Questions and Answers on the Argentina default
Barbara Kotschwar (PIIE) Aug 1, 2014
Has Argentina defaulted on its debt for the second time in 13 years? On July 30, negotiations in New York failed to resolve differences with a group of bondholders (some of them in speculative funds derided in Argentina as the "vulture funds") demanding full payment on $1.3 billion in bonds it owns.
The Argentina Problem Can't Be Fixed
Leonid Bershidsky (Bloomberg View) Aug 1, 2014
Governments are the worst possible debtors because their assets can't be tapped to repay creditors. New bankruptcy mechanisms aren't likely to solve the problem.
Ukraine pact may deal blow to dollar
Chris Cook (AT) Aug 1, 2014
A deal between Germany and Russia could help to end the conflict in Ukraine. While recognizing Crimea's annexation by Russia, it could also further erode the importance of the US dollar in the region's energy transactions.
An East-West showdown in Africa
Nick Turse (AT) Aug 1, 2014
China has used aid, trade and infrastructure for much of the past decade as a bulwark to set itself up as the dominant foreign player in Africa, while the United States has deployed the blunt language and hardware of war. Amid starkly different results in the continent, which approach wins will have profound implications for all concerned.
A Tear for Argentina
Kenneth Rogoff (Project Syndicate) Aug 1, 2014
Argentina’s latest default poses unsettling questions for policymakers. Though the country’s periodic debt crises are often the result of self-destructive macroeconomic policies, the default has been triggered this time by a significant shift in the international sovereign-debt regime.
Russia’s Eurasian Vision
Nouriel Roubini (Project Syndicate) Aug 1, 2014
The escalating conflict in Ukraine between the Western-backed government and Russian-backed separatists has focused attention on the Kremlin’s long-term objectives. Though Russian President Vladimir Putin’s immediate goal may have been limited to retaining some influence in Ukrainian affairs, his longer-term ambition is much bolder.
Hunting Tigers in China
Minxin Pei (Project Syndicate) Aug 1, 2014
The news that China has launched a formal investigation into one of the Chinese Communist Party’s most senior figures, Zhou Yongkang, has been met with widespread approval from the Chinese public and international observers. But is President Xi Jinping's anti-corruption campaign really what China needs?
Africa’s Inclusive Growth Potential
Viswanathan Shankar (Project Syndicate) Aug 1, 2014
Euphoria abounds in much of Africa nowadays, and rightly so, as seven of the world’s ten fastest-growing countries are there. But, amid all the good news, there is a risk of overlooking the bad: Growth has not been inclusive; the rising tide has left many boats behind.
Japan's Weak Yen Woes
William Pesek (Bloomberg View) Aug 1, 2014
Japan's weak-yen policy was meant to benefit exporters, but it's proving a crushing burden for some.
Why developing host countries sign increasingly strict investment agreements
Eric Neumayer, Peter Nunnenkamp & Martin Roy (VoxEU) Aug 1, 2014
Hoping to attract more FDI, developing countries are increasingly entering stricter investment agreements. But there is no conclusive evidence that such agreements serve them well. This column argues that contagion may help explain this trend. Competition between developing countries for FDI from developed ones could drive the diffusion of international investment agreements.
The African Dream
Paul Kagame, Uhuru Kenyatta and Yoweri Museveni (Project Syndicate) Aug 2, 2014
The dream that the twenty-first century will be the “African Century” is powerful and intoxicating – and increasingly becoming reality. As African officials gather in Washington, DC, at a summit hosted by US President Barack Obama, it is worth considering the basis – and the limits – of the continent’s progress.
Christopher Sabatini (FA) Aug 2, 2014
In international diplomacy, South America chooses quantity over quality.
A better American strategy for Africa
Joseph Stiglitz (FT) Aug 3, 2014
The big strategic issue facing the US is the right balance between building new drone bases and strengthening business.
Bundesbank has abandoned principle
Wolfgang Munchau (FT) Aug 3, 2014
The eurozone does not need wage or price fixing. It needs further monetary expansion.
‘Getting India Back on Track’, by Bibek Debroy, Ashley Tellis and Reece Trevor
James Crabtree (FT) Aug 3, 2014
Following Modi’s lacklustre start, a group of academics propose often bold and broadly sensible reforms to rebuild the economy.
Modi's Trade Barricade
WSJ Aug 3, 2014
India blocks a global deal, despite America's pleas.
Africa’s next steps
Kofi Annan (WP) Aug 3, 2014
A strong Africa can help solve many of the world’s challenges.
How to rip off a bank, Espí-rito Santo style
Frances Coppola (Pieria) Aug 3, 2014
The half-year results for Banco Espírito Santo are grim reading. It is, in a word, bust. What caused this disaster? And will the bank be rescued?
Argentina and Its Creditors after Default: More Questions and Answers
Anna Gelpern (PIIE) Aug 3, 2014
Argentina and the small group of creditors demanding full payment from the nation's 2001 default failed to resolve their differences on July 30. As a result, creditors did not receive the $539 million interest payment on Argentina's restructured bonds that had to be paid by that date.
'Flash Boys' and the Speed of Lies
Brad Katsuyama (Bloomberg View) Aug 3, 2014
With so many billions of dollars at stake, it is not surprising that people will spin rich fictions about IEX.
First world war: Ripples across the century
Tony Barber (FT) Aug 4, 2014
One hundred years after the opening shots of the conflict, commemorations take very different forms across Europe.
Digital trade: Data protectionism
Shawn Donnan (FT) Aug 4, 2014
Negotiators are struggling to create rules to govern cross-border commerce in data. But privacy concerns and protectionism could stifle a free flow of goods and services.
Small-scale vision is right for Britain
Janan Ganesh (FT) Aug 4, 2014
The country does have a role in the world, and it is that of host. It is a nexus for global flows of capital and people, and makes its living this way.
Currency lull no fun for forex investors
Beat Siegenthaler (FT) Aug 4, 2014
US dollar is unlikely to recover in a sustained way until central banks accelerate their currently glacial pace towards monetary policy normalisation.
Michael Gerson (WP) Aug 4, 2014
The diverse continent has fast-growing economies and stable nations.
America's Oil Export Policy Is Stuck in the '70s
Thomas Tunstall (WSJ) Aug 4, 2014
The Gulf Coast can't handle the country's bonanza of light oil, but we can't ship to European refineries either.
Can Africa Maintain its Economic Growth?
Arancha González (Globalist) Aug 4, 2014
Smart Industrialization for Africa’s Economic Transformation.
How Far Are Western Sanctions against Russia Going?
Anders Åslund (PIIE/RBC Daily) Aug 4, 2014
The novel Western sanctions against Russia because of Russia's military aggression against Ukraine are usually discussed in immediate policy terms: What will the West do if Russia does this or that? Economic sanctions have however become quite a science. There are many regularities, and inertia is great.
China paying for corruption crackdown
Michael Lelyveld (RFA) Aug 4, 2014
Arab countries, which appear to have started losing confidence in normal food supply chains and are concerned about rising food prices, are turning to acquisitions of farmland around the world.
India rocks WTO with protocol snub
Ravi Kanth Devarakonda (IPS) Aug 4, 2014
India's decisive stand not to adopt the World Trade Organization's protocol of amendment of the trade facilitation agreement was met with "astonishment" by trade diplomats from the North - shocked that any party should have the brass neck to place the interests of its constituents on the negotiating table.
The benefits of attracting high skilled migrants
Anna Rosso (Pieria) Aug 4, 2014
A Special Issue on Migration (NIESR) looks at the social and economic causes and consequences of migration policies.
Why Currencies Are Poised for More Shifts
Mohamed A. El-Erian (Bloomberg View) Aug 4, 2014
Why are once stable currency markets suddenly in flux? Mohamed El-Erian will tell you, and also let you know why more volatility is coming.
Mark Gilbert (Bloomberg View) Aug 4, 2014
Whatever shenanigans killed Banco Espirito Santo, someone got away with additional monetary mischief even after the Portuguese authorities realized something was rotten.
There's No Defense for Today's Income Inequality
Edward D. Kleinbard (Bloomberg View) Aug 4, 2014
Income inequality deniers play numbers games. A neutral look at the numbers shows the U.S. has less economic mobility than do many of its peer countries.
Waking Up to Africa's Opportunity
Bloomberg View Aug 4, 2014
This week's U.S.-Africa Leaders Summit will be a success if it achieves just one thing: alerting businesses and investors to Africa's new economic potential.
Asia's Next Crisis Is a Flood of Debt
William Pesek (Bloomberg View) Aug 4, 2014
As economists survey the scene, Thailand once again tops the worry list. Debt there has risen rapidly, underwriting standards appear loose and nonperforming loans are rising.
The updated deposit insurance database
Asli Demirgüç-Kunt, Edward J Kane & Luc Laeven (VoxEU) Aug 4, 2014
As governments are struggling to construct a global financial safety net, they must take into consideration the lessons from the recent crisis. To help in this task, this column presents findings from an updated database on deposit insurance arrangements from around the world through 2013. The number of countries with explicit deposit insurance programmes has continued to increase but differences across countries are observed. Although it is too early to draw conclusions about the reliability of further insurance deposit expansion as a tool for managing a future crisis, insurance fulfilled its primary purpose – it prevented open runs on bank deposits.
The inadequacies of the inequality debate
Adam Posen (FT) Aug 5, 2014
The idea that someone’s economic fortunes might depend upon race, gender or ethnicity is largely ignored.
Markets fret and rejoice over China
Henny Sender (FT) Aug 5, 2014
The world has come to depend on a high rate of growth in China, which depends in turn on the Chinese banks doing their bit.
Weaker correlations boost diversification
Jamie Chisholm (FT) Aug 5, 2014
The kind of tight correlations witnessed since the financial crisis peaked have weakened, potentially allowing for easier portfolio diversification.
Top One Percent Has One-Third of China’s Wealth
Caixin Aug 5, 2014
A new report explains why inequality has not led to broad resentment.
The Missing Women in the Inequality Discussion
Caroline Freund and Sarah Oliver (PIIE) Aug 5, 2014
Growing inequality of income and wealth has become a major global concern. In many countries inequality has been driven by weak earnings growth not only among the poor but also among groups across much of the income distribution, while earnings of the top 1 percent continue to rise dramatically.
