The Amazing Tale of U.S. Energy Independence
Philip K. Verleger, Jr. (TIE) Jun 1, 2012
A leading expert claims the United States within a decade will be an energy exporter. And it’s all happening by accident.
Beware Unknown Unknowns
Andreas Dombret (TIE) Jun 1, 2012
The Sibylline Books and how to prevent financial crises.
The Crisis and Beyond
Finance and Development June 1, 2012
Five years on from the Great Recession and some countries have recovered, but others are still struggling. F&D looks at the world today and sees a complex and mixed picture for the future of the world economy.
The Eurozone: Breakaway or breakup?
Marco Annunziata (VoxEU) Jun 1, 2012
There was a time when Greek exit from the Eurozone seemed implausible – now the prospect is so openly discussed that it even has its own word: Grexit. But amid the media frenzy, we should remind ourselves that single-country breakaway is not the same as a Eurozone breakup. This column discusses the steps to ensure that the former does not imply the latter. It urges leaders to take them quickly.
Austerity and Debt Realism
Kenneth Rogoff (Project Syndicate) Jun 1, 2012
With many of today’s advanced economies near or approaching the 90%-of-GDP level that loosely marks high-debt periods, expanding today’s already large deficits is a risky proposition, not the cost-free strategy that many advocate. On the contrary, the impact of prolonged high debt levels on long-term growth is likely to be profound.
Democracy versus the Eurozone
Daniel Gros (Project Syndicate) Jun 1, 2012
The EU is a voluntary quasi-federation of sovereign and democratic states in which elections matter and each country seeks to determine its own destiny, regardless of the wishes of its partners. But it should now be apparent to everyone that the eurozone was designed with a very different institutional arrangement in mind.
Japan, China bypass US in currency trade
Kosuke Takahashi (AT) Jun 2, 2012
Japan and China on Friday started direct trading between the yen and the yuan in Tokyo and Shanghai, by-passing the need first to exchange either currency into the US dollar. The move should strengthen trade between the two economies while marking an important step in the internationalization of the yuan.
A contrarian moment
Economist Jun 2, 2012
Share prices in Europe may have priced in the bad news.
Venture capital in emerging markets: VC clone home
Economist Jun 2, 2012
Making money by bringing old ideas to new markets.
Spain’s banking system: Teetering
Economist Jun 2, 2012
Spain has avoided facing up to its banking problems. Now it has no choice
A new measure of the global middle class
Shimelse Ali & Uri Dadush Jun 2, 2012
According to the broadest measure, anyone who is not poor is part of the middle class – that could mean that anyone living on more than $2 a day. This column suggests a more sensible measure: anyone who owns a car. Based on this measure, the global middle class looks quite different.
Eurozone crisis: What do the economists think?
Andres Frick, Andrea Lassmann, Heiner Mikosch, Stefan Neuwirth & Theo Suellow (VoxEU) Jun , 2012
How do European economists assess the economic crisis in Europe? This column presents results of a survey of members of the Association of European Conjuncture Institutes on various issues related to the European economic crisis, such as the likelihood of Greece leaving the Eurozone, the likelihood of Europe falling back into recession, and the role of the European Central Bank.
Look beyond interest rates to get out of the gloom
Lawrence Summers (FT) Jun 3, 2012
Countries regarded as havens that can borrow long-term at a very low cost should be rushing to take advantage.
Kirchner's Oil Expropriation Backfires
Mary Anastasia O'Grady (WSJ) Jun 3, 2012
Many Argentines fear the checks and balances restraining presidential power are gone.
Europe’s grim choices
Robert J. Samuelson (WP) Jun 3, 2012
Defend the euro or abandon it?
Strong Yen Belies a Worrisome Japanese Economy
A. Gary Shilling (Bloomberg) Jun 3, 2012
Investors have enough to worry about: the crisis in the euro area, the uneven U.S. recovery and the probable hard landing in China. So I hate to be the bearer of more worrisome tidings: They also need to start keeping a watchful eye on Japan.
Chile in the Streets
Ricardo Lagos (Project Syndicate) Jun 4, 2012
Chile is South America’s most prosperous and, until now, one of its most stable countries. But Chileans are demanding new rights and refusing to accept the restrictions imposed by the country’s past dictatorship, thus making one of the region’s most prosperous countries a less harmonious one.
Is Global Financial Reform Possible?
Paul Volcker (Project Syndicate) Jun 4, 2012
Nowadays there is ample evidence that financial systems, whether in Asia in the 1990’s or a decade later in the United States and Europe, are vulnerable to breakdowns. But, in the absence of international consensus on some key points, reform will be greatly weakened, if not aborted.
Europe needs its ‘Lehman moment’
Michael Tory (FT) Jun 4, 2012
A Greek exit would pose eurozone leaders with the immediate choice of a comprehensive fix or the project’s disintegration.
Our volatile age defies spreadsheet strategy
Gillian Tett (FT) Jun 4, 2012
Computer models alone can no longer calculate meaningful probabilities about what will happen next in the eurozone.
Banks weigh awkward truths on storage
Tom Braithwaite (FT) Jun 4, 2012
Most bankers admit that the Volcker rule is not the real reason for the liquidity drain in the bond market – inventories are down because of fear
Taxation goes global
Richard Rahn (WT) Jun 4, 2012
What government unit has the right to tax you - your local government, regional or state government, federal government or multinational organizations, such as the United Nations, the World Bank and the World Health Organization? The reason the question is becoming more important is that rising numbers of politically powerful persons and institutions are calling for global taxes on such things as financial transactions, tobacco, sugar and carbon emissions.
Europe on the brink
Roger C. Altman (WP) Jun 4, 2012
A market implosion may be near.
The End of the Con
Andy Xie (Caixin) Jun , 2012
The days of easy growth are gone, meaning the government must address problems linked to low household income and excess investment.
Shards of Europe
Harold James (Project Syndicate) Jun 5, 2012
What would follow the disintegration of the eurozone and – almost certainly with it – that of the EU? The best place to consider that question would not be Brussels, but Tiraspol, the capital of the entity that calls itself the Pridnestrovian Moldavian Republic, or Trans-Dniestr.
Is America Healing Fast Enough?
Mohamed A. El-Erian (Project Syndicate) Jun 5, 2012
Six internal factors suggest that the US economy is slowly and steadily healing, with some observers suggesting that they form a critical mass that is likely to propel the economy into escape velocity. Unfortunately, a lot more needs to happen – indeed, urgently – to restore America's traditional vigor and vitality.
The Price of Inequality
Joseph E. Stiglitz (Project Syndicate) Jun 5, 2012
America likes to think of itself as a land of opportunity, and others view it in much the same light. But there is less equality of opportunity in the US today than there is in Europe – or, indeed, in any advanced industrial country – and none of the resulting inequality in income and wealth is contributing to economic growth.
The Danger of External Debts
Philipp Bagus (Mises Daily) Jun 5, 2012
Economists and journalists often point to the danger of external public debts — in contrast to internal debts, which are regarded as less troublesome. Japan is a case in point. Japan has an enormous public-debt-to-GDP ratio of more than 200 percent. It is argued that the high ratio is not a problem, because the Japanese save a lot and government bonds are held mostly by Japanese citizens; it is internal debt.
Financing start-ups: The impact of credit scoring and bank concentration
Martin Brown, Hans Degryse, María Fabiana Penas & Daniel Hoewer (VoxEU) Jun 5, 2012
Might bank consolidation and the increasing reliance on external credit ratings harm access to credit for start-up firms, especially those in high-tech industries? This column examines how the availability of credit for start-ups in Germany is related to their external credit rating as well as the size and expertise of their main bank.
The euro and the global crises: Finding the balance between short-term stabilisation and forward-looking reforms
Joshua Aizenman (VoxEU) Jun 5, 2012
The Eurozone crisis poses the single greatest downside risk to the global economic outlook. Were the founders of the euro hopelessly optimistic? This column argues that such crises present an opportunity for institutions to be put in place that prevent short-sightedness and increase the stability of the monetary union.
Tall Tales About China's Banks Hide Economy's Problems
Yukon Huang (Bloomberg) Jun 5, 2012
As China’s growth slows, its banking system is coming under greater scrutiny. The general perception outside the country is that negative real interest rates are causing financial instability, repressing consumption and encouraging excessive investment in capital-intensive industries.
Barbell Approach Only Way to Lift Heavy Economy
Peter Orszag (Bloomberg) Jun 5, 2012
Despite the hoopla over last week’s jobs numbers and Tuesday’s long-term fiscal outlook from the Congressional Budget Office, the underlying reality of the U.S. economy hasn’t changed all that much lately. We are still in the midst of the hard slog following the financial crisis, and we still face a massive long-term government budget deficit.
US and Europe Have No Excuse for Next Recession
Clive Crook (Bloomberg) Jun 5, 2012
Four years after the onset of the Great Recession, a second and possibly worse global slump is starting to seem possible. If this happens, governments won’t be able to say they were taken by surprise. It will happen because governments have frozen in the face of hazards that are well understood and readily avoidable.
Japan's Unsustainable Deficit-Financing Model
A. Gary Shilling (Bloomberg) Jun 5, 2012
Financing government debt and deficits hasn’t been a problem for Japan: Until recent years, the country’s big-saving consumers provided the funds to finance the shortfalls.
India: Bollygarchs at bay
James Crabtree (FT) Jun 5, 2012
Tension between Delhi and leading industrialists is hampering investment – and hopes of an early return to rapid growth.
