News & Commentary:

August 2007 Archives


Gender equality
Finance and Development Jun/Aug 2007
The June 2007 issue of F&D spotlights gender equality. The lead article discusses progress toward fulfilling the Millennium Development Goal (MDG) on redressing gender discrimination and empowering women and related MDGs. The section also looks at how budgeting with gender issues in mind can help countries promote gender equality and what needs to be done to get girls from 'excluded' social groups into school. Other articles focus on Asia 10 years after the financial crisis, the implications of China's and India's growing ties with Africa, and making remittances work for Africa. 'Country Focus' looks at the challenges facing Bulgaria now that it has joined the European Union, 'Picture This' highlights the globalization of labor, and 'Back to Basics' gives a primer on microfinance. Two other pieces discuss the efficiency of public spending in Latin America and how countries can use the public sector balance sheet approach to diagnose vulne rabilities that are not immediately visible in the budget.

The Failed States Index 2007 Recommended!
The Fund for Peace/Foreign Policy Jul/Aug 2007
The world’s weakest states aren’t just a danger to themselves. They can threaten the progress and stability of countries half a world away. In the third annual Failed States Index, FOREIGN POLICY and The Fund for Peace rank the countries where the risk of failure is running high.

The Ideology of Development Recommended!
William Easterly (Foreign Policy) Jul/Aug 2007
The failed ideologies of the past century have come to an end. But a new one has risen to take their place. It is the ideology of Development—and it promises a solution to all the world’s ills. But like Communism, Fascism, and the others before it, Developmentalism is a dangerous and deadly failure.

The Debt Frenzy Foreign Policy Subscription Required
David Bosco (Foreign Policy) Jul/Aug 2007
From Argentina to Zambia, investment firms are snatching up the poor world’s debt. To turn a buck, they sue, harass, and otherwise claw their way into making debtor states pay. Poverty activists say these so-called vulture funds are preying on the impoverished. But they’re only doing what the international financial system can’t—holding corrupt and irresponsible regimes to account.

The List: Five Lies My Economist Told Me
Foreign Policy Jul/Aug 2007
Economics prides itself on being the most scientific of the social sciences. Yet the X and Y axes can’t always capture globalization’s unpredictable turns. In this week’s List, FP looks at five ways in which the world economy is pushing economists to think outside the box.

A New Deal for Globalization Recommended!
Kenneth F. Scheve and Matthew J. Slaughter (Foreign Affairs) Jul/Aug 2007
Globalization has brought huge overall benefits, but earnings for most U.S. workers -- even those with college degrees -- have been falling recently; inequality is greater now than at any other time in the last 70 years. Whatever the cause, the result has been a surge in protectionism. To save globalization, policymakers must spread its gains more widely. The best way to do that is by redistributing income.

Debtor Nation
Jonathan Shaw (Harvard Magazine) Jul/Aug 2007
Only a few people make great profits on US spending habits and growing global imbalances.

China Should Speed Up the Yuan’s Rise
Jonathan Anderson (FEER) Aul/Aug 2007
Jonathan Anderson, chief Asian economist at UBS, dispels common myths about the Chinese exchange rate and explains why yuan revaluation is the only remedy for China’s economic “whiplash.”

Economists Against Protectionism Wall Street Journal Subscription Required
Pat Toomey (WSJ) Aug 1, 2007
Judging from all the anti-China rhetoric, Congress still hasn't learned the lesson of the Smoot-Hawley tariff.

How the Shrimp Tariff Backfired
Aleksandra Dunaeva and Don Mathews (Mises Daily) Aug 1, 2007
The great Frederic Bastiat (1801-–1850) taught that wealth can be obtained in two ways: it can be produced or it can be plundered. Production is undertaken by entrepreneurs. Plunder is often undertaken with the express assistance of government, taking the form of tariffs, taxes, subsidies, and other interventionist measures justified as policy in the public interest.

