less dependent on global value chains, or diversifying the export folios, could be useful in reducing the risk of a slowdown in global merchandise.
Weaker renminbi could be China’s subprime
Diana Choyleva (FT) Apr 7, 2014
A lower renminbi could cause a scramble for liquidity, pushing asset prices down, when debt in foreign currency needs to be repaid.
World Bank: Man on a mission
Robin Harding (FT) Apr 7, 2014
An ambitious restructuring programme by Jim Yong Kim, bank president, has attracted both admiration and criticism – but can it deliver results?
‘Whatever it takes’ may not be enough
Gideon Rachman (FT) Apr 7, 2014
The eurozone still faces significant political and economic problems that are beyond the control of the president of the ECB and his colleagues.
Eurosceptic weak spot is vagueness
Janan Ganesh (FT) Apr 7, 2014
At the present count, the Outers are touting three definitions of exit from the EU – two too many for anyone who craves certainty Read more >>
Nigeria doubles GDP and exposes state
William Wallis (FT) Apr 7, 2014
Revised figures highlight the extent of economic expansion over the past two decades, but do not alter the messy reality facing the country today.
‘Asian century’ to dominate global markets
Paul J Davies (FT) Apr 7, 2014
A financial revolution will be needed to drive Asian growth, which will mean China’s bond markets, for example, will become ten times bigger by 2030.
Capital for the Masses
Christopher DeMuth (WSJ) Apr 7, 2014
Thomas Piketty's new book from the left provides unwitting support for private retirement accounts.
Defining India's Role in the World
Alyssa Ayres (CFR) Apr 7, 2014
The main opposition Bharatiya Janata Party offers a vision of India that emphasizes alliance and growth, invoking a view of the country's past as one of traders, scientists, and economic leaders, a position damaged by colonial rule and one necessary to recover. Read more on Asia Unbound »
Moving Forward With the Normalization of Yields
Scott A. Mather & Michael Story (PIMCO) Apr 7, 2014
One response to yield normalization is to consider retaining core bonds and diversifying the specific risk factor of concern, in this case duration. In the past, global bonds have captured most of the upside but avoided a significant amount of the downside relative to domestic-only bonds. Generating capital gains from bonds in a rising yield environment requires defining concretely what yield normalization means - where yields are going and when they will get there - and setting these expectations against forward market pricing, country by country.
Now is the time to preempt deflation
John H. Makin (AEI) Apr 7, 2014
Inflation is falling in the United States, Europe, and China, suggesting a real threat of impending deflation that could cripple the global economy. Deflation is especially dangerous because it is self-reinforcing; once it takes hold, economic conditions will get much worse before they get better. Central banks in the United States and around the world must end their complacency and respond preemptively to the threat by monitoring inflation rates and undertaking aggressive monetization.
Are Countries Better Off with Their Own Monetary Regimes?
Edwin M. Truman (PIIE) Apr 7, 2014
The continuing economic and financial challenges facing members of the euro area, combined with more recent pressures on some emerging market and developing countries, raise a familiar question. What is the best monetary regime for countries facing such stresses? The answer is that no monetary regime is best for all countries, at all times, in all circumstances, including times of stress.
Information Versus Speed
Matt Levine (Bloomberg View) Apr 7, 2014
This has basically become just a high-frequency trading linkwrap, but then, so has the internet. But this has news from previous Michael Lewis books too!
The Mosquito Menace
John J. Cohrssen and Henry I. Miller (Project Syndicate) Apr 7, 2014
It takes only one bite from a disease-carrying mosquito to transmit a debilitating or deadly infection. Though there are no vaccines or treatments for most mosquito-borne diseases, better mechanisms for controlling mosquito populations are at hand – if we give them a chance.
Learning about global value chains from official trade data
Zhi Wang, Shang-Jin Wei & Kunfu Zhu (VoxEU) Apr 7, 2014
The growth of international trade in intermediate inputs – the global value chain revolution – means that gross trade statistics can give a misleading picture of the patterns of world trade. This column introduces an accounting framework that can be used to decompose gross trade flows into various components, including exports of value-added, domestic value-added that returns home, foreign value-added, and double-counted intermediate trade.
Economic liberty in the long run: Evidence from OECD countries
Leandro Prados de la Escosura (VoxEU) Apr 7, 2014
Measures of economic freedom provide useful cross-country comparisons, but lack the time dimension to track intertemporal progress. This column presents a new measure and extends it back in time to tell a history of economic freedom over the course of the twentieth century.
Chinese savers can scorch the world
Martin Wolf (FT) Apr 8, 2014
We have all surely had enough fun with financial crises to last a long time. China needs to reform first and only then open up.
Scots can be sterling squatters
John Kay (FT) Apr 8, 2014
The currency was once a badge of statehood, but perhaps today it is as much an anachronism as the national airline.
Investors in ‘new Africa’ repeat old errors
Michael Holman (FT) Apr 8, 2014
Foreign companies have piled in, pursuing profit but avoiding responsibility.
Sleaze v spin in Mexico’s race for reform
Jude Webber (FT) Apr 8, 2014
Enrique Peña Nieto’s administration in Mexico combines an ambitious drive for reform with rigid discipline and control of its message.
Time running out for the market riggers
John Plender (FT) Apr 8, 2014
Central bankers and corporate executives have for several years successfully manipulated the markets to the point where valuations are looking shaky.
Martin Hutchinson (AT) Apr 8, 2014
Unless someone knows of a worse financial instrument, credit default swap options are the most leveraged and the most inaccurately rated by risk management of all products out. Regulators should take notice, but I'll bet they don't.
Rich can help BIMSTEC poor bloc
Vibhanshu Shekhar (AT) Apr 8, 2014
The countries in the South and Southeast Asian bloc BIMSTEC include some of the world's poorest, making its goal of cooperative development vital. Some solid steps were taken at a recent group summit, but more needs to be done, including an expansion eastward from the Bay of Bengal to encompass Asia's richest and most capable nations.
Recovery Strengthening, but Requires Stronger Policy Effort
IMF Survey Apr 8, 2014
The strengthening of the recovery from the Great Recession in the advanced economies is a welcome development, according to IMF staff. But the latest World Economic Outlook also emphasizes that growth remains subpar and uneven across the globe
American Expressed: Life in a World of Oligopolies
Uwe Bott (Globalist) Apr 8, 2014
Self-serving, not customer service: A story of U.S. corporate practices toward consumers.
Sovereign Debts in a Fossil-Fueled World
Will Hickey (YaleGlobal) Apr 8, 2014
Transition away from fossil fuels toward new alternatives is not going smoothly. Proponents of alternatives confront a powerful industry with longstanding incentives and favorable tax policies, suggests analyst Will Hickey.
Keep Calm and Save the EU
Bloomberg View Apr 8, 2014
The City of London has had too little to say about the biggest issue clouding its future: Britain's possible exit from the EU.
A Silver Lining in Libor Rigging
Mark Gilbert (Bloomberg View) Apr 8, 2014
Any and every company that has lost money on an interest-rate swap supplied by a bank caught up on the Libor rigging scandal should reach for its lawyers.
Cementing Europe’s Recovery
Mohamed A. El-Erian (Project Syndicate) Apr 8, 2014
Europe’s renewed sense of hope and confidence, however encouraging, is not yet sufficient to produce appreciable gains for current and future generations. A few things need to happen over the next several weeks and months if Europe is to minimize the risk of another prolonged period of under-performance and financial risk.
Europe’s Bogus Banking Union
Philippe Legrain (Project Syndicate) Apr 8, 2014
Europe's banking union may soon exist on paper. In practice, the eurozone banking system is likely to remain fragmented along national lines and divided between a northern “core,” where governments continue to stand behind local banks, and a southern “periphery,” where governments have run out of cash.
The Periphery’s Purgatory
Yannos Papantoniou (Project Syndicate) Apr 8, 2014
The eurozone’s core economies are showing signs of recovery, and financial conditions in the over-indebted periphery are improving as well. But, as the contours of Greece's troubled economy make clear, capital shortages, depressed demand, and reform bottlenecks mean that continued progress is far from certain.
A Surplus of Controversy
Kenneth Rogoff (Project Syndicate) Apr 8, 2014
When the US Treasury recently added its voice to critics of Germany’s chronic trade surplus, it underscored the deep disagreement over what, if anything, should be done about it. It is a highly contentious debate, often informed more by ideology than facts.
How to loosen the banks-sovereign nexus
Paolo Angelini & Giuseppe Grande (VoxEU) Apr 8, 2014
The ‘deadly embrace’ between banks and their government has strengthened with the EZ Crisis. This column argues that this has mostly been consequence rather than a cause of the Crisis. Moreover, adverse bank-sovereign negative feedback depends on the economy-wide effects of the sovereign risk, not just the banks’ direct exposure. Loosening the embrace requires sound public finances and well-capitalized, well-supervised banks – including the banking union project.