Putting the Trade Facilitation Agreement Back on Track after India's Obstruction
Jeffrey J. Schott and Gary Clyde Hufbauer (PIIE) Aug 5, 2014
India has blocked the implementation of the Trade Facilitation Agreement (TFA) approved by all members of the World Trade Organization (WTO) last December, drawing understandable condemnation from around the world. Bluntly put, with its action on July 31, India is holding the TFA hostage in return for the renegotiation of the Bali accord reached at a ministerial meeting in December 2013.
U.S. Can End Its Losing Streak in Africa
Stephen Mihm (Bloomberg View) Aug 5, 2014
Africa may be at a turning point, given that seven of the 10 fastest-growing economies in the world are on the continent.
Inequality Exists. Ask the Middle Class.
Edward D. Kleinbard (Bloomberg View) Aug 5, 2014
Inequality deniers play numbers games in an attempt to prove there is a buoyant middle class.
A New World of Health Care
Prabhjot Singh (Project Syndicate) Aug 5, 2014
Traditional health-care systems are struggling in the face of cost constraints and public demand for higher quality. The growing gap between the promise and the reality of health care has created room – in developed and developing countries alike – for new players who are concerned more with social behavior than with biology.
Wakeup Call for Europe
Philippe Legrain (YaleGlobal) Aug 5, 2014
Europe fails to deliver opportunity, and a lost generation is in the making
In Argentina, debt default is a solution, not a problem
John Weeks (Pieria) Aug 5, 2014
The problem is not default, the problem is the absence of an international mechanism to bring it about in an orderly manner.
US-led vs. China-led economic architecture
Pradumna B. Rana (VoxEU) Aug 5, 2014
China’s frustration with the slow progress of IMF governance reform has contributed to the evolution of a China-led architecture that locks out the West – the latest examples being the New Development Bank and the Credit Reserve Arrangement established by the BRICS. This column argues that these institutions are not a threat to the IMF and the World Bank, but they complicate global economic governance. It is unlikely that Europe’s ‘troika’ model – where the IMF works jointly with regional financing facilities – will be possible in Asia. We perhaps need a New Bretton Woods.
World’s 13 ‘super-aged’ nations by 2020
Sarah O'Connor (FT) Aug 6, 2014
Number of countries where a fifth of the population is 65 or older is set to reach 13 in 2020 and 34 a decade later, says Moody’s.
Argentina: Unresolved debts
Benedict Mander, Elaine Moore and John Paul Rathbone (FT) Aug 6, 2014
The nation’s bond default creates uncertainty over its economic prospects and the settlement of future sovereign debt cases.
The virus that saps Liberia’s recovery
Amara Konneh (FT) Aug 6, 2014
Ebola was not reflected in our 2010 deal with the IMF. It may need to be. The economic impact is already being felt.
Modi confounds devotees and detractors
Victor Mallet (FT) Aug 6, 2014
It is clear that India’s prime minister will quickly fulfil neither the fervent hopes of his fans nor the worst fears of his foes.
Bridge Asia’s income gap
Juzhong Zhuang (FT) Aug 6, 2014
Better educated and healthier people have a greater chance of finding and keeping work, and of earning higher incomes.
Sell-off reminder of threats to stability
Mohamed El-Erian (FT) Aug 6, 2014
This should worry western policy makers, who have been forced to rely on asset markets as the means of reaching growth and employment objectives.
The economic case for ditching coal
Al Gore and David Blood (FT) Aug 6, 2014
For long-term investors to be properly compensated for the risks of owning coal, they would have to believe coal will deliver sustained outperformance.
ECB must counteract market turbulences
Lorenzo Bini Smaghi (FT) Aug 6, 2014
The central bank needs to step up action aimed at further easing eurozone policy amid the Fed’s tightening of US monetary conditions.
The Tax Dodge Goes On
NYT Aug 6, 2014
The ideal solution would be for all countries to agree to end the advantages.
Wanted: an inclusive TPP trade pact
Harsha Vardhana Singh (IPS) Aug 6, 2014
The focus of the Trans-Pacific Partnership trade pact negotiations suggests a strong possibility for markets and economic opportunities to get fragmented. This can be prevented through steps to create inclusive systems, which are essential in our increasingly inter-dependent world.
Confusing Capitalism with Fractional Reserve Banking
Frank Hollenbeck (Mises Daily) Aug 6, 2014
Today, capitalism is blamed for our current disastrous economic and financial situation and a history of incessant booms and busts. Support for capitalism is eroding worldwide. In a recent global poll, 25 percent (up 2 percent from 2009) of respondents viewed free enterprise as “fatally flawed and needs to be replaced.” The number of Spaniards who hold this view increased from 29 percent in 2009 to 42 percent, the highest amongst those polled. In Indonesia, the percentage went from 17 percent to 32 percent.
India Spurns WTO and That's OK
Chandrahas Choudhury (Bloomberg View) Aug 6, 2014
India has certainly not expressed its position flawlessly at the WTO. But neither has it behaved dishonestly.
Latin America’s Populist Cycles
Roberto Laserna (Project Syndicate) Aug 6, 2014
Populism in Latin America is at a low point. But, though mounting economic problems facing Venezuela and Argentina might presage a return to market-based economic policies in the short term, this will not end the familiar cycle of populism, profligacy, pain, and pragmatism that has long characterized the region.
Aryeh Neier (Project Syndicate) Aug 6, 2014
At its recent summit meeting in Equatorial Guinea, the African Union formalized its decision to grant immunity from prosecution to sitting heads of state and senior officials. This is a transparent attempt to let guilty parties – including those who attended the meeting in Equatorial Guinea – off scot-free.
An American “Reset” for Africa?
Ellis Mnyandu (Globalist) Aug 6, 2014
Africa no longer needs the US as a benefactor. It wants a relationship based on mutual interests.
Regulation must not be an empty threat
Sheila Bair (FT) Aug 7, 2014
Almost six years after the financial crisis, obvious solutions still languish on the drawing board.
Africa shows global growth potential
William Wallis (FT) Aug 7, 2014
Dominant theme at Washington summit was continent’s role as motor for world economy and what US companies can do to mobilise capital and create jobs.
Risk culture in finance must change
William Rhodes (FT) Aug 7, 2014
Before a new financial crisis occurs, it is vital that actions are taken recognising that proper risk behaviour matters to the safety of the system.
The African alliance
David Ignatius (WP) Aug 7, 2014
Can the U.S. help Africa avoid going the way of the Middle East?
Global success stories
Fareed Zakaria (WP) Aug 7, 2014
India, Mexico and Indonesia hold bright futures.
Just How Deeply Ingrained is Corruption in China?
Ken Courtis (Globalist) Aug 7, 2014
China’s anti-corruption fight requires another Cultural Revolution.
A Banker Buys India Too Much Slack
William Pesek (Bloomberg View) Aug 7, 2014
Raghuram Rajan, India's central bank chief, helped stabilize the nation's economy when he took over almost a year ago. The new prime minister, Narendra Modi, hasn't taken advantage of the opportunity.
Draghi Disses the Euro
Mark Gilbert (Bloomberg View) Aug 7, 2014
The ECB's acknowledgment that market prices suggest inflation is undershooting its target by half demands more action than policy makers are contemplating.
China's $343 Billion in the Shadows
William Pesek (Bloomberg View) Aug 7, 2014
China's "trust companies" are a growth industry, notable not for imparting stability to the $9.2 trillion economy, but for the red flags they raise.
Europe's Crisis Puts France and Italy in the Spotlight
Stratfor Aug 7, 2014
As the crisis weighs heavily on their economies, France and Italy are the focus of the debate on the eurozone's future.
Sanctions and Solidarity
Daniel Gros (Project Syndicate) Aug 7, 2014
A common fund to provide compensation for the economic costs of sanctions should be an integral part of the EU’s emerging foreign-policy stance toward Russia. Creating such a fund would provide a potent symbol of solidarity within the EU, while providing an ideal opportunity to show why the sanctions’ costs are likely to be low.
The Global Economy’s Groundhog Day
Ashoka Mody (Project Syndicate) Aug 7, 2014
In the movie "Groundhog Day," a TV weatherman awakes every morning at 6:00 to relive the same day. A similar sense of déjà vu has pervaded economic forecasting since the global economic crisis erupted a half-decade ago, yet policymakers remain convinced that the growth model that prevailed prior to the crisis is still their best guide.
Joseph E. Stiglitz and Martin Guzman (Project Syndicate) Aug 7, 2014
Argentina's recent default was the work of one man: US federal judge Thomas Griesa, who prohibited the country from repaying its creditors until it repaid in full the 7% who refused a restructuring deal. Ultimately, however, it may be America that pays the steepest price.
More Crop for the Drop
Henry I. Miller (Project Syndicate) Aug 7, 2014
The UN has called drought the “world’s costliest natural disaster," with annual costs estimated at $6-8 billion. But a proven technology could go a long way toward reducing the impact of drought: genetic engineering.
Draghi's Dithering Threatens Europe
Bloomberg View Aug 7, 2014
The European Central Bank has led investors to expect no further stimulus for the euro area's economy. Today, ECB President Mario Draghi ought to shift course.
Will the US inflate away its public debt?
Jens Hilscher, Alon Raviv & Ricardo Reis (VoxEU) Aug 7, 2014
Faced with daunting levels of public debt, it may be tempting to inflate away the burden. Some recent research has endorsed such a policy, but this column argues that it is infeasible. The rule of thumb that suggests an inflation rate four percentage points higher would reduce debt by 20% ignores creditor composition and maturity details, even if a 6% inflation rate were achievable. The hard truth is that there is no easy way out of debt.
The Youngest Are Hungriest
Seema Jayachandran and Rohini Pande (NYT) Aug 8, 2014
Why do eldest sons in India overshadow their siblings? Because they're literally taller.
The Tricks of China’s Trade
Zhang Monan (Project Syndicate) Aug 8, 2014
Last year, China ostensibly reached another milestone in its meteoric rise: it surpassed the US to become the world’s largest trading country. But this achievement is largely illusory – and should not be allowed to obscure China's need to transform its trading model.