Panic has become all too rational
Martin Wolf (FT) Jun 5, 2012
The fear must now be that a wave of banking and sovereign failures might cause a meltdown inside the eurozone.
Only market evangelists reconcile Jekyll with Hyde
John Kay (FT) Jun 5, 2012
A country needs a financial system to prosper. It does not follow that the larger the system, the more prosperous the country.
Time for Beijing to open its wallet
Simon Rabinovitch (FT) Jun 5, 2012
The indebtedness of Chinese companies is at an all-time high. Thankfully, the government has plenty of scope to spend more to prop up aggregate demand.
Tupy and Richardson: Some Good News From Zimbabwe, for a Change
Marian L. Tupy & Craig J. Richardson (WSJ) Jun 5, 2012
Once Mugabe's inflated currency was replaced by the American dollar, the economy expanded.
What the Locusts Ate
Thomas L. Friedman (NYT) Jun 5, 2012
Europe, the United States, China and the Arab world have all squandered huge dividends, and digging out of their respective holes won't be easy.
Can We Survive the New Golden Age of Oil?
Steve Levine (FP) Jun 5, 2012
A flurry of new finds has analysts giddy over a new age of energy abundance. Just don't ask about global warming.
Cleaning up the mess: Bank resolution in a systemic crisis
Daniel Gros & Dirk Schoenmaker (VoxEU) Jun 6, 2012
In Greece, the problem is an insolvent government bringing down the banks. In Spain, the problem is now insolvent banks bringing down the government. This column argues that despite their differences, the potential costs to the rest of Europe mean that both problems require a European solution.
Is Greece European?
Robert D. Kaplan (Stratfor) Jun 6, 2012
Greece is where the West both begins and ends. The West -- as a humanist ideal -- began in ancient Athens where compassion for the individual began to replace the crushing brutality of the nearby civilizations of Egypt and Mesopotamia. The war that Herodotus chronicles between Greece and Persia in the 5th century B.C. established a contrast between West and East that has persisted for millennia. Greece is Christian, but it is also Eastern Orthodox, as spiritually close to Russia as it is to the West, and geographically equidistant between Brussels and Moscow. Greece may have invented the West with the democratic innovations of the Age of Pericles, but for more than a thousand years it was a child of Byzantine and Turkish despotism. And while Greece was the northwestern bastion of the anciently civilized Near East, ever since history moved north into colder climates following the collapse of Rome, the inhabitants of Peninsular Greece have found themselves at the poor, southeastern extremity of Europe.
Why Internal Devaluation Is Advantageous
Anders Aslund (PIIE) Jun 6, 2012
Internal devaluation has become a big issue in the euro area but it remains controversial. In the latest International Monetary Fund (IMF) letter of intent for Greece, box 3 on “Internal Experience with Internal Devaluation” (pp. 48–49) opposing internal devaluation has been incorporated. It summarizes the standard arguments, but the point of this comment is to show that they are all flawed.
The Wrong Austerity Cure
Laura Tyson (Project Syndicate) Jun 6, 2012
Fiscal profligacy did not cause the sovereign-debt crisis engulfing Europe, and fiscal austerity will not solve it. On the contrary, it has aggravated the crisis and now threatens to bring down the euro and throw the global economy into another tailspin.
Mario Monti’s Nordic Dream
Fabrizio Tassinari (Project Syndicate) Jun 6, 2012
As the EU’s top competition official a decade ago, Mario Monti was regarded as a very Anglo-Saxon regulator. Today, he is the most Nordic prime minister that Italy has ever had – in a country where politics and society remain anything but Nordic.
APEC Trade Ministers Aim for Green Goods List by September
Bridges Weekly Trade News Digest, Volume 16, Number 22 Jun 6, 2012
Trade ministers from the 21 Asia-Pacific Economic Cooperation (APEC) countries hope to have a list of environmental goods for tariff liberalisation by September, officials announced after meeting in Kazan, Russia earlier this week. The two-day gathering also saw ministers address issues such as food security and trade facilitation, while continuing discussions on liberalising trade in services and information technology products in the WTO context.
Differences Persist as Rio+20 Conference Approaches
Bridges Weekly Trade News Digest, Volume 16, Number 22 Jun 6, 2012
Negotiators meeting in New York last week struggled to achieve demonstrable progress on narrowing down an outcome document to forward to this month's Rio+20 summit, sparking questions among observers about what to expect at the high-profile UN gathering.
US-China Clean Energy Rift Deepens with Wind Tower Countervailing Duty Announcement
Bridges Weekly Trade News Digest, Volume 16, Number 22 Jun 6, 2012
The US Commerce Department will begin imposing duties on wind tower imports from China, after finding that producers receive unfair government support. The move is expected to ratchet up tensions between the two trading partners, which have escalated quickly over the past few months over competing claims from both sides of illegal support and dumping of renewable energy products.
Protectionism Concerns Intensify as G-20 Summit Approaches
Bridges Weekly Trade News Digest, Volume 16, Number 22 Jun 6, 2012
Protectionist measures are on the rise in the Group of 20 leading economies, according to a new report issued last week by the WTO. The finding comes just weeks ahead of the annual G-20 summit, set to be held in Los Cabos, Mexico on 18-19 June.
As Japan Stops Saving, a Crisis Looms
A. Gary Shilling (Bloomberg) Jun 6, 2012
With their declining household-saving rate, Japanese consumers are no longer both financing government deficits and sustaining their nation’s current-account surpluses. How is the gap being filled?
Booming Sweden’s Free-Market Solution
Anders Aslund (Bloomberg) Jun 6, 2012
Not so long ago, Sweden could claim world leadership in unmitigated Keynesian economics, with a 90 percent marginal tax rate and a welfare state second to none. Now Swedes look at the conflict between the U.S. and German examples over whether more spending or more austerity is the key to financial salvation, and for them the choice is easy: Germany was right. Northern Europe harbors no sympathy for the spendthrifts of Southern Europe.
Crony Capitalism and the Crisis of the West
Luigi Zingales (WSJ) Jun 6, 2012
In Italy and Greece, the most talented don't get ahead. That's also increasingly true in the United States.
Germany: A lonely path
Quentin Peel (FT) Jun 6, 2012
Those looking to Angela Merkel to stabilise the euro fear her focus on voters at home will stop her taking rapid action.
Fed risks diminishing returns with more QE
Peter Fisher (FT) Jun 6, 2012
The Fed could radically expand its balance sheet if it thought deflation was around the corner. But would that make sense?
Sayonara decline! Japan is globetrotting again
David Pilling (FT) Jun 6, 2012
Japanese companies are ramping up their international push. Last year they spent $25bn more than Chinese concerns.
A Greek exit would be national suicide
John Sfakianakis (FT) Jun 6, 2012
Remaining in the eurozone is the lesser of two evils.
Fighting Russia’s corruption
Robert Kagan and David J. Kramer (WP) Jun 6, 2012
The most consequential legislation in years.
Beginning of the end for the euro?
Jagadeesh Gokhale (WT) Jun 6, 2012
The euro was introduced as part of the Stability and Growth Pact of 1999, which also prescribed clear fiscal guidelines for member nations to limit public debts and deficits, and ensure the economic stability needed for the European Central Bank's conduct of a common European monetary policy.
Real assets: A sought-after investment class in times of crisis
Josef Auer, Eric Heymann, Jochen Mobert, Claire Schaffnit-Chatterjee & Antje Stobbe (DB Research) Jun 6, 2012
In the wake of the global financial crisis, investors are increasingly turning to real assets, such as real estate and renewable energies. Empirical studies show that, in reality, real assets offer protection from inflation and could contribute to the diversification of a portfolio. However, in contrast to homogenous real asset investments like gold and other raw materials, for heterogeneous real assets such as real estate, ships or offshore wind farms, a comprehensive assessment of the investment concerned, its earning potential and its risk profile, is of major importance. Investment in real assets presupposes a well-informed investor, capable of assessing the various alternative forms of investment. This applies all the more because most real asset investments have very long investment horizons, they often have low fungibility and/or liquidity, and investors frequently have to take entrepreneurial risks.
Animal spirits and firm internationalisation
Yasuyuki Todo (VoxEU) Jun 7, 2012
How do firms go international? This column reviews evidence from industrialised and emerging economies, including Japan and China, with some surprising findings.
The driver of oil prices
Hossein Askari (AT) Jun 7, 2012
For all that supply and demand are the basic drivers of oil prices, numerous other factors, from speculation to war to cartel manipulation, play their role. Yet over the past century and half, prices as high as today's are a true rarity.
Europe in denial
Nita Ghei (AT) Jun 10, 2012
Time is running out for Europe. As Spain's banking crisis deepens, politicians on the continent remain in denial. The only solutions in their mind involve borrowing or subsidies from German taxpayers. With the International Monetary Fund (IMF) acting as their enabler, Europe's high-debt countries may be able to put off the required reforms, but delaying the inevitable is taking a toll on their economies.
What Makes Countries Rich or Poor?
Jared Diamond (NYRB) Jun 7, 2012
Norway, the world’s richest country, is 496 times richer than Burundi, the world’s poorest country. Why? That’s a central question of economics.
You don’t need to be a lefty to support Krugman
Samuel Brittan (FT) Jun 7, 2012
I wish there were a way of getting ministers to learn by heart the chapter on the folly of their deficit obsession.
Europe should stop arguing and look to Asia
Jin Liqun and Keyu Jin (FT) Jun 7, 2012
The eurozone must cease the endless negotiations in search of a perfect solution and find a realistic, if suboptimal deal.
