News & Commentary:

September 2011 Archives


Liquidity measures land central banks in deep water
The Banker Sep 1, 2011
Emergency measures taken by the major central banks are widely credited for having a stabilising influence on the financial system and the economy. But there are growing concerns about the long-term impact of these measures.

From Aid to Global Development Cooperation Recommended!
Various (Brookings) Sep 1, 2011
The context for aid is changing. Globalization has spurred economic convergence, upending the 20th century economic balance and creating a smaller world where both problems and solutions spill across national borders more readily. This has given rise to a legion of new development actors—including emerging economies, nongovernmental organizations, private businesses and coordinating networks, who have brought fresh energy and resources to the field while rendering the prospect of genuine donor coordination ever more difficult. Global integration and the competition for resources have raised the prominence of global public goods, whose equitable and sustainable provision requires international collective action. Meanwhile, poor countries are demanding a new form of partnership with the international community, built upon the principles of country ownership and mutual accountability. From the Group of Twenty (G-20) meetings and the upcoming Fourth High-Level Forum on Aid Effectiveness in Korea to unfolding events in the Middle East and North Africa, leadership from the United States is crucial, placing pressure on the Obama administration to deliver on its promise of farreaching reforms to U.S. global development efforts. And amidst this shifting global landscape remains the issue of how to effectively communicate the importance of global development cooperation to both national and global publics, at a time when budget pressures are being felt across many of the world’s major economies. The following policy briefs explore these issues in detail, laying out the challenges and offering a range of specific recommendations on what needs to happen and why.

All for One Recommended!
Finance and Development Sep 1, 2011
Examines inequality and the many ways it matters. In our overview article, the World Bank's Branko Milanovic explains how income inequality is measured and tells us that it's increased in most countries. The good news, he says, is that global inequality--between countries--could be on the downturn. IMF economists Andrew Berg and Jonathan Ostry find that a more equal society has a greater likelihood of sustaining longer-term growth. Other IMF research on inequality finds that financial sector development not only 'enlarges the pie' by supporting economic growth but divides it more evenly; that higher income inequality in developed countries is associated with higher indebtedness--at home and abroad; and that while fiscal consolidation is necessary in the medium term, slamming on the brakes too quickly can harm jobs and cut wages, exacerbating inequality. Also in this issue, we profile Elinor Ostrom, the first woman to receive the Nobel Prize for economics. In a tour of the globe, we look at how the African diaspora can help their home countries from afar, try to draw some early lessons from the euro area's debt crisis, investigate how the United States and its neighbor Canada handled public debt--with different results, and find out about the rise of emerging markets as systemically important trading centers. Back to Basics explains the difference between micro- and macroeconomics, and Data Spotlight tells us about a new worldwide survey of foreign direct investment.

Bridges to Somewhere
Justin Yifu Lin (FP) Sep 1, 2011
More austerity won't save the global economy. Building infrastructure just might.

The big questions China still has to answer Financial Times Subscription Required
Robert Zoellick (FT) Sep 1, 2011
Without fundamental structural changes, the country is in danger of becoming caught in a ‘middle income trap’.

Get used to world without ‘risk free’ rate Financial Times Subscription Required
Gillian Tett (FT) Sep 1, 2011
With a shortage of alternative haven benchmarks, the investment model that 20th century finance was so addicted to may need to be reconsidered

Will the Sun Still Rise?
Heizo Takenaka (Project Syndicate) Sep 1, 2011
The scale of the earthquake and tsunami that struck Japan in March was far greater than even the authorities’ worst nightmare scenarios foresaw. But Japan's crisis is also a rare opportunity to undertake the comprehensive reforms that have been postponed for too long.

The Inevitable Superpower: Why China's Dominance Is a Sure Thing
Arvind Subramanian (FA) Sep 1, 2011
To debtors, creditors can be like dictators. Governments in financial trouble often turn to the International Monetary Fund as supplicants, and acting at the behest of its own major creditors, the IMF often imposes tough conditions on them. After the Asian financial crisis of the late 1990s, Mickey Kantor, U.S. trade representative under President Bill Clinton, called the organization "a battering ram," because it had served to open up Asian markets to U.S. products. During the 1956 Suez crisis, the United States threatened to withhold financing that the United Kingdom desperately needed unless British forces withdrew from the Suez Canal. Harold Macmillan, who, as the British chancellor of the exchequer, presided over the last, humiliating stages of the crisis, would later recall that it was "the last gasp of a declining power." He added, "perhaps in 200 years the United States would know how we felt."

Technology Will Take on a Life of Its Own
Ayesha Khanna & Parag Khanna (FP) Sep 1, 2011
Welcome to the Hybrid Age.

Micromultinationals Will Run the World
Hal Varian (FP) Sep 1, 2011
And cheap robots will help them do it.

Everything Will Be Too Big to Fail
John Seo (FP) Sep 1, 2011
The density dynamic is worth banking on, but that doesn't mean it won't cost us.

The Shape of the Global Economy Will Fundamentally Change
Mohamed El-Erian (FP) Sep 1, 2011
It's not a crash, it's the new normal.

The Americas, Not the Middle East, Will Be the World Capital of Energy
Amy Myers Jaffe (FP) Sep 1, 2011
Adios, OPEC.

The World Will Be More Crowded -- With Old People
Phillip Longman (FP) Sep 1, 2011
Actually, the children aren't our future.

Problems Will Be Global -- And Solutions Will Be, Too
Anne-Marie Slaughter (FP) Sep 1, 2011
A more multilateral world is just the beginning.

Megatrends That Weren't
Joshua E. Keating (FP) Sep 1, 2011
A look at yesterday's Next Big Things, from the Japanese rising sun to Dow 36,000.

The Lap of Luxembourgery
Eric Pape (FP) Sep 1, 2011
So what if it has the world's highest per capita GDP? A visit to the debt-ridden capital of European complacency.

Why a slowdown in Germany could be good for Europe
Alberto Alesina & Francesco Giavazzi (VoxEU) Sep 1, 2011
One major problem with the Eurozone as a currency area is that its economies are not in sync. With growth in Germany now slowing, this column argues that this could be the blessing the ECB has been praying for.

Will the IMF Stand Up to Europe?
Kenneth Rogoff (Project Syndicate) Sep 1, 2011
Until now, the IMF has sycophantically supported each new European initiative to rescue the over-indebted eurozone periphery, committing more than $100 billion to Greece, Portugal, and Ireland so far. Unfortunately, the Fund is risking not only its members’ money, but, ultimately, its own credibility.