Rising inequality is Asia’s main challenge
David Pilling (FT) Apr 9, 2014
Much of the benefit goes to those who were already better off, allowing them to pull away from the pack.
Longevity is here to stay – embrace it
Emma Jacobs (FT) Apr 9, 2014
The total number of centenarians is projected to rise from 14,000 in 2013 to 111,000 in 2037.
Debt worries weigh on European groups
Sarah Gordon (FT) Apr 9, 2014
Region’s companies have to repay or refinance more than $4tn of debt between now and 2018 – nearly half of the $8.9tn of corporate debt maturing globally.
Beware a heady bond market rush in Athens
Ralph Atkins (FT) Apr 9, 2014
Danger is that rush of capital market success distracts from essential reforms such as overhauling bloated public sector and improving tax collection.
Global Financial Stability Improved, Still Challenged
IMF Survey Apr 9, 2014
Over the past six months, financial stability has broadly improved in advanced economies and has deteriorated in emerging economies, according to the International Monetary Fund’s latest Global Financial Stability Report.
Governments Must Press Ahead With Spending Reform
IMF Survey Apr 9, 2014
In many countries, public finances remain on edge as economies struggle to return to pre-crisis levels of economic growth, highlighting the need for growth-supporting fiscal reforms.
Economic Sanctions Not Key Cause of Russia’s Possible Recession
Frank Shostak (Mises Daily) Apr 9, 2014
According to commentators, sanctions imposed by the US and the European Union are pushing Russia toward a recession. However, we hold that some key Russian economic data have been displaying a weakening prior to the annexation of the Crimea to Russia. This raises the likelihood that sanctions might not be the key factor for an emerging recession.
There's No Bailout for Puerto Rico
Megan McArdle (Bloomberg View) Apr 9, 2014
It’s been clear for a while that Puerto Rico is going to have to default on its debt.
France's Economic Plan: Hope for Miracles
Marc Champion (Bloomberg View) Apr 9, 2014
Prime Minister Manuel Valls probably won't be able to reform France, but he's right about leeway on the deficit and the European Central Bank.
Fix the Banks, Fix Europe
Leonid Bershidsky (Bloomberg View) Apr 9, 2014
European governments enjoy extremely low borrowing costs, but their benefits are not filtering through a paralyzed banking system.
Sentiment and Sensibility in Emerging Markets
Laura Tyson (Project Syndicate) Apr 9, 2014
The next several months are likely to be marked by volatility in capital flows to emerging markets. But for investors who distinguish between the prospects of individual countries and sectors, emerging markets will remain attractive long-term investment opportunities.
Only the ignorant fear hyperinflation
Martin Wolf (FT) Apr 10, 2014
Failure to understand how the monetary system works has made it more difficult for central banks to act effectively.
US labour productivity: key to growth
Andrew Smithers (FT) Apr 10, 2014
There needs to be a pick-up if expectations about the potential growth of the American economy are not to prove far too optimistic.
Lex in depth: Boutique banks
Sujeet Indap and Robert Armstrong (FT) Apr 10, 2014
Moelis & Co’s initial public offering next week follows a good run for small, specialist banks. They could perform even better if there is another M&A boom.
What’s in it for us
Fareed Zakaria (WP) Apr 10, 2014
The responses of India, Israel and China to Ukraine reveal an emerging tension involving global norms.
Warning signs in China
David Ignatius (WP) Apr 10, 2014
The booming economy is experiencing some busts.
We're All High-Frequency Traders Now
Burton G. Malkiel and Arthur Levitt (WSJ) Apr 10, 2014
Faster buying and selling is being blamed unfairly for some problems caused by the fragmentation of markets.
Australia, Japan Reach Trade Deal
Bridges Weekly Trade News Digest, Volume 18, Number 13 Apr 10, 2014
Japan and Australia clinched a bilateral trade pact on Monday, agreeing to slash import tariffs on a series of products, including beef, dairy, and automobiles. The news has sparked questions over what impact the deal might have on the pace – and outcome – of the 12-country Trans-Pacific Partnership (TPP) negotiations, of which both countries are members.
EU-Africa Summit Eyes Increased Trade, Investment Ties
Bridges Weekly Trade News Digest, Volume 18, Number 13 Apr 10, 2014
EU and African leaders meeting in Brussels last week pledged to deepen trade and investment ties between their two continents, with both sides calling for a "fundamental shift" in cooperation. The 2-3 April gathering brought together over 60 heads of state, making it the EU’s largest ever summit.
Azevêdo Urges WTO Members to "Shift Gears" in Doha Restart Effort
Bridges Weekly Trade News Digest, Volume 18, Number 13 Apr 10, 2014
Efforts to develop a work programme aimed at revamping the stalled Doha Round negotiations are ready to enter a "second stage," WTO Director-General Roberto Azevêdo reported to the global trade body on Monday, after four months of preliminary consultations among members.
Rethinking China's Future Path
Richard Phillips (Globalist) Apr 10, 2014
The Chinese economy in its current form may not be sustainable.
On Buying Greek Debt, Desperately
Mark Gilbert (Bloomberg View) Apr 10, 2014
Investors who've been in line for days are flooding through barely open doors, battling to get their hands on Greece's first new bonds since it defaulted/restructured, depending on your view.
The World Bank Group and the use of financial intermediaries
Bretton Woods Update Apr 10, 2014
Follow the money: The World Bank Group and the use of financial intermediaries reveals the World Bank Group is channelling crucial development resources to banks instead of directly investing in projects that will improve the lives of the poorest peoples.
The West’s Financial Arsenal
Harold James (Project Syndicate) Apr 10, 2014
The revolution in Ukraine and Russia’s illegal annexation of Crimea have generated a serious security crisis in Europe. But, with Western leaders testing a new kind of financial warfare, the situation could become even more dangerous.
The Grand Global Health Convergence
Gavin Yamey and Helen Saxenian (Project Syndicate) Apr 10, 2014
By 2035, we could achieve a “grand convergence” in global health, reducing preventable maternal and child deaths, including those caused by infectious diseases, to unprecedentedly low levels worldwide. All that is needed is a coordinated, future-oriented investment strategy.
China: Avoiding the Minsky Moment
Daniel Kollar (Diplomat) Apr 10, 2014
Troubling signs have been emerging in China’s shadow banking sector. The government is responding.
Understanding contagious bank runs
Martin Brown, Stefan Trautmann & Razvan Vlahu (VoxEU) Apr 10, 2014
Contagious bank runs are an important source of systemic risk. However, with observational data it is near-impossible to disentangle the contagion of bank runs from other potential causes of correlated deposit withdrawals across banks. This column discusses an experimental investigation of the mechanisms behind contagion. The authors find that panic-based deposit withdrawals can be strongly contagious across banks, but only if depositors know that the banks are economically related.
Three Questions for the IMF and World Bank
Robert Kahn (CFR) Apr 10, 2014
This week's IMF/World Bank Spring meetings take place amid significant global uncertainty. The meeting's broad agenda should cover questions of global confidence in growth, reform of the IMF, and the risk of inflation.
How poorer nations benefit from EU membership
Nauro F Campos, Fabrizio Coricelli & Luigi Moretti (VoxEU) Apr 10, 2014
In the wake of the recent crisis, the debate about the economic benefits from EU membership has intensified. This column presents new results about the benefits countries derive from becoming EU members, using data from the 1980s and 2004 enlargements. There are substantial positive pay-offs, with a gain in per capita GDP of approximately 12%. Despite differences across countries, the evidence shows that the benefits of EU membership outweighed the costs for most countries – except for Greece. An important research question would be to identify factors that allow countries to better exploit EU entry.
Putin's Lehman Moment
Robert Kahn (FA) Apr 10, 2014
Why sanctions will work in Russia.
Book Review: 'War! What Is It Good For?' by Ian Morris
Felipe Fernandez-Armesto (WSJ) Apr 11, 2014
War is bad for people, who starve, suffer and die. But war is good for states, which grow ever more powerful.
Time for the United States to Risk Its IMF Veto
Edwin M. Truman (PIIE) Apr 11, 2014
Support in the United States for the International Monetary Fund (IMF) is at a new low. The reasons are many and varied, and the IMF is unpopular in many countries, not just among the women and men on the streets, most of whom have never heard of the IMF unless their countries are in crisis, but also among the policy elites. But it is Washington's failure to back the IMF that threatens the legitimacy of the world's most important financial institution.
Food Price Shock, 2014 Edition
James Greiff (Bloomberg View) Apr 11, 2014
Drought in the U.S., past and present, might make 2014 one of the more volatile years for food prices and supplies globally.