Prospects for Doha Accord Dim, As WTO Heads into Summer Recess
BRIDGES Weekly Trade News Digest - Vol. 11, Number 28 Aug 1, 2007
Prospects for salvaging an accord in the Doha Round of global trade talks remain dim as the WTO heads into its annual August recess, even though Director-General Pascal Lamy insists that a deal is within governments' grasp, should they be willing to make it.

Draft NAMA Agreement Text Criticised By Many Developing Countries
BRIDGES Weekly Trade News Digest - Vol. 11, Number 28 Aug 1, 2007
A potential Doha Round compromise on industrial goods trade set out by the chair of the negotiating committee came under heavy fire from several developing countries last week.

In New Zealand, a model of farm efficiency, without subsidies
IHT Aug 1, 2007
Watching grass grow is supposed to be dull. But watching it grow with a dairy farmer like Malcolm Lumsden is anything but.

China open to currency changes, U.S. Treasury chief says
IHT Aug 1, 2007
The U.S. Treasury secretary, Henry Paulson Jr., said Wednesday that he was assured that China was committed to currency flexibility and more financial reforms.

Summer of Setbacks
Ernesto Zedillo (Forbes) Aug 1, 2007
Despite globalization's many contributions to global wealth, some world leaders reinforce protectionist walls

The China Connection: Globalization and the Narcotics Trade
NYT Aug 2, 2007
Stopping large-scale traffickers who can source raw materials anywhere around the globe will make interdiction much more difficult for law enforcement.

ECB signals another rate increase in September
IHT Aug 2, 2007
The bank president said he would exercise "strong vigilance" to guard against a rise in inflation, and vowed to pay "great attention" to volatile developments in global financial markets.

Apec warns on rise in protectionism
FT Aug 3, 2007
Finance ministers from countries accounting for more than half the world’s trade warned on Friday that rising protectionism was a “serious threat” to global economic growth and regional living standards.

IMF stands by bright forecast despite pain
FT Aug 3, 2007
The global economic outlook remains "very favourable", despite recent market volatility and shockwaves from the US subprime mortgage crisis, John Lipsky, the IMF's first deputy managing director, said yesterday.

Food That Travels Well
James E. McWilliams (NYT) Aug 6, 2007
Why imported produce may be better for the earth than local.

Bernanke's Bear Market Wall Street Journal Subscription Required
WSJ Aug 6, 2007
The mortgage credit crunch, the dollar, and the Fed.

Hot-Rolled Hokum Wall Street Journal Subscription Required
WSJ Aug 6, 2007
U.S. steel makers always want more tariffs.

The Real Uribe Record Wall Street Journal Subscription Required
Mary Anastasia O'Grady (WSJ) Aug 6, 2007
Why Colombia deserves an FTA.

Refocus the Fund Financial Times Subscription Required
Mohamed El-Erian and Michael Spence (FT) Aug 6, 2007
The International Monetary Fund recently took a step towards establishing a more open, merit-based approach to selecting a replacement to Rodrigo de Rato as its managing director, a position hitherto reserved for a European. The impact of the change has been neg­ated, however, by some European countries’ eagerness to lobby aggressively for their candidate before the nomination period closes at the end of August.

Trading Without America Wall Street Journal Subscription Required
WSJ Aug 7, 2007
Defeating the U.S.-South Korea FTA will send the wrong message.

For Russians, rewards and risks of soaring ruble
IHT Aug 7, 2007
The ruble's strength is helping to raise living standards and inspiring hopes of Russian greatness.

A Slow-Moving Chinese Train Wreck
Desmond Lachman (AEI) Aug 7, 2007
China's currency is still egregiously undervalued, and neither the IMF nor the U.S. treasury secretary seems to want to do anything about it.

A Weak Dollar and the Fed
NYT Aug 8, 2007
How did the Fed lose room to maneuver? The answer is rooted in the Bush administration's misguided economic policies.