How Beijing Is Stifling Chinese Innovation Wall Street Journal Subscription Required
Anil K. Gupta & Haiyan Wang (WSJ) Sep 1, 2011
Multinationals are far more comfortable doing research in India.

New-Fangled Love Songs
Bill Gross (PIMCO) Sep 1, 2011
We are into the "bumpy journey" phase of our New Normal where fear, lack of policy options and loss of control can dominate relationships. Liquidity concerns may affect all European peripheral bond markets unless the European Central Bank counters the rush for the exits with an enlarged daily checkbook. In the U.S., discord between rich and poor has led to lower, not higher, Treasury yields as approaching recessionary winds force the Fed and private investors to favor bonds. We prefer investing in the "cleaner" dirty shirt countries of Canada, Australia, Mexico and Brazil, along with non-dollar currencies that have strong trade ties with the Asian continent.

Systemic Risk Returns: Is the Current Crisis Worse Than the Lehman Collapse?
John H. Makin (AEI) Sep 1, 2011
The United States is close to another recession: the first-half growth rate is 0.7 percent and employment growth is weak. Current conditions point to a threat of systemic risk: the sudden shock of the US financial crisis, interconnections between the US economy and the European financial system, and the absence of viable policy solutions. We need good economics over politics, now more than ever. That means sensible tax reform, a Fed focus on maintaining liquidity, and rationalization of the European monetary system.

IMF's bold recipe for recovery
T. Ram Mohan (Economic Times) Sep 1, 2011
How to prevent a slide into another recession is the question that is engaging the world's policy-makers. At the meeting of central bankers at Jackson Hole in the US last week, all eyes were on the holy trinity of international economic policy - the chairman of the Fed, the president of the European Central Bank and the managing director of the IMF.

The God Clause and the Reinsurance Industry
Brendan Greeley (Bloomberg) Sep 1, 2011
The risk business can tell us a lot about catastrophes. Why don't we listen?

Is the Global Economy Headed for a Double Dip?
Uri Dadush and Bennet Stancil (CEIP) Sep 1, 2011
write that the world economy is not likely to head back into recession unless the sovereign debt crisis in Italy and Spain gets worse.

The Great Bank Robbery
Nassim Nicholas Taleb & Mark Spitznagel (Project Syndicate) Sep 2, 2011
For the US economy – and other developed economies – the elephant in the room is the amount paid to bankers over the last five years. Investors, and the rest of us, would be better off if these funds flowed to productive companies, perhaps with an amount equivalent to what would be transferred to bonuses directed to well-managed charities.

Restructuring European banking systems
Marco Onado (VoxEU) Sep 2, 2011
Growing pessimism and a spread of contagion is still haunting the Eurozone. This column argues that if the crisis moves beyond Greece, Ireland, and Portugal, no capital injection can reassure markets about possible losses on a few big Eurozone countries. What is needed is a credible restructuring of the debt of peripheral countries to ring-fence the damage.

Why Lagarde is right: Bank recapitalisation is the best strategy
Harald Hau (VoxEU) Sep 2, 2011
The latest proposed solution to the Eurozone crisis is Eurobonds. This column argues that such a move would be politically poisonous and would shift the losses of the continent’s richest to the taxpayer. Instead, Europe’s policymakers should follow the strategy outlined by the new IMF chief Christine Lagarde. She calls for the recapitalisation of banks so that they can absorb the worst of the losses should Eurozone countries default.

Global: The Economic Consequences of Greece
Arnaud Marès (MS GEF) Sep 2, 2011
Private sector involvement in the Greek debt restructuring changed the perception of sovereign debt as risk-free and therefore as safe haven assets.

Global: Those Elevated Earnings
Gerard Minack (MS GEF) Sep 2, 2011
A big medium-term uncertainty for DM equity investors is the sustainability of earnings.

Shadow sovereign ratings
Otaviano Canuto, Sanket Mohapatra & Dilip Ratha (VoxEU) Sep 3, 2011
Sovereign ratings are important for countries to access international capital, but even today 58 developing countries are not rated by Standard and Poor’s, Moody’s, or Fitch. This column presents an exercise to predict “shadow” sovereign ratings for these unrated countries. Contrary to popular perception, the unrated countries are not all at the bottom of the rating spectrum.

Government and business in China: Privatisation with Chinese characteristics
Economist Sep 3, 2011
The hidden costs of China's state capitalism.

Politics in emerging markets: The new middle classes rise up
Economist Sep 3, 2011
Marx’s revolutionary bourgeoisie finds its voice again.

Economics focus: Too strong for comfort
Economist Sep 3, 2011
How to live with an overvalued currency.

The world economy: Mountains to climb Economist Subscription Required
Economist Sep 3, 2011
August was a nerve-racking month for the world economy. September and October will be no better.

We need internationalist spirit – and a plan for global growth
Ed Balls (Guardian) Sep 4, 2011
The world must reject the complacent isolationism of the 1930s and follow Keynes's lead: global problems need global solutions

China, Trade Gangster, Pulls Off Stunning Caper
Gordon G. Chang (Forbes) Sep 4, 2011
China's export quotas may violate WTO rules, but with a verdict far off, manufacturers that rely on the metals are being forced to move production to the country.

Welcome to phase 2 of the Eurozone (EZ) crisis
Richard Baldwin (VoxEU) Sep 5, 2011
The Eurozone crisis moved into phase 2 this August when the contagion spread to Italian debt, Spanish debt, and most EZ banks. Radical ECB actions prevented a disaster. This column argues that the ECB emergency policies are unsustainable politically and perhaps legally. The only policy combination that EZ leaders could agree on quickly enough involves political cover for ECB bond buying in exchange for national fiscal reforms of the German “debt brake” type.

How to fix crisis management in the Eurozone
Stefano Micossi (VoxEU) Sep 5, 2011
This column takes stock of what we have learned from the Eurozone crisis and the policy responses. It discusses how Europe can put in place policies to reduce the chances of such a crisis repeating itself. By strengthening the Eurozone’s ability to withstand speculative attacks, it argues that policymakers would make them much less likely.

The worst of the euro crisis is yet to come Financial Times Subscription Required
Wolfgang Münchau (FT) Sep 4, 2011
The present system of uncoordinated policies gives us contagious austerity with a contagious downturn.

