News & Commentary:

May 2007 Archives


'The Two Faces of Financial Globalization' Recommended!
Finance and Development Volume 44, Number 1 Mar/May 2007
'The Two Faces of Financial Globalization' looks at the phenomenon of rising cross-border financial flows-credited with boosting growth in developing countries but also blamed for the emerging market crises of the late 1980s and 1990s. The lead article puts together a framework for analyzing studies about the costs and benefits of financial globalization. Other articles look at the worldwide allocation of capital, the role of finance in macroeconomic management, and changes in the investor base. 'Picture This' illustrates the growth and direction of capital flows. One guest contributor describes India's capital account liberalization, and another looks at how participants in international finance can cope with a fluid financial landscape. 'People in Economics' profiles Guillermo Calvo; 'Back to Basics' explains the difference between the purchasing power parity exchange rate and market exchange rates as measures of global economic growth ; and 'Country Focus' spotlights Australia.

Why Wolfowitz Should Stay
Nuhu Ribadu (NYT) May 1, 2007
Paul Wolfowitz, president of the World Bank, helped change my country.

Notes on a Scandal
Bret Stephens (WSJ) May 1, 2007
How ethical are Paul Wolfowitz's detractors?

Fed chief Bernanke warns against protectionist trade measures
IHT/AP May 1, 2007
A move to protect U.S. industries and workers from foreign competition would be a serious mistake that would jeopardize the sizable benefits of free trade, the Federal Reserve chairman, Ben Bernanke, said Tuesday.

Ag Chair Describes 'Centre Of Gravity' For Plausible Doha Deal
BRIDGES Weekly Trade News Digest Vol. 11, Number 15 May 2, 2007
The chair of the deadlocked Doha Round talks on cutting farm tariffs and subsidies on 30 April issued a paper outlining parameters for a plausible deal on several issues in the negotiations, in an effort to goad WTO Members into reconsidering their bargaining positions.

Services Cluster Finishes With New Focus On 'Breakthrough Sectors'
BRIDGES Weekly Trade News Digest Vol. 11, Number 15 May 2, 2007
The first formal cluster of services meetings held at the WTO since the Doha Round talks were suspended last July concluded on 27 April after two weeks of intensive plurilateral and bilateral negotiations. Although many developing countries remain reluctant to further open their markets to foreign services providers until there is more progress in the talks on agriculture and industrial tariffs, some major 'demandeur' Members such as the EU and the US have identified key 'breakthrough' sectors in which they are especially eager to see new liberalisation.

Heated Debate Over Pakistan's Attempt At Compromise On 'Special' Farm Products
BRIDGES Weekly Trade News Digest Vol. 11, Number 15 May 2, 2007
WTO Members have kicked off a new attempt to try to bridge their differences in the faltering Doha Round trade talks and conclude a deal by the end of the year (see related article, this issue). Last week's meeting of the agriculture negotiating committee only served to underline how difficult it will be for them to succeed, even after five and a half years of negotiations.

Europeans wary of Wolfowitz
IHT May 3, 2007
A Brussels meeting was overshadowed by questions about the World Bank president.

World Bank rolls
WSJ May 3, 2007
Nearly 1,400 employees make more than Condi Rice.

Wolfowitz’s Big Mistake New York Times Select Subscription Required
David Brooks (NYT) May 3, 2007
Let’s say you’re a Republican appointed to an important job in Washington. You’ll probably find that 90 percent of the people who work in your agency are Democrats, as are 90 percent of the media types who cover you and 90 percent of the academics who comment on your work.

Gagging Shaha Riza
WSJ May 4, 2007
Why won't the World Bank let Shaha Riza have her say?

Losing Latin America Wall Street Journal Subscription Required
WSJ May 4, 2007
Democrats gang up on our free-trade, anti-terror allies.

Predatory Lending Wall Street Journal Subscription Required
George B.N. Ayittey (WSJ) May 4, 2007
The World Bank, "credibility" and Africa.