Pharmaceutical industry: Murky medicines
Andrew Jack (FT) Jun 7, 2012
A trade in drugs that exploits European price differences pitches dealers against wholesalers and multinationals.
Time to End Fuel Subsidies?
Will Hickey (YaleGlobal) Jun 7, 2012
Budgetary balance and need to develop alternatives, are reasons to end fuel subsidies
China Argues Over How Much Corruption Is Best
Adam Minter (Bloomberg) Jun 7, 2012
The worst kept secret in contemporary China is the role that corruption plays in the function and disfunction of public life. Take, for example, Zhang Shuguang, the former deputy chief of engineering for China’s Railway Ministry.
Strong Yen Won’t Survive Japan’s Fiscal Cliff
A. Gary Shilling (Bloomberg) Jun 7, 2012
As its current-account surplus fades into deficit, Japan will be forced to import money at high international rates to finance its government debt. Huge amounts of money creation by the Bank of Japan could temporarily postpone the ensuing debt death spiral.
IMF Aiming to Restore Stability, Rekindle Growth
IMF Survey Jun 7, 2012
With the global economy still fragile and risks looming on several fronts, the International Monetary Fund has drawn up a work program for the next six months aimed at restoring stability and growth, while also making progress on its own governance issues.
The Common Currency as a Guarantee of Discontent
David Champion (HBR) Jun 7, 2012
It now seems pretty certain that Greece will exit the Euro. And you have to wonder whether Spain might not be advised to as well. In fact, the whole Euro project looks like a pretty badly thought-through plan.
The Accidental Empire
George Soros (Project Syndicate) Jun 7, 2012
Germany is likely to do what is necessary to preserve the euro – but nothing more – resulting in a German-dominated eurozone in which the divergence between creditor and debtor countries continues to widen. The EU would then become a German empire with a permanently depressed peripheral hinterland in need of constant transfer payments.
Europe’s Three Eastern Questions
Javier Solana (Project Syndicate) Jun 7, 2012
The eurozone’s sovereign-debt crisis, one hopes, will ultimately give rise to a more integrated and effective Europe. But, to get there, relations with three major countries to Europe’s east – Turkey, Russia, and Ukraine – will need to be put on more secure footing.
Living Europe’s Nightmare
Christopher T. Mahoney (Project Syndicate) Jun 7, 2012
When the truth is unimaginable, human psychology finds an alternative reality in which to dwell. That describes the global situation today, when the entire planet seems to be in denial about what is about to occur in the eurozone.
Kemal Dervis (Project Syndicate) Jun 8, 2012
Many inside and outside of Germany declare that both austerity and more growth are needed, and that more emphasis on the latter implies decrease in the former. The drama of the ongoing eurozone crisis has focused attention on Europe, but how the austerity-growth debate plays out there is more broadly relevant, including for the US.
Why do trade negotiations take so long?
Christoph Moser & Andrew K Rose (VoxEU) Jun 8, 2012
Why do trade negotiations take so long? The WTO’s Doha Round is into its 11th year and still far from completed. This column uses data on regional trade agreements to identify the determinants of how long it takes to conclude regional trade agreements. The findings are not good news for the chances of the Doha Round ending any time soon.
Can Spain and Italy export their way out of trouble?
Uri Dadush & Zaahira Wyne (VoxEU) Jun 8, 2012
For many, the origin of the Eurozone crisis is a lack of competitiveness among the periphery countries. This column looks at Spain and Italy and argues that in order to emerge from crisis, they must rely less on domestic demand and more on their tradable sector.
What Happened to India?
Raghuram Rajan (Project Syndicate) Jun 8, 2012
Major emerging-market economies around the world are slowing, for reasons both shared and unique. Hardest to understand, though, is why India, where annual GDP growth has fallen by five percentage points since 2010, is underperforming so much relative to its potential.
A Tale of Two Soccer Hosts
WSJ Jun 8, 2012
Similar countries, two European destinies.
The World Waits For Germany
Mark Blyth and Matthias Matthijs (FA) Jun 8, 2012
Two years, three sovereign bailouts, more than a trillion euros in cheap ECB loans, and dozens of summits later, the latest developments in Germany suggest that Berlin is moving to solve the continent's crisis. But the country’s idea of a solution remains a system in which Berlin gets de facto and de jure veto power over national budgets in return for eurobonds. That misses the point: the crisis is not fiscal, but financial. It began, and it will end, with the banks.
China as a vital force for Africa
Gavin du Venage (AT) Jun 8, 2012
China could do with better PR as it weaves its way into the fabric of African economies, with its businesses struggling to shake off the label of rapacious neo-colonialists interested only in stripping out mineral wealth. Yet as China spreads investments into everything from construction to agriculture to heavy engineering, a once basket case of the world is beginning to emerge as an economic force in its own right.
How to leave your (euro) lover
Ellen Brown (AT) Jun 8, 2012
The euro appears to be a marriage of incompatible partners, yet there are numerous ways to resolve the present crisis - whether breaking, bending or strictly following the marriage vows. Greece can be set free - but big finance prefers the whip and chains.
Farewell to Incredible India
Economist Jun 9, 2012
Bereft of leaders, an Asian giant is destined for a period of lower growth. The human cost will be immense.
Europe Needs a German Marshall Plan
Charles S. Maier (NYT) Jun 9, 2012
Berlin must rescue the euro project. It's a matter of historical vision, not bookkeeping.
A gravity model for global value chains
Richard Baldwin & Daria Taglioni (VoxEU) Jun 10, 2012
Global value chains are transforming world trade patterns. This column argues that the standard gravity formulation cannot be applied to trade flows where parts and components are important. This is because GDPs in origin and destination countries are poor proxies for supply and demand for parts and components. It shows that the standard model performs poorly on such flows and suggests an alternative specification.
How Greece Looks From Asia
William Pesek (Bloomberg) Jun 10, 2012
Seoul (KOSPI) may be the most poignant place one could pick in Asia for a spectator seat at Greece’s economic implosion.
Democracy and Capitalism Are Heading for a Breakup
Pankaj Mishra (Bloomberg) Jun 10, 2012
Once upon a time Marxist-Leninists said that the state, after its seizure by the proletariat, would wither away. Instead, big government grew more oppressive in communist countries. In our own deeply ideological age of global capitalism, the state was supposed to yield to the logic of the free market, while being a self-effacing facilitator of private investment.
What Traders' Testosterone Tells Us About Markets
Mark Buchanan (Bloomberg) Jun 10, 2012
An unusual study of traders’ spit may offer a taste of the future in how we understand what drives markets -- and why they aren’t as stable and efficient as we might hope.
Industry: Future factories
Peter Marsh (FT) Jun 10, 2012
High-cost nations are considering a return to manufacturing as innovation makes it cleaner and more competitive.
Why I was won over by Glass-Steagall
Luigi Zingales (FT) Jun 10, 2012
One way to combat the excessive power of the major players, if only partially, is to bring the act back.
Germany, Not Greece, Should Exit the Euro
Red Jahncke (Bloomberg) Jun 10, 2012
All the debate about the pros and cons of a Greek exit from the euro area is missing the point: A German exit might be better for all concerned.
Europe's Latest Bailout
WSJ Jun 10, 2012
Greece, Ireland, Portugal and now Spanish banks.
Another Bank Bailout
Paul Krugman (NYT) Jun 10, 2012
An old routine plays out in Spain, with the banks getting help while the unemployed continue to suffer.
Germany to the rescue?
Robert J. Samuelson (WP) Jun 10, 2012
Dark truth: Even a willing Germany can’t do it.
International rules for capital controls
Olivier Jeanne, Arvind Subramanian & John Williamson (VoxEU) Jun 11, 2012
Do we need international rules for capital controls? This column looks at the different regimes in countries such as Brazil and China and argues that we do.
China’s investment arms extend reach
Henny Sender (FT) Jun 11, 2012
China is showing its determination to use investment as well as trade to secure technology and resources it needs to take growth to next level
Industry: In search of inspiration
Peter Marsh (FT) Jun 11, 2012
Chinese manufacturing has made strides in technology, but is some way from making its own innovative breakthroughs.
A Eurobond medicine Ms Merkel could swallow
John Muellbauer (FT) Jun 11, 2012
Just as bad drivers pay more for car insurance, so countries with weak fundamentals would pay a higher interest rate.
India must look to the states for salvation
Devesh Kapur and Arvind Subramanian (FT) Jun 11, 2012
If India is to thrive economically, cities need more autonomy and their leaders need to be held more accountable.
Spain’s balancing act to avert doom loop
Patrick Jenkins (FT) Jun 11, 2012
The drag on Spanish sentiment is the refusal of policy makers to recognise the link between the fortunes of the country and those of its banks
Bond buyers should be mindful of history
Burton Malkiel (FT) Jun 11, 2012
Investors’ flight to havens risks resulting in period of negative real returns after inflation, shown by last time Treasury yields hit 1.5% in 1946
The Next Step for Europe Is Financial Union
Christian Noyer (WSJ) Jun 11, 2012
The single currency area needs to share responsibility for deposit guarantees, banking supervision and crisis resolution.
The Indian Miracle Lives
Shashi Tharoor (Project Syndicate) Jun 11, 2012
To hear some people tell it, the bloom is off the Indian economic rose: hailed until recently as the next big success story, the country has lately been assailed by bad news. But today’s pessimism is as exaggerated as yesterday’s optimism was overblown.