Can the World Still Feed Itself? Wall Street Journal Subscription Required
Peter Brabeck-Letmathe (WSJ) Sep 5, 2011
Yes, but not if we burn food for fuel, fear genetic advances and fail to charge for water.

How the Index Fund Was Born Wall Street Journal Subscription Required
John C. Bogle (WSJ) Sep 5, 2011
Once derided as 'Bogle's Folly,' the Vanguard 500 Index totals $200 billion.

Hang on to your purse, Ms Merkel Financial Times Subscription Required
Gideon Rachman (FT) Sep 5, 2011
Rather than lambasting the German chancellor, the rest of Europe should be grateful that they have a calm and cautious leader in Berlin.

Why austerity is only cure for the eurozone Financial Times Subscription Required
Wolfgang Schäuble (FT) Sep 5, 2011
A leap into fiscal union would address only the most superficial symptoms of the single currency area’s ills.

It is time for outsiders to save the single currency Financial Times Subscription Required
Barry Eichengreen (FT) Sep 5, 2011
Europe needs debt reduction along the lines of the Brady Plan – but it must not follow the Brady Plan mindlessly.

Gold miners will soon feel the bullion effect Financial Times Subscription Required
Jim Slater (FT) Sep 5, 2011
The disconnect between the rising gold price and falling gold shares continues to surprise.

What’s the free-trade holdup?
Mitch McConnell (WP) Sep 5, 2011
Deals languish on Obama’s desk.

The Eurozone’s Strength in Disunity
Harold James (Project Syndicate) Sep 5, 2011
For months, an increasingly frenetic, even apocalyptic, debate about the fate of the euro has been the major driver of global instability. And yet the euro's exchange rate has remained remarkably stable, because, paradoxically, the governance weaknesses that skeptics criticize are what makes the common currency attractive.

Divided We Fall
Gordon Brown (Project Syndicate) Sep 5, 2011
Countries claiming to have reached the limit of what they can do to boost economic recovery really mean that they have reached the limit of what they can do on their own. The way forward to sustained growth and employment is not through a flurry of one-off national initiatives, but rather through global policy coordination.

The Saver’s Dilemma
Daniel Gros (Project Syndicate) Sep 6, 2011
Interest rates are now close to zero throughout the developed world, but the global economy is slowing down, and financial markets went into a tailspin during the summer. The fundamental problem is simple: the market cannot be brought back into equilibrium when savers do not want to lend to those who would be willing to take these savings.

Democratic Hysteria
Pranab Bardhan (Project Syndicate) Sep 6, 2011
In recent political impasses that paralyzed the world’s two largest democracies, India and the United States, both countries’ usually clear-sighted leaders, to paraphrase William Butler Yeats, lacked all conviction, while the misguided and the shallow were full of passionate intensity. Indeed, that passion shows little sign of waning.

Reformers in need of reform? A critical assessment of global financial governance
Daniel D. Bradlow (VoxEU) Sep 6, 2011
Many economists have called on the IMF to reform, particularly in light of the shifting centre of gravity in the global economy towards emerging markets. This column argues that global financial governance, which includes the role of the IMF, should be based on five principles: A holistic vision of development, comprehensive coverage, respect for applicable international law, coordinated specialisation, and good administrative practice.

Making sense of TARGET imbalances
Willem Buiter, Juergen Michels & Ebrahim Rahbari (VoxEU) Sep 6, 2011
The Eurozone money transfer system, TARGET2, has huge imbalances whose meaning is subject to much debate. This column introduces a new CEPR Policy Insight by Citigroup Chief Economist Willem Buiter and co-authors that sorts out the issues. It argues that the imbalances show some banks can’t fund themselves without public support. This is a wakeup call – Eurozone banking systems must rapidly be put on sound footing.

The Libyan Oil Tap
Edward L. Morse and Eric G. Lee (FA) Sep 6, 2011
Bringing Libyan crude oil back to market will ease world prices and provide much-needed funding for Libya's new government. But getting the pumps flowing again will not be easy. Read

'Helicopter Ben' risks destroying credit creation Financial Times Subscription Required
Bill Gross (FT) Sep 6, 2011
The Federal Reserve chief's zero interest rate monetary policy means a bank can no longer borrow short and lend two years longer at a profit.

We must listen to what bond markets are telling us Financial Times Subscription Required
Martin Wolf (FT) Sep 6, 2011
They are saying: borrow and spend, please. Yet those who profess faith in the markets are determined to ignore the cry.

Economics fails to resolve exceptions to the rule Financial Times Subscription Required
John Kay (FT) Sep 6, 2011
Unpredictability applies to the actions of fools, such as those who believed securitisation conjured wealth out of thin air.

Traders Turn to the Non-Euro Currencies of Eastern Europe
II Sep 6, 2011
Two of the world's biggest currencies, the euro and the dollar, are struggling. But amid worldwide market turmoil, the Czech koruna and the Polish zloty offer welcome opportunities.

Swiss Franc-ensense Wall Street Journal Subscription Required
WSJ Sep 7, 2011
Central banking in a currency crisis.

Emerging markets banks: Strong growth potential Adobe Acrobat Required
Marion Mühlberger & Lutz Sager (DB Research) Sep 7, 2011
Emerging market economies are not only gaining in importance in the real economy, but the strong economic catch-up is mirrored in the banking sector. The fact that nine of the world’s 30 largest banks by market capitalisation are located in EMs highlights the shifting balance in global banking markets. Our simple forecast model shows that over the next five years private sector credit is expected to expand by 12% per year on average (in nominal terms), with Russia, Korea, Argentina, China, Indonesia, Nigeria, India, the Czech Republic, Romania, Taiwan and Saudi Arabia expanding at an above-average speed.

Trade Pacts, China Currency Legislation Could All be on the Table as US Congress Returns
Bridges Weekly Trade News Digest Volume 15, Number 29 Sep 7, 2011
Major movement could be on the horizon for Washington's trade agenda as Congress returns from its August recess, with one trade-related bill - the renewal of the lapsed Generalized System of Preferences - tentatively scheduled for a vote in the US House of Representatives later today. The renewal is expected to be the first step in a complicated legislative process to pass three major US FTAs, along with a worker aid programme, by early October.