Greece's Bond Hangover
Mark Gilbert (Bloomberg View) Apr 11, 2014
Those hot new Greek bonds that went on sale yesterday are looking a bit hungover.
Who Needs Credit Ratings?
Leonid Bershidsky (Bloomberg View) Apr 11, 2014
Sovereign credit ratings are more or less in line with market sentiment. So why not just look to the market in deciding what is and isn't investment-grade?
Optimism Meets Realism as Africa Seeks Ways to Maintain Growth
IMF Survey Apr 11, 2014
Sub-Saharan Africa’s economic achievements over the past decade have sparked optimism about a continent on the rise, but those gains also have prompted caution about the core issues still to be addressed by policymakers, a Washington conference hears.
The Growing Divide Within Developing Economies
Dani Rodrik (Project Syndicate) Apr 11, 2014
Look around the developing world and you will see a bewildering fissure opening up between economies' leading and lagging sectors. Worse, in many developing countries, the share of employment in these low-productivity sectors is expanding.
China’s Currency Conundrum
Ronald McKinnon (Project Syndicate) Apr 11, 2014
In late February, the gradual appreciation of the renminbi was interrupted by a 1% depreciation. The resulting international outcry obscured a troubling feature of China’s exchange-rate policy: the tendency for sporadic renminbi appreciation (even small movements) to trigger speculative inflows of “hot” money.
Barry Eichengreen (Project Syndicate) Apr 11, 2014
Two of the world’s most prominent economic institutions, the IMF and Larry Summers, recently warned that the global economy may be facing an extended period of low interest rates. Why is that a bad thing, and what can be done about it?
Hold the Champagne, Hong Kong
William Pesek (Bloomberg View) Apr 11, 2014
Nothing about linking the Hong Kong and Shanghai bourses makes China's government more transparent, its companies more shareholder-friendly, or its financial system sounder.
The increasing competitiveness of the southern Eurozone
Raphael Auer (VoxEU) Apr 11, 2014
Some view the improvements in current accounts for Greece, Italy, Portugal, and Spain as short-lived – the result of a temporary compression of import demand that is likely to be reversed as the recession eases. This column argues the contrary, based on the fact that their improving trade balances reflect better export performance. This development points toward a fundamental stabilisation of the competitiveness of these economies.
Everything You Need to Know About High-Frequency Trading
Matthew O'Brien (Atlantic) Apr 11, 2014
Why the algobots that rule Wall Street are good--and why they're evil, too.
IMF Policy-Steering Body Aims for Balanced, Job-Rich Global Economy
IMF Survey Apr 12, 2014
With the global economy strengthening, the IMFC stressed that countries should shift their focus from the short term to the medium term, with special emphasis on carrying out structural reforms that will support sustainable, balanced, and job-rich growth.
Inequality Seriously Damages Growth, IMF Seminar Hears
IMF Survey Apr 12, 2014
Growth and inequality are mutually incompatible, participants agreed at a high level seminar held during the IMF-World Bank meetings, but they differed sharply about the priorities to address the rise in inequality over recent decades.
The slumps that shaped modern finance
Economist Apr 12, 2014
Finance is not merely prone to crises, it is shaped by them. Five historical crises show how aspects of today’s financial system originated—and offer lessons for today’s regulators
Are Speculative Bubbles Good?
John Cassidy (New Yorker) Apr 12, 2014
Are bubbles a destructive sideshow, or were they vital to the creation of railways, radio, and the Internet?
Personal experience and risk aversion in times of crisis
Peter Koudijs & Hans-Joachim Voth (VoxEU) Apr 12, 2014
Human behaviour in times of financial crises is difficult to understand, but critical to policymaking. This column discusses new evidence showing that personal experience in financial markets can dramatically change risk tolerance. A cleanly identified historical episode demonstrates that even without losses, negative shocks not only modify risk appetite, but can also create ‘leverage cycles’. These, in turn, have the potential to make markets extremely fragile. Remarkably, those who witnessed this episode but were not directly threatened by it, did not change their own behaviour. Thus, personal experience can be a powerful determinant of investors’ actions and can eventually affect aggregate instability.
A slippery ladder
Shawn Donnan, Ben Bland and John Burn-Murdoch (FT) Apr 13, 2014
The first of a series on the rise from poverty of millions in the emerging world and how fragile their grip is on this extra economic security.
The developing world’s fragile middle class
John Burn-Murdoch and Steve Bernard (FT) Apr 13, 2014
2.8bn people in the developing world sit just above the poverty line, at risk of slipping back as economic growth in emerging markets slows down.
This could be when Greece defaults
Wolfgang Münchau (FT) Apr 13, 2014
It not in recession nor is it recovering. It has collapsed. But there is another story – that of the bond salesman.
Doom-mongers risk a self-fulfilling prophecy
Jürgen Stark (FT) Apr 13, 2014
Warnings about outright deflation and the call for ECB action are exaggerated, misguided and irresponsible.
Economic frailty will force Putin’s hand
Christopher Granville (FT) Apr 13, 2014
Russia will try to replace western customers by tapping Asian demand.
An unrepentant defence of globalisation
Gideon Rachman (FT) Apr 13, 2014
A lucid if overly optimistic post-crisis reassessment of economic integration.
Tensions mar global economic policy talks
Chris Giles (FT) Apr 13, 2014
Countries may promise to co-operate at IMF and World Bank meetings only to go home and implement measures purely on the grounds of national interest.
Three Expensive Milliseconds
Paul Krugman (NYT) Apr 13, 2014
We're giving huge sums to the financial industry while receiving little or nothing in return.
Revising Nigeria's Economy
NYT Apr 13, 2014
Why aren't more of the country's 170 million people benefiting from economic growth?
If You're Big and Move Money, Watch Out
Peter J. Wallison (WSJ) Apr 13, 2014
Unless Congress acts, the feds will say that all large financial firms pose a 'systemic' risk and need bank-like regulation.
GDP at 70: What’s Next?
Eloi Laurent (Globalist) Apr 13, 2014
The revolution of well-being and sustainability is under way.
Making global value chains work for developing nations
Demián Dalle, Verónica Fossati and Federico Lavopa (VoxEU) Apr 13, 2014
Discussions of global value chains (GVCs) have permeated international organisations’ research and policy agendas. This column presents a critical view on some of the recent policy recommendations that urge for as much liberalisation of trade in goods and services as possible. These proposals cannot be automatically applied to developing countries without some type of government intervention.
China ‘Potemkin defaults’ mask debt reality
Jamil Anderlini (FT) Apr 14, 2014
Defaults and small bankruptcies hint at a Chinese economy under pressure, but Beijing is trying to impose market discipline without halting growth.
Is ‘smart beta’ the latest money tree?
Pauline Skypa (FT) Apr 14, 2014
The approach has gained traction among investors but as more money flows into the strategies, returns could fall.
Sceptics underestimate Japan policy shift
David Bowers (FT) Apr 14, 2014
If the ECB took similar action as the BoJ, the markets would regard it as a paradigm shift; but because Japan has done it, somehow it does not count.
Gold: In search of a new standard
Xan Rice (FT) Apr 14, 2014
The London fix has served the bullion market for almost a century, but critics say the system is opaque and must be reformed.
To Build Resilience in Growth, Focus Must Turn to Structural Reforms
IMF Survey Apr 14, 2014
In an interview, Tharman Shanmugaratnam—Deputy Prime Minister of Singapore and Chair of the IMFC—says that the focus must now turn to structural reforms to “build resilience in growth and jobs.”
Income Inequality Rises in Asia
Philip Bowring (Asia Sentinel) Apr 14, 2014
ADB says it’s time for East Asia to raise its game on education, health and welfare.
The West Can't Have It Both Ways on China
William Pesek (Bloomberg View) Apr 14, 2014
Of course China is actively weakening the yuan, as it should be. Leaders in Beijing have at least three good reasons to do so: hot-money flows, Japan and the desperate need for growth.
Algeria's Forecast: Arab Spring
Noah Feldman (Bloomberg View) Apr 14, 2014
We may never know what exact combination of economic, moral and political frustration led to the Arab Spring in 2011. But we can derive a rule for assessing which regimes went down and which survived.
What Greece Could Tell Us About Ukraine
Mohamed A. El-Erian (Bloomberg View) Apr 14, 2014
If Greece can restructure its debts and return to the market, why can't Ukraine?
The Dangers of Policy Drift
Mohamed A. El-Erian (Bloomberg View) Apr 14, 2014
The annual spring meetings of the International Monetary Fund and the World Bank signaled yet another wasted opportunity for enlightened and aggressive policy leadership at a time when the global economy desperately needs better steering.