India’s Homemade Food Crisis
Asit K. Biswas and Cecilia Tortajada (Project Syndicate) Aug 8, 2014
What accounts for India’s chronic food insecurity? The most significant factor – one that policymakers have long ignored – is that a high proportion of the food India that produces never reaches consumers.
How immigration benefits natives
Michele Battisti, Gabriel Felbermayr, Giovanni Peri and Panu Poutvaara (VoxEU) Aug 8, 2014
Immigration continues to be a hotly debated topic in most OECD countries. Economic models emphasising the benefits of immigration for natives have typically neglected unemployment and redistribution – precisely the things voters are most concerned about. This column analyses the effects of immigration in a world with labour market rigidities and income redistribution. In two-thirds of the 20 countries analysed, both high-skilled and low-skilled natives would benefit from a small increase in immigration from current levels. The average welfare gains from immigration are 1.25% and 1.00% for high- and low-skilled natives, respectively.
When She Talks, Banks Shudder
Binyamin Appelbaum (NYT) Aug 9, 2014
In a quest for tougher rules on banking, Anat R. Admati, an industry gadfly, is rapidly gaining a broader audience.
Monetary policy transmission via balance sheets: Evidence from Japan
Kaoru Hosono & Daisuke Miyakawa (VoxEU) Aug 9, 2014
In the wake of the Global Crisis, several central banks have adopted unconventional monetary policies. This column presents new evidence from Japan on the transmission of monetary policy through banks’ balance sheets. Overall, the evidence suggests that bank net worth affects loan supply, that the effect depends on monetary policy and economic growth, and that this bank balance sheet channel has a significant impact on firms’ financing and investment. Exiting from unconventional monetary policies when bank balance sheets are weak could thus have a severe adverse impact on investment.
Brazil’s Petrobras: Tarred by corruption
Joe Leahy and Samantha Pearson (FT) Aug 10, 2014
An investigation into the state oil company has tarnished the president’s reputation, thrown open the presidential race and sparked allegations.
The Economics of Ebola
Amara Konneh (WSJ) Aug 10, 2014
U.S. investment and trade will spur employment—and that's essential to ending the poverty that helps spread the disease.
WTO trade disputes, big and small
Chad P Bown & Kara M. Reynolds (VoxEU) Aug 10, 2014
WTO dispute settlement is well-known for its high-profile cases – e.g., US-EU clashes over bananas, hormone-treated beef, genetically modified organisms, subsidies to Boeing and Airbus, etc. – some of which cover annual trade in the billions of dollars. Are the trade stakes from such disputes representative of the WTO caseload? This column presents evidence from a newly available data set and reveals some surprising facts about the prevalence of both large and small WTO disputes.
Unwary yield hunters risk liquidity trap
Alberto Gallo (FT) Aug 11, 2014
Credit inflows could reverse if monetary policy changes direction, and banks are less able to facilitate trading in the secondary market.
The Savings and Loan Debacle: Twenty-Five Years Later
Dale Steinreich (Mises Daily) Aug 11, 2014
August 9, 2014 marks twenty-five years since the signing into law of the US savings and loan (S&L) industry bailout, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) of 1989. After FIRREA was signed into law by President George H.W. Bush, the federal government took control of 327 failed S&Ls with $147 billion in assets.
Finance: The FICC and the dead
Tracy Alloway and Michael MacKenzie (FT) Aug 11, 2014
Fed policy and a regulatory crackdown have humbled banks’ once-mighty trading businesses. Will a return of volatility to the markets revive them?
Merkel wants a stable world and is willing to pay a price
Quentin Peel (FT) Aug 11, 2014
Russia expected Germany to resist action that would affect its exporters. It was wrong.
Equality lacks relevance if the poor are growing richer
Deirdre McCloskey (FT) Aug 11, 2014
Capital is necessary and so are water, labour, oxygen and pencils.
Markets enter the ‘Great Frustration’ phase
Stephen Foley (FT) Aug 11, 2014
Economic optimism remains, but valuations are too high.
The Fed's Systemic-Risk Balancing Act
Martin Feldstein and Robert Rubin (WSJ) Aug 11, 2014
Using 'macroprudential' tools means recognizing the breadth of the potential trouble in the financial system.
Switzerland, a Country That Works
Richard W. Rahn (Washington Times/Cato) Aug 11, 2014
Switzerland is not perfect, but as countries go, it is hard to find one that is much better.
Sergei Guriev (Project Syndicate) Aug 11, 2014
The West's sanctions on Russia are already having a powerful effect, and the expectation that they will be tightened further is a huge concern for investors and the Russian government. And, though some Russians dream of autarky, the need to maintain living standards – the foundation of Putin’s domestic support – rules it out.
A Great Breakdown?
Kemal Dervis (Project Syndicate) Aug 11, 2014
In the months and years preceding August 1914, the global economy performed relatively well: world trade expanded, financial markets seemed healthy, and the business community shrugged off political problems as either temporary or irrelevant. Is today's world similarly sleepwalking toward catastrophe?
Responding to Ebola
Jeffrey D. Sachs (Project Syndicate) Aug 11, 2014
The horrific Ebola epidemic in at least four West African countries demands not only an emergency response to halt the outbreak, but also re-consideration of some basic assumptions concerning global public health. Fortunately, a better system is within reach if the world invests appropriately.
The Great Recession: Moving Ahead
Stanley Fischer (FRB) Aug 11, 2014
I will discuss three key aspects of the challenges policymakers face as they seek to move ahead.
Corruption with Chinese characteristics
Joe Zhang (FT) Aug 12, 2014
If Buffett had his pick of investments, he would have gone for the lucrative markets the government has chosen.
Indebted corporate Asia is risk this time
Henny Sender (FT) Aug 12, 2014
Many Asian companies have been huge beneficiaries of the inflows set in train by the Federal Reserve’s zero interest rate policies.
Bonds, Not Bailouts, for Too Big to Fail Banks
Steven Gjerstad and Vernon Smith (WSJ) Aug 12, 2014
Call the bonds Class R, for reorganization. Owners might take a haircut, but they'd also become owners of the bank.
Taking on India's Crony Capitalists
William Pesek (Bloomberg View) Aug 12, 2014
After 11 months of battling speculators nipping at India's currency, Raghuram Rajan is going after a more powerful enemy: the nation's own crony capitalists.
Africa's Governments Should Be Cautious Borrowers
Bloomberg View Aug 12, 2014
Sub-Saharan Africa, this year's emerging-market darling, is borrowing furiously in the capital markets. Countries should be careful not to take on too much sovereign debt and become like Greece.
Europe's Crash-and-Burn Economy
Mark Gilbert (Bloomberg View) Aug 12, 2014
The euro economy is a step away from deflation and two slips away from slumping back into recession as Germany loses momentum.
The Underachieving Education Business
John S. Katzman (Project Syndicate) Aug 12, 2014
Capitalism has produced many high-quality products and services, from smart phones to high-speed transport and compelling entertainment. Yet the profit motive, essential in so many fields, seems to have disappointed in one crucial area: education.
Africa’s Necessary Data Revolution
Amanda Glassman (Project Syndicate) Aug 12, 2014
African governments and international donors continue to devote far too few resources to data collection. Only 2% of official development aid is earmarked for improving the quality of statistics – an amount wholly insufficient to assess accurately the impact of the other 98% of aid.
Inequality - a key issue of economic research
Frances Coppola (Pieria) Aug 12, 2014
As Nobel Laureates and young economists gather for the 5th Lindau Meeting on Economic Sciences, 20-23 August 2014, inequality is the subject most on everyone' s minds.
The Successful U.S.-Africa Leaders Summit Exposes the American Media’s Ignorance of Emerging Africa
Mwangi S. Kimenyi (Brookings) Aug 12, 2014
The limited and biased media coverage of last week's U.S.-Africa Leaders Summit demonstrated the American media's ignorance of the opportunities afforded by emerging Africa.
Varying Solutions to Youth Unemployment in Sub-Saharan Africa
Brandon Routman and John McArthur (Brookings) Aug 12, 2014
Roughly 10 to 12 million sub-Saharan African youth enter the labor market every single year. Five countries can provide lessons for tackling the growing problem of youth unemployment.
Disintegrated nations, integrated Europe: Alesina-Spolaore logic applied
Edoardo Campanella (VoxEU) Aug 12, 2014
Separatism is on the rise in Europe. This column argues that, while the Eurozone Crisis is certainly reinforcing regional tensions, the underlying causes are globalisation and the deepening of the European project. Independence campaigners want access to the larger European market, while unfettering their regions from the centralised control of national governments. Renegotiating the terms of the relationship between national and regional governments is preferable to resorting to political threats or the use of force.
Modi Bets the Farm
Surupa Gupta and Sumit Ganguly (FA) Aug 12, 2014
Why Indian agricultural policy might unravel the WTO.
Bad Role Models
Lauren Carasik (FA) Aug 12, 2014
The embattled arrival of Honduras' model cities.
Asset tracing: Follow the money
Cynthia O’Murchu (FT) Aug 13, 2014
Efforts to track and recover funds stolen by former regimes are gaining ground but significant obstacles remain.
ECB would, for now, prefer to do nothing
Claire Jones (FT) Aug 13, 2014
Inaction may appear alarmingly complacent but officials believe the effects of the package of measures they unveiled in June will boost growth.
Renzi promises ‘open door revolution’
Rachel Sanderson (FT) Aug 13, 2014
Italian prime minister’s pledge to welcome foreign investors has big implications for corporate Italy and its fragmented banking industry.
Sanctions must prompt a rethink on Russia
Mohamed El-Erian (FT) Aug 13, 2014
If sanctions and counter sanctions continue it becomes only a matter of time until demand and supply disruptions affect market valuations.
Trade bodies left existentially tested
Jonathan Guthrie (FT) Aug 13, 2014
The defection hurts the Association of British Insurers in two ways: it will lack clout and it exposes the association’s conservativeness.
Corruption with Chinese characteristics
Joe Zhang (FT) Aug 13, 2014
If Buffett had his pick of investments, he would have gone for the lucrative markets the government has chosen.
Case for credit investment still stands
Mark Haefele and Kiran Ganesh (FT) Aug 13, 2014
Investors should not dismiss fixed income because prospective returns are lower, but should treat it as an asset that helps protect against volatility.