Major Green Disputes Move Ahead at WTO
Bridges Weekly Trade News Digest Volume 15, Number 29 Sep 7, 2011
With an appeal by China in the China-Raw Materials (DS394, 395, 398) case and a new consultation request by the EU regarding the Canadian province of Ontario's controversial feed-in tariff programme for renewable energy (DS426), two high-stakes - and high-profile - environmental disputes recently moved forward at the global trade body.

Australia Carbon Tax Plan Receives Strong EU Backing, Despite Domestic Unpopularity
Bridges Weekly Trade News Digest Volume 15, Number 29 Sep 7, 2011
Australia's controversial carbon tax plan has received a public pledge of support from Europe, though the measure continues to face substantial opposition at home. In a 5 September bilateral meeting between European Commission President José Manuel Barroso and Australian Prime Minister Julia Gillard, the two also announced the start of talks for the eventual linkage of their carbon trading schemes.

WTO Disputes Roundup: Rulings Issued on Spirits, Tobacco
Bridges Weekly Trade News Digest Volume 15, Number 29 Sep 7, 2011
Public health concerns over cigarettes and protectionism fears over spirits tariffs featured in some of the WTO Dispute Settlement Body's (DSB) work over the August recess, with the DSB releasing two new panel reports over the last few weeks. These reports concerned a Philippine excise tax for foreign spirits (DS396,403) and a US ban of clove cigarettes (DS406), with the Philippines and the US being at the losing end, respectively.

Farm Subsidies: Ballooning US Food Aid Pushes Total Support to New High
Bridges Weekly Trade News Digest Volume 15, Number 29 Sep 7, 2011
Domestic food aid payments in the US have doubled between 2002 and 2009, new figures show - pushing total farm subsidy levels to a record high of US$114 billion. The data, from Washington’s official report to the WTO on 2009 spending levels, classes nine-tenths of recent US farm support as green box payments.

Expulsion from the eurozone has to be the final penalty Financial Times Subscription Required
Mark Rutte and Jan Kees de Jager (FT) Sep 7, 2011
Countries that systematically infringe the rules must be granted less freedom in their budgetary policy.

The SNB’s measures will work for now Financial Times Subscription Required
Mansoor Mohi-uddin (FT) Sep 7, 2011
The Swiss central bank’s actions to weaken the franc will work for now but they may need to consider more draconian measures such as capital controls.

China's Rise Isn't Our Demise New York Times Subscription Required
Joseph R. Biden Jr (NYT) Sep 7, 2011
The United States can and will flourish from its competition with China.

Eurobonds: The Solution to the Euro Crisis?
Alfred Steinherr (Globalist) Sep 7, 2011
One oft-mentioned solution to Europe's crisis is the issuance of eurobonds. The pros and cons.

Banking on the average: A new way to regulate banks
Hans Gersbach (VoxEU) Sep 7, 2011
Current regulation imposes fixed capital requirements on banks. However, this makes it impossible to use regulatory capital as a buffer against negative macroeconomic shocks. This column explains how this paradox could be resolved by basing capital requirements each year on average bank equity capital in the industry.

"Triple-knot" fiscal safety for the Eurozone
Hans Gersbach (VoxEU) Sep 8, 2011
Many economists are calling for new rules in European governance to put a stop to the Eurozone crisis, with some going so far as to suggest steps towards political union. This column outlines an institutional framework – a proposal the author calls “Reciprocal Parliamentary Approval” – that may help to restore the fiscal stability many see as vital to the survival of Europe’s single currency without states surrendering their sovereignty.

The risk of default in the Eurozone: New analysis of fiscal space, CDS spreads, and market pricing of risk
Joshua Aizenman, Michael M Hutchison & Yothin Jinjarak (VoxEU) Sep 8, 2011
Bond markets provide sleepless nights for even the most powerful of political leaders. This column estimates the pricing of sovereign risk for over 60 countries during the last five years. It finds that fiscal space and other macroeconomic factors are important determinants of market prices of sovereign risk. But when looking at the Eurozone crisis, it finds that the market is excessively pessimistic.

Greece’s Only Way Out: Looking Beyond the Debt Issue
Thanos Skouras and Alfred Steinherr (Globalist) Sep 8, 2011
Why the key to Greece's fiscal crisis is to change the political calculus, not just the economic one.

Is Inflation the Answer?
Raghuram Rajan (Project Syndicate) Sep 8, 2011
Recently, a number of commentators have proposed a sharp, contained bout of inflation as a way to reduce debt and reenergize growth in the US and the rest of the industrial world. But, while is an attractive solution at first glance, a closer look reveals cause for serious concern.

Free Trade in Theory and Practice
Brian Farmer (New American) Sep 8, 2011
When one studies international economics, one will inevitably encounter the topic of "free trade."

G-8 Nations Pledge New Aid to Arab Spring Economies
NYT Sep 8, 2011
The G-8 will provide $38 billion in new aid to Egypt, Tunisia, Jordan and Morocco to help underpin their moves to democracy and allay social tensions.

The Changing Landscape of Global Investing
Mohamed A. El-Erian (PIMCO) Sep 8, 2011
National and global realignments are fundamentally and durably changing the global investment landscape. Investors face the challenge of recalibrating some of the traditional parameters that are key to managing risk and delivering returns. There are also implications for investment management firms which are yet to be sufficiently reflected in the thinking and actions of the industry as a whole.

The Belgian Solution
John Lanchester (LRB) Sep 8, 2011
Quarterly GDP data don’t, on the whole, tend to make the person studying them laugh out loud. The most recent set, however, are an exception, despite the fact that the general picture is of unrelieved and spreading economic gloom. Instead of the surge of rebounding growth which historically accompanies successful exit from a recession, we have the UK’s disappointing 0.2 per cent growth, the US’s anaemic 0.3 per cent and the glum eurozone average figure of 0.2 per cent. That number includes the surprising and alarming German 0.1 per cent, the desperately poor French 0 per cent and then, wait for it, the agreeably frisky Belgian 0.7 per cent. Why is that, if you’ve been following the story, laugh-aloud funny? Because Belgium doesn’t have a government.

Demographic trends in advanced and emerging economies and their potential consequences
Markus Jaeger (DB Research) Sep 8, 2011
Population growth is projected to turn negative in China (2025) and Brazil (2040). Russia’s population has been declining for over a decade. This is worth keeping in mind when analysing the “rise of the BRICs”. The BRICs (with the exception of India) will sooner rather than later be confronting significant demography-related challenges, including a shrinking labour supply, a potentially declining pace of innovation, declining domestic savings, rising pension and healthcare expenditure and, more arguably, a structural decline in inflation. Moreover, both developed and emerging economies must not discount the non-linear effects population decline is bound to trigger.