Masters of the Economy
Robert J. Samuelson (WP) Aug 8, 2007
It's no secret that the housing industry is in a deep downturn. In its heyday, the real estate boom added 30,000 housing-related jobs a month (construction workers, mortgage brokers, real estate agents). Now, the bust is subtracting 15,000 a month, says Moody's In 2005, housing starts reached almost 2.1 million; expects starts of 1.4 million this year. By mid-2008, it forecasts, median prices for existing homes will be down almost 9 percent from their peak.

Will China drop the bomb on the US dollar?
Andrew Leonard (Salon) Aug 8, 2007
Economic war! China prepares to deploy the "nuclear option"! Duck and cover!

China threatens 'nuclear option' of dollar sales
Daily Telegraph Aug 9, 2007
The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Another Shot in Currency Fight: Chinese Threaten Divestment
WP Aug 9, 2007
In a Wednesday opinion piece in the state-run China Daily, a Chinese government researcher made what sounded like a warning to U.S. policymakers not to get too tough in insisting the yuan should appreciate.

Bono, Foreign Aid and Skeptics New York Times Select Subscription Required
Nicholas D. Kristof (NYT) Aug 9, 2007
Getting foreign aid right is harder than it looks. So how do we make aid smarter?

Sovereign Wealth to the Rescue Wall Street Journal Subscription Required
Michael Pettis (WSJ) Aug 9, 2007
Massive global reserves will chase the bears back to their dens.

Spectacular Acts Of Central Banking
Paul Maidment (Forbes) Aug 9, 2007
Should we be relieved that the ECB and Fed have boosted liquidity to forestall a credit crunch, or is it a signal that worse is to come?

Despite controversial past, World Food Program chief gets to work
IHT Aug 10, 2007
Although disputes erupted over her candidacy to head the World Food Program, Josette Sheeran has settled into the position, and is focusing on efforts to streamline the agency. But critics still question her conservative past.

Are Global Prices Converging or Diverging?
FRBSF Aug 10, 2007
Most people barely think twice anymore when they discover that their toothbrush was made in China, their tee-shirt was made in Honduras, and their car was made in Germany. With an increasing volume of goods and services flowing around the world, it is natural to assume that the marketplace has become "global," which is to say, much more integrated. One implication of greater integration among the world's markets is that prices for equivalent goods and services from country to country should tend to converge.

Very Scary Things
Paul Krugman (NYT) Aug 10, 2007
In September 1998, the collapse of Long Term Capital Management, a giant hedge fund, led to a meltdown in the financial markets similar, in some ways, to what’s happening now. During the crisis in ’98, I attended a closed-door briefing given by a senior Federal Reserve official, who laid out the grim state of the markets. “What can we do about it?” asked one participant. “Pray,” replied the Fed official.

Variations on a theme: Thai women and foreign husbands
IHT Aug 12, 2007
Sometimes the reasons are economic, but sometimes the matches between foreign men - now mostly Europeans - and Thais may not only save the women from poverty, but lead to happiness as well.

The no-risk models that weren't
Gretchen Morgenson (IHT) Aug 12, 2007
For something that everybody assured us was "contained," the subprime mortgage mess certainly has spread.

ECB bail-out sows seeds of crisis Financial Times Subscription Required
Paul de Grauwe (FT) Aug 12, 2007
The large-scale interventions of the central banks to prop up liquidity last week raise difficult questions. Were they right to do so? Did the central banks – especially the European Central Bank, which alone pumped more liquidity into the system than all other central banks combined – not over­react? Do these interventions create the seeds for future crises in the financial system?

Food Fights Wall Street Journal Subscription Required
James M. Rice (WSJ) Aug 13, 2007
Safety doesn't have to be protectionist.

Falling Dollar, After All
Robert P. Murphy (Mises Daily) Aug 13, 2007
For some time I have been trying to defuse the hysteria over the US current account deficit.

ECB takes lead role in calming markets
IHT Aug 13, 2007
The European Central Bank has traditionally supported the Federal Reserve in global financial crises, and Monday it made the bold move of injecting ?47.7 billion into the financial system.