Europe’s Deepening Muddle
Ashoka Mody (Project Syndicate) Apr 14, 2014
German Finance Minister Wolfgang Schäuble recently called for EU treaty changes to create a European budget commissioner, among other things. But, while Schäuble’s strategy may sound appealing, it will amount to nothing – not least because of countries' unwillingness to cede sovereignty.
Africa in China: Xi Jinping’s First Year
Yun Sun (Brookings) Apr 14, 2014
Xi Jinping's policies demonstrate Beijing’s evolving priorities in the continent.
Predicting economic turning points
Hites Ahir and Prakash Loungani (VoxEU) Apr 14, 2014
Forecasters have a poor reputation for predicting recessions. This column quantifies their ability to do so, and explores several reasons why both official and private forecasters may fail to call a recession before it happens.
How Important Are Hedge Funds in a Crisis?
Reint Gropp (FRBSF Economic Letter) Apr 14, 2014
Before the 2007–09 crisis, standard risk measurement methods substantially underestimated the threat to the financial system. One reason was that these methods didn’t account for how closely commercial banks, investment banks, hedge funds, and insurance companies were linked. As financial conditions worsened in one type of institution, the effects spread to others. A new method that more accurately accounts for these spillover effects suggests that hedge funds may have been central in generating systemic risk during the crisis.
Biofuels: Wasted energy
Christian Oliver (FT) Apr 15, 2014
Muddled EU climate policies mean that pioneering companies seeking to produce low-emission transport fuel from waste may quit the continent.
‘Too big to fail’ is too big to ignore
Martin Wolf (FT) Apr 15, 2014
The problem is not only the explicit subsidy for risk-taking by banks, it is also the likelihood of unforeseen disasters that bring huge economic costs.
The real problem with GDP
John Kay (FT) Apr 15, 2014
Lay criticisms are valid but beside the point. We do not expect a thermometer to tell us how comfortable we feel.
Why we must care about dynamic modelling
John McDermott (FT) Apr 15, 2014
The technique could transform how public policy is assessed in Britain and make arguing for tax cuts and a smaller state a lot easier.
Geithner, S&P and Downgrade Payback
WSJ Apr 15, 2014
A federal judge compels Justice to cough up the documents behind its ratings case.
Africa Is Refuting the Usual Economic Pessimism
Ian Birrell (WSJ) Apr 15, 2014
Even as Nigeria battles Islamist terrorism, this remarkably entrepreneurial nation is racing ahead.
Kleptocrats' Loot Could Rebuild Ukraine
Harold James (Bloomberg View) Apr 15, 2014
International agreements on retrieving stolen assets need to be strengthened.
What Nestle Says About Emerging Markets
Mark Gilbert (Bloomberg View) Apr 15, 2014
Nestle, the world's biggest food company, published first-quarter sales today, and there are some takeaway lessons about the global economy available in the figures.
What Draghi Can't Promise
Mohamed A. El-Erian (Bloomberg View) Apr 15, 2014
The European Central Bank's Mario Draghi would be right to do "whatever it takes" to battle deflation in the euro area. But he can't promise an ideal outcome.
The Future of Economic Progress
Kemal Dervis (Project Syndicate) Apr 15, 2014
Slowly but surely, the debate about the nature of economic growth is entering a new phase. The emerging questions are sufficiently different from those of recent decades that one can sense a shift in the conceptual framework that will structure the discussion of economic progress – and economic policy – from now on.
The Irrelevant German Consumer
Michael Heise (Project Syndicate) Apr 15, 2014
With global rebalancing set to be high on the agenda at the next G-7 and G-20 meetings, Germany, with its persistent export surplus, will again come under pressure to boost household demand. But the German consumer is a sideshow, while the main acts are investment demand and monetary policy.
Taming the China Bears
Yu Yongding (Project Syndicate) Apr 15, 2014
China’s growth slowdown and mounting financial risks have spurred a wave of pessimism, with economists worldwide warning of an impending crash. But these predictions are largely based on historical precedents and universal indicators against which China, with its unique economic features, simply cannot accurately be judged.
Taxing, spending, and inequality
Benedict Clements, David Coady, Ruud de Mooij & Sanjeev Gupta (VoxEU) Apr 15, 2014
The causes and consequences of rising inequality have stirred a lively debate on appropriate policy responses. This column reviews how governments have successfully used fiscal policy to address distributive concerns. It also examines the policy alternatives that countries can pursue in order to reduce income and wealth inequality at a minimum cost to efficiency. Such policies include exploitation of property taxes, reductions in tax deductions that favour upper-income groups, investing in increasing the human capital of low-income groups, and reforming social benefits.
Xi dreams of shaking a slumbering China
Jonathan Fenby (FT) Apr 16, 2014
Xi Jinping has yet to achieve his dream of national rejuvenation and recognition from the great powers, but the Russia-Kiev stand-off offers an opportunity.
The financial tide cannot be held back
Robert Jenkins (FT) Apr 16, 2014
We will not abolish greed or stupidity but we must address excessive bank leverage. If not, another storm will wreak havoc.
The bear has made monkeys of the west
Bruce Anderson (FT) Apr 16, 2014
There is no reason to fear a strong and self-confident nation that strives like any other to promote economic growth and higher living standards.
When use of pseudo-maths adds up to fraud
Stephen Foley (FT) Apr 16, 2014
Many investment strategies that use mathematical models tweak strategy to fit data or are just statistical flukes.
End of ‘currency wars’ in sight
Simon Derrick (FT) Apr 16, 2014
Policy shifts in China and Russia mean currencies buoyed by demand from forex reserve managers may trade at more reasonable prices.
Is Japan Heading From Deflation to Stagflation?
William Pesek (Bloomberg View) Apr 16, 2014
Is Japan getting too much inflation too quickly? Worse, isn't this really the bad kind of price rise, based more on corporate opportunism than economic fundamentals?
Europe's Half-Baked Banking Union
Bloomberg View Apr 16, 2014
Europe's new banking union is a step forward that doesn't go far enough.
The IMF is Dead Wrong on Low Interest Rates
Brendan Brown (Mises Daily) Apr 16, 2014
In its just-published World Economic Outlook the IMF trumpets the view that the real level of equilibrium interest rates worldwide has declined substantially since the 1980s and is now in slightly negative territory. There is a good Irish word to describe this story: baloney.
Making Sense of China's GDP Slowdown
Mohamed El-Erian (Bloomberg View) Apr 16, 2014
Exploring the divergent predictions about Chinese economic growth and its implications for the global economy.
Europe's Gentle Clampdown on Flash Boys
Leonid Bershidsky (Bloomberg View) Apr 16, 2014
A new set of EU market rules billed as "the world's biggest clampdown on high-frequency trading" merely allow regulators to observe the activity more closely:
Target of Naked Short Sellers Is Angry, Confused
Matt Levine (Bloomberg View) Apr 16, 2014
There seems to be an uncanny correlation between (1) being accused of securities fraud and (2) accusing your enemies of naked short selling.
The High-Tech, High-Touch Economy
Adair Turner (Project Syndicate) Apr 16, 2014
Though we live in the hi-tech virtual world of the Internet, the most physical things – including urban land and service jobs – are rising in importance. But there is no contradiction: In an age of information and communication technology, it is inevitable that we value what an ICT-intensive economy cannot create.
Howard Davies (Project Syndicate) Apr 16, 2014
The release of the latest Global Financial Centres Index (GFCI), published by the consultancy Z/Yen in London, shows stability at the top of the table and volatility below. But do such rankings really contain valuable insights into how the global financial system is evolving?
Africa's Tech Edge
Dayo Olopade (Atlantic) Apr 16, 2014
How the continent's many obstacles, from widespread poverty to failed states, allowed African entrepreneurs to beat the West at reinventing money for the mobile age
The Pirate Economy
Joe Pinsker (Atlantic) Apr 16, 2014
The high price of warding off hijackings in Somali waters
Learning about global value chains by looking beyond official trade data: Part 2
Zhi Wang, Shang-Jin Wei & Kunfu Zhu (VoxEU) Apr 16, 2014
One common measure of trade linked international production networks is the so-called VAX ratio, i.e. the ratio of value-added exports to gross exports. This column argues that this measure is not well-behaved at the sector, bilateral, or bilateral sector level, and does not capture important features of international production sharing. A new gross trade accounting framework is proposed that can better track countries’ movements up and down global value chains.
Avoiding Africa's Oil Curse
Ricardo Soares De Oliveira (FA) Apr 16, 2014
What East Africa can learn from past booms.
A Better Way to Run Rating Agencies
Alan Blinder (WSJ) Apr 17, 2014
Incredibly, the faulty credit-rating system that helped cause the last financial crisis hasn't been fixed.