How a Debt Exchange Could Ease Europe's Crisis
Luigi Zingales (Bloomberg) Sep 8, 2011
The political response to the European crisis so far has been denial and temporary patches. But policy makers are facing more than just a liquidity crunch; they also need to tackle a solvency crisis and possibly a structural one. One of the most pressing issues is addressing the over-leverage of the southern European nations.

What the world must do to boost growth Financial Times Subscription Required
Tim Geithner (FT) Sep 8, 2011
The question is not whether we have the economic or financial capacity to act to strengthen growth, but whether we have the political ability to do the right things.

I can’t hear the markets but I can smell fear Financial Times Subscription Required
Stephen King (FT) Sep 8, 2011
Investors are desperately trying to find pockets of safety in a world where the financial system appears to be crumbling.

Beware whacking speculators for commodity swings Financial Times Subscription Required
Gillian Tett (FT) Sep 8, 2011
Economists are sharply divided over 'financialisation' as the Commodity Futures Trading Commission's decision deadline approaches

Global Economic Prospects as of September 9, 2011: How Deep the Current Slowdown? Adobe Acrobat Required
Michael Mussa (PIIE) Sep 9, 2011
After solid performance across most of the world economy early this year, global growth slowed significantly in the spring and yet shows little sign of accelerating. Even with some anticipated pick-up later this year, real GDP growth for the world economy will probably come in a little below 4 percent this year after 5 percent growth in 2010. The key question now is whether growth of around 4 percent may still reasonably be expected for 2012 or whether a more significant and sustained slowdown is more likely? Michael Mussa continues to be optimistic but not exuberant. He expects that after declining from an unsustainable pace of 7 percent growth in 2010 to just below 6 percent this year, emerging-market and developing countries will sustain about 6 percent growth in 2012. For the advanced economies, the situation is more complicated. Revised GDP estimates indicate that the US economy was far weaker in the first half of this year than was expected six months ago, and concerns about an extended slowdown or possible recession have been heightened by controversies over fiscal policy that are yet to be resolved. After stronger than expected first quarter results, weakening economic activity and broadening concerns about fiscal sustainability in Europe (and its implications for the banking system) have depressed expectations for growth in the remainder of 2011 and into 2012. In Japan, the economic impact of the earthquake and its aftermath have been more negative than initially estimated, although recovery is still expected to begin in the second half and extend through next year.

The Challenges for the Global Economy
Christine Lagarde (IMF) Sep 9, 2011
Countries must act now—and act boldly—to steer their economies through this dangerous new phase of the recovery. The world is collectively suffering from a crisis of confidence, in the face of a deteriorating economic outlook and rising concerns about the health of sovereigns and banks. All this is happening at a time when the scope for policy action is considerably narrower than when the crisis first erupted. But while the policy options may be fewer, there is a path to recovery.

Global: Concerted Easing?
Manoj Pradhan & Joachim Fels (MS GEF) Sep 9, 2011
With a fiscal response unavailable, the burden of propping up markets and the economy for the next few months falls on central banks.

Europe on the Verge of a Political Breakdown
Barry Eichengreen (Project Syndicate) Sep 9, 2011
If Europe is to avert the worst – a meltdown of the eurozone, if not of the EU itself – it is critical that European leaders distinguish what must be done now from what can be left for later. Indeed, unless they complete three urgent tasks, there will be no reason to discuss long-term reforms.

Europe’s debt crisis: Fudge, the final frontier
Economist Sep 10, 2011
European leaders are at a fork in the road. They’ll probably go straight on.

Emerging-market firms and Britain: The new special relationship Economist Subscription Required
Economist Sep 10, 2011
Amid the economic gloom, Britain is at the leading edge of an important global trend.

Exchange-rate targets: Francly wrong Economist Subscription Required
Economist Sep 10, 2011
The Swiss take fright at the strength of their currency---and set an unfortunate example.

Stop rejoicing. This was no victory for the eurozone Financial Times Subscription Required
Wolfgang Münchau (FT) Sep 11, 2011
The German court ruling significantly increases the chances of default by one or several member states.

Coming soon: when the renminbi rules the world Financial Times Subscription Required
Arvind Subramanian (FT) Sep 11, 2011
Not a day seems to pass without some foreign entity being granted greater but selective access to the currency.

An Impeccable Disaster New York Times Subscription Required
Paul Krugman (NYT) Sep 11, 2011
The moralizers, who hate the idea of letting nations off the hook for alleged fiscal sins, are sending the euro over the edge.

What caused the recession of 1937-38? A new lesson for today’s policymakers
Douglas Irwin (VoxEU) Sep 11, 2011
The swift policy response to the recent financial crisis helped the world economy avoid a replay of the Great Depression of 1929-32. But can we avoid a replay of 1937-38? With the world economy weakening once again, this column addresses the question with a renewed urgency and comes up with an oft-overlooked explanation – the Treasury Department's decision to sterilise all gold inflows starting in December 1936.

The Banking Conundrum
Xavier Vives (Project Syndicate) Sep 12, 2011
Whereas central bankers and regulators tend to worry that too much competition in the financial sector increases instability and the risk of systemic failure, competition authorities tend to believe that the more competition, the better. Both can’t be right.

The Crisis of Fiscal Imagination
Dani Rodrik (Project Syndicate) Sep 12, 2011
Greedy banks, bad economic ideas, incompetent politicians: there is no shortage of culprits for the economic crisis in which rich countries are engulfed. But when future generations place our leaders in historical perspective, they will most likely reproach them, above all, for their lack of institutional imagination.

China vs. America
Emily Miller (Washington Times) Sep 12, 2011
There are two schools of thought about the future of the People's Republic of China (PRC). The first is that the growing communist state will do anything to become the world's preeminent power, including use its military - the world's largest - to forcefully get its way. Beijing intends to dominate Asia, and it plans to push the United States aside to become the regional hegemon. The second, a more skeptical crowd, thinks China has too many challenges to pose a serious threat to America. In other words, don't worry about another Cold War any time soon.