Beijing's threats fuel U.S. protectionist rhetoric
IHT Aug 13, 2007
The last thing China needs is to give American politicians new excuses to erect protectionist defenses against Chinese imports. So it is stupefying that some Chinese officials - with the blessing of the government press - have been talking of using China's enormous cache of U.S. Treasury bonds as an economic weapon.

Michael Barone (AEI) Aug 13, 2007
Trading in the past.

Al Harberger, Labor, and Capital in Latin America: Did the Washington Consensus have it right?
Dennis de Tray (CGD) Aug 13, 2007
Arnold "Al" Harberger came to Washington and to CGD on Friday. For those readers who don't know, Al is, among other things, known as the father of the "Chicago Boys" -- young economists from Chile and elsewhere in Latin America who trained at the University of Chicago in the 1970s and returned to lead the reform of their countries' economies. Al is also a long-time advisor to governments around the world, especially in Latin America, where he is universally known as "Alito," and a teacher in all the best economic departments.

The Central Bank as the Market Maker of last Resort: From lender of last resort to market maker of last resort Recommended!
Willem Buiter and Anne Sibert (VoXEU) Aug 13, 2007
Last week's actions by the ECB, the Fed and the Bank of Japan were not particularly helpful – a classic example of trying to manage a credit crisis or liquidity squeeze using the tools suited to monetary policy-making in orderly markets. Monetary policy is easy; preventing or overcoming a financial crisis is hard; managing the exit from a credit squeeze without laying the foundations for the next credit and liquidity explosion is harder still. Central bankers should earn their keep by acting as market makers of last resort.

Trading Down Wall Street Journal Subscription Required
David Broder (WSJ) Aug 14, 2007
Protectionist sentiment appears to be rising in Congress.

Chinese Toy Executive Found Hanged After Export Ban
WP Aug 14, 2007
When Mattel recalled nearly a million toys manufactured by Zhang Shuhong's company, he fought hard to find a way to resume sales to the United States. They were the lifeblood of his firm, Lee Der Industrial, and its lucrative share of the export boom driving China's economic growth.

Can Central Banks Head Off a Credit Crunch?
Richard Berner (MSDW) Aug 13, 2007
Risks are rising that the ongoing tightening of lending standards and the abrupt repricing of risk across several asset classes will morph into a credit crunch. If it occurred, such an event would pose clear-cut downside risks to the economy. For some borrowers, the swing from über-easy credit — especially for mortgage and commercial paper borrowing — to tougher terms may already feel like a crunch. For example, mortgage lenders who cannot sell securities in the non-agency MBS market are sharply curbing credit availability as they are constrained by the size of their balance sheets. And managers of structured investment vehicles who cannot roll over the maturing asset-backed commercial paper used to fund them are under pressure to liquidate assets.

Approve Free Trade with S. Korea
James R. Lilley, Stephen W. Bosworth, Donald Gregg, Thomas C. Hubbard & James T. Laney (AEI) Aug 14, 2007
The trade accord signals the U.S. commitment to Asia.

China, Unregulated
NYT Aug 15, 2007
American businesses and the Bush administration must send a clear message to Beijing that it has to clean up its act or its export-led boom will falter.

Global Warming Simplicities
Robert J. Samuelson (WP) Aug 15, 2007
We in the news business often enlist in moral crusades. Global warming is among the latest. Unfortunately, self-righteous indignation can undermine good journalism. A recent Newsweek cover story on global warming is a sobering reminder. It's an object lesson on how viewing the world as "good guys vs. bad guys" can lead to a vast oversimplification of a messy story. Global warming has clearly occurred; the hard question is what to do about it.

Toy Story Wall Street Journal Subscription Required
WSJ Aug 15, 2007
Mattel's recall, and China bashing.