IMF Meetings Highlight Improved Prospects for Global Economy
Bridges Weekly Trade News Digest, Volume 18, Number 14 Apr 17, 2014
Improved trade and global growth estimates are cause for cautious optimism, officials at the International Monetary Fund (IMF) Spring Meetings said last weekend, while urging countries to adopt structural reforms to boost growth and reduce unemployment. The Washington gathering – which focused primarily on how to transition from recession-era policies to those of a more normal period – also reviewed the ongoing efforts to enact reforms to the lending institution, giving the US Congress until year's end to ratify the measures.
WTO Raises Trade Growth Forecasts for 2014, 2015
Bridges Weekly Trade News Digest, Volume 18, Number 14 Apr 17, 2014
World trade is expected to grow this year by 4.7 percent, WTO economists announced this week, exceeding earlier predictions for 2014. While these numbers show a noticeable improvement over the past two years, they still lag well below the 20-year average for trade growth.
UN Climate Scientists Warn of Escalating Emissions, Call for Action
Bridges Weekly Trade News Digest, Volume 18, Number 14 Apr 17, 2014
The UN panel on climate change released findings from a new report on climate mitigation on Sunday, indicating that manmade greenhouse gas (GHG) emissions have ballooned more quickly between the years 2000-2010 than in any of the three previous decades.
America and India: So Much in Common
John West (Globalist) Apr 17, 2014
The world’s two largest democracies are engaged in plenty of unnecessary strife.
Nigeria: An Incentive for South Africa
Ellis Mnyandu (Globalist) Apr 17, 2014
Bigger GDPs for other countries in Africa are not a zero-sum game.
Egypt's Solvency Crisis
Steven A. Cook (CFR) Apr 17, 2014
The risk factors and warning signs of a solvency crisis in Egypt, and policy options to prevent such a crisis or mitigate its consequences.
Global Warming’s Upside-Down Narrative
Bjørn Lomborg (Project Syndicate) Apr 17, 2014
When politicians around the world tell the story of global warming, they cast it as humanity’s greatest challenge, but promise that they can meet it at low cost while improving the world in countless other ways. Nonsense – on all counts.
Derivatives and the Eurozone crisis
Anne-Laure Delatte, Julien Fouquau & Richard Portes (VoxEU) Apr 17, 2014
In retrospect, it is striking that the sovereign bond spreads of peripheral Eurozone countries surged while the economic conditions were gradually deteriorating. This column provides a new explanation for this phenomenon. It suggests that the markets in credit default swap indices have exacerbated shocks to economic fundamentals. The same change in fundamentals had a higher impact on the spread during the crisis period than it had previously.
Big Data for Poor Students
Jin-Yong Cai (Project Syndicate) Apr 18, 2014
If we are to end poverty, reduce unemployment, and stem rising economic inequality, we must find new, better, and cheaper ways to teach – and on a vast scale. Fortunately, we live in an age in which information technology gives us the right tools to broaden access to high-quality, affordable education.
Has US household deleveraging ended?
Bruno Albuquerque, Ursel Baumann & Georgi Krustev (VoxEU) Apr 18, 2014
Household deleveraging in the US has impeded consumption and market activity in recent years, holding back the recovery. Despite substantial progress in balance sheet repair, a key question is whether deleveraging has ended or whether further adjustment is needed. This column presents time-varying equilibrium estimates of the household debt-to-income ratio determined by economic fundamentals. Taking into account the latest available data, the estimates suggest that the household deleveraging process may have ended at the end of 2013.
Coal, fuel of the future
Economist Apr 19, 2014
For the world’s sake, and its own, China needs to change the way it builds and runs its cities.
How Obama lost influence with Brics
Edward Luce (FT) Apr 20, 2014
The president’s real pivot is not to Asia but to America, inspired by domestic sentiment. Yet this is not going too well either.
The left can please neither rich nor poor
John Lloyd (FT) Apr 20, 2014
Large sections of the working and lower-middle class see social change as more disturbing than inequality.
Sweden Turns Japanese
Paul Krugman (NYT) Apr 20, 2014
The sadomonetarists, with their gut dislike of low interest rates, have claimed another victim.
How Argentina's Default Could Be New York's Loss
Jonathan Macey (WSJ) Apr 20, 2014
The commercial capital depends on U.S. courts to hold governments to their promises.
China's Growth Struggles
WSJ Apr 20, 2014
Market reform is crucial to avoiding the middle-income trap.
A needed rebalance
Tom Donilon (WP) Apr 20, 2014
A reorientiation to Asia will help ensure stability.
America's Manufacturing Renaissance?
George R. Tyler (Globalist) Apr 20, 2014
Despite all the hype, few manufacturing jobs have returned to the United States so far, by
Obama’s Asia policy is ambiguous
Gideon Rachman (FT) Apr 21, 2014
The rise of China is the big strategic challenge facing the US and should focus its attention.
Europe’s economy needs securitised debt
Jacques de Larosière (FT) Apr 21, 2014
Investors can now earn higher returns by investing in industrial companies rather than financial institutions.
Risks in buying Russian bonds on dips
Mohamed El-Erian (FT) Apr 21, 2014
Yield-hungry investors are often advised to buy on dips, and although such a strategy has worked so far for Russian bonds, the risks are rising.
Obama's China Challenge
WSJ Apr 21, 2014
U.S. allies look for support against Beijing's new aggression.
Thomas Piketty Revives Marx for the 21st Century
Daniel Shuchman (WSJ) Apr 21, 2014
An 80% tax rate on incomes above $500,000 is not meant to bring in money for education or benefits, but 'to put an end to such incomes.'
An Odd Hostility in the Americas
Roger Cohen (NYT) Apr 21, 2014
Brazil and the United States should be natural allies. They are not.
A New ECB Outlook? Part I
Jacob Funk Kirkegaard (PIIE) Apr 21, 2014
The European Central Bank (ECB) seems to be tiptoeing toward further easing of monetary policy in the euro area.
Big Data: Don’t Let the Billions of Data Points Blind You
Zeynep Tufekci (Brookings) Apr 21, 2014
When using big data to inform policy, low-hanging fruit can hide major shortcomings.
Confronting the U.S. Economic Slump
Mohamed A. El-Erian (Bloomberg View) Apr 21, 2014
It really does matter whether the U. S. is exiting from an unusually prolonged phase of sluggish economic growth and job creation or, instead, stuck in that slump for a lot longer.
Putin’s Perilous Course
Jeffrey D. Sachs (Project Syndicate) Apr 21, 2014
Following Russia’s forcible takeover of Crimea, it is almost unimaginable that normal economic relations between Russia and the West could survive a Russian invasion or annexation of another part of Ukraine. And, if the worst-case scenario materializes, as appears increasingly likely, Russia would be the long-term economic loser.
The End of the New World Order
Christopher R. Hill (Project Syndicate) Apr 21, 2014
Russia’s annexation of Crimea and ongoing intimidation of Ukraine appears to mean the end of a 25-year period whose hallmark was an effort to bring Russia into greater alignment with Euro-Atlantic goals and traditions. Now the question is: What comes next?
Asia’s Giants Under New Management
Kishore Mahbubani (Project Syndicate) Apr 21, 2014
More than one-third of the world’s population lives in just three countries: China, India, and Indonesia. With all three undergoing significant political transitions, this is a decisive moment in shaping the global economy’s future.
The Second Opening of Japan
Shinzo Abe (Project Syndicate) Apr 21, 2014
US President Barack Obama is visiting Tokyo at a unique moment in Japan's history, with its economy moving onto a new growth path that will take advantage of its geographic position. Japan no longer considers itself the “Far” East, but rather the very center of the Pacific Rim, and a neighbor to the global economy's growth center.
Obama Travels to Asia, But Future of Trade Pact Is Uncertain
David Dapice (YaleGlobal) Apr 21, 2014
TPP critics are many: China, environmentalists, workers, politicians worry about corporate interests supplanting national control.
An equal society will not hinder growth
Martin Wolf (FT) Apr 22, 2014
Not only does inequality damage the economy, but efforts to remedy it are, on the whole, not harmful.
Russia remains ripe for investors
Chris Weafer (FT) Apr 22, 2014
The emergence of an affluent middle class represents a lucrative market and a potent force that will reshape the country’s politics.
Baltics admit need to overcome squabbles
Richard Milne (FT) Apr 22, 2014
Estonia, Latvia and Lithuania admit need to overcome local differences for the greater good, given their shared history and anxieties about Russia.
China tightening rations credit abroad
Henny Sender (FT) Apr 22, 2014
China Development Bank lent money in places where the availability of capital was low, the tenure short and the cost high, but is now stepping back.
The American Middle Class Is No Longer the World’s Richest
David Leonhardt and Kevin Quealy (NYT) Apr 22, 2014
After three decades of slow growth, middle-class incomes in the U.S. appear to trail those of Canada. Poor Americans now make less than the poor in several other countries.