Euro-Zone Exit Scenarios: Germany Plans for Possible Greek Default
Der Spiegel Sep 12, 2011
The rest of the euro zone is losing patience with Greece. German Finance Minister Wolfgang Schäuble is no longer convinced that Athens can be saved from bankruptcy. His experts at the Finance Ministry have been working on scenarios exploring what would happen if Greece left the euro zone.

The G-7 disappoints again
Mohamed El-Erian (Reuters) Sep 12, 2011
Unlike recent G-7 meetings of finance ministers and central bankers that were essentially ignored, there was quite a bit of interest in the one held over this past weekend in Marseille. That interest turned out to be misplaced, however, as the G-7 delivered little of substance yet again.

The long slide into protectionism Financial Times Subscription Required
Gideon Rachman (FT) Sep 12, 2011
The economy of the European Union is larger than that of China or the US. So a European economic, banking and debt seizure has global ramifications.

Regulate in haste, repent at leisure Financial Times Subscription Required
Jo Johnson (FT) Sep 12, 2011
A futile pursuit of an unachievable nirvana of financial stability will only be at the cost of economic growth.

Discord at the ECB heralds the eurozone’s endgame Financial Times Subscription Required
David Marsh (FT) Sep 12, 2011
Jürgen Stark’s resignation is one more milestone in a long line of central banking dismissals in Europe’s most important economy.

Financial bust bequeathes a crisis of capitalism Financial Times Subscription Required
George Magnus (FT) Sep 12, 2011
Markets will not recover without jobs creation and austerity measures are thus counter-productive.

A Europe Divided? New York Times Subscription Required
Various (NYT) Sep 12, 2011
The euro was supposed to unify Europe. Is it only magnifying the north-south cultural differences instead?

Somalia's Worsening Famine New York Times Subscription Required
NYT Sep 12, 2011
Getting aid to the victims is only part of the solution. Somalia also needs to improve governance, eradicate corruption and end conflict in the region.

Inward look at Chinese outward investment
Jean-Marc F Blanchard (AT) Sep 13, 2011
Fear of being displaced by China tops off many claims that its companies' overseas investments bring wanton damage to the environment, the abuse local workers, and disregard for traditional customs. Such anxieties are based on an ignorance of the facts or context amid China's dramatically changing profile as an outward investor.

The Phoenix has yet to rise
Reuven Brenner (AT) Sep 13, 2011
The United States' recovery since 9/11 has been much slower than would be expected given the strengths of its institutions and the history of the US and other countries when faced with savage setbacks. Yet the defining, global companies of the past decade have been from the US - not Europe or Asia. This Phoenix will rise - eventually.

The Eurozone debt crisis: Why the IMF’s proposal is flawed
Jordi Gual (VoxEU) Sep 13, 2011
The IMF has recently suggested the recapitalisation of Europe’s banks as the most prudent way out of the continent’s economic crisis. This column argues that such thinking is based on a flawed analysis of the problem and is an unhelpful distraction at best. Europe is facing a crisis of government debt. The true problem of the Eurozone is not its banking system.

Can We Increase Gross National Happiness?
Peter Singer (Project Syndicate) Sep 13, 2011
The small Himalayan kingdom of Bhutan is known internationally for its policy of promoting “gross national happiness” instead of economic growth. But can happiness really be measured, and can people really agree on what increases it?

Strong Credit Growth, Asset Price Hikes Can Signal Financial Risks
IMF Survey Sep 13, 2011
Rapid credit growth, increased asset prices, greater reliance on banks’ foreign borrowing and an appreciating currency are signs a country could be headed for a financial crisis, according to the IMF's latest analysis in the Global Financial Stability Report.

Time for Germany to make its fateful choice Financial Times Subscription Required
Martin Wolf (FT) Sep 13, 2011
The failure of Germany’s leaders to explain the facts at home makes it impossible to solve the current crisis.

Taming the banks: long overdue or utter folly? Financial Times Subscription Required
John Kay (FT) Sep 13, 2011
Without ringfencing it will soon be a case of 'here we go again'.

Taming the banks: long overdue or utter folly? Financial Times Subscription Required
Martin Jacomb (FT) Sep 13, 2011
Beware the paradox that a system to limit risk invariably increases it.

Biggest test of central bank credibility is to come Financial Times Subscription Required
John Plender (FT) Sep 13, 2011
Low inflation in the developed world is essential to permit a convergence of living standards.

The Gathering Eurozone Storm
Christopher Alessi (CFR) Sep 13, 2011
Investors and financial markets are growing convinced that Greece will default on its debt, heightening fears of a eurozone banking crisis that would have significant ramifications for an already fragile global economy.

A Brief History of Cheap Labor
Sanjeev Sanyal (Globalist) Sep 13, 2011
Developing countries like China and India have benefited mightily from Western companies outsourcing work to locales with cheap labor. But, in the 19th century, it was the United States, Britain and Germany that benefited from cheap labor.

Europe: The Continent That Follows Rahm Emanuel's Maxim
Stephan Richter (Globalist) Sep 14, 2011
How Europe is following the famous maxim of former White House Chief of Staff Rahm Emanuel: “Never let a serious crisis go to waste.”

Questions over Future of Doha Intensify as Ministerial Draws Nearer
Bridges Weekly Trade News Digest, Volume 15, Number 30 Sep 14, 2011
As the WTO returns from its summer recess, members are actively looking at what options remain for the struggling Doha Round of trade talks, especially given the fast approach of December's WTO Ministerial. While some WTO members, such as the US, are suggesting that the global trade body's membership acknowledge that the round is "deadlocked," others are urging the exploration of other possibilities.

Leaked EU Texts Reveal Greener Farm Policy, 'Recoupling' Plans
Bridges Weekly Trade News Digest, Volume 15, Number 30 Sep 14, 2011
Leaked EU draft texts confirm expectations that the 27-member bloc is likely to seek to 'green' farm subsidy payments after 2013 by adding new rules on protecting the environment. Controversially, though, the drafts also reveal new plans to allow some countries to re-allocate more direct payments to the production of particular crops - reversing prior attempts to 'decouple' farm support from production and thus reduce the trade distortions that this support might cause.

Cairns Group Ministers "Press the Alarm Buzzer" on Doha Agriculture Talks
Bridges Weekly Trade News Digest, Volume 15, Number 30 Sep 14, 2011
With December's WTO Ministerial Conference on the horizon, ministers from the Cairns Group of agricultural exporters met last week to brainstorm on how to proceed with the troubled Doha Round of trade talks. While focusing on the Doha agriculture negotiations, Cairns Group ministers also discussed the international agriculture trade policy environment, food security issues, and science-based trade.