Japan Takes a Consumption Tax Dive
WSJ Aug 13, 2014
Shinzo Abe needs to break from Finance Ministry orthodoxy.
The West Against the Rest
Chandran Nair (Globalist) Aug 13, 2014
A short history of the West's geopolitical dominance.
The West: A Minority Club
Chandran Nair (Globalist) Aug 13, 2014
Why not hold the West as well as the Rest accountable for their actions?
Global Policy Divergence - Really??
Axel Merk (Merk Investments) Aug 13, 2014
Last week, European Central Bank (ECB) head Draghi talked about the de-coupling of the ECB and the Fed’s policies, of policy divergence. Lots of pundits have suggested the same. With due respect to their views, my analysis of the data suggests they are wrong. If you own dollars, the euro or gold, you might want to pay attention to this one.
The U.S. Should Help Lower the Euro
Melvyn Krauss (Bloomberg View) Aug 13, 2014
A joint currency intervention to lower the euro would help Europe deal with slow growth and, at the same time, neutralize the impact of sanctions on Europe.
Asia’s Reform Trinity?
Kishore Mahbubani (Project Syndicate) Aug 13, 2014
China's Xi Jinping, India's Narendra Modi, and Indonesia's Joko "Jokowi" Widodo could all end up ranked among their countries' greatest modern leaders. But, to succeed, they must embrace policies that directly challenge their countries' most influential actors.
Banking on the BRICS
Barry Eichengreen (Project Syndicate) Aug 13, 2014
For the leaders of the BRICS countries, the announcement in July of their agreement to establish a “New Development Bank” and a “Contingent Reserve Arrangement” was a public-relations coup. The NDB makes sense for the BRICS, and it has a future, but the CRA is empty symbolism, and that is how it will be remembered.
When Fewer Is Better
Adair Turner (Project Syndicate) Aug 13, 2014
Judging by the lamentations of economists and policymakers in the advanced economies, where people are living longer and birth rates have fallen below replacement levels, one might think that a shrinking population is a bad thing. In fact, the benefits of demographic stability – or even decline – outweigh any adverse effects.
Trouble Amid Plenty in Emerging Africa
David Miliband (Project Syndicate) Aug 13, 2014
Barack Obama’s recent summit with 40 African heads of state and more than 200 US and African business leaders suggests a new, more confident mood. That is encouraging; but as long as parts of Africa continue to struggle with conflict and corruption, the continent’s economic potential will not be fully realized.
China's Credit Slowdown Raises Concerns About Overall Economic Health
Stratfor Aug 13, 2014
New economic data released by China's National Bureau of Statistics on Aug. 13 shows the supply of credit to the Chinese economy expanded by only $44.3 billion in July, the slowest pace in almost six years. To be precise, credit expanded at the slowest pace since October 2008, the month after Lehman Brothers filed for bankruptcy and the month before the Chinese government launched an economic stimulus program that sheltered China's economy from the worst effects of the global financial crisis. That program also locked China into a growth model grounded in the intimate bond between government-led credit expansion and housing and infrastructure construction -- one that the Chinese government is now struggling, against time and at the risk of crisis, to escape.
Despite gloomy data economy has bounce
Martin Sandbu (FT) Aug 14, 2014
The economic news from Germany and Japan is being misinterpreted and growth in Spain, Portugal and Greece ignored.
A beachgoer’s guide to August’s upsets
Ralphd Atkins (FT) Aug 14, 2014
A strengthening US economy will aid Europe, and by September, when everybody is back at their desks, the sands on the beaches could have shifted again.
The Forever Slump
Paul Krugman (NYT) Aug 14, 2014
The United States should learn from Europe's experience of raising interest rates too soon.
In Nepal, a Better Life With a Steep Price
Gardiner Harris (NYT) Aug 14, 2014
Plagued by endemic poverty, many young people in Nepal leave to work abroad. But the backbreaking labor they find there often results in death.
Beijing vs. Foreign Capitalist Roaders
WSJ Aug 14, 2014
China uses antitrust as a tool of economic nationalism.
Argentina Defaulted on Bonds No One Can Even Find
Matt Levine (Bloomberg View) Aug 14, 2014
Two of the weirdest things in finance are sovereign CDS and Argentina's debt negotiations. So it makes sense that sovereign CDS on Argentina's debt would be very weird indeed.
Europe's Economy Is Broken
Bloomberg View Aug 14, 2014
Investors were expecting bad numbers, but not this bad.
Swiss Deflate the Deflation Theory
Leonid Bershidsky (Bloomberg View) Aug 14, 2014
Switzerland's example shows a country can have both extremely low inflation and growth. It's more Swiss common sense that European governments need, not faster price growth.
Can Anyone Give Mario Draghi a Hand?
Mark Gilbert (Bloomberg View) Aug 14, 2014
ECB President Draghi argues that government's have do to the heavy lifting to revive growth. He's right; but the worsening economic backdrop will sap any appetite for structural reform.
Markets Are Making a Sucker's Bet on Europe
Mohamed A. El-Erian (Bloomberg View) Aug 14, 2014
This morning’s shockingly bad economic data out of Europe is being treated as good news by the markets.
The Subsidy Trap
Jeffrey Frankel (Project Syndicate) Aug 14, 2014
Once subsidies for food and energy are in place, they are extraordinarily difficult to remove. But that does not necessarily mean that keeping them is a savvy politician’s best option.
The Perils of Economic Consensus
Dani Rodrik (Project Syndicate) Aug 14, 2014
Disagreements among economists reflect the fact that their discipline comprises a diverse collection of models, and that matching reality to model is an imperfect science. It is better for the public to be exposed to this uncertainty than for it to be lulled into a false sense of security based on the appearance of certain knowledge.
Marcel Fratzscher (Project Syndicate) Aug 14, 2014
With the crisis in Ukraine intensifying, the US and the EU are locked in a battle of wills – and sanctions. The real threat to the West does not lie in Russia's retaliatory sanctions, but rather in the potential impact of a financial crisis sparked by its own restrictions on Russian banks.
Why Central Banks Worry About Ukraine
Mohamed A. El-Erian (Bloomberg View) Aug 14, 2014
Central bankers don't have much reason to share markets' optimism about Ukraine.
Valuations are expensive but history shows they can grow more expensive yet
Andrew Lyddon (Pieria) Aug 14, 2014
US equities are, relative to most of their history, expensive
Ukraine's Oligarchs Are Still Calling the Shots
Sergii Leshchenko (FP) Aug 14, 2014
The revolutionaries of the Maidan wanted to end crony capitalism. But it's back with a vengeance.
How retail drug markets in poor countries develop
Daniel Bennett & Wes Yin (VoxEU) Aug 14, 2014
Many drugs sold in poor countries are counterfeit or substandard, endangering patients’ health and fostering drug resistance. Since drug quality is difficult to observe, pharmacies in weakly regulated markets may have little incentive to improve quality. However, larger markets allow firms to reorganise production and invest in technologies that reduce the marginal cost of quality. This column discusses how the entry of a new pharmacy chain in India led incumbents to both cut prices and raise drug quality.
India's Modi vows to modernise governance
AlJazeera Aug 15, 2014
Prime minister also addresses violence against women and unveils financial initiative in first Independence Day speech.
All Eyes on Africa
J. Peter Pham (YaleGlobal) Aug 15, 2014
Disturbing news out of Africa, whether about extremist Boko Haram or the outbreak of Ebola, are aberrations for a young continent eager to grow and innovate. Like China and Europe, the United States is ready to court Africa as signaled by the first US-Africa Leaders Summit.
China's Radical Transformations: From Middle Kingdom to Global Sea Power
Jean-Pierre Lehmann (Globalist) Aug 15, 2014
China from Mencius to Mahan – through Marx, Mao and Market Leninism.
Has China Lost Its Magic Wand?
William Pesek (Bloomberg View) Aug 15, 2014
A recent plunge in credit expansion has many China watchers wondering if the jig is up for the world's second-largest economy. It may very well be.
The Fragmentation of Bretton Woods
Mohamed A. El-Erian (Project Syndicate) Aug 15, 2014
In recent years, political support for economic multilateralism has eroded, undermining the effectiveness of the Bretton Woods institutions and disrupting the international monetary system. This is not only hampering the global economy’s ability to meet its potential; it is also contributing to geopolitical insecurity.
Secular stagnation: Facts, causes, and cures – a new Vox eBook
Richard Baldwin & Coen Teulings (VoxEU) Aug 15, 2014
Six years after the Crisis and the recovery is still anaemic despite years of zero interest rates. Is ‘secular stagnation’ to blame? This column introduces an eBook that gathers the views of leading economists including Summers, Krugman, Gordon, Blanchard, Koo, Eichengreen, Caballero, Glaeser, and a dozen others. It is too early to tell whether secular stagnation is really secular, but if it is, current policy tools will be obsolete. Policymakers should start thinking about potential solutions.
Are foreign takeovers getting domestic cherries or lemons?
Bruce Blonigen, Lionel Fontagné, Nicholas Sly & Farid Toubal (VoxEU) Aug 15, 2014
The concerns of economic nationalists about cross-border takeovers are rooted in the idea that foreign enterprises extract the most valuable assets from top performing domestic firms. Practical concerns about economic efficiency of cross-border M&A markets hinge on whether takeovers transfer underperforming domestic economic resources toward more productive uses at foreign enterprises. How then to reconcile these concerns when forming policies about cross-border activity? It’s all in the timing.
China's economy is bound up in Xi's anti-corruption campaign
George Magnus (Pieria) Aug 15, 2014
Why has Xi Jinping unleashed this major anti-corruption campaign, and how does it tie in with the important economic transformation that China faces?
African growth looking forward
Marco Annunziata (VoxEU) Aug 16, 2014
Africa has generated a lot of enthusiasm lately. The cynical view of the continent as a hopeless basket case has been replaced by the lofty narrative of Africa Rising. This column argues that Africa’s progress is impressive, and there is more to the story than a commodity boom. But Africa is at a crossroads. The opportunities are huge, but the road ahead is long, and will require persistent and patient effort from policymakers as well as business.
Workers of the world, log in
Economist Aug 16, 2014
The social network has already shaken up the way professionals are hired. Its ambitions go far beyond that.