In Europe We Distrust
Ana Palacio (Project Syndicate) Jun 11, 2012
Discipline and morality may well be key to reinforcing trust and credibility to Europe’s social fabric – a point that northern Europeans never tire of making. But, unless all Europeans accept responsibility for saving the euro – and, with it, the EU – everything else is shallow rhetoric.
Lead over India widens as China powers ahead
Henny Sender (FT) Jun 11, 2012
Fears for the Chinese economy may be overdone and the country is so far ahead in heavy manufacturing its South Asian rival may never catch up
We must avoid an accidental Greek exit
Moritz Kraemer (FT) Jun 11, 2012
An exit from the eurozone is likely to foster a downward spiral of economic contraction and fiscal austerity.
A new form of European union
Martin Wolf (FT) Jun 11, 2012
A return to external and internal balance in crisis-hit countries cannot be achieved without higher spending and inflation in the core.
Global Rebalancing: The U.S.-China Dimension
Stephen S. Roach (Globalist) Jun 11, 2012
The outlook for world economic growth depends on how the United States and China address their respective economic imbalances. For China, it is shifting from an export-led to a consumption-based economy. For the United States, it is learning to save.
WT Jun 11, 2012
Europe is in big trouble. Unemployment remains sky-high, and economic growth averaged a mere 1.2 percent in 2011, with some economies continuing to shrink. Estonia is a remarkable exception to the depressing trend.
Spain Shows Policymakers Are Running Out of Time
Mohamed El-Erian (PIMCO/CNBC) Jun 11, 2012
Monday’s disappointing market reception to the bailout package for Spanish banks is a reminder to European policymakers of something that is more than familiar to veteran sovereign crisis managers in emerging countries: The greater the erosion of policymaking credibility, the harder it is to get the private sector to buy into your plans.
NYT Jun 11, 2012
The latest European bailout has not calmed anyone's nerves, with good reason. The next potential calamity is just days away.
New preface to Charles Kindleberger, The World in Depression 1929-1939
J. Bradford DeLong & Barry Eichengreen (VoxEU) Jun 12, 2012
Charles Kindleberger’s classic book on the Great Depression was originally published 40 years ago. In the preface to a new edition, two leading economists argue that the lessons are as relevant as ever.
Global weakness: Are we out of policy tools?
John H. Makin (AEI) Jun 12, 2012
With nearly two-thirds of the global economy either shrinking or slowing, the 2008 economic and financial crisis is back with a vengeance and threatens to bring on a recession that engulfs the world’s major economies. A convergence of factors--including an intensifying European financial crisis, a slated year-end US tax hike, and increased slowing of major developing economies--have increased uncertainty in the global economy. The recession may slow if Europe takes appropriate measures to stabilize its banking system and adjust its monetary policy and if the Greek election produces a cooperative government--however, these outcomes are unlikely, meaning the euro system may not survive the summer.
Share the Work
Barry Eichengreen (Project Syndicate) Jun 12, 2012
For those unfortunate enough to experience it, long-term unemployment is a tragedy, and there is a danger for society as a whole that the productive capacity of a significant portion of the labor force will be impaired. In the US, an old solution from the 1930's, work-sharing, should be revived and encouraged.
When Democracies Collide
Volker Perthes (Project Syndicate) Jun 12, 2012
The multipolar nature of today’s international system will again be on display at the upcoming G-20 summit in Los Cabos, Mexico. As incipient great and middle powers, such as India, Brazil, Indonesia, South Korea, Turkey, and South Africa, pursue their own interests and stake out their own positions, the "Old West" must adjust.
Kandeh K. Yumkella, Michelle Bachelet & Margaret Chan (Project Syndicate) Jun 12, 2012
It is already clear that achieving sustainable development in poor countries is not possible without sustainable energy. Indeed, access to energy spurs development on many levels – not least in terms of women and their health, safety, and autonomy.
Spain, Debt and Sovereignty
George Friedman (Stratfor) Jun 12, 2012
Eurozone countries on June 9 agreed to lend Spain up to 100 billion euros ($125 billion) to stabilize the Spanish banking system. Because the bailout dealt with Spain's financial sector directly rather than involving the country's sovereign debt, Madrid did not face the kind of demands for more onerous austerity measures in exchange for the loan that have led to political instability in countries such as Greece.
Green from the Grassroots
Elinor Ostrom (Project Syndicate) Jun 12, 2012
We have never had to deal with problems of the scale facing today’s globally interconnected society. But decades of research demonstrate that a variety of overlapping policies at city, subnational, national, and international levels is more likely to succeed than are single, overarching binding agreements.
Don't Sweat the Bond Markets
Layna Mosley (FA) Jun 12, 2012
How Eurozone government debt works.
Don’t Replace Data With Ideology
Emi Nakamura, Jon Steinsson and Nicolas Vincent (Bloomberg) Jun 12, 2012
Argentina’s government regularly publishes false data on the country’s inflation rate. Greece lied about the size of its budget deficit. Believe it or not, the U.S. is headed down a path that could ultimately make similar shenanigans possible in the world’s largest economy.
How China competes
Benjamin A Shobert (AT) Jun 12, 2012
The ability of Chinese companies to compete internationally is helped by aggressive and coordinated government assistance - that is, China has made it easy to do business with its businesses, a fact the US White House may be starting to recognize.
Save Europe's Marriage With a Trial Separation
Robert Hockett (Bloomberg) Jun 12, 2012
The euro is not a fundamentally bad idea. It just needs a timeout while some critical kinks are worked out.
Greek Hedge Manager Says Drachma Is Back as Wages Plunge
James Pressley (Bloomberg) Jun 12, 2012
Jason Manolopoulos, the hedge-fund manager who wrote “Greece’s ‘Odious’ Debt,” has news for anyone wondering whether the country will exit the euro: The drachma has already returned.
Banking union in the Eurozone and the EU
Jacopo Carmassi, Carmine Di Noia & Stefano Micossi (VoxEU) Jun 12, 2012
Is Europe ready for a banking union? This column argues that the current debate is missing several key points. Chief among these is that much of what is needed for Europe’s financial system is already feasible within the existing set up.
How the Euro Will End
Gerald O'Driscoll (WSJ) Jun 12, 2012
Greece will simply run out of cash. Then Spain's real-estate bubble will ruin an economy that really matters.
Two Worlds Cracking Up
Thomas L. Friedman (NYT) Jun 12, 2012
The euro zone that came into being after the cold war and the Arab state system that came into being after World War I are both coming unglued at once.
Don't Sweat the Bond Markets
Layna Mosley (FA) Jun 12, 2012
News accounts often anticipate that political decisions (especially bad ones) will spell trouble in the market for government debt. In the short term, they will. But such fluctuations don't universally translate into long-term devaluations nor do they necessarily constrain governments.
Asia’s Next Axis
Young-kwan Yoon (Project Syndicate) Jun 13, 2012
Last month, the leaders of China, Japan, and South Korea agreed to begin negotiations later this year on a trilateral free-trade agreement. If the talks succeed, the global trade map will need to be redrawn.
The European Banking Union?
Hans-Werner Sinn (Project Syndicate) Jun 13, 2012
In blatant violation of the Maastricht Treaty, the European Commission has come forward with one bailout plan after another for Europe’s distressed economies. Now it wants to socialize not only government debt by introducing Eurobonds, but also banking debt by proclaiming a “banking union.”
The End of the World as We Know It
Dani Rodrik (Project Syndicate) Jun 13, 2012
It is not difficult nowadays to imagine a nightmare scenario in which the EU disintegrates, Arab states embrace Islamist authoritarianism, and Chinese economic and foreign policies fuel conflict with the Romney administration in the US. Such a scenario might be remote, but it is not remote enough.
Russian Accession to WTO Forces Rethink on US Human Rights Approach
Bridges Weekly Trade News Digest, Volume 16, Number 23 Jun 13, 2012
The road to formalising Russia's WTO accession appears to be nearing an end, with the country's Parliament set to examine the accession accord on 4 July. Meanwhile, the debate on whether to lift Cold War-era restrictions on US-Russia trade has ramped up in Washington, after bipartisan legislation geared at making Moscow a full trading partner was introduced in the US Senate on Tuesday amid burgeoning questions regarding Russia's human rights record.
Pacific Alliance Launched in Chile
Bridges Weekly Trade News Digest, Volume 16, Number 23 Jun 13, 2012
Chile, Colombia, Mexico, and Peru have inked an accord aimed at developing closer economic ties and boosting trade with Asia-Pacific countries, leaders from the four countries announced last week.
EU Farm Support: Rapporteur Calls for Simpler 'Greening' Measures
Bridges Weekly Trade News Digest, Volume 16, Number 23 Jun 13, 2012
The EU should maintain but simplify new 'greening' requirements for farmers receiving direct payments under the bloc's post-2013 farm policy, according to a draft report that will be discussed next week by the European Parliament.
Lamy Cautions Against "Alarming" G-20 Trade Restrictions, Urges Members to Push Forward on Doha
Bridges Weekly Trade News Digest, Volume 16, Number 23 Jun 13, 2012
"Given the deterioration and trade outlook, 2012 cannot be a wasted year," WTO Director-General Pascal Lamy told members in an informal gathering last Thursday, repeating earlier calls for rebuffing protectionism and moving the eleven-year Doha talks forward. The comments come as leaders of the Group of 20 leading economies prepare to meet next week in Los Cabos, Mexico, where protectionism is expected to be one of the headline items on the agenda.