Back Story: How We Found the Income Data
David Leonhardt (NYT) Apr 22, 2014
For 15 years, an economics writer sought a data set that compared incomes across countries.
Mulally vs. Piketty
Holman Jenkins (WSJ) Apr 22, 2014
The great inequality theorist offers a shallow analysis of CEO pay.
At Last, a Better Economic Measure
Mark Skousen (WSJ) Apr 22, 2014
Gross output will correct the fallacy fostered by GDP that consumer spending drives the economy.
Russia Is in No Economic Shape to Fight a War
Anders Åslund (PIIE/Moscow Times) Apr 22, 2014
Last Friday evening, the Russian Security Council met. In attendance were 12 men—almost all of whom are around 60 years old and who once worked in the KGB in St. Petersburg—and one woman. Many have speculated that they might have agreed on a plan to invade eastern and southern Ukraine after Russian President Putin revived the term "Novorossia," or New Russia. None has significant economic insights.
A New ECB Outlook: Part II
Jacob Funk Kirkegaard (PIIE) Apr 22, 2014
As argued in Part I of this posting, the European Central Bank (ECB) has tiptoed toward a policy of monetary easing but is unlikely to act quickly. Here I discuss what the ECB might do in the second half of 2014, if the inflationary environment continues to deteriorate.
Can China Achieve Its 7.5 Percent Growth Target?
Li-Gang Liu (PIIE) Apr 22, 2014
China announced its first quarter GDP growth in April. The economy slowed to 7.4 percent on a year-over-year basis in the first quarter of 2014, down from 7.7 percent on the same basis in the fourth quarter of 2013, slightly higher than the market expectation of 7.3 percent. Comparing the first quarter of 2014 to the fourth quarter of 2013, the economy grew only 1.4 percent, down from 1.7 percent in the previous quarter.
Don't Reverse Globalization. Refine It.
Uwe Bott (Globalist) Apr 22, 2014
Globalization's positives can only be achieved if we correct the problems.
Deflation Is About to Wallop Europe
A. Gary Shilling (Bloomberg View) Apr 22, 2014
Real gross domestic product growth in the euro area is only 0.9 percent annually, well below the 2.3 percent in the U.S. Does the euro really deserve to be strong against the greenback?
India and Indonesia Pursue Different Economic Paths
Pankaj Mishra (Bloomberg View) Apr 22, 2014
Indonesia may gain in the next few weeks what India may not until the next general election: a leadership compelled by disgruntled masses to focus on growth as a means of creating jobs, not just as a playground for plutocrats.
Is the U.S. Shale Boom Going Bust?
Tom Zeller Jr. (Bloomberg View) Apr 22, 2014
While the most dire of warnings are probably overstated, a host of geological and economic realities increasingly suggest that the fracking party might not last as long as most Americans think.
The Future of the Captured State
Simon Johnson (Project Syndicate) Apr 22, 2014
The extreme free-market view of finance gained less traction in Europe than it did in the US in recent decades (with the exception of the United Kingdom). But the challenges of implementing effective regulatory reforms in Europe are actually more difficult.
The Oligarchy Fallacy
Jeffrey Frankel (Project Syndicate) Apr 22, 2014
Many fear that the rise in income inequality stems from the growing role of money in politics, with the rich persuading governments to adopt policies that favor them as a class. But pursuing the anti-oligarchy argument is not the best way to reduce inequality.
The Democratic Disruption of Finance
Mohamed A. El-Erian (Project Syndicate) Apr 22, 2014
There seems to be no limit to the exciting possibilities that come from combining technical innovations, the Internet, and social media. What is less appreciated is the extent to which the same phenomenon is starting to play out in finance, via a democratization process that could transform the institutional landscape.
Digging Themselves in Deeper
Keith Johnson (FP) Apr 22, 2014
Why Big Oil is doubling down on Putin's Russia.
Persistent noise trading and market meltdowns
Giovanni Cespa & Xavier Vives (VoxEU) Apr 22, 2014
Since capital flows to and from hedge funds are strongly related to past performance, an exogenous liquidity shock can trigger a vicious cycle of outflows and declining performance. Therefore, ‘noise’ trades – usually thought of as erratic – may in fact be persistent. Based on recent research, this column argues that there can be multiple equilibria with different levels of liquidity and informational efficiency, and that the high-information equilibrium is unstable. The model provides a lens through which to interpret the ‘Quant Meltdown’ of August 2007 and the recent financial crisis.
Thomas Piketty is Absolutely Right
Robert Solow (New Republic) Apr 22, 2014
The economist of the moment says inequality will get worse and worse unless we do something about it. Here's everything you need to know about 'Capital in the Twenty-First Century'.
French ‘time-bomb’ can be safely defused
Huw Pill (FT) Apr 23, 2014
Breathing space offered by France’s favourable sovereign funding environment creates scope for a gradual restructuring process.
China Belongs in the Pacific Trade Pact
Bernard K. Gordon (WSJ) Apr 23, 2014
Its leaders say they want to better connect with the global economy, and that 'the market will be decisive.'
Pacific Trade Stall
WSJ Apr 23, 2014
Foreigners won't budge if Obama won't press Democrats in Congress.
Market valuation and the 'two egg' problem
Chan Akya (AT) Apr 23, 2014
An oversimplified use of the "two egg" formula to explain step-like movements in asset prices would suggest investors push up the markets in ever smaller increments to figure out where breaking points lie. This ignores human and technical factors affecting the market's fragility.
Obama runs China's pivot gauntlet
Peter Lee (AT) Apr 23, 2014
Barack Obama is taking part in a pivot promotion tour of Asia with a certain smugness that the political and economic foundations of a China-containment regime have been laid. But with overt confrontation in East Asia from Beijing signaling its preparedness to manage relations in more hostile ways, the US president has no reason to feel other than the beginning of the end for the American Century is upon him.
The Economic Monster Called Deflation
A. Gary Shilling (Bloomberg View) Apr 23, 2014
Central bankers fear deflation so much that they want an inflationary cushion to prevent an economic shock or geopolitical crisis from sending low inflation into negative territory.
An Introduction to World Cup Economics
Jim O'Neill (Bloomberg View) Apr 23, 2014
World Cup wins are such momentous events that they've been known to give economies a lift.
Europe Still Has a Mountain of Debt
Mohamed A. El-Erian (Bloomberg View) Apr 23, 2014
It's still too early for Europe to declare victory in its sovereign-debt crisis.
The Gain in Spain
Michael Spence (Project Syndicate) Apr 23, 2014
The Spanish economy is beginning to attract investors’ attention – and not only because asset prices are depressed in the current climate. While there are huge problems that must still be overcome, there is also a clear sense on the ground that the economy has passed a turning point, roughly at the start of this year.
Human capital and income inequality
Amparo Castelló-Climent & Rafael Doménech (VoxEU) Apr 23, 2014
Most developing countries have made a great effort to eradicate illiteracy. As a result, the inequality in the distribution of education has been reduced by more than half from 1950 to 2010. However, inequality in the distribution of income has hardly changed. This column presents evidence from a new dataset on human capital inequality. The authors find that increasing returns to education, globalisation, and skill-biased technological change can explain why the fall in human capital inequality has not been sufficient to reduce income inequality.
Strip banks of the power to create money
Martin Wolf (FT) Apr 24, 2014
Our financial system is so unstable because the state first allowed it to create almost all the money in the economy and was then forced to insure it.
ECB QE: real prospect or fantasy game?
Ralph Atkins (FT) Apr 24, 2014
Bonds and equity markets have already anticipated any announcements – the risk is of a correction if Mario Draghi, ECB president, disappoints.
The IMF should loosen up
Andrew Smithers (FT) Apr 24, 2014
The fund must recognise that fiscal stimulus is sometimes but not always a sensible policy response to weak demand.
Sugar: Drastic measures
Scheherazade Daneshkhu (FT) Apr 24, 2014
Global food and drink companies are resisting stricter regulation in emerging economies that threatens to slash profits.
The Piketty Phenomenon
David Brooks (NYT) Apr 24, 2014
The reaction to Thomas Piketty's new book says more about class rivalry within the educated classes than it does about expanding opportunity.
The Piketty Panic
Paul Krugman (NYT) Apr 24, 2014
New scholarship by the French economist is a bona fide phenomenon, and the right is terrified.
U.S. should embrace Asia
Fareed Zakaria (WP) Apr 25, 2014
China and others need a more global voice.
Aging Japan seeks more foreign workers
Suvendrini Kakuchi (AT) Apr 24, 2014
Desperate for more workers to support a construction boom, Japan has proposed to expand its controversial foreign trainee program to permit more unskilled labor from Asia to work in Japanese companies for five years from the current three years.