Draghi has few legal ways to fix the euro
Wolfgang Munchau (FT) Aug 17, 2014
By pussyfooting around with liquidity policies instead of acting on inflation, the ECB has signalled that it is safe to bet against the inflation target.
‘The System Worked’, by Daniel W Drezner
Alan Beattie (FT) Aug 17, 2014
Economic governance has a patchy record, but this impressive and cogent book argues that policy makers did well during the crisis.
Unlimited presidential terms threaten Africa
William Wallis (FT) Aug 17, 2014
The US helped secure the inclusion of term limits in African constitutions following the cold war but a reversal is in danger of taking hold.
Morningstar: Force to be reckoned with
Stephen Foley (FT) Aug 17, 2014
The research firm’s five-star rating system gives it unrivalled power to influence the $30tn mutual fund industry but its methodology attracts criticism.
The Draw of the New City-States
Roger Cohen (NYT) Aug 17, 2014
The superrich who trash the West trust the West with their money.
The Panama Canal Celebrates 100 Years
Mary O'Grady (WSJ) Aug 17, 2014
Panamanian ownership has transformed a staid, state-owned utility into a modern business.
Europe’s Recurring Malaise
NYT Aug 17, 2014
Misguided European Union policies are impeding further economic recovery.
Prosperity: No panacea
Robert J. Samuelson (WP) Aug 17, 2014
In this post-euphoric time, let’s be realistic.
Growth escalators and growth convergence
Ejaz Ghani (VoxEU) Aug 17, 2014
Just like the East Asian Tigers, the Lions of Africa are now growing much faster than the developed economies. However, this column shows that the growth escalators in Africa are different than in East Asia. The East Asian Tigers benefitted from a rapidly expanding manufacturing sector. The African Lions are benefitting from increases in productivity in the service sector, while the agricultural sector remains unproductive.
Fed’s regimen will not cure Europe’s ills
Philipp Hildebrand (FT) Aug 18, 2014
The key is to mend the ailing European banking system. There will be no robust European growth without properly capitalised European banks.
The threat to the global ties that bind
John Plender (FT) Aug 18, 2014
Geopolitical tensions are testing the infrastructure of globalisation and jeopardising economic recovery.
Investors buy junk bond recovery more time
Scott Minerd (FT) Aug 18, 2014
Defaults remain low and investors returning from their summer breaks are still seeking high yielding assets.
Don’t fight the US Treasury bond rally
Henny Sender (FT) Aug 18, 2014
It is premature to sell now, but as 10-year Treasury yields approach 2% it should provide an opportunity to rebalance portfolios.
Ukraine's Revolutionaries Surrender to Corruption
Leonid Bershidsky (Bloomberg View) Aug 18, 2014
The heroes of Ukraine's successful winter uprising are quitting the government jobs they took as rewards, now dissatisfied with the pace and radicalism of change.
Why Are Bonds and Stocks Acting Strangely?
Mohamed A. El-Erian (Bloomberg View) Aug 18, 2014
Might bond markets see something that stocks don't?
War Does Nothing for Your Investments
Barry Ritholtz (Bloomberg View) Aug 18, 2014
The reason geopolitical events don't have a large impact on markets is because they do little to alter the underlying fundamentals of the world economy.
In my view: The Structural Gap approach offers a new model for co-operation with middle-income countries
Alicia Bárcena (OECD Insights) Aug 18, 2014
Middle-income countries differ widely in their reliance on official development assistance (ODA). While for some, ODA represents less than 1% of their gross national income, for others it is more than 30%. This divergence reflects countries’ differing capacity to access financial resources and capital markets.
What Stock Markets Tell Us About Russia
Alexei Bayer (Globalist) Aug 18, 2014
If economy is king, then Russia may be weaker than it seems.
India’s East Asian Dream
Sanjeev Sanyal (Project Syndicate) Aug 18, 2014
Since 1991, India has been slowly changing its policy framework away from the socialist vision of its first prime minister, Jawaharlal Nehru. But now, despite significant obstacles and risks, Prime Minister Narendra Modi has articulated an explicit economic-growth model that would enable India to overcome Nehru's legacy.
How Money is Made
Karl-Theodor zu Guttenberg and Richard A. Werner (Project Syndicate) Aug 18, 2014
The unfettered creation of money by private banks has generated overwhelming instability, undermining the fundamental principle that money creation should serve the public good. By implementing safeguards that ensure that credit serves productive purposes, policymakers can achieve debt-free, stable, and sustainable economic growth.
Saving the House
Javier Solana (Project Syndicate) Aug 18, 2014
Top-down governance approaches have been useful in addressing climate change, showing the willingness of some of the historical greenhouse-gas emitters to accept remedial responsibility. But the most recent climate-change summits have revealed the limits of this approach.
Great Depression recovery: The role of capital controls
Kris James Mitchener & Kirsten Wandschneider (VoxEU) Aug 18, 2014
The IMF has recently revised its position on capital controls, acknowledging that they may help prevent financial crises. This column examines the effects of capital controls imposed during the Great Depression. Capital controls appear not to have been successfully used as tools for rescuing banking systems, stimulating domestic output, or for raising prices. Rather they appear to have been maintained as a means for restricting trade and repayment of foreign debts.
Michael W. Clune (CHE) Aug 18, 2014
What the left gets wrong about the French economist.
Home Currency Issuance in Global Debt Markets
Galina B. Hale, Peter Jones, and Mark M. Spiegel (FRBSF Economic Letter) Aug 18, 2014
Historically, businesses in most countries have not been able to sell bonds denominated in their home currencies to foreign investors. In recent decades this trend has been changing. Research shows that bonds denominated in currencies other than the major global currencies have increased, particularly following the global financial crisis. However, not all countries were affected equally. Countries that were able to take advantage of the temporary disruption and near-zero interest rates in global financial markets were the ones with a combination of low government debt and a history of stable inflation.
LatAm swaps populists for apparatchiks
Daniel Lansberg-Rodriguez (FT) Aug 19, 2014
Beijing’s readiness to invest without value judgments facilitates regimes attempting to become more like China.
Microcapitalists lurking in China's midst
Patti Waldmeir (FT) Aug 19, 2014
Gone are the bad old days in China when “landlord” was a dirty word, and squeezing four families into a flat built for one another of Mao’s brilliant ideas.
Japan’s warning to eurozone bond markets
John Plender (FT) Aug 19, 2014
Structural reform, rather than quantitative easing by the European Central Bank, is needed to lift European growth rates.
Modi Revs Up Reform
WSJ Aug 19, 2014
The New PM begins to challenge India's old government ways.
Shared Prosperity Is a Moral Imperative
William A. Galston (WSJ) Aug 19, 2014
Since businesses can't easily raise prices, higher wages will have to be paid out of profits.
Why You Should Care About Jackson Hole
Mohamed A. El-Erian (Bloomberg View) Aug 19, 2014
Central bankers, a group of largely independent technocrats, wield more power over the fates of politicians, investors and regular folk than ever before.
Will the Calm in Global Markets Last?
Jim O'Neill (Bloomberg View) Aug 19, 2014
Tranquil markets present certain challenges: staying awake, justifying your pay and saying when volatility will come back.
European Austerity Is a Myth
Leonid Bershidsky (Bloomberg View) Aug 19, 2014
European governments are spending more as a share of output than they did in 2007. Their talk of stringent austerity measures is disingenuous.
How to Survive a Secular Stagnation
Mohamed A. El-Erian (Bloomberg View) Aug 19, 2014
Are the U.S. and Europe stuck in an unusual and prolonged equilibrium, in which frustratingly slow economic growth is the norm? A new book sheds light.
The Trouble with Universal Education
Bjørn Lomborg (Project Syndicate) Aug 19, 2014
In an ideal world, universal, high-quality education at all levels would be a worthy international development goal. But, amid competing demands for basic necessities like health care and potable water, narrower, more cost-effective education targets are essential.
Ebola Wreaking Havoc on African Economy
David Francis (FP) Aug 19, 2014
The death toll in the worst Ebola outbreak in history topped more than 1,200 as of Tuesday, according to the World Health Organization. The good news is that, for now, new cases appear to be limited to Guinea, Liberia, Sierra Leone, and Nigeria. The bad news is that even if the outbreak doesn't spread beyond West Africa, the economic and political fallout in this fragile part of the world will likely last years, experts said.
Europe's Malaise: The New Normal?
George Friedman (Stratfor) Aug 19, 2014
Russia and Ukraine continue to confront each other along their border. Iraq has splintered, leading to unabated internal warfare. And the situation in Gaza remains dire. These events should be enough to constitute the sum total of our global crises, but they're not. On top of everything, the German economy contracted by 0.2 percent last quarter. Though many will dismiss this contraction outright, the fact that the world's fourth-largest economy (and Europe's largest) has shrunk, even by this small amount, is a matter of global significance.
African Perspectives on Sovereign Debt Restructuring
Skylar Brooks, Domenico Lombardi and Ezra Suruma (CIGI Commentary) Aug 19, 2014
Since the early 1980s, there have been a total of 317 sovereign debt restructurings in Africa yet African perspectives have not featured prominently in the ongoing sovereign debt debate.
Mexico is looking to the future
Enrique Peña Nieto (FT) Aug 20, 2014
Our goal is to play a more active role in the global economy and provide our people with a better quality of life.
Draghi must start doing whatever it takes
Richard Portes (FT) Aug 20, 2014
Perceptions matter, but you cannot conjure an economic recovery just by summoning the confidence fairy
What next for M&A now bubble has burst?
Sarah Gordon (FT) Aug 20, 2014
The collapse of high-profile mergers and acquisitions tax inversion deals looks to be prompting legislation change, to the relief of bankers.
Time to dust off euro crisis strategies
Trevor Greetham (FT) Aug 20, 2014
With growth weakening once more it is time to dust off the old euro crisis playbook: short the euro, short the periphery, long Germany.
Russia helps lower crude prices
Dan McCrum (FT) Aug 20, 2014
Despite tensions over Ukraine, refineries in Russia have been boosting the quality of oil to Europe, where there is now a glut.
M&A boom must evolve to create growth
Mohamed El-Erian (FT) Aug 20, 2014
Mergers should encourage expansion in production, labour and investment and not just benefit the M&A lawyers, bankers and sophisticated investors.