Current Market Turmoil: Non-Priceable Knightian “Uncertainty” Rather Than Priceable Market “Risk”
Nouriel Roubini (RGE Monitor) Aug 15, 2007
Economists distinguish between “Risk” and “Uncertainty”: the former can be priced by financial markets while the latter cannot. The distinction between the two was made by the famous economist Frank H. Knight in his seminal book, Risk, Uncertainty, and Profit (1921). In brief, “Risk is present when future events occur with measurable probability” while “Uncertainty is present when the likelihood of future events is indefinite or incalculable”.

How, and How Not, to Stop AIDS in Africa Recommended!
William Easterly (NYRB Volume 54, Number 13) Aug 16, 2007
On The Invisible Cure: Africa, the West, and the Fight Against AIDS by Helen Epstein.

Surviving the markets Economist Subscription Required
Economist Aug 16, 2007
The new financial order is undergoing its harshest test. It will not be pretty, but it is necessary.

Behind the veil Economist Subscription Required
Economist Aug 16, 2007
Big market losses provide insights into a volatile financial world.

China's toxic toymaker Economist Subscription Required
Economist Aug 16, 2007
The death of Zhang Shuhong could herald the demise of China's many anonymous subcontractors.

Putting Financial Globalization to Work
Paolo Mauro and Jonathan D. Ostry (IMF Survey) Aug 16, 2007
Financial globalization is here to stay and all countries, essentially, are affected by it to varying degrees.

Yen carry trade falling from favor
IHT Aug 17, 2007
The recent volatility in global stock markets has raised the prospect that a distinguishing feature of the financial world for years now, an investing tool known as the "yen carry trade," may be coming to an end.

The New Myth About Climate Change
Idean Salehyan (Foreign Policy/YaleGlobal) Aug 17, 2007
Corrupt, tyrannical governments—not changes in the Earth’s climate – will be to blame for the coming resource wars

Money Ball
WSJ Aug 17, 2007
What works, and what doesn't, in a credit crisis.

The Lessons of '87 Wall Street Journal Subscription Required
Thomas Mayer (WSJ) Aug 17, 2007
If central banks do the right thing, the world economy should have no problem riding out the subprime mess.

Stronger Asia Seen as Better Able to Deflect Waves from U.S.
NYT Aug 17, 2007
The U.S. used to be able to pick up the slack when growth stalled in the rest of the world. Now that dynamic has reversed, but many countries are still worried that the U.S. could drag them down as well.

While the ECB ponders, the Fed moves, and cleverly at that
Charles Wyplosz (VoxEU) Aug 17, 2007
The Fed move, to cut the discount rate while keeping the Fed Funds rate unchanged, is both innovative and shrewd. It allows banks to liquefy discredited mortgage assets at low cost while leaving open the decision on monetary policy. It also leaves in the Fed’s hands the more powerful tool of cutting the Fed Funds rate if its action does not succeed in quieting market fears.

Fearing Slide in Economy, Fed Cuts Its Discount Rate
NYT Aug 18, 2007
The rare move was seen as an admission by the Federal Reserve that its outlook on the credit crisis was flawed, and analysts suggested that further cuts are likely.

Chinese Entrepreneurs Flourish in Africa
NYT Aug 18, 2007
Hundreds of thousands of Chinese migrants are doing business on a continent that had been terra incognita.

What a Difference a Simple Rate Cut Makes
NYT Aug 18, 2007
The Dow Jones industrial average surged 233 points Friday after the Federal Reserve cut interest rates for loans to banks and indicated it would act again if the economic outlook worsens.

A Better Way to Feed the Hungry
NYT Aug 18, 2007
A cash-based food aid system could save as much as $33 million that is now lost to shipping and transaction costs. That money could be far better spent fighting hunger.

The Fed at a Discount Wall Street Journal Subscription Required
WSJ Aug 18, 2007
Ben Bernanke tries some liquidity brinksmanship.

Milton Friedman, Meet Richard Feynman
Tim Harford (Slate) Aug 18, 2007
How physics can explain why some countries are rich and others are poor.