De Rato on hedge funds and trade Adobe Acrobat Required
IMF Survey May 7, 2007
Plus: Portugal on IMF technical assistance; Latin American growth; Iraq reforms economy; debt restructuring in eight countries; IMF research: investment, reserves, inflation; exchange rate adjustment and global imbalances

The Whistleblowers' Tale
Bret Stephens (WSJ) May 8, 2007
The real disgrace at the World Bank.

Axis of Soros Wall Street Journal Subscription Required
WSJ May 9, 2007
The men and motives behind the World Bank coup attempt.

Save the WTO From the Doha Round
Ernesto Zedillo (Forbes/Yaleglobal) May 9, 2007
Plummeting expectations of the trade talks threaten to undermine the World Trade Organization itself.

Euro becomes currency of choice for cocaine traffickers
IHT May 10, 2007
The euro has become the currency of choice for Latin American cocaine traffickers as the drug's popularity among Europeans has soared and the value of the currency against the dollar has risen, a top U.S. anti-narcotics official said Thursday.

Bush and Democrats in Accord on Trade Deals
NYT May 10, 2007
The Bush administration reached agreement on Thursday with the House speaker, Nancy Pelosi, and other Democrats to attach environmental and worker protections in several pending trade accords, clearing the way for early passage of some pacts and improving prospects for others.

Ditching laissez-faire, India plans a city
Anand Giridharadas (IHT) May 10, 2007
A year ago, this relatively small, forgettable city in the heart of India did not have an air-conditioned cinema. In the sweltering heat of May, the rich here were known to fly one hour to Mumbai, the financial hub of India, to see a movie. There they stocked up on Levi's jeans and Domino's pizza and other big-city treats that Nagpur failed to provide.

Banking on Obsolete Statism Wall Street Journal Subscription Required
George F. Will (WSJ) May 11, 2007
The World Bank's rationale, never strong, has evaporated.

Sacrificial Wolfie
Naomi Klein (Nation) May 14, 2007
It's not the act itself, it's the hypocrisy. That's the line on Paul Wolfowitz, coming from editorial pages around the world. It's neither: not the act (disregarding the rules to get his girlfriend a pay raise) nor the hypocrisy (the fact that Wolfowitz's mission as World Bank president is fighting for "good governance").

Corruption Fighter Recommended! Wall Street Journal Subscription Required
Bambang Harymurthi (WSJ) May 14, 2007
Fighting corruption is a hazardous mission.

World Bank Jobbery
WSJ May 15, 2007
More evidence the Wolfowitz accusers chose to ignore.

Bank’s Report Says Wolfowitz Violated Ethics
NYT May 15, 2007
A World Bank committee charged Monday that Paul D. Wolfowitz violated ethical and governance rules as bank president by showing favoritism to his companion in 2005. In response, the Bush administration mounted a last-ditch global campaign to save Mr. Wolfowitz from being ousted from office.

Wolfowitz Saga Exposes Structural Flaws of the World Bank
Devesh Kapur (YaleGlobal) May 15, 2007
The apathy of some international players hints at the decreasing relevance of global institutions.

Deal or No Deal Wall Street Journal Subscription Required
WSJ May 16, 2007
The good, and bad, in the Rangel-Bush trade agreement.

Benn and Wolfowitz Wall Street Journal Subscription Required
WSJ May 16, 2007
The British forgive this conflict of interest.

Wolfowitz exit from World Bank appears close
IHT May 16, 2007
After six weeks of fighting efforts for his ouster as president of the World Bank, Paul Wolfowitz on Wednesday began negotiating the terms of his possible resignation.

Asia and the IMF: 10 Years After the Asian Crisis
David Burton (IMF) May 16, 2007
Both Asia and the IMF have changed in many important ways in response to the Asia crisis and its aftermath. A decade later, Asia has made considerable progress in strengthening its economic foundations, and is once again the most dynamic region in the world economy. For its part, the IMF has retooled itself to better help its membership cope with increasing economic and financial globalization. Today, I will talk about these changes, focusing on those aimed at adapting to financial globalization. But let me first go back briefly to the crisis itself.