Euro’s ‘death cross’ need not spell doom
Jamie Chisholm (FT) Aug 20, 2014
The dollar’s bullish run may be looking stretched, just as euro bearish positioning appears vulnerable to a short squeeze.
Andrew Smithers (FT) Aug 20, 2014
Equities have provided a better insurance than cash or bonds against the risks of unanticipated inflation.
Ukraine’s economy: Broken down
Robin Wigglesworth and Roman Olearchyk (FT) Aug 20, 2014
With the world focused on violence in the east, the country’s finances have worsened, raising pressure on the International Monetary Fund.
Do the SNP really want independence?
Tomas Hirst (Pieria) Aug 20, 2014
Why the currency issue may decide which side of the Scottish independence debate has been swimming in the buff.
Argentina's Last Bond Exchange Went So Well It's Doing Another
Matt Levine (Bloomberg View) Aug 20, 2014
There's a footnote here about using bitcoin to coordinate Argentina's exchange offer so I'm feeling pretty good about myself.
Central Bankers Are Getting Itchy
Mark Gilbert (Bloomberg View) Aug 20, 2014
The Bank of England is inching toward higher rates in a preemptive strike to ensure borrowing costs can stay lower for longer.
In Search of Convergence
Ricardo Hausmann (Project Syndicate) Aug 20, 2014
For 200 years, the world’s rich countries grew faster than poorer countries. Why has that trend reversed during the past three decades, and what does the answer imply for development strategies?
European bank results: Is the glass half-full or half-empty?
Jan Schildbach (DB Research) Aug 20, 2014
The half-year results of large European banks offer ammunition to both optimists and pessimists: loan losses and administrative expenses are shrinking, but so are total revenues. Net interest income, the sickly child of recent years, finally seems to be stabilising; however, net income is down again to poor levels. The state of an industry with two distinct faces.
The economics of density: Evidence from the Berlin Wall
Gabriel M. Ahlfeldt, Stephen Redding, Daniel M. Sturm & Nikolaus Wolf (VoxEU) Aug 20, 2014
Economic activity is highly unevenly distributed across space. Understanding what drives the agglomeration and dispersion is important for many economic and policy questions. This column describes a theoretical model of internal city structure incorporating agglomeration and dispersion and heterogeneity in local fundamentals. The authors use the division and reunification of Berlin as a natural experiment. Their findings show that both heterogeneity in locational fundamentals and agglomeration forces are important in shaping a city’s internal structure.
Inflation is best way to avoid stagnation
Tim Harford (FT) Aug 21, 2014
Interest rates will be very low as a matter of course, and central banks will routinely find themselves nearly helpless.
Dramas to match scenery at Jackson Hole
Ralph Atkins (FT) Aug 21, 2014
‘Re-evaluating labour market dynamics’, the topic of this weekend’s US summit, appears deliberately dull, as if intended to keep markets in a slumber.
‘Fear gauge’ loses its punching power
Michael Mackenzie (FT) Aug 21, 2014
Wall Street’s Vix is a handy ‘buying on the dip’ indicator as spikes within the CBOE index are proving shortlived and less potent.
US’s role as world bank regulator
Jonathan Guthrie (FT) Aug 21, 2014
New York’s Department for Financial Services has fined the UK’s Standard Chartered bank $300m for failings in money laundering compliance.
Crucial test for gold as QE largesse ends
Jamie Chisholm (FT) Aug 21, 2014
Since last summer, the bullion has meandered in a $200 range, twitching on geopolitically induced haven buying and taper tantrum-based selling.
No need for banks in an era of intellectual capital
Felix Salmon (FT) Aug 21, 2014
Silicon Valley deals are not based on factors that bankers can model.
Mining Asteroids and Exploiting the New Space Economy
K. Dean Larson (WSJ) Aug 21, 2014
Once property rights are established, space-based free enterprise can take off.
A Few Things the Fed Has Done Right
John H. Cochrane (WSJ) Aug 21, 2014
The Fed's plan to maintain a large balance sheet and pay interest on bank reserves is good for financial stability.
Oil Subsidies Hold Back Indonesia
William Pesek (Bloomberg View) Aug 21, 2014
Indonesia's outgoing president should do his successor one big favor before leaving office: start lifting unsustainable fuel subsidies now.
Central Bankers Set Stage for Jackson Hole
Mohamed A. El-Erian (Bloomberg View) Aug 21, 2014
There's a lot of disagreement among the world's most powerful economic policy makers as they head for their annual conference in Wyoming.
The Secret Life of the Renminbi
Leonid Bershidsky (Bloomberg View) Aug 21, 2014
The IMF chooses not to track the use of the renminbi as a reserve currency, which isn't stopping central banks from accepting it as such.
Free Money for Germany Is Bad News for Euro
Mark Gilbert (Bloomberg View) Aug 21, 2014
When investors are willing to lend money to Germany for two years for free, at a zero interest rate, you know the euro project is in trouble again.
China’s Fire Next Time
Yu Yongding (Project Syndicate) Aug 21, 2014
The Chinese economy has been stabilizing in recent months, easing fears of a financial crisis. But, with the economy's fundamental problems – particularly a sharp rise in corporate debt – remaining unresolved, the respite may be brief.
Italy’s Downward Spiral
Hans-Werner Sinn (Project Syndicate) Aug 21, 2014
Italy is now in a triple-dip recession. But it didn’t get there by itself: Though the economy’s long slide reflects Italian leaders’ failure to confront the country's loss of competitiveness, it is a failure that is widely shared in Europe.
Nominal GDP targeting for developing nations
Pranjul Bhandari & Jeffrey Frankel (VoxEU) Aug 21, 2014
Central banks, especially in developing countries, still seek transparent and credible communication. Yet signalling intentions through forward guidance or commitment sometimes creates undesirable constraints. This column argues that central bank pronouncements phrased in terms of nominal GDP are less likely to run afoul of the supply and trade shocks so common in developing countries, compared to pronouncements phrased in terms of inflation.
Bruno Biais, Jean-Charles Rochet & Paul Woolley (VoxEU) Aug 21, 2014
The Global Crisis has intensified debates over the merits of financial innovation and the optimal size of the financial sector. This column presents a model in which the growth of finance is driven by the development of a financial innovation. The model can help explain the securitised mortgage debacle that triggered the latest crisis, the tech bubble in the late 1990s, and junk bonds in the 1980s. A striking implication of the model is that regulation should be toughest when finance seems most robust and when innovations are waxing strongly.
How to jumpstart the Eurozone economy
Francesco Giavazzi & Guido Tabellini (VoxEU) Aug 21, 2014
The stagnating Eurozone economy requires policy action. This column argues that EZ leaders should agree a coordinated 5% tax cut, extension of budget deficit targets by 3 or 4 years, and issuance of long-term public debt to be purchased by the ECB without sterilisation.
Recent trends in FDI activity in Europe: Regaining lost ground to accelerate growth
Stefan Vetter (DB Research) Aug 21, 2014
In recent years, the European Union has lost its appeal as the globally most important region for foreign direct investment (FDI). In 2013, China alone received more FDI inflows than all EU countries together. Apart from the rising importance of emerging markets, the economic crisis in Europe has reduced investment incentives for companies from abroad. However, especially in Europe low FDI stocks can also be linked to competitiveness deficits. Some EU countries have not received substantial FDI flows even before the crisis and would benefit substantially by attracting more investments.
You Can’t Run an Economy with Spreadsheets
Nicolás Cachanosky (Mises Daily) Aug 22, 2014
Argentina’s economic minister, Axel Kicillof, has become famous for his assertion that it is possible to centrally manage the economy now because we have spreadsheets such as Microsoft Excel. This assertion comes from the mistaken view that the cost of production determines final prices, and it reveals a profound misunderstanding of the market process.
Lessons Not Learned
Joe Nocera (NYT) Aug 22, 2014
The S.&L. crisis could have helped us avoid the financial crisis.
Larry Summers Is On to Something
Mark Whitehouse (Bloomberg View) Aug 22, 2014
There's a lot of credit being created for each dollar of economic growth, suggesting efforts by central banks to boost growth may be laying the foundation for another crisis.
Yellen Sets Jackson Hole Agenda
Mohamed A. El-Erian (Bloomberg View) Aug 22, 2014
Federal Reserve Chair Janet Yellen set the agenda at the annual Jackson Hole, Wyoming, economics conference by describing the challenges in determining the state of the labor market.
A European Lost Decade?
Michael Heise (Project Syndicate) Aug 22, 2014
Europe's current economic predicament sounds a lot like Japan’s in the 1990s, which culminated in a “lost decade” of stagnant growth and deflation from which the country is still working to recover. How can Europe avoid a similar fate?
Argentina's Exchange Offer May Not Be Clever Enough Yet
Matt Levine (Bloomberg View) Aug 22, 2014
It's fun to think up schemes to help Argentina to complete its bond exchange, though you have to worry a little bit that it's forbidden by a court order.
Measuring Inclusive Growth
Mahmoud Mohieldin (Project Syndicate) Aug 22, 2014
Creating a more sustainable world requires us to redefine “growth” in a way that encompasses a wide range of economic, social, and environmental factors, not just income. This attests to the importance of “natural capital accounting,” which assesses the value of natural resources in development planning and national accounts.
Pricing and EZ membership: Evidence from Latvia
Alberto Cavallo, Brent Neiman & Roberto Rigobon (VoxEU) Aug 22, 2014
What happens to prices when a country joins a currency union, and do prices behave differently in a pegged exchange rate regime? This column sheds lights on these questions by using evidence from Latvia, whose currency was pegged to the euro before the country became a Eurozone member on 1 January 2014. The authors find that clothing retail prices in Latvia completely converged to those in other Eurozone countries.
Currency Wars and the International Economic Order
C. Fred Bergsten (PIIE) Aug 22, 2014
The United States should mobilize a coalition of nonmanipulators to achieve the needed systemic changes to correct the failure of the international monetary system to effectively sanction surplus countries.
Eric Maskin and inequality
Economist Aug 23, 2014
Learn, and be less unequal.
Africa’s testing ground
Economist Aug 23, 2014
To make it big in Africa, a business must succeed in Nigeria, the continent’s largest market. No one said it would be easy.