Counterfeit, Trademarks, and Copyright Top the Agenda at TRIPS Council
Bridges Weekly Trade News Digest, Volume 16, Number 23 Jun 13, 2012
Last week's meeting of the WTO's Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) saw talks proceed on a host of issues, including counterfeit goods, exceptions and limitations to copyright, and a long-running dispute over a Cuban rum trademark.
Europe: On to a smaller canvas
Tony Barber (FT) Jun 13, 2012
Even if France and Germany salvage some unity for the EU, the bloc seems set to gravitate towards a central core, narrowing an earlier pan-continental vision.
A proposal to end Europe’s debt crisis
Christophe Chamley and Laurence Kotlikoff (FT) Jun 13, 2012
Conduct all financial intermediation through ‘limited purpose banking’ and you have an entire system that never fails.
This Separate Isle
John Redwood (NYT) Jun 13, 2012
The United Kingdom's decision not to join the euro zone turned out to be prescient.
Martin Hutchinson (AT) Jun 13, 2012
Productivity growth is declining around the world, and there is a simple explanation: a mistaken policy of unnaturally low interest rates is imposing anti-market distortions that result in an increasingly inefficient global economic system.
Débâcle: The 11th GTA report on protectionism
Simon J Evenett (VoxEU) Jun 14, 2012
In recent weeks official bodies such as the World Trade Organisation and the European Commission as well as leading private sector associations – the International Chamber of Commerce (ICC) and the so-called B20 group of business leaders – have made strong statements concerning rising protectionism in the run up to the G20 summit in Los Cabos, Mexico. On the basis of most extensive update to the Global Trade Alert (GTA) database, that was conducted in preparation for this, the eleventh GTA report, they were right to do so.
Room for manoeuvre among Eurozone banks
Heiko Hesse, Claus Puhr, Stefan W Schmitz & Ralph Spitzer (VoxEU) Jun 14, 2012
In the following column we investigate balance-sheet growth, capitalisation, and deleveraging of European banks since the end of 2008 and show that based on existing empirical evidence banks have so far reduced their leverage (i) markedly and (ii) mainly by raising capital rather than reducing exposure to the real economy. In doing so, banks were able to address two concerns at the same time: One related to their fundamental soundness (“banks are undercapitalised”), the other related to potential harm done to the economy at large (“banks are causing a credit crunch”). This is particularly important, as history has shown that deleveraging too slowly can lead to periods of stagnant growth.
How to Help Burma
Radek Sikorski (Project Syndicate) Jun 14, 2012
Across the Middle East, and now in Burma, one of the great questions of contemporary global politics has re-emerged: How can countries move from a failing authoritarianism to some form of self-sustaining pluralism? Foreign ministers everywhere, in turn, face crucial policy questions: When, and how, should their countries help?
Justin Yifu Lin (Project Syndicate) Jun 14, 2012
Despite talk of a rising Asia, only a handful of its economies have moved from low- to high-income status during the past several decades, and very few countries worldwide have converged with US per capita income over the last 60 years. A new development economics is needed to grasp the nature and causes of modern economic growth.
Hollande walks in the shadow of De Gaulle
Philip Stephens (FT) Jun 14, 2012
To decouple from Germany and put France at the head of Europe’s Club Med would tear up half a century of French European policy.
Sombre Spanish lessons on fighting credit bubbles
Sebastian Mallaby (FT) Jun 14, 2012
Regulatory intervention will always face political resistance and will seldom be pursued vigorously enough to avert a bubble.
What's at Stake in the Greek Vote
Nicholas Economides, Yannis Ioannides, Emmanuel Petrakis, Christopher Pissarides and Thanasis Stengos (WSJ) Jun 14, 2012
If a Greek exit from the euro zone looks close to certain after Sunday's election, we will see a full-fledged bank run.
A 'Bail-In' Could Save Spain's Banks
Juan Ramon Rallo (WSJ) Jun 14, 2012
Let's convert debt to equity, so investors bear the cost of their own mistakes.
As Europe's Currency Union Frays, Conspiracy Theories Fly
Floyd Norris (NYT) Jun 14, 2012
The roots of the current euro crisis lie in events 20 years ago, when an experiment with semi-fixed exchange rates broke down under pressure from German monetary policy.
Jeffrey Frankel (Project Syndicate) Jun 14, 2012
The introduction of Eurobonds could be part of the solution to the eurozone's sovereign-debt crisis, if designed properly. Above all, German taxpayers will need some credible reason to believe that 20 years of false assurances have come to an end – that this is the last bailout.
Passing the Bailout Buck
Philipp Bagus (Mises Daily) Jun 14, 2012
Recently, there has been an intense debate in Europe on the TARGET2 system (Trans-European Automated Real-time Gross Settlement Express Transfer System 2), which is the joint gross clearing system of the eurozone. The interpretation of this system and its balances has provoked divergent opinions. Some economists, most prominently Hans-Werner Sinn, have argued that TARGET2 amounts to a bailout system. Others have vehemently denied that. Jürgen Stark of the European Central Bank (ECB) even said that some commentators could lose their reputation as serious academics by claiming that TARGET2 functions as a bailout system.
OPEC in driving seat
Hossein Askari (AT) Jun 14, 2012
The Organization of the Petroleum Exporting Countries initially sought only to arrest declining oil prices - as opposed to increasing them. It took the sales strategy of Colonel Muammar Gaddafi to break the power of the oil majors and let OPEC take pricing the driving seat. This is the fourth article in a special series on oil and the Persian Gulf.
What China really wants in Africa
Cedric Muhammad (AT) Jun 14, 2012
The simple resources-for-infrastructure narrative used to explain China's engagement in Africa is less compelling than suspicions the continent is being readied as a home for a 300-500 million overflow of China's population. The main trigger given for the exodus - environmental degradation - is a less likely than another reason: the individuals imbued with ambition through China's "one-child" policy. Africa offers Chinese entrepreneurs an unprecedented chance to thrive.
Africa: China's promised land
Cedric Muhammad (AT) Jun 15, 2012
Moving to Africa is the "ingenious adaptation" for millions of Chinese seeking to escape environmental degradation and the impact of the 'one-child' policy. The journey west also permits enough breathing room for Chinese ethnic trading networks to collaborate in ways not possible at home. Africa is not a future colony but quite possibly the neurotic promised land China needs to survive.
Commodity windfalls help reduce debt… in democracies
Rabah Arezki & Markus Brückner (VoxEU) Jun 15, 2012
Booming commodity prices generate large foreign currency inflows for exporting nations. This column argues that in countries with executive constraints and political competition windfalls from commodity booms lead to a significant reduction in external debt. In autocratic regimes, on the other hand, the windfalls are used to increase consumption expenditures.
Preventing a Eurozone bank and bond run
Catherine Dobbs & Michael Spence (VoxEU) Jun 15, 2012
Whether the Greek elections this weekend trigger the Eurozone’s first exit or not, the possibility of exit is now firmly on the table. But where are the plans for this highly complex operation that could, if mishandled, cause untold economic damage in Europe and beyond? This column, by a Wolfson Prize finalist and a Nobel Laureate, sketches the core elements of one such plan.
Lessons from Latvia
Olivier Blanchard (VoxEU) Jun 15, 2012
Latvia was severely hit by the Global Crisis yet its adjustment has been remarkable. Four years after the hit it has one of the highest growth rates in Europe, its euro-peg has held, and the fiscal and current accounts are close to balance. This column outlines seven reasons why its adjustment has worked so well. It warns however that the lessons are not easily exportable.
Yannos Papantoniou (Project Syndicate) Jun 15, 2012
Sunday’s election in Greece will decide whether confrontation or negotiation will be used to change the terms of Greece’s refinancing agreement with the eurozone. There is no alternative to renegotiation, because confrontation – and with it a rapid eurozone exit – is no solution at all.
A Global Perfect Storm
Nouriel Roubini (Project Syndicate) Jun 15, 2012
Dark, lowering financial and economic clouds are, it seems, rolling in from every direction: the eurozone, the United States, China, and elsewhere. Indeed, the global economy in 2013 could be a very difficult environment in which to find shelter.
The Battle of Markets Vs. Governments
Ravi Menon (Globalist) Jun 15, 2012
A dual message for would-be reformers: Yes, Europe, governments need markets — and yes, America, markets need governments. The key is that markets and governments need to do what they do more effectively.
Protectionism Is Back
Thomas J. Donohue and Dean C. Garfield (WSJ) Jun 15, 2012
The 21st-century euphemism is 'indigenous innovation,' and it's as damaging as ever.
A Cellphone for Every Woman
James D. Wolfensohn (NYT) Jun 15, 2012
Giving every woman a cellphone could have an enormous impact on gender inequality in low-income countries.
Britain Is Outside Euro Zone but Not Euro Crisis
Stephen Castle (NYT) Jun 15, 2012
A move by the Bank of England to offer billions in cheap loans to banks to kick-start lending underlines how standing aloof from the single currency has only helped Britain so much.
Spain’s bail-out: Insuficiente
Economist Jun 16, 2012
Why the rescue plan for Spain is not enough.
The global labour market: United workers of the world
Economist Jun 16, 2012
Unbalanced skill levels could make the world more unequal.
The implicit subsidy of banks
Joseph Noss & Rhiannon Sowerbutts (VoxEU) Jun 17, 2012
A credible threat of failure is an integral part of any industry. But this does not always apply to banks as failure may result in unacceptable economic costs. As a result, unprecedented amounts of public money have been used to avert bank failure. This column explains why the subsidy arises, why it is a public policy concern, and how it can be quantified.