Might Be Time to Short the Euro
A. Gary Shilling (Bloomberg View) Apr 24, 2014
To fight deflation, the ECB could stimulate the euro-area economy by purchasing securities backed by mortgages, small-business loans, corporate debt and bank loans, as well as government debt.
Africa Set for Faster Growth amid Changes in Global Trends
IMF Survey Apr 24, 2014
Growth in sub-Saharan Africa is set to accelerate in 2014, reflecting better prospects in most oil exporters and in some low-income countries and fragile states. The IMF’s new regional outlook projects 2014 GDP growth at 5½ percent, up from about 5 percent in 2013.
How to Lose in Ukraine
Mohamed A. El-Erian (Bloomberg View) Apr 24, 2014
If the West and Russia can't calm tensions in Ukraine soon, everyone will lose.
Economists, Start Your Computers
Mark Buchanan (Bloomberg View) Apr 24, 2014
It's a pity economists hate agent-based modeling, because it will play a big role in the future of their profession.
Hunt for Exotic Yields Is Dangerous
Leonid Bershidsky (Bloomberg View) Apr 24, 2014
Low yields on investment-grade and even many junk bonds are driving investors toward increasingly creative instruments, the risk of which is easy to misjudge.
The Other Transatlantic Partnership
Karl-Theodor zu Guttenberg and Ulf Gartzke (Project Syndicate) Apr 24, 2014
The EU and Canada have been deepening bilateral ties, including the recent completion of a strategic partnership agreement and a comprehensive economic and trade agreement. Given the crisis in Ukraine and both countries' rising tensions with Russia, this effort could not be more timely.
Europe’s Next Moral Hazard
Hans-Werner Sinn (Project Syndicate) Apr 24, 2014
The limit beyond which eurozone governments' creditors become anxious has been raised significantly by the bailout architecture put in place over the last two years. This will bring a few years of calm as debt levels climb steadily to that limit, before the architecture collapses, injuring ordinary citizens the most.
The Renminbi Goes Abroad
Hamid Poorsafar (Diplomat) Apr 24, 2014
The internationalization of China’s currency is underway, albeit with some important hurdles still to clear.
The End of American Exceptionalism?
Charles Murray (Globalist) Apr 24, 2014
America, on the road to become like Europe’s social democracies, is losing its exceptionalism, by the AEI's Charles Murray
Want to Fix Income Inequality? Relink Wages to Productivity
George R. Tyler (Globalist) Apr 24, 2014
Can policymakers lessen inequality without harming innovation, investment and productivity growth?
Inequality Is Not the Problem
Jeff Madrick (NYRB) May 29, 2014
The powerful findings of Thomas Piketty have challenged long-held assumptions that America is a meritocracy. Yet we also now have stagnating incomes for a large majority and runaway incomes at the very top. There is a complete lack of growth for much of the country.
Closing the US-EU productivity gap
Ana Rincon Aznar, Anastasios Saraidaris, Michela Vecchi & Francesco Venturini (VoxEU) Apr 24, 2014
The importance of innovation activities for productivity growth has long been recognised. However, there are significant differences in the level of intangible investments across developed economies. This column describes how the EU can enhance its productivity growth and close the gap with the US. One such main channel is through investing in intangible assets and absorptive capacity. A second one is increasing production efficiency. Relevant policy recommendations are also discussed.
Uganda: The General Challenges the Dictator
Helen Epstein (NYRB) Apr 24, 2014
I first met General Sejusa in October 2013, in a chain restaurant on the outskirts of a British university town. The story he told me would defy belief, if much of it weren’t confirmed by contemporary news reports and interviews with other Ugandan political observers.
Innovation and the Government
Jeff Madrick (NYRB) Apr 24, 2014
A new book makes a forceful case for the value and competence of government itself, and for its ability to do what the private sector simply cannot.
Lessons from a rock-star economist
Gillian Tett (FT) Apr 25, 2014
‘Thomas Piketty has forced Americans to confront some of their contradictions’.
Flash boys can't match central banks
Chan Akya (AT) Apr 25, 2014
Michael Lewis's latest book uses accessible language to describe the complex algorithms involved in high-frequency trading, with colorful prose and oddball characters helping to sketch out the "scandal". However, it fails to explore the role of Wall Street strategy departments in inflating the prospects of markets, and to note the bigger scam involving central banks.
Switzerland's Toxic Prosperity
Dan Fagin (NYT) Apr 25, 2014
The chemical industry of Basel once dumped its wastes into the Rhine, a practice it later brought to the United States and China.
Why Everyone’s Talking About the Great Lime Shortage
Neil Irwin (NYT) Apr 25, 2014
And what the problem teaches us about the Federal Reserve.
Why Markets Are Caught In a Tug-of-War
Mohamed A. El-Erian (Bloomberg View) Apr 25, 2014
Equity markets may well lose some of the support that has proven so critical in blunting the scope and scale of price pullbacks in recent months.
Courting Asia: China’s Maritime Silk Route vs America’s Pivot
Yukong Huang (Diplomat) Apr 25, 2014
Could the revitalization of an ancient trade route help ameliorate territorial disputes?
How the Private Sector Can Contribute to Global Development
Laurence Chandy, Kemal Dervis, George Ingram, Homi Kharas & Steven Rocker (Brookings) Apr 25, 2014
Three new essays explore how the private sector can help end extreme poverty over the next generation.
The Arab World’s Options
Marwan Muasher (Project Syndicate) Apr 25, 2014
After three years of struggle, the transitions initiated by the Arab Spring uprisings have only just begun. Whether Arab countries succeed in advancing pluralism and democracy depends on which of three models they use to guide their transitions.
Russia’s tit for tat
Peter A.G. van Bergeijk (VoxEU) Apr 25, 2014
In reaction to the Crimean crisis, the EU imposed certain sanctions on Russia. Russia responded by blacklisting EU and US officials. This column discusses the comparative vulnerability of the EU and Russia amid this tit for tat pattern. In purely economic terms, the EU is in a much better position than Russia. However, political regimes also matter. The autocracy score for Russia dampens the impact that the economic sanctions would have politically. The democratic nature of the European governments would translate the sanctions imposed by Russia into great political pressure for the EU. This makes the Russian tit for tat threat realistic.
Chinese pollution: A shift in the wind
Pilita Clark and Lucy Hornby (FT) Apr 27, 2014
After resisting foreign calls to cut emissions, domestic pressure is finally forcing change. The state though has to find a way to do it while maintaining growth.
Confidence is a poor measure of health
Wolfgang Munchau (FT) Apr 27, 2014
If you think an improvement in mood in the eurozone signals a robust and broad-based recovery, you could not be more wrong.
China’s crisis is coming
Prasenjit Basu (FT) Apr 27, 2014
The country’s economy can stay unbalanced for a while – but the longer it does, the worse the eventual outcome will be.
Financial crises are the cost of progress
John Authers (FT) Apr 27, 2014
Hedge fund manager’s history of financial crises through the ages covers many examples of financial folly and suggests we seem doomed to repeat them.
US infrastructure: Broken system
Robin Wright (FT) Apr 28, 2014
The looming crisis in the country’s transport network is explored.
Modi is a risk worth taking for India
Gideon Rachman (FT) Apr 28, 2014
The BJP leader’s record as Gujarat chief minister offers reasons for hope in a country in need of economic reform.
Money creation is not for the state alone
Phillip Booth (FT) Apr 28, 2014
The great inflations of the past were caused by profligate or greedy governments indulging in deficit financing.
Funds play it cautious in emerging markets
Henny Sender (FT) Apr 28, 2014
Credit risk is increasingly driving investors into income-generating sectors of emerging markets.
How to strengthen the fragile middle
Branko Milanovic (FT) Apr 28, 2014
Can inequality rise further, deepening regional and urban-rural divides, without slowing the expansion of the middle?
What Does Today Owe Tomorrow?
Justin Gillis (NYT) Apr 28, 2014
That simple question goes to the heart of figuring out what we should spend now on efforts to deal with climate change.
Busting Insider Trading: As Pointless as Prohibition
Henry G. Manne (WSJ) Apr 28, 2014
Just as Americans found ways to keep drinking, Wall Street will always look for an edge.
Asia’s Patriotic Gore
Koichi Hamada (Project Syndicate) Apr 28, 2014
If a space alien landed in East Asia today, it would find a region shaped by rapid economic change, complex geopolitical dynamics, and deep historical animosities. Perhaps viewing the region from such a perspective is exactly what Asia’s leaders need to do to ensure that its positive trends continue – and to halt the dangerous ones.
Containing Competitive Monetary Easing
Raghuram Rajan (Project Syndicate) Apr 28, 2014
In a world where debt overhangs and the need for structural reform are constraining domestic demand, unconventional monetary policies have profound spillover effects – and prompt damaging responses. The only way to break the destabilizing cycle of monetary expansion and retaliation is to increase global monetary-policy coordination.