New-breed global investors and financial stability
Gaston Gelos & Hiroko Oura (VoxEU) Aug 23, 2014
The landscape of portfolio investment in emerging markets has evolved considerably over the past 15 years. Financial markets have deepened and become more internationally integrated. The mix of global investors has also changed, with more money intermediated by mutual funds. This column explains that these changes have made capital flows and asset prices in these economies more sensitive to global financial shocks. However, broad-based financial deepening and improved institutions can enhance the resilience of emerging-market economies.
The euro masks the blunders of politicians
Martin Sandbu (FT) Aug 24, 2014
States should spend less time thinking about what others can do for them and more on co-operating for the integration they want.
Notebook: Building blocks of discontent
Henny Sender (FT) Aug 24, 2014
The growing influence of mainland money reminds locals that they have never been in control of their destiny.
Central bank rules are made to be broken
Barry Eichengreen (FT) Aug 24, 2014
The more sophisticated the system becomes, the more difficult it is to for policy makers to make the right judgment.
How to Deregulate Cities and States
Edward Glaeser and Cass Sunstein (WSJ) Aug 24, 2014
Cost-benefit analysis and 'lookbacks' could lift the unnecessary burdens of occupational licensing.
The role of corporate saving in global rebalancing
Philippe Bacchetta & Kenza Benhima (VoxEU) Aug 24, 2014
Among the various explanations behind global imbalances, the role of corporate saving has received relatively little attention. This column argues that corporate saving is quantitatively relevant, and proposes a theory that is consistent with the stylised facts and useful for understanding the current phase of global rebalancing. The theory implies that, while the economic contraction originating in developed countries has pushed interest rates towards the zero lower bound, the recent growth slowdown in emerging countries could push them out of it.
Abenomics: Off target
Jonathan Soble (FT) Aug 25, 2014
After the excitement about the effect of the Bank of Japan’s aggressive stimulus, the economy has shown virtually zero real growth.
The unfamiliar world of a nation’s past
Fu Ding (FT) Aug 25, 2014
China’s suffering 100 years ago explains much about its subsequent political and economic development.
A costly fixation with price stability
Anjum Hoda (FT) Aug 25, 2014
The banking crisis hid the truth that the volatility of the past 15 years was not due to excessive bonuses and lax regulation.
No need to panic about high-yield bonds
Martin Sandbu (FT) Aug 25, 2014
In functioning markets, prices fall, selling eases, buyers enter and a new clearing price is established, which is what happened in global high yield.
The euro masks the blunders of politicians
David Riley (FT) Aug 25, 2014
States should spend less time thinking about what others can do for them and more on co-operating for the integration they want.
Ecuador's Phony Bitcoin Ploy
Mary O'Grady (WSJ) Aug 25, 2014
President Correa's new 'electronic currency' will make it easier to engage in monetary devaluation.
Reloading the debt dice
Ellen Brown (AT) Aug 25, 2014
Global financiers and corporations are increasingly supplanting governments on the international stage. Case in point: Argentina's debt struggle. Part of the answer can be found by funding through sovereign currencies and public banks, a recipe followed by China, Russia, South Korea and Japan.
What Made This Summer Different
Mohamed A. El-Erian (Bloomberg View) Aug 25, 2014
Three forces contributed to this summer to the strength and resilience of financial markets.
Europe’s Fitful Financial Integration
Howard Davies (Project Syndicate) Aug 25, 2014
The road to pan-European financial regulation over the last two decades has been winding and rocky. But the general direction is clear: Unless the new internal market commissioner takes a different view, the European Commission will push further in the direction of centralization.
Who Cares What Economists Say About Immigration?
Cass R. Sunstein (Bloomberg View) Aug 25, 2014
Drawing attention to what economists think -- as President Obama did in his State of the Union speech -- is not the best way to promote immigration reform.
Gene Frieda (Project Syndicate) Aug 25, 2014
Since the World Cup ended in July, Brazilian economic activity has plummeted, inflationary pressures have intensified, and consumer and business confidence have collapsed. Just how sick is Brazil’s economy, and how will its malaise affect the outcome of the presidential election in October?
Singapore must keep its reform edge
Jeremy Grant (FT) Aug 26, 2014
Island-state must stay on its guard to keep ahead of the region.
End the ‘illegality industry’ at borders
Ruben Andersson (FT) Aug 26, 2014
Migration has become a funding stream for many border forces and the defence industry, as well as a raison d’être in times of ‘open’ borders.
Rising risk of currency market volatility
Mohamed El-Erian (FT) Aug 26, 2014
After a long period of monetary policy alignment, advanced economies are embarking on increasingly contrasting paths, creating a ‘multi-track’ world.
No need to panic about high-yield bonds
David Riley (FT) Aug 26, 2014
In functioning markets, prices fall, selling eases, buyers enter and a new clearing price is established, which is what happened in global high yield.
US shale: What lies beneath
Ed Crooks (FT) Aug 26, 2014
An innovation boom is resulting in lower costs and higher productivity but the big question is how much longer the growth spurt will last.
How the World Is Becoming More Equal
Nicholas Eberstadt (WSJ) Aug 26, 2014
Globally, lifespans have never been so long and evenly distributed. Education has had an equalizing effect too.
The Cure for a Currency Default—in Iceland and Beyond
Adam Lerrick (WSJ) Aug 26, 2014
Balance-of-payments crises will become more common in a world of mobile capital. Here's a way out.
Italy and Japan: Troubled Twins of Globalization
Joji Sakurai (YaleGlobal) Aug 26, 2014
In separate quests for beauty and perfection, Japanese and Italians are lulled into provincial trapt
Can Korea Tax Itself to Prosperity?
William Pesek (Bloomberg View) Aug 26, 2014
Both Korea and Japan are struggling to get companies to spend their cash piles. Taxing the stashes might just work.
Recessions and the Big Shock Theory
Mark Buchanan (Bloomberg View) Aug 26, 2014
Economists are still struggling to figure out why economies everywhere in the world, at one point or another,fall into recession.
Good and Bad Inequality
Michael Spence (Project Syndicate) Aug 26, 2014
The “old” theory about inequality was that redistribution via the tax system weakened incentives and undermined economic growth. But the relationship between inequality and growth is far more complex and multi-dimensional than this simple trade-off suggests.
The Overstretched West
Joschka Fischer (Project Syndicate) Aug 26, 2014
Today’s accumulating crises, accompanied by America’s strategic fatigue, are forcing Europe to define what role it will play in the future of Western – and global – stability. But Europe cannot assume greater responsibility for global order without unifying politically, and too many European leaders cannot – or will not – understand this.
Agio Pereira (FA) Aug 26, 2014
Why it won't be the next failed state.
The Fed and Regulators Need to More Actively Manage Financial Cycles
Douglas J. Elliott (Brookings) Aug 26, 2014
The disastrous financial crisis of 2007-2009 underlined the serious damage our economy suffers from booms and busts in the financial system. The harm from busts is obvious, with credit crunches inhibiting business investment and consumer purchases while falling asset values destroy confidence and lead to further cutbacks. As a result, serious financial busts produce severe recessions. The excesses of boom times do harm as well, mostly by setting up the inevitable bust, but also by encouraging activities that are a poor use of resources, simply because money is so cheap and readily available. Think about the vast waste during the "Dot Com" bubble for what can happen when silly money floods into a sector of the economy. The housing bubble that helped lead to the recent financial crisis was less silly, but ultimately more harmful.
Dethrone ‘King Dollar’
Jared Bernstein (NYT) Aug 27, 2014
America can't afford to maintain the world's reserve currency.
Free schools: Lessons in store
Helen Warrell (FT) Aug 27, 2014
Once the model for countries desperate to improve education standards, the role of Sweden’s friskola is being questioned after a plunge in the OECD rankings.
A chance to turn on, tune in and pay out
John Gapper (FT) Aug 27, 2014
Festivals have become big business, while being while gaining much of their appeal from being a respite from the capitalist world
Poverty eradicated at statistical stroke
David Pilling (FT) Aug 27, 2014
Different calculations tell widely different stories. The number of poor in the developing world goes up and down like a yo-yo.
German locomotive becomes liability
Marcel Fratzscher (FT) Aug 27, 2014
The fall in output should be a wake-up call for the country. It needs to realise it cannot succeed without its neighbours.
Abenomics’ arrows fail to hit their mark
Henny Sender (FT) Aug 27, 2014
The limits of a weaker yen are becoming all the more obvious.
Watch stress tests for rate rise timing
Robert Jenkins (FT) Aug 27, 2014
It is when the regulators sound the ‘all clear’ for the banks that investors might want to take cover from the risks of rising interest rates.
The persistent myth of deleveraging
Robert Jenkins (FT) Aug 27, 2014
The rate of US growth after the downturn before 2009 has been below par, but this fits readily with America’s long-term trend decline.
Are Stock Prices Headed for a Fall?
Burton G. Malkiel (WSJ) Aug 27, 2014
Long-run equity returns from today's price levels are likely to be considerably lower than their 10% long-run average.
Elderly get wealthier
Robert J. Samuelson (WP) Aug 27, 2014
Some hidden good news about wealth inequality.
Frances Coppola (Pieria) Aug 27, 2014
Technology changes and post-crisis monetary policy are making financial assets and money indistinguishable. Central banks now need to work in partnership with fiscal authorities.
The retrospective nature of volatility can induce a false sense of security
Ian Kelly (Pieria) Aug 27, 2014
The current lack of market volatility is lulling many investors into a false sense of security.
No Easy Exit From the Euro
Megan McArdle (Bloomberg View) Aug 27, 2014
Even discussing a dissolution of the euro zone makes a crisis more likely.
Hollande's Mitterand Moment
Mohamed A. El-Erian (Bloomberg View) Aug 27, 2014
French President Francois Hollande has borrowed from a left-wing predecessor, Francois Mitterand, who tacked to the center in the 1980s to revive the economy and boost his political fortunes.
Mario Draghi's Challenge to Europe
Mohamed A. El-Erian (Bloomberg View) Aug 27, 2014
Europe's political leaders need to read the five points European Central Bank President Mario Draghi made during his speech last week at Jackson Hole, Wyoming.
Is Secular Stagnation Real?
Clive Crook (Bloomberg View) Aug 27, 2014
Europe's shaky economies provide the ideal testing ground for a scary theory on slow growth and high unemployment.