Budgetary Austerity Can Help Trim Trade Deficits
IMF Survey Sep 14, 2011
Spending cuts and tax hikes are expected to be a fact of life in many economies over the coming years. The IMF examines the repercussions of budgetary cutbacks on external trade balances—finding that cutting the budget deficit can also improve a country’s current account balance.

The myth of the 'China model' in Africa
Jian Junbo (AT) Sep 14, 2011
The United States has taken aim at a so-called "China model" of authoritarian, state-led capitalism it says is catching on in Africa, while indirectly accusing Beijing of neo-colonialism. African nations indeed want to emulate China's rise, but lack its centralized politics and history of unification, and the West's fears are simply linked to helplessness over its dwindling influence on the continent.

The Horn of Africa’s Last Famine?
Sam Dryden (Project Syndicate) Sep 14, 2011
With more than 13 million people facing starvation in the Horn of Africa, the international community must do much more to meet the immediate needs of this famine’s victims. But we should also be thinking about long-term solutions to prevent food crises on this scale from happening in the first place.

Legal origin: A Chinese perspective
Debin Ma (VoxEU) Sep 14, 2011
Recent research stresses the key role of a nation’s 'legal origin' – for example, common law versus civil law regimes – in determining economic performance. This column explores the much-overlooked origin of Chinese law and the role it is playing in the country’s development.

A consensus view on liquidity risk
Viral Acharya, Arvind Krishnamurthy & Enrico Perotti (VoxEU) Sep 14, 2011
Liquidity risk – which was at the heart of the September 2008 financial meltdown and explains regulatory concerns about a Greek default today – remains an open issue in financial regulatory reform. This column presents a consensus view of several leading academics on what more needs to be done to close this regulatory gap.

Do equity price drops foreshadow recessions?
John C Bluedorn, Jörg Decressin & Marco E Terrones (VoxEU) Sep 14, 2011
There are concerns that the recent sharp drop in equity prices in the advanced economies may signal a rise in the risk of a double-dip recession. This column examines the performance of equity prices as predictors of new recessions in the G7 economies. The findings suggest that equity prices are useful predictors of recessions in most of these countries. Recent drops in equity prices suggest that the probability of a double-dip recession in France, the UK, and the US has increased substantially.

Euro Bonds Are Wrong Fix in Half-Way Union
Riccardo Barbieri (Bloomberg) Sep 14, 2011
A number of European politicians and economists are hailing the euro-bond proposal as the only viable solution to the region’s sovereign-debt dilemma. What proponents of euro bonds ignore is that, unless the initiative stems from a broader process leading to economic and fiscal union, it risks taking the euro area into an even more disruptive phase in the future.

To Save Euro, Turn to Mutual-Fund Banks
Laurence Kotlikoff (Bloomberg) Sep 14, 2011
Eleven years ago, economic historian Niall Ferguson and I marked the euro’s birth with a Foreign Affairs article titled “The Degeneration of EMU.” We argued that absent centralized fiscal policy, euro-zone countries would fight over how much money the European Central Bank should print to help pay their bills. We gave the euro a decade. Tragically, we may end up close to the mark.

Leave the Euro to the PIGS Wall Street Journal Subscription Required
Allan H. Meltzer (WSJ) Sep 14, 2011
Europe's responsible countries should establish their own new currency union.

German hotheads are close to destroying the euro Financial Times Subscription Required
Jeffrey Sachs (FT) Sep 14, 2011
It is naive to believe the downward spiral will stop with Greece. Italy, Spain, Portugal, Ireland, and even France will be next.

Forced borrowing: the WMD of fiscal policy Financial Times Subscription Required
Jean-Paul Fitoussi, Gabriele Galateri di Genola & Philippe Weil (FT) Sep 14, 2011
Sovereigns are not private borrowers: they can always force-feed debt to their own citizens.

Five stages of grief for global markets Financial Times Subscription Required
Jerome Booth (FT) Sep 14, 2011
From denial to acceptance: get used to the new reality or risk years of depression.

Sewing Her Way Out of Poverty New York Times Subscription Required
Nicholas Kristof (NYT) Sep 14, 2011
In Kenya, a former prostitute's dressmaking business bought her children a better home and an education, showing how empowering women can lift families out of poverty.

Can China save Europe?
Fareed Zakaria (WP) Sep 14, 2011
How it can halt the European debt crisis.

Europe - into the end game
Chan Akya (AT) Sep 15, 2011
Concerted action is required to resolve the eurozone's deepening woes, yet the institutions in Europe and the United States required to play a key role are at war with each other, while external intervention, say from China, has little in the way of positive history. We are approaching, or are already in, the end game for the euro project.

Global: The Deflation Risk
Gerard Minack (MS GEF) Sep 15, 2011
Given the downside risk, I think that markets are likely to remain focused on the possibility of developed world deflation.

The damaged ECB legitimacy
Anne Sibert (VoxEU) Sep 15, 2011
The European Central Bank was once known for its focus on price stability. Since the global economic crisis, however, its role has extended to saving banks and sovereign countries. This column argues that such a move has badly harmed the institution’s legitimacy – something that will damage both its policy effectiveness and confidence in the governing bodies of the EU as a whole.

Thinking the Unthinkable in Europe
George Soros (Project Syndicate) Sep 15, 2011
To resolve a crisis in which the impossible has become possible, it is necessary to think the unthinkable. So, to resolve Europe’s sovereign-debt crisis, it is now imperative to prepare for the possibility of default and defection from the eurozone by Greece, Portugal, and perhaps Ireland.

Lagarde Urges Collective Action to Restore Confidence
IMF Survey Sep 15, 2011
Amid uncertainty in the world’s financial markets, world leaders should address together the three main challenges facing the global economy: debt pressures sapping growth, risk of instability in the core of the global economic system, and social tension, the head of the IMF says.

What Tim Geithner Should Tell the Europeans about Collaborative Crisis Solutions
Jacob Funk Kirkegaard (PIIE) Sep 15, 2011
It isn't every month a US Treasury Secretary flies to Europe multiple times to meet with Europe's top economic policymakers. So even if the Obama administration has an obvious own-interest in lining up a potential convenient external excuse for Europe, should the American economy continue to sputter during the accelerating election campaign, it is important to realize that rarely has a US Treasury Secretary been better placed to offer Europe crucial needed advice than Tim Geithner is today.