Chinese Cities’ Four Modernizations
William Antholis (Project Syndicate) Apr 28, 2014
Among the most significant developments driving China’s economic growth and rising living standards is the shift from a rural, agricultural society to a modern, urban one. But, while the centrality of urbanization to China’s future is indisputable, exactly how the trend will develop remains far from certain.
Sustaining Asia’s Momentum: Time for Vigilance and Reform
IMF Survey Apr 28, 2014
The outlook for Asia is one of steady growth. GDP growth is forecast to improve to 5.5 percent in 2014–15, says the IMF in its latest Asia and Pacific Regional Economic Outlook.
Inequality: a missing perspective
Chris Dillow (Pieria) Apr 28, 2014
Yes, inequality is a problem. This is partly because it is often a sign of market failure. But it also threatens to undermine democracy, social harmony and equality of respect.
IMF preferred creditor status and the Eurozone crisis
Susan Schadler (VoxEU) Apr 28, 2014
The IMF has had a preferred creditor status throughout the history of its lending. This implies that borrowing countries are expected to give priority to meeting their obligations to the IMF over other creditors. This column reviews the onset of this preferred status, its purpose, and the way it changed after the recent Eurozone crisis. By lending €30 billion to Greece in 2010, the IMF introduced the option to permanently waive the requirement that a borrowing country is on the path to stability. This option increases the chance of moral hazard and undermines the strong framework for the preferred creditor status.
A ripple of hope in a stagnant world
Martin Wolf (FT) Apr 29, 2014
Excess supply and low interest rates go hand in hand and raise the risk of leaving the recovery in the doldrums Read more >>
India FDI woes need more than empty words
James Crabtree (FT) Apr 29, 2014
The country’s recent record as an investment destination has been poor. It will take more than words to put it right.
Markets beware a complacent bank industry
John Plender (FT) Apr 29, 2014
Potential banana skins are being ignored by banks as their chief current concern is over-regulation rather than risk management.
Tax avoidance: The Irish inversion
Vanessa Houlder, Vincent Boland and James Politi (FT) Apr 29, 2014
US companies are shifting their headquarters abroad as they seek to protect growing overseas cash piles from Uncle Sam.
The Mismeasure of Technology
Ricardo Hausmann (Project Syndicate) Apr 29, 2014
One idea about which economists agree almost unanimously is that, beyond mineral wealth, the bulk of the huge income difference between rich and poor countries is attributable to neither capital nor education, but rather to “technology.” So what is technology?
The Resource Revolution
Stefan Heck and Matt Rogers (Project Syndicate) Apr 29, 2014
The world is on the threshold of the biggest business opportunity in a century, rivaling both the first Industrial Revolution, which transformed labor productivity, and the second, which mobilized unprecedented amounts of capital. The new revolution centers on the third primary factor of production: natural resources.
The Return of the Renminbi Rant
Stephen S. Roach (Project Syndicate) Apr 29, 2014
China’s currency, the renminbi, has been weakening in recent months, resurrecting familiar US charges of official manipulation and beggar-thy-neighbor mercantilism. But this timeworn charge – politically inspired and grounded in bad economics – diverts attention from far more important issues affecting the US-China economic relationship.
Europe’s Trapped Politics
Jean Pisani-Ferry (Project Syndicate) Apr 29, 2014
If Europe were politically unified, issues stemming from growing economic divergences among EU member states would dominate the run-up to May’s European Parliament election. Instead, the issue that matters most to voters – and to Europe – has remained outside the scope of the campaign.
Studying the Rich
Mike Konczal (Boston Review) Apr 29, 2014
With Thomas Piketty's Capital, the rich are now a problem to be studied. They may still be in control, but they are right to be worried.
How to address inequality
Jeffrey Frankel (VoxEU) Apr 29, 2014
Awareness of inequality is rapidly rising. This column argues that commentators should focus on identifying the policies that are best suited to improving income distributions efficiently, and the politicians that support them. It is not sufficient to sound the alarm about inequality and the political reach of the super-rich.
The nine stages of the Piketty bubble
Robert Shrimsley (FT) Apr 30, 2014
Everybody’s talking about that important work by that French economist with the funny name because they feel they have to.
Investors are ignoring eurozone risks
Philippe Legrain (FT) Apr 30, 2014
The initial fall in yields from their panicky heights was welcome and justified, but the epic rally this year is taking them into bubble territory.
By One Measure, China Set to Become Largest Economy
Michael Forsythe and Neil Gough (NYT) Apr 30, 2014
In terms of purchasing power, China’s economy is poised to overtake the United States economy this year, but numbers don’t always tell the entire tale.
China's Century Starts Now
Bloomberg View Apr 30, 2014
Remember how China's economy was likely to surpass the U.S.'s sometime in the next decade or so? Turns out it may already have happened.
China Is Bigger than America: "Eclipse" versus IMF?
Arvind Subramanian (PIIE) Apr 30, 2014
In my book, Eclipse: Living in the Shadow of China's Economic Dominance, I estimated that the Chinese economy overtook that of the United States in 2010 measured in purchasing power parity (PPP) dollars. The International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) predicts that this Il Sorpasso will occur in 2019. The Economist magazine has also dated the overtaking for around 2019. Who is right? Well, now there is an official answer.
India's GDP Revised Upward
Arvind Subramanian (PIIE) Apr 30, 2014
If politicians cannot give India a boost, sometimes statisticians can. Today, the World Bank released its estimates for purchasing power parity (PPP)-based GDP for the year 2011 for countries around the world based on the elaborate survey of prices that the International Comparison of Prices (ICP) project conducts every five to six years. India's GDP and GDP per capita have been revised upwards by about 28 percent (see table). The comparison is with the latest forecast from the International Monetary Fund (IMF) in its April World Economic Outlook (WEO). For 2011, India's GDP is now estimated at $5,758 billion and per capita GDP at $4,735.
China May Be Biggest Economy, But Not the Best
William Pesek (Bloomberg View) Apr 30, 2014
New data showing that China may surpass the U.S. as the world's biggest economy this year are undermined by rising inequality on the mainland.
Reimagining China’s Urban Future
Bert Hofman (Project Syndicate) Apr 30, 2014
China’s urbanization has undoubtedly supported the country’s impressive growth and rapid economic transformation. But China’s citizens, especially the poor, would benefit from a shift in government policy from the physical expansion of cities and infrastructure to the delivery of better, more fairly distributed public services.
Infrastructure’s Class of Its Own
Justin Yifu Lin and Kevin Lu (Project Syndicate) Apr 30, 2014
It is time for Asia’s leaders to recognize that the lack of private funding for infrastructure projects cannot be reduced to one or even two problems – and develop comprehensive solutions that account for the full scope of the challenge. This requires, first and foremost, redefining infrastructure as a new asset class.
Global Ground Zero in Asia
Nouriel Roubini (Project Syndicate) Apr 30, 2014
The most pressing geopolitical issue of our time is not the prospect of conflict between Israel and Iran over nuclear proliferation or rising tensions between Russia and the West over Ukraine. It is the challenge of managing China's rise and ensuring that peace and prosperity prevail in Asia.
The Right’s Piketty Problem
J. Bradford DeLong (Project Syndicate) Apr 30, 2014
Thomas Piketty's book Capital in the Twenty-First Century has quickly won widespread praise in the US. And, rather than offering substantive criticism of the work, many conservative reviewers have engaged in puerile, ad hominem attacks on its author.
A Weaker Euro for a Stronger Europe
Martin Feldstein (Project Syndicate) Apr 30, 2014
There are few if any panaceas in economics. But a sharp decline in the euro’s exchange rate – say, by 15% – would remedy many of the eurozone’s current economic problems, including slow growth, high unemployment, and a growing risk of deflation.
Economics is too important to leave to the experts
Ha-Joon Chang (Guardian) Apr 30, 2014
Citizens may be able to see the world more clearly than narrowly focused professional economists.
Saving bank resolution in the Eurozone
Jeffrey N. Gordon & Georg Ringe (VoxEU) Apr 30, 2014
The European Parliament recently adopted the Single Resolution Mechanism. Though supposed to be a pillar of the European banking union, it is fraught with difficulties. This column makes a proposal for a new organisational structure that can deal with bank failure more effectively. European banks should be required to self-insure against failure. Further, the ECB should be the only financially credible player to provide liquidity for the resolution procedure. These proposals would strengthen the current banking union project, and can overcome certain political difficulties.
Hell Is an Understatement
Graeme Wood (New Republic) Apr 30, 2014
A report from the bloody, crumbling Central African Republic.
The Rupee Dilemma
Neil K. Shenai (FA) Apr 30, 2014
Is the United States responsible for India's economic problems?