The Silence of the BRICS
Jaswant Singh (Project Syndicate) Aug 27, 2014
The world, it seems, is in the grip of geopolitical anomie, with no leader, group of leaders, or institution commanding sufficient authority to restore order. For many, this global rudderlessness recalls Europe’s sleepwalk into catastrophe 100 years ago.
A Step Closer to Brexit?
Peter Sutherland (Project Syndicate) Aug 27, 2014
The referendum on Scottish independence, to be held on September 18, comes at a time of growing opposition in the UK to remaining in the EU. This is significant, because Scotland is the strongest base of pro-European sentiment in the UK.
The Stall-Speed Syndrome
Stephen S. Roach (Project Syndicate) Aug 27, 2014
As tempting as it may be to attribute developed economies' latest growth slowdown to idiosyncratic factors, weakening performance in the US, Europe, and Japan is not so easily dismissed. In all of these cases, the post-recession rebound has not been nearly large enough to alter the sluggish underlying trend.
Freedom of choice, bitcoins and legal tender
Adrian Blundell-Wignall (OECD Insights) Aug 27, 2014
Some of the technologies associated with crypto-currencies are very interesting and may one day become a serious disruptive technology for financial intermediaries. But these technologies should be thought about separately from the crypto-currencies like Bitcoin that have some very dubious uses. These coins can never replace legal tender like dollars. However, some Bitcoin proponents seem to be very confused about the place crypto-currencies occupy versus legal tender.
The Syrian Marshall Plan
Adam Heffez and Noam Raydan (FA) Aug 27, 2014
Why foreign investors are pouring money into the country's economy.
Regulatory revenge risks scaring investors away
Gillian Tett (FT) Aug 28, 2014
As uncertainty is seen shifting to legal risk, questions arise about the investability of banks.
Classic warning sounds for investors
Michael Mackenzie (FT) Aug 28, 2014
US equities and bonds can probably prosper until data settle the issue of their divergence. Only then will there be repercussions for some investors.
ECB QE: will it happen and what next?
Lawrence Mutkin (FT) Aug 28, 2014
Given the record valuations already reached, some of the responses to a QE announcement may be the opposite of what one might normally expect.
The Fall of France
Paul Krugman (NYT) Aug 28, 2014
Has President François Hollande doomed the European project as the disastrous consequences of austerity policies grow more obvious with each passing month?
The Greater Depression
J. Bradford DeLong (Project Syndicate) Aug 28, 2014
Seven years after the global financial crisis began, the US and eurozone economies are still performing well below potential – and are facing additional downward shocks. When will their leaders admit that the Greater Depression has begun?
Simon Johnson (Project Syndicate) Aug 28, 2014
Two hundred years ago, Washington DC was captured by the British – who then set fire to official buildings, including the White House, Treasury Department, and Congress. Today, it is a domestic interest group – very large banks – that has captured Washington, and the costs are likely to be far higher than they were in 1814.
Is Technology Stagnating?
Clive Crook (Bloomberg View) Aug 28, 2014
Without breakthroughs in innovation more powerful than we've recently seen, long-term growth in U.S. output is likely to disappoint.
A BMW for Piketty
Mark Gilbert (Bloomberg View) Aug 28, 2014
BMW's numbers suggest Piketty was right about one thing: cheap ECB money is making shareholders a richer, not workers, boding ill for a consumer-led recovery.
India Buries Central Planning
Chandrahas Choudhury (Bloomberg View) Aug 28, 2014
The end of an institution as old as the modern Indian state.
Lending Club's Brilliant Charade
Leonid Bershidsky (Bloomberg View) Aug 28, 2014
Lending Club demonstrates that traditional banking can safely be split up into parts, most of which will not need to be regulated.
Indonesia: Now the Real Work Begins
Joseph Chinyong Liow & Lex Rieffel (Brookings) Aug 28, 2014
Democracy in Indonesia has taken another step forward with the election of Joko “Jokowi” Widodo as Indonesian president.
Let's Work Together on Sanctions
Simeon Djankov (Kommersant/PIIE) Aug 28, 2014
The Russian and European economies have something in common: They are not growing. According to the latest numbers by the International Monetary Fund (IMF), the Russian economy will grow a measly 0.2 percent this year, and at 1 percent in 2015.
Exit spillover: How to handle the coming tightening
Esteban R Vesperoni, Emil Stavrev and Sebastian Weber (VoxEU) Aug 28, 2014
As prospects in key advanced economies improve, financial conditions will tighten. The effect of outward spillovers from source countries to emerging markets will depend on whether financial conditions are driven by stronger growth (real shocks) or unexpected tightening in financial conditions (money shocks) – including those due to financial stability concerns or market uncertainty about the exit path. From a recipient’s perspective, spillovers will also differ across countries – reflecting interactions between domestic fundamentals and policies with the external shock.
China’s misleading economic indicators
Yukon Huang (FT) Aug 29, 2014
Contrary to popular beliefs, existing distortions may be giving a more negative impression than the reality.
The Myth of the Unchanging Value of Gold
Joseph T. Salerno (Mises Daily) Aug 29, 2014
According to mainstream economics textbooks, one of the primary functions of money is to measure the value of goods and services exchanged on the market.
Mr. Modi Goes to Tokyo
Dhiraj Nayyar (Bloomberg View) Aug 29, 2014
India's Narendra Modi heads to Tokyo with a high-profile delegation, hoping to attract billions in Japanese investment. He needs to get his own house in order first.
How Should Future Argentinas Treat Future Vultures?
Matt Levine (Bloomberg View) Aug 29, 2014
Sovereign bankruptcy! CACs! CDS! Pari passu! Multiple Series Aggregation - Single Limb Voting! Happy Friday before Labor Day weekend.
A Sensible Step to Mitigate Sovereign Bond Dysfunction
Anna Gelpern (PIIE) Aug 29, 2014
Lingering fallout from the debt crises in Argentina and Greece exposed serious flaws in the sovereign debt restructuring process: Small groups of creditors were able to extract preferential treatment and cause serious disruptions for everyone else. On August 29, 2014, the International Capital Market Association (ICMA) released a new set of model clauses for foreign sovereign bond contracts to address some of these flaws.
Structural reform lowers country risk
Christopher Findlay, Silvia Sorescu & Camilo Umana Dajud (VoxEU) Aug 29, 2014
Countries facing rising risk premiums on their debt have recognised the need for structural reform, but some politicians have argued that austerity is necessary in the short run because structural reform takes too long. This column argues that financial markets can bring forward the benefits of structural reform, and therefore that such reforms should be given greater weight in the package of crisis responses.
Europe’s Russian connections
Aasim M. Husain, Anna Ilyina & Li Zeng (VoxEU) Aug 29, 2014
The conflict in Ukraine and the sanctions against Russia have already affected the Russian financial markets. This column discusses the repercussions for the rest of Europe of possible disruptions in the trade and financial flows with Russia. Eastern European countries could be seriously affected by a slowdown in the Russian economy due to their close links with Russia. Western countries – despite having looser links with it – could also experience significant effects.
Why we need a fiscal backstop
Dirk Schoenmaker (VoxEU) Aug 30, 2014
In the aftermath of the financial crisis, governments have been reducing their potential exposures to the banking system. This column argues that a fiscal backstop remains necessary for a banking system, contrary to what many policymakers claim. The main reason is that private arrangements may not be sufficient in a severe crisis. Without a credible backstop, depositors will run on a troubled banking system.
What is driving the ‘African growth miracle’?
Margaret McMillan (VoxEU) Aug 30, 2014
Some argue that growth across Africa is fundamentally a result of rising commodity prices and that if these prices were to collapse, so too would Africa’s growth rates. This column documents substantial shifts in the occupational structure of most African economies between 2000 and 2010 and thus provides a good reason for cautious optimism about the continent’s economic progress.
Germany: In a spin
Stefan Wagstyl (FT) Aug 31, 2014
With growth slowing, the problems facing the economy – from the Ukraine crisis to rising energy costs – will have an impact beyond its borders.
Draghi approaches his Abenomics moment
Stephanie Flanders (FT) Aug 31, 2014
The question is whether we have reached the point where large-scale QE will do more good than harm. It seems the ECB president thinks so.
More integration is still right for Europe
Karl Lamers and Wolfgang Schäuble (FT) Aug 31, 2014
Each tier of government – regional, national or supranational – must be given the appropriate legislative powers and the authority to enforce the rules.
Investors still wary of getting burnt by solar
Ed Crooks (FT) Aug 31, 2014
Growth in sun-powered energy has been the result of an unusually favourable combination of circumstances, which is now coming to an end.
Stopping Europe's Descent Into Deflation
Bloomberg View Aug 31, 2014
If Europe's long recession gets worse, it will be because its leaders saw what was happening yet chose not to act.
Nouriel Roubini (Project Syndicate) Aug 31, 2014
Two years ago, Shino Abe’s election as Japan’s prime minister led to the advent of “Abenomics,” a three-part plan to rescue the economy from a treadmill of stagnation and deflation. It now appears that the European Central Bank has a similar plan in store for the eurozone.
Europe According to Draghi
Jean Pisani-Ferry (Project Syndicate) Aug 31, 2014
A few months ago, the consensus was that the time for redesigning the euro had passed, and that the eurozone would have to live with the architecture inherited from its crisis-driven reforms. Not anymore.
Argentina’s Use and Abuse of Keynes
Andrés Velasco (Project Syndicate) Aug 31, 2014
Last week, addressing the elite of Argentina’s business community, the economy minister, Axel Kicillof, explained the government's policies as a real-world application of Keynesian theory. But that is a deeply flawed interpretation.
Water as the Oil of the 21st Century
Tara Sonenshine (Globalist) Aug 31, 2014
H2O will be a source of conflicts and de-stabilization.
Publish or be damned – or why central banks need to say more about the path of their policy rates
Richard Barwell & Jagjit Chadha (VoxEU) Aug 31, 2014
In the wake of the crisis, forward guidance has become a prominent tool of monetary policy. This column argues that central banks should go a step further, communicating to the public the internal policy debate that goes into monetary policy formation – especially regarding uncertainty. Since policy is determined contingent on a range of possible outcomes, forward guidance would become more effective by explicitly communicating how policy would respond along this uncertain path.