NYT Aug 19, 2007
There are good reasons to hope — and believe — that the Federal Reserve will ably manage the turmoil in the financial markets. Its surprise lending rate cut on Friday and earlier infusions of cash into the banking system show that it is committed to crisis management.

Rising Breed of Migrant Worker: Skilled, Salaried and Welcome
NYT Aug 20, 2007
While many countries are seeking to restrict immigration by low-skilled migrants, they are increasingly working to attract those with advanced degrees and scarce skills.

It's a Miserable Life New York Times Select Subscription Required
Paul Krugman (NYT) Aug 20, 2007
New-fashioned bank runs are at the heart of the current financial crisis.

Easy Credit, Bubbles and Betrayals New York Times Select Subscription Required
Roger Cohen (NYT) Aug 20, 2007
Here is a touching tale of how the struggling and affluent are linked, all the way across the Atlantic.

Debunking Decoupling Wall Street Journal Subscription Required
Michael Kurtz (WSJ) Aug 20, 2007
Asia's economies are still heavily dependent on the U.S.

In Time of Tumult, Obscure Economist Gains Currency Wall Street Journal Subscription Required
WSJ Aug 20, 2007
Mr. Minsky Long Argued Markets Were Crisis Prone; His 'Moment' Has Arrived.

Concern about 'sovereign wealth funds' spreads to Washington
IHT Aug 20, 2007
At a time of global financial instability, the U.S administration has started to worry and many experts are asking whether cross-border investment is evolving into something new that could be called cross-border nationalization.

Globalization closes in on Swedes' treasured vacation
IHT Aug 20, 2007
The nation may have the world's most generous allotment of paid time off, but the question is how long this laid-back state of affairs can last. Changes are under way in the face of industrial competition.

Sovereign Wealth to the Rescue
Michael Pettis (YaleGlobal/WSJ) Aug 20, 2007
Holders of huge cash reserves in Asia still seek out high returns - and big risks around the globe

China’s Trade in Africa Carries a Price Tag
NYT Aug 21, 2007
Manufacturing has suffered in Africa as cheap Chinese goods flood the market, eliminating needed jobs.

Subprime on the Rhine
Peter Gumbel (Fortune) Aug 21, 2007
How Germany's IKB Bank became the biggest international victim of America's subprime-mortgage crisis.

Managing Globalization: To reduce poverty, money isn't everything
IHT Aug 21, 2007
How much can governments do to fight poverty? In South America, a couple of answers are emerging in the growing economies of Venezuela and Brazil. Both governments have publicly pledged billions of dollars to raise living standards - but have they succeeded?

IMF warns of risk to global growth
FT Aug 21, 2007
Turmoil in the financial markets will affect growth worldwide, John Lipsky, the number two official at the International Monetary Fund, said on Tuesday.

Day and Knight
Serhan Cevik and Katerina Kalcheva (MSDW) Aug 21, 2007
The days of abundant liquidity turned into a Knightian uncertainty for financial markets.

Like Wages for Chocolate
Humphrey Hawksley (YaleGlobal) Aug 21, 2007
Failing to pay living wages to African farmers growing cocoa risks turning them against the West

A Theoretically Bold Move Toward ‘Managed Capital Account Liberalization’
Qing Wang (MSDW) Aug 21, 2007
China’s SAFE announced on Monday, August 20, that retail investors will be allowed to invest in the Hong Kong market directly through brokerage accounts opened with the Bank of China (BOC).

A Farewell to Alms Wall Street Journal Subscription Required
Arvind Subramanian (WSJ) Aug 22, 2007
The troubling consequences of foreign aid.

Bank Bungles Wall Street Journal Subscription Required
WSJ Aug 22, 2007
South Korea has a funny way of showing its global financial aspirations.

Is the Boom in Peril?
Robert J. Samuelson (WP) Aug 22, 2007
Just a few weeks ago, Fortune magazine pronounced the world to be in "the greatest economic boom ever." This may be, but the turmoil in stock and bond markets poses some unnerving questions. Is the global economy stable? Or might its periodic crises someday lead to a calamity?