The Gospel of Growth
Julia Gillard & Lee Myung-bak (Project Syndicate) Jun 17, 2012
When the G-20 meets in Mexico, on June 18-19, its challenge will be to shift public perceptions to an optimistic mindset of growth and stability. The world needs resolute action to address the uncertainty confronting the global economy and chart a path toward self-sustaining recovery and strong job creation.
Buying European bank shares a risk
John Authers (FT) Jun 17, 2012
Until transparency on assets and political certainty are achieved, such purchases remain a leveraged bet on a political outcome.
Australia: Mine, all mine
Neil Hume (FT) Jun 17, 2012
The island continent is well positioned to profit from Asia’s rise but its dependence on mineral exports is suffocating competitiveness in other parts of the economy.
Greece as Victim
Paul Krugman (NYT) Jun 17, 2012
Whose hubris caused this crisis?
How to feed a hungry world
Paul Polman and Daniel Servitje (WP) Jun 17, 2012
Meeting the demand of 7 billion people.
Notes for currency wars: The trilemma of international finance
Michael Bordo, Owen F Humpage & Anna J Schwartz (VoxEU) Jun 18, 2012
The so-called trilemma of international finance maintains that a country cannot simultaneously peg an exchange rate, maintain an independent monetary policy, and permit free cross-border financial flows. At best, only two of the three are feasible. This column argues that despite their best efforts, countries are set to learn this lesson again and again.
Greece Vs. the Rest
John Lanchester (New Yorker) Jun 18, 2012
Playing chicken in the euro zone.
A Rio Report Card
Jeffrey D. Sachs (Project Syndicate) Jun 18, 2012
One of the world’s pre-eminent scientific publications, Nature, has just issued a scathing report card in advance of next week’s Rio+20 summit on sustainable development. With failing grades on fighting climate change, protecting biological diversity, and combating desertification, can humanity avoid getting itself expelled?
Reinventing the European Dream
Anne-Marie Slaughter (Project Syndicate) Jun 18, 2012
The euro crisis and Queen Elizabeth’s recent Jubilee seem to have nothing in common. In fact, together they impart an important lesson: the power of a positive narrative – and the impossibility of winning without one.
Predators and Professors
Simon Johnson (Project Syndicate) Jun 18, 2012
America's great universities have become unscrupulous accomplices to increasingly rapacious economic elites. Too many prominent academics and institutions maintain unhealthy relationships with too-big-to-fail banks, providing these banks with the intellectual justifications that their contributions to politicians cannot buy.
Europe’s Banks Need a TARP of Their Own
Thomas Cooley, Matthew Richardson and Kermit Schoenholtz (Bloomberg) Jun 18, 2012
In spite of Sunday’s victory of pro- bailout parties in the Greek election, the European Monetary Union remains in a battle for its survival. What began as a debt predicament is now compounded by a rapidly expanding banking crisis and growing political instability that threaten European integration.
Finance: A union to bank on
Alex Barker and George Parker (FT) Jun 18, 2012
A bold plan for a European banking union is gaining credibility, but national interests and technical complexity risk derailing the latest proposal to stem the eurozone crisis.
Time to act: euro collapse would define our era
Lawrence Summers (FT) Jun 18, 2012
Its prospect must focus the minds of all at the G20 summit on action. Only if the system is preserved can its future be debated.
Rich nations must take the lead in a clean-energy revolution
Nicholas Stern and José Antonio Ocampo (FT) Jun 18, 2012
It would be morally unacceptable to insist that developing countries drop or scale back plans to fight poverty.
The G-20 Needs Better Admissions Standards
Alex M. Brill and James K. Glassman (WSJ) Jun 18, 2012
Our study shows that four countries should get the boot, while Norway, Malaysia, Singapore and Switzerland should join.
Rise of the Different
Ian Bremmer and David Gordon (NYT) Jun 18, 2012
The challenge for the West is not the "rise of the rest," but the rise of states that do not buy into the post-war system.
G-20 Speed Dating in Los Cabos
David Malpass (WSJ) Jun 19, 2012
The obstacles to global growth are clear and need to be addressed in national capitals, not a resort town.
Finance: Grinding to a halt
Michael MacKenzie, Nicole Bullock and Tracy Alloway (FT) Jun 19, 2012
America’s $8tn corporate debt market faces a liquidity drought as banks retreat from the trade, threatening companies trying to raise funds.
I come to praise Ms Merkel not to bury her
Joseph Joffe (FT) Jun 19, 2012
Money became cheap under the euro, and profligacy easy. Monetary union was to achieve exactly the opposite.
Our poor excuse for an understanding of poverty
John Kay (FT) Jun 19, 2012
Distortion arises whenever a single metric is used to describe a multifaceted complex phenomenon such as the incidence of poverty.
The euro’s future begins now
Pier Carlo Padoan, Urban Sila & Paul van den Noord (VoxEU) Jun 19, 2012
With Greek politics in a stalemate, the Eurozone enters yet another week of deep uncertainty over its future. This column argues that the Eurozone must set the appropriate policies now to secure its future lest it be trapped in a cycle of of falling growth and soaring debt.
Inflation Targeting is dead: Long live Nominal GDP Targeting
Jeffrey Frankel (VoxEU) Jun 19, 2012
The current economic crisis has called into question the role of monetary policy, particularly Inflation Targeting and its oversight of asset bubbles and supply side shocks. This column is an obituary to Inflation Targeting and call for Nominal GDP Targeting to replace it.
Clarity about Austerity
Michael Spence (Project Syndicate) Jun 15, 2012
Achieving a sustainable pattern of growth requires choices that affect not just the level of aggregate demand, but also its composition – for example, investment versus consumption. Whether one calls this austerity or something else is a matter of semantics, though the confusion that has resulted is anything but harmless.
Greece and the Limits of Anti-Austerity
Mark Roe (Project Syndicate) Jun 19, 2012
Judging from the modest recovery in the US versus non-recovery in Europe, American policy accommodation is performing better than European austerity. But that is not the whole story: Europe’s microeconomic structure makes the same growth-based macroeconomic policies less effective in the EU than in the US.
Europe's crisis is about wealth, not growth
Spengler (AT) Jun 19, 2012
Bad behavior is being rewarded as European institutions continue to prop up the continent's asset bubble as part of a fallacious "growth policy". But as aging populations put catastrophic pressures on national pension and health systems, the issue is not growth - it is who takes the hit when Europe's illusory wealth is written off.
The Eurozone’s May 2010 strategy is a disaster: Time to pay up and end this crisis
Charles Wyplosz (VoxEU) Jun 20, 2012
The EZ rescue strategy adopted in May 2010 failed to restore debt sustainability, avoid contagion, or reduce moral hazard. This column argues that a volte face is needed. The debt of Greece, Portugal and Italy – and perhaps Ireland, Spain and France as well – must be restructured to restore growth and end the crisis. All EZ nations should pay since their leaders’ decision to violate the Maastricht Treaty’s no-bail out clause is what brought us here.
The Ill Wind from the West
Jaswant Singh (Project Syndicate) Jun 20, 2012
At the nadir of the financial crisis four years ago, many Asian governments came to believe that robust growth had led to a near-“decoupling” of their economies from the West and its ongoing problems. But now, as the eurozone teeters and America’s recovery weakens, Asia, too, is showing signs of faltering.
How Skilled Immigrants Create Jobs
Matthew J. Slaughter (WSJ) Jun 20, 2012
The Employ American Workers Act has achieved three things: Lost ideas. Lost jobs. Lost taxes.
Can the rest of Europe stand up to Germany?
Anatole Kaletsky (Reuters) Jun 20, 2012
As financial markets slide toward disaster, scarcely pausing to celebrate the “success” of the Greek election or the deal to recapitalize Spanish banks, the euro project is finally revealing its fatal flaw. One country poses an existential threat to Europe – and it is not Greece, Italy or Spain. Every serious proposal to resolve the euro crisis since 2009 – haircuts for bank bondholders, more realistic fiscal consolidation targets, jointly guaranteed eurobonds, a pan-European bailout fund, quantitative easing by the European Central Bank – has been vetoed by Germany, and this pattern looks likely to be repeated next week.
Forget Grexit, it’s time to fret about ‘Chindown’
David Pilling (FT) Jun 20, 2012
If Greece goes, everyone will suffer. But as China slows, only for some will it spell the end of their magic moment.
Latin America: Bloody but booming
Adam Thomson (FT) Jun 20, 2012
Drug violence is terrifyingly brutal but investors find Mexico has distinct advantages over China.
The Eurozone: Choked by an accounting identity
Anton Brender, Emile Gagna & Florence Pisani (VoxEU) Jun 21, 2012
Is austerity in the Eurozone doomed to fail? This column argues that Eurozone governments have to acknowledge that their response to the sovereign crises has been wrong. Bringing budgets back to balance as quickly as possible and at any cost for growth is a recipe for disaster.
The roots of shadow banking
Enrico Perotti (VoxEU) Jun 21, 2012
The ‘shadow banking’ sector is a loose title given to the financial sector that exists outside the regulatory perimeter. This column argues that despite its unpleasant sounding name, and its crucial role in the credit boom that preceded the global crisis, it does have its benefits – something that the regulators should be aware of.
Rio’s Unsustainable Nonsense
Jagdish Bhagwati (Project Syndicate) Jun 21, 2012
If George Orwell were alive today, he would be irritated, and then shocked, by the cynical way in which every lobby that has an axe to grind and money to burn has hitched its wagon to the alluring phrase “sustainable development.” At Rio+20, the sins of omission will be even worse.