Lamy Warns Members: Compromise Soon Or Face Failure
BRIDGES Weekly Trade News Digest - Vol. 11, Number 17 May 16, 2007
WTO Member governments "will be forced to confront the unpleasant reality of failure" in the Doha Round negotiations if they do not compromise soon, Director-General Pascal Lamy said on 9 May. Speaking to a meeting of the General Council, the WTO's top permanent decision-making body, he highlighted the steps countries must take during the coming months in order to meet their stated aim of concluding the talks by around the end of the year.

White House, Democrats Reach Deal On Bilateral FTAs, Sparking Hopes For TPA
BRIDGES Weekly Trade News Digest - Vol. 11, Number 17 May 16, 2007
The Bush administration and senior Democratic lawmakers have struck a deal on environmental, labour, and drug patent protections in pending US bilateral free trade agreements, boosting their chances of receiving Congressional approval. Movement towards broader bipartisan cooperation on trade may also herald brightened prospects for the troubled Doha Round multilateral negotiations at the WTO.

It's Win-Win on U.S.-China Trade Wall Street Journal Subscription Required
Wu Yi (WSJ) May 17, 2007
"Attempts to politicize trade issues should be resisted."

Wolfowitz Resigns From World Bank
NYT May 18, 2007
Paul D. Wolfowitz's departure, which will occur on June 30, ended weeks of furor over charges of favoritism toward a bank employee who is his female companion.

World Bank Justice
WSJ May 18, 2007
Wolfowitz's resignation offers a window into a corrupt institution.

The China Trade Wall Street Journal Subscription Required
WSJ May 21, 2007
The world economy doesn't need a dollar devaluation.

Not only the poorest need aid
IHT May 21, 2007
The G-8 and the G-11 countries must forge a stronger partnership to continue with needed reforms.

Trade Talks With China at a Juncture
Steven R. Weisman (NYT) May 21, 2007
Some question whether efforts to open China to U.S. goods will satisfy a Congress irate over a staggering trade deficit.

Yuan Worries Wall Street Journal Subscription Required
Matthew J. Slaughter (WSJ) May 22, 2007
China isn't manipulating its currency for trade advantage. It can't.

Changing the Global Architecture Wall Street Journal Subscription Required
Stuary E. Eizenstat & Grant D. Aldonas (WSJ) May 22, 2007
Our post-WW2 institutions are badly outdated.

The U.S.-China Trade Deficit, Debunked Wall Street Journal Subscription Required
Li Jin & Shan Li (WSJ) May 22, 2007
The trade imbalance could escalate into a trade war.

World Bank struggles with identity crisis
IHT May 22, 2007
The entire international economic architecture established after World War II is buckling, experts and policy makers say.

China Capital Wave Wall Street Journal Subscription Required
WSJ May 23, 2007
The global liquidity boom has a new big player.

U.S.-China economic talks end with limited steps on opening Chinese markets
IHT May 23, 2007
The measures appeared unlikely to impress critics of Chinese economic practices in the U.S. Congress. Critics of China charge that it keeps the level of its currency low in order to make exports less expensive and imports into China more costly.

As currency strengthens, India fears harm to growth
IHT May 23, 2007
The central bank of India is under pressure to curb a rise in the national currency, which a growing number of economists warn may threaten growth by creating a more expensive environment for outsourcing, a pillar of Indian economic success.

Foes of Free Trade Get a Foot in the Door
Jagdish Bhagwati (AEI) May 23, 2007
The new bipartisan trade compromise for fast-track authority requires an excessive concession to labor interests.

The World Bank Needs Radical Reform
Desmond Lachman (AEI) May 23, 2007
The World Bank needs a new president who is not only politically appealing--it needs someone to fundamentally change the way the Bank does business.