Reframing the debate about the Chinese Renminbi Recommended!
Marvin Goodfriend and Eswar Prasad (VoxEU) Aug 22, 2007
US and EU pressure on China to revalue the renminbi create the mistaken impression that there is an unavoidable conflict of interests. A switch by China to a more flexible exchange rate regime, accompanied by a shift to a new nominal anchor, would serve China’s domestic interests and simultaneously defuse protectionist sentiments abroad. A politically savvy recasting of this issue as one of Chinese monetary-policy independence could help solve many problems.

ECB acts to dispel clouds over European credit markets
IHT Aug 22, 2007
The European Central Bank made the largest amount of emergency loans in two months and said it would inject another ?40 billion.

Online gambling case pits Antigua against U.S. and challenges WTO
IHT Aug 22, 2007
The dispute, the WTO's first to deal with the Internet, is likely to serve as a major precedent.

Russia offers alternative as head of IMF
IHT Aug 22, 2007
Russia on Wednesday nominated Josef Tosovsky, a former Czech prime minister and central bank chief, to head the International Monetary Fund, a move that puts the Kremlin at odds with the European Union.

What's Ahead for the Stock Market -- and Quant Funds
Knowledge@Wharton Aug 22, 2007
After weeks of skittishness and fear, investors showed signs on Tuesday of settling down. "Yesterday was one of the dullest days in the market that we've had in a while, and that's good in many ways," says Wharton finance professor Jeremy Siegel.

Paper losses Economist Subscription Required
Economist Aug 23, 2007
Central banks struggle to restore calm without breeding complacency.

Lessons from Subprime Turbulence
John Kiff and Paul Mills (IMF) Aug 23, 2007
The recent wave of turbulence in credit markets has now directly affected hedge funds, investment funds, and the commercial paper market.

World Growth Solid Amid Market Fears
IMF Aug 23, 2007
Despite recent financial market turbulence, the global economy is still expected to perform well this year, but considerable uncertainty remains about the implications of the ongoing liquidity squeeze for financial markets and for the real economy, IMF Managing Director Rodrigo de Rato said.

"Made in China" Label Spurs Global Concern
Paul Mooney (YaleGlobal) Aug 23, 2007
A leading global exporter will reassure consumers abroad only when it has done so at home.

China pushes back following scandals
IHT Aug 23, 2007
China is sending a message that it intends to crack down on tainted or defective exports. But officials are also shifting the blame: accusing the U.S. of protectionism, faulting multinationals for sloppiness, charging foreign media with sensationalism and finding flaws with U.S. goods.

U.S. Treasury plan backfires: IMF focuses on dollar instead of yuan
IHT/Bloomberg Aug 23, 2007
The U.S. Treasury took two years to persuade the International Monetary Fund to police global currency markets - and just two months to trash the initiative once the IMF adopted it.

Analysts Cut Expectations for Economic Growth
NYT Aug 24, 2007
Policy makers and Wall Street analysts are being forced to scale back their expectations for growth in the overall economy.

Democracy Ascendant
Michael Maiello (Forbes) Aug 24, 2007
Foreign policy expert Michael Mandelbaum explains democracy's popularity.

Reclaim Power from the Ratings Agencies
Charles W. Calomiris & Joseph Mason (AEI) Aug 24, 2007
Are ratings agencies to blame for the current mortgage crisis?

Dollars for Sale
NYT Aug 25, 2007
In the absence of policies to boost domestic savings, a steady decline of the dollar implies a steady decline in American living standards.

Why the markets' roller coaster seems wilder
IHT Aug 26, 2007
Stocks regained some composure last week, and not a moment too soon for investors worn out by the market's turbulence. Credit markets remain easily shaken, however, and justifiably so. There is still so much that investors do not know about what lurks in portfolios around the world and exactly when it might jump out and say "boo!"