Emerging Markets’ Europe Problem
Dominique Moisi (Project Syndicate) Jun 21, 2012
Until recently, Europe was a sort of mirror that confirmed for the major emerging economies the spectacular nature of their own success. But, today, emerging countries are growing very concerned with what they rightly perceive as serious risks to their own economies implied by excessive weakness in Europe.
Latvia is no model for an austerity drive
Michael Hudson and Jeffrey Sommers (FT) Jun 21, 2012
The impression that neoliberal policy has been a success and that Latvians support it is incorrect.
Quota formula reform is about IMF credibility
Arvind Virmani (VoxEU) Jun 22, 2012
Looking at the economic and business media over the past few months you can be forgiven for thinking there are no other problems with the world economy. This column argues that we need to remind ourselves of the need to reform the IMF, lest the ‘International’ part will lose all credibility.
Why the Euro Crisis Will Go On and On
Holman Jenkins (WSJ) Jun 22, 2012
Imposing 'more Europe' over the heads of voters just compounds the original sin.
Will the IMF "make history" with a new view on capital flows?
Bretton Woods Update No. 81 Jun 22, 2012
In October the Fund is expected to present in October an updated institutional view on capital account regulations. The most recent IMF paper on the topic received criticism for advocating for capital account liberalisation in China and India. Meanwhile emerging economies worry that the Fund's prescriptions still constrain their capacity to cope with global financial volatility. read article...
Why U.S. Must Get Over Renminbi
Yukon Huang (The Diplomat) Jun 22, 2012
U.S. politicians are tempted to blame Chinese currency manipulation for the country’s economic woes. But doing so is unhelpful.
Could the euro destroy the EU? Our verdict: Only "more Europe" can avoid a deeper crisis
Kemal Dervis & Javier Solana (Europe's World) Jun 22, 2012
It's not just the Eurozone that's in danger, but the European Union itself. They argue that only the emergence of a European "political space" and further sharing of sovereignty can overcome the crisis.
Switzerland's Fight to Suppress Its Currency Comes at a Price at Home
Floyd Norris (NYT) Jun 22, 2012
Switzerland is struggling to hold down the value of its currency, but its efforts aren't helping exports and may be creating a housing bubble.
The Only Way to Help Congo
Sverine Autesserre (NYT) Jun 23, 2012
The international community has failed to stabilize Congo because it has neglected a main cause of violence: local power plays.
Beware the Brexit
Economist Jun 23, 2012
Britain is stumbling towards leaving the EU.
Fakes and status in China
Economist Jun 23, 2012
The dodgy consumption habits of an emerging economy.
Rethinking austerity: Introducing a new Vox eCollection
Giancarlo Corsetti (VoxEU) Jun 23, 2012
The French and Greek elections, together with a softer than expected Eurozone macroeconomy, are forcing a rethink of the austerity-only solutions embraced by political leaders across Europe. This column introduces an ‘eCollection’ that brings together analysis by a dozen leading thinkers on austerity. The book also launches ‘eCollection’ , a new VoxEU.org vehicle for disseminating research-based policy analysis by the world’s top economists.
Why devaluation isn’t a viable option for Greece: Insights from a small open economy
DeLisle Worrell (VoxEU) Jun 23, 2012
If Greece leaves the euro, it can devalue its currency and start an export-led recovery – or so the popular argument goes. This column provides some hands-on insights from another small open economy, Barbados. It argues that for these economies that rely heavily on imports, devaluation will never be a viable option.
Saving Private Euro: What if Spain falls?
Bernard Delbecque (VoxEU) Jun 24, 2012
It is not just the crisis that is intensifying; so too is the debate on the potential solutions. This column proposes what to do if Spain is next to fail.
Mutualising Eurozone sovereign bonds? First of all, tame the tails
David Veredas (VoxEU) Jun 23, 2012
Many view Eurobonds as the silver bullet to end the Eurozone’s crisis. But this column argues that Eurozone debt tail risks are worryingly high, with those of bailout countries rising despite the rescue packages. It urges Europe’s leaders to be cautious when pooling debt to create a Eurobond – adding that it is only advisable once tail risks are tamed.
Banking union instead of Eurobonds – disentangling sovereign and banking crises
Thorsten Beck, Daniel Gros & Dirk Schoenmaker (VoxEU) Jun 24, 2012
After more than two years of efforts and innumerable emergency summits, the Eurozone crisis shows now signs of responding to treatment. This column argues that solving the Eurozone crisis requires policies that separate the banking and sovereign facets of the crisis. The losses incurred by Europe’s banks must be swiftly recognised by establishing a European Resolution Authority to identify weak banks and fix or liquidate them. Such an institution needs a fiscal backstop and the ESM should provide one. But this would not create Eurobonds – the very need for Eurobonds might to some extent disappear with a strong banking union.
How Europe Can Rescue Europe
George Soros (Project Syndicate) Jun 24, 2012
German Chancellor Angela Merkel argues that it is against the rules to use the European Central Bank to solve eurozone countries’ fiscal problems – and she is right. The upcoming EU summit is missing an important agenda item: a European Fiscal Authority that, in partnership with the ECB, could do what the ECB cannot do on its own.
China: Dug in too deep
Henny Sender (FT) Jun 24, 2012
Beijing is hungry to secure mineral resources abroad but overspending and project delays reveal mining groups are ill-prepared for global expansion
Germany’s reticence to agree threatens European stability
George Soros (FT) Jun 24, 2012
For the good of the eurozone, Germany must move from ‘can’t do’ mode.
We should celebrate the end of the commodity supercycle
Ruchir Sharma (FT) Jun 24, 2012
A sharp decline in commodity prices boosts western economies and frees capital to flow to more productive industries.
The Great Abdication
Paul Krugman (NYT) Jun 24, 2012
In Europe and America, those who have the power to contain the crisis refuse to act.
Contagion in Europe: Evidence from the sovereign debt crisis
Paolo Manasse & Luca Zavalloni (VoxEU) Jun 25, 2012
If Greece defaults, what about Spain, what about the rest of the Eurozone, and what about the rest of Europe? “Contagion” has become a buzzword in international economics. This column asks whether markets are responding irrationally to the nightmare scenario or finally waking up to reality.
A free trade agreement for Asia
Pradumna B. Rana (VoxEU) Jun 25, 2012
China, Japan, and South Korea are currently negotiating a free trade agreement (FTA) lending support to the possibility of an agreement for the South-East Asian region as a whole. This column calls for more of the same – and quickly.
An Agenda for Europe’s Weary Magicians
Jean Pisani-Ferry (Project Syndicate) Jun 25, 2012
Contrary to some perceptions, Europeans have not remained inactive over the last year. But they have lost their touch: like aging magicians, they try tricks that used to impress, but that fail to deliver results – or, worse, prove counterproductive.
What Is Next in Europe?
Jacob Funk Kirkegaard (PIIE) Jun 25, 2012
As economic and financial pressures rise in the euro area, the commentary often suggests that an economic collapse and an outgrowth of extremist political forces reminiscent of the 1930s are upon us.
US economy: Declaration of interdependence
Ed Crooks and Keith Fray (FT) Jun 25, 2012
The globalisation of America – now emerging as an election issue – has brought benefits and risks as the country becomes more integrated with the world.
Renminbi to increase global trade role
Henny Sender (FT) Jun 25, 2012
A dollar shortage in Asia is threatening to restrict credit growth and is driving a push by Beijing aimed at promoting trade in renminbi.
Employment, Italian Style
WSJ Jun 25, 2012
The rules and burdens that explain Europe's economic crisis.
Xavier Vives (Project Syndicate) Jun 26, 2012
The line of credit to Spain from fellow eurozone governments may help to stabilize a fragile banking system, at least in the short term, but it is a missed opportunity. Spain’s banking crisis provides a perfect opening to move towards a European banking union, without which the euro is doomed to a relatively rapid demise.
Back from the future: A solution to the Eurozone crisis
Javier Andrés & Rafael Doménech (VoxEU) Jun 26, 2012
The next meeting of the European Council takes place on 28 and 29 June amid growing fear and uncertainty over the Eurozone’s future. This column proposes a solution to the crisis – one that is bold and challenging, and that cannot wait.
The IMF response to the crisis: Crisis prevention and political influence
Andrea F Presbitero & Alberto Zazzaro (VoxEU) Jun 26, 2012
In the wake of the global crisis the IMF has increased its exposure and modified its lending approach. This column looks at IMF loan arrangements in developing countries since 2008 and suggests that the Fund has played a role in dampening contagion effects. However, its lending operations have also been influenced by political similarity between borrowers and G7 governments.
Lender regulation and the mortgage crisis
Jihad Dagher & Ning Fu (VoxEU) Jun 26, 2012
Ever since the recent mortgage crisis, calls for tighter regulation on lenders have been widespread. But would stricter supervision and regulation of lenders have been any use during the frenzied optimism of a boom? This column argues that it might. It shows that lending by the loosely regulated non-bank companies was associated with higher foreclosure during the housing downturn when compared with lending by the more tightly regulated banks.
Look beyond summits for euro salvation
Martin Wolf (FT) Jun 26, 2012
Germany is committed to federal solutions – but ‘not yet’. Deficit countries should accept that a federal rescue is unavailable.
Be alive to the risks and rewards of a banking union
Nick Clegg (FT) Jun 26, 2012
We must ensure that protection of the single currency does not translate into protectionism within the single market.