G-4 Say Talks 'Productive', But No Signs Of Convergence Yet
BRIDGES Weekly Trade News Digest - Vol. 11, Number 18 May 23, 2007
The world's leading trading powers say that they made progress towards a compromise in the Doha Round trade talks during meetings in Paris and Brussels last week. Nevertheless, it remains far from clear whether WTO Members will be able to hammer out a framework deal on cutting subsidies and tariffs by the end of July, so that the faltering negotiations can be concluded by the end of the year.

WHO Members Adopt Resolution On Pharmaceutical Innovation
BRIDGES Weekly Trade News Digest - Vol. 11, Number 18 May 23, 2007
Intellectual property issues were prominent at the World Health Organization's annual summit in Geneva from 14-23 May. After extensive negotiations, member states adopted a last-minute resolution based on a Brazilian proposal calling for the global health body to take on an expanded role in encouraging health research and access.

The Dollar and the Renminbi Recommended!
C. Fred Bergsten (IIE) May 23, 2007
The US Treasury should notify China that if it fails to make a significant "down payment" appreciation of at least 10 percent before the release of Treasury’s next report on exchange rates, it will be labeled a “manipulator.” In addition, the administration should notify its G-7 partners and the International Monetary Fund that it plans to label China a manipulator absent action. These other countries would prefer to avoid a US-China confrontation on the issue and could thus be brought into a multilateral effort. The administration should also take a multilateral initiative on the trade side by filing a case in the World Trade Organization (WTO) a gainst China’s currency practices as an export subsidy or as a frustration of trade liberalization under WTO Article XV(4), or both. If these multilateral efforts fail, the United States will have to address the issue unilaterally. Treasury can then intervene directly in the currency markets. Finally, if all of the above fails, the administration should notify the Chinese that it will be unable to oppose responsible congressional legislation that would effectively sanction the Chinese (and some other Asians) for their failure to observe their international currency obligations.

Immigration and Welfare
WSJ May 24, 2007
Most immigrants will pay at least as much in taxes as they collect in benefits.

Tainted Chinese Imports Common
Rick Weiss (WP) May 24, 2007
China is in a big rush to feed the world, flooding the market with unfit food

The world needs a stronger World Bank
IHT May 25, 2007
The World Bank has no rival as a source of development expertise.

IEO on IMF exchange rate advice Adobe Acrobat Required
IMF Survey May 28, 2007
Plus: GFSR: financial system risks and issues for regulators; good times in Belgium; Africa's oil exporters; outlook for Middle East and Central Asia; Causasus and Central Asia:capital flows; lessons from a decade of crises

Getting to a Colombia Trade Deal
NYT May 29, 2007
Before Congress approves the Colombia trade agreement, the Uribe government must expand its investigative efforts, improve its conviction rate and send a clear message that terrorism will no longer be tolerated.

Cracking Open India's Capital Account Wall Street Journal Subscription Required
Esward S. Presad (WSJ) May 29, 2007
More than just money would flow in.

The Rising Rupee Wall Street Journal Subscription Required
WSJ May 29, 2007
The conundrum India is facing today.

Defining China's Economy Wall Street Journal Subscription Required
WSJ May 29, 2007
What is China today, a market economy, or a nonmarket economy?

Banking on Zoellick
Philip I. Levy (American) May 30, 2007
The World Bank needs strong leadership, not timidity.

Zoellick's Clean-Up Duty
WSJ May 31, 2007
The World Bank tries to silence its anti-corruption unit.

Who Needs the World Bank? Wall Street Journal Subscription Required
WSJ May 31, 2007
More developing countries are borrowing from private markets.

A Clean Start at the World Bank
NYT May 31, 2007
Think how much better it would have been if President Bush had simply named Robert Zoellick to lead the World Bank two years ago instead of putting the bank, his administration and the world through the unnecessary and embarrassing Paul Wolfowitz ordeal.

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