Mexico's Plutocracy Thrives on Robber-Baron Concessions
Eduardo Porter (NYT) Aug 27, 2007
Who is the richest man in the world? It's not Bill Gates anymore.

US Action on Free Trade Is Left Hanging
Peter G. Gosselin (LAT/YaleGlobal) Aug 27, 2007
Global trade may produce many winners, but US politicians hear from the losers.

What Looks and Sounds Like a Bailout?
NYT Aug 28, 2007
Even if the Federal Reserve succeeds in managing the credit crisis, its actions stir questions about the sustainability of the debt-fueled state of the American economy.

Yen Gains on Speculation Credit Losses Will Deter Carry Trades
Bloomberg Aug 28, 2007
The yen strengthened for a second day against the dollar on speculation banks will report more credit- market losses, prompting traders to pare higher-yielding investments funded by loans in Japan.

World Bank mimics Wall Street as it looks for a new role
IHT Aug 28, 2007
The World Bank president, Robert Zoellick, is bringing a touch of Goldman Sachs to rescue the poverty-fighting agency's slumping business.

The Music Stops
John H. Makin (AEI) Aug 28, 2007
What happens to global financial markets when liquidity dries up?

When 'Free Trade' Isn't Wall Street Journal Subscription Required
Greg Rushford (WSJ) Aug 29, 2007
Japan's FTA push is the latest example of an alarming global trend.

Lee Kuan Yew, founder of Singapore, changing with times
IHT Aug 29, 2007
Lee Kuan Yew, who turned a malarial island into a modern financial center with a first world skyline, is peering ahead again into this city-state's future.

Europe to keep tariffs on light bulbs
IHT Aug 29, 2007
European plans to lift tariffs on energy-saving light bulbs from China were put off for a year on Wednesday.

Ruble Rumble Wall Street Journal Subscription Required
Judy Shelton (WSJ) Aug 30, 2007
Putin wants to overtake the dollar.

The Tale of Globalization's Exiles
Richard Lapper (FT) Aug 30, 2007
With a global workforce on the move, economists focus on the increasing sums of remittances sent to poor nations

The IMF's Leadership Search
Lee Hudson Teslik (CFR) Aug 29, 2007
The IMF faces widening questions over its operational structure—and global relevance—as Russia challenges the French front-runner nominee for IMF president.

Argentina's Mystery Money
Stephanie Hanson (CFR) Aug 30, 2007
Strange money stashes and questionable inflation numbers cloud the future for President Nestor Kirchner and his wife Cristina, Argentina's political power couple.

Sarkozy tells France to accept globalization - but in a French way
IHT Aug 30, 2007
The president vowed to make conditions more business-friendly at home to allow French companies to better compete in the world.

Don't Blame the Rating Agencies Wall Street Journal Subscription Required
Vickie Tillman (WSJ) Aug 31, 2007
Their role in this turbulent market is misunderstood.

An extensive but benign crisis? Recommended!
Tommaso Monacelli (VoxEU) Aug 31, 2007
The public is overreacting to the current turmoil in financial markets. The turmoil is most likely a situation where very specific problems are spread out extensively across investors and countries and thus the defaults are benign.

Assessing the Collateral Damage from the Crisis
Stephen Jen (MSDW) Aug 31, 2007
In this note, we revisit the issue of economic de-coupling, i.e., how a prospective slowdown in the US economy could affect the RoW. However, instead of declaring our central case view, which we and others have already done, given the uncertainties regarding the current financial crisis (its duration, its impact on sentiment, its influence on consumption in the US and the Fed’s likely actions), we aim to do two things in this note. First, we highlight some of the key findings from academic studies on this issue of economic de-coupling. Second, we discuss the current situation in light of this body of economic literature. This is a qualitative discussion, in which we aim to underscore some key conceptual issues supported by academic studies to counter what we believe are increasingly emotional and subjective predictions of the fate of the global economy.

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