Monti’s need for speed underpins EU summit
Peter Spiegel (FT) Jun 26, 2012
The debate at Thursday’s meeting is stark. Will leaders agree on short-term fixes or limit themselves to long-term cures.
Why German bonds are no ‘big short’
George Magnus (FT) Jun 26, 2012
German bond yields will turn tail only if there is soon a vigorous demonstration of political will, and of German political will in particular.
Germany the Euro Winner? Hardly
Gunnar Beck (NYT) Jun 26, 2012
Contrary to the familiar view, Germany has not been the big beneficiary of the euro.
To Save the Euro, Leave It
Kenneth C. Griffin & Anil K. Kashyap (NYT) Jun 26, 2012
As the European economic crisis continues to intensify, policy makers are faced with the need to take ever more extreme measures to prevent a financial cataclysm. Tomorrow, European Union leaders will meet in Brussels to discuss the latest proposals: centralizing banking regulation and putting limits on national spending and borrowing.
Saving the Eurozone: Is a ‘Real’ Marshall Plan the answer?
Nicholas Crafts (VoxEU) Jun 27, 2012
Renewed calls are being made for a Marshall Plan for Greece. Yet this column argues that few people seem to understand what the Marshall Plan actually was. It suggests that repeating the 1940s’ recipe would mean a ‘structural adjustment programme’ targeting supply-side reforms and, as such, would probably appeal to Greeks even less than it would to Germans.
Could Eurobonds be the answer to the Eurozone crisis?
Jeffrey Frankel (VoxEU) Jun 27, 2012
Solutions to the Eurozone crisis must balance the evils of austerity and moral hazard. This column argues that the blue/red Eurobonds proposal might just get this balance right.
How to Make Trade Easier
Robert B. Zoellick, Ahmad M. Al-Madani, Donald Kaberuka, Haruhiko Kuroda, Thomas Mirow & Luis A. Moreno (Project Syndicate) Jun 27, 2012
A new WTO Trade Facilitation Agreement would benefit all by increasing developing countries’ capacity to trade, strengthening the WTO’s development mandate, and boosting global economic growth. Indeed, such an agreement could be a down payment on WTO members' commitment to linking trade and development.
The Impotence of the Federal Reserve
Martin Feldstein (Project Syndicate) Jun 27, 2012
The US Federal Reserve’s recent announcement that it will buy an additional $670 billion of long-term Treasury bonds over the next six months had virtually no impact on either interest rates or equity prices. The market’s lack of response was an important indicator that monetary easing can no longer increase economic activity.
The Great American Mirage
Stephen S. Roach (Project Syndicate) Jun 27, 2012
In September 1998, during the depths of the Asian financial crisis, the US Federal Reserve’s then-chairman, Alan Greenspan, had a simple message: the US is not an oasis of prosperity in an otherwise struggling world. Greenspan’s point is even closer to the mark today than it was back then.
Central Asia: A rocky road to riches
Leslie Hook and David Pilling (FT) Jun 27, 2012
Vast mineral deposits have brought Mongolia a massive influx of investment, but ahead of elections fears are growing that the transformation could undermine democracy.
In India, Not All Capital Inflows Are Welcome
Arvind Subramanian (PIIE) Jun 27, 2012
Monday's policy announcements—in the form of further significant opening of the capital account—to restore investor confidence deserve a failing grade. The response of most analysts is that the policy changes will at best succeed in attracting capital and at worst will fail to do so. Wrong. The policy changes are bad on substance.
A manifesto for economic sense
Paul Krugman and Richard Layard (FT) Jun 27, 2012
As a result of mistaken ideas, many western policy makers are inflicting suffering on their peoples.
Insecurity fails to stem Mexico’s growth
John Paul Rathbone (FT) Jun 27, 2012
The institutional fragility of the fledging democracy helps explain how Mexico combines violence and economic boom.
A Weaker Euro Could Rescue Europe
Martin Feldstein (WSJ) Jun 27, 2012
Devaluation is the only way to save the single currency.
Beijing, a Boon for Africa
Dambisa Moyo (NYT) Jun 27, 2012
China's investment in Africa is not a new form of imperialism it's Africa's best hope for economic growth.
Greeks lacking cures
David Ignatius (WP) Jun 27, 2012
Fear is taking over the country.
Bank downgrades with a twist
Nita Ghei (WT) Jun 27, 2012
News from Europe continues to be bleak. Moody's downgraded 28 Spanish banks on Monday, not long after major financial institutions, including Citigroup, Morgan Stanley, Goldman Sachs, Bank of America and JPMorgan Chase, suffered the same fate.
Not a Global Crisis, But the West's (And Keynes Can't Help)
Meghnad Desai (Globalist) Jun 27, 2012
Some economists believe that Keynes gave policymakers all the tools they need to cope with deep recessions such as Western economies are mired in. But today's crisis in Europe and the United States is one of overspending, not underspending. And so, the West will need to look beyond Keynes to solve its problems.
The fable of German ants - and Club Med crickets
Reuven Brenner (AT) Jun 28, 2012
Wrangling and hand-wringing over the future or the euro and its disparate family members can be boiled down to a message from Aesop's fables - come the bitter winter, hard-working and food-storing ants should remain deaf to pleas by the summer-loving and indolent singing crickets.
What Do You Believe About Investing?
Ashby Monk (II) Jun 28, 2012
Until recently, investors found great comfort in their traditional models. This was a world where products trumped risks; computers trumped people; the quantitative trumped the qualitative; and top-down trumped bottom up. And then those investors took the red pill... and woke up in the real world.
Could a Delay Tame the World of High Frequency Trading?
Katherine Heires (II) Jun 28, 2012
Three outspoken critics of the growing prominence of high frequency trading on U.S. and global equity markets — HFT accounts for more than 50 percent of equity trading activity in the U.S. — have proposed time-oriented solutions to what they say are its harmful impact on markets.
The Great Global Bargain Hunt
Yuriko Koike (Project Syndicate) Jun 28, 2012
Given the global menace posed by Europe’s sovereign-debt and banking crises, measures to strengthen the European banking system and encourage fiscal integration gained some momentum at the recent G-20 summit in Los Cabos, Mexico. But some countries, notably China, have seen Europe's agony as an opportunity to go shopping.
One Big Union
Howard Davies (Project Syndicate) Jun 28, 2012
In the last few weeks, the idea of establishing a European banking union has become the latest remedy advanced as a solution to the long-running euro crisis. But, whatever the merits of a banking union – and there are many – proposals to establish one raise more questions than can currently be answered.
Germans Taking the Wrong Lessons From History of Default
Scott Reynolds Nelson (Bloomberg) Jun 28, 2012
Germans complaining about how Greeks, Italians and Spaniards aren’t paying their debts is a recurring feature of Europe’s debt crisis.
Breaking the vicious cycle: Restoring balanced and sustainable growth in the global economy
Stephen Cecchetti & Boris Hofmann (VoxEU) Jun 29, 2012
The global economy is still suffering. This column assesses the structural adjustments, monetary and fiscal policy measures, and financial reforms that are needed to break the vicious cycle of weak growth, impaired financial systems, risks to fiscal sustainability and being propped up by monetary policy.
Do oil prices help forecast real GDP?
Lutz Kilian (VoxEU) Jun 29, 2012
It has long been argued that changes in the price of oil can help forecast US real GDP growth. This column addresses the common concern among many policymakers that the feedback from oil prices to the economy may become stronger once the price of oil reaches a certain level.
Africa: Lessons from Lagos
Xan Rice (FT) Jun 28, 2012
The slow reinvention of Nigeria’s chaotic commercial capital is offering an unexpected model of how African megacities can cope with soaring populations.
Soviet collapse holds a lesson for the euro
Philip Stephens (FT) Jun 28, 2012
The conviction that the euro will survive offers an increasingly threadbare shield against the gathering storms.
The Rise Of Innovative State Capitalism
Joshua Kurlantzick (Businessweek) Jun 28, 2012
Over the past five years, as much of the developed world has staggered through crisis, a new type of capitalism has emerged as a challenger to laissez-faire economics. Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market.
Naked emperors, holy cows and Libor
Chan Akya (AT) Jun 29, 2012
It would take a brave person to draw a line between tottering Arab dictatorships, American bankers under siege, the European sovereign debt crisis, credit rating agencies losing their mojo and this week, the Libor scandal. Institutionalization of habits tends to create its own perverse ripple effect within which the seeds of chaos are embedded. This isn't about capitalism versus socialism but rather the appreciation of inertia as the greatest force known to mankind.
One more summit: The crisis rolls on
Charles Wyplosz (VoxEU) Jun 30, 2012
The EU summit produced a vaguely worded agreement that can and has been read in different ways in different nations. This column provides a quick reaction to what was and was not decided. It concludes that useful progress was made, but this was far from the decisive turn-around that many had hoped for. The crisis will continue to unfold in the months ahead.
Income inequality, tax base, and sovereign spreads
Joshua Aizenman & Yothin Jinjarak (VoxEU) Jun 30, 2012
Might income inequality make structural adjustments more difficult? This column presents data from 50 countries in 2007, in 2009, and in 2011, and finds that higher income inequality in the country is associated with a lower tax base, less fiscal space, and higher sovereign spreads.
Free exchange: The real wealth of nations
Economist Jun 30, 2012
A new report comes up with a better way to size up wealth.
Population and recession: Europe’s other crisis
Economist Jun 30, 2012
Recession is bringing Europe’s brief fertility rally to a shuddering halt.