Currency Wars
Uri Dadush & Vera Eidelman (CEIP) Sep 15, 2011
In September 2010, Brazilian Finance Minister Guido Mantega shocked the world by launching the opening salvo in what he called a “currency war.” Mantega claimed that emerging markets were being squeezed by a combination of a depreciating U.S. dollar and an undervalued Chinese renminbi (RMB).

Why Are Gold Prices So High?
Robert P. Murphy (Mises Daily) Sep 15, 2011
Ever since Ben Bernanke began flooding the banking system with trillions of new dollars in the fall of 2008, economists and other pundits have disagreed on whether the US is in store for a grinding deflation or an accelerating inflation. Part of the disagreement stems from some people using the terms to refer to prices, whereas others refer to changes in the total quantity of money and credit.

Of course it’s right to ringfence rogue universals Financial Times Subscription Required
Martin Wolf (FT) Sep 15, 2011
Some bleat about ‘level playing fields’. My response is that if France wishes to put taxpayers at risk, that is its folly.

A cheer for ECB’s attempt at shock and awe Financial Times Subscription Required
Sebastian Mallaby (FT) Sep 15, 2011
The central bank’s latest intervention is excellent news for Europe’s banks, hence why their stocks are soaring. But it won’t solve the continent’s other problems

Uncanny echoes of damage caused by CDOs Financial Times Subscription Required
Gillian Tett (FT) Sep 15, 2011
Hopefully the story of UBS should now put more fire in the regulators’ belly. If so, it may have actually done the financial industry a favour.

Europe should not count too much on Chinese cash Financial Times Subscription Required
Henny Sender (FT) Sep 15, 2011
China has learned that western capital is not stable capital.

Stand or Fall Together New York Times Subscription Required
NYT Sep 15, 2011
To save the euro, Europe's leaders need to put up more cash and let go of old ideas.

The Planning Fallacy New York Times Subscription Required
David Brooks (NYT) Sep 15, 2011
The historical pattern of financial crises has been universally acknowledged and universally ignored.

The damaged ECB legitimacy
Anne Sibert (VoxEU) Sep 15, 2011
The European Central Bank was once known for its focus on price stability. Since the global economic crisis, however, its role has extended to saving banks and sovereign countries. This column argues that such a move has badly harmed the institution’s legitimacy – something that will damage both its policy effectiveness and confidence in the governing bodies of the EU as a whole.

The Development Deception
Brendan P O'Reilly (AT) Sep 16, 2011
There is a dangerous lie that permeates the media, government and general discourse of nearly every single nation on Earth. That lie is the Development Deception; it is grossly misleading for the nations who over-consume the world's finite resources to be considered developed.

The Fear Factor
Roger Farmer (Project Syndicate) Sep 16, 2011
The dominant macroeconomic paradigm since the early 1980’s does not include unemployment as a factor, and it does not assign an independent role to confidence. But confidence is a scientific concept that can be inferred from observing asset price movements.

The ECB’s Moment of Decision
Gene Frieda (Project Syndicate) Sep 16, 2011
It is not too late to resolve the current eurozone crisis, but an effective response must be immediate, overwhelming, and free of the ideological rivalries that have enfeebled the common currency since its launch. The European Central Bank is the only institution that can generate such a response.

Financing Africa: New hopes and continuous challenges
Thorsten Beck (VoxEU) Sep 16, 2011
Financial systems can be a powerful tool for economic development across Africa. This column, which summarises a new report on finance in Africa, argues that in order to become such a tool, more competition, an increased focus on the necessary financial services, and more attention to demand-side constraints are needed.

Public debt in the Eurozone, Japan, and the US
Charles Wyplosz (VoxEU) Sep 16, 2011
Europe’s debt crisis is unfolding while Japanese and US debt problems are on hold. The problem of public debt in advanced economies will be with us for decades. This column introduces a new Geneva Report on the World Economy that addresses the nuts, bolts, and worries surrounding the issue.

Downgrading the downgraders? Ratings, sovereign debt, and financial-market volatility
Donato Masciandaro (VoxEU) Sep 16, 2011
Credit-rating agencies have come in for strong criticism for their role in the global crisis. This column asks whether by communicating their opinions rating agencies can make a crisis worse and outlines some of the policy implications if they do.

For Jobs, It's War New York Times Subscription Required
Charles M. Blow (NYT) Sep 16, 2011
The United States is not poised to fight the global battles for good jobs.

The privatisation of infrastructure: One size does not fit all
Alexis Maingard & Laura Recuero Virto (VoxEU) Sep 16, 2011
Is privatisation of infrastructure a cheap road to development? This column argues that policymakers should recognise that what works for some situations won’t work for all. When it comes to infrastructure, the column suggests that governments and international financial institutions should look beyond the private sector.

BRIC public sector debt is very manageable in spite of rising off-balance sheet risks
Markus Jaeger (DB Research) Sep 16, 2011
Over the next five years, government debt in the G4 (US, Japan, Germany and the UK), with the exception of Germany, will rise very significantly. The G4 will therefore have to undergo a multi-year fiscal adjustment in order to put debt on a sustainable path. By contrast, the BRIC governments, having weathered the global crisis fiscally unscathed, will see their debt levels largely unchanged and face a very limited or even non-existent need for a fiscal adjustment. Even if BRIC public sectors were forced to take on contingent liabilities (e.g. in case of a banking sector bail-out), they would still be in better shape, financially speaking, than the G4.

China – Not really a white knight for the eurozone
Steffen Dyck (DB Research) Sep 16, 2011
Recent media reports put a lot of emphasis on the role China could play in assisting to resolve the eurozone debt crisis. In our view, however, hopes pinned on China might be overdone. The amount needed when looking at estimated refinancing needs for 2012 is huge, amounting to EUR 730 bn for the GIIPS countries. Even if China were willing to increase its investments in euro assets a realistic number would be around EUR 150 bn for 2012. Risk aversion coupled with potentially hostile domestic public opinion make substantially increased – and unconditional – Chinese investment in the eurozone unlikely in the near term.

Bon Voyage, World Bank!
Lex Rieffel (Globalist) Sep 16, 2011
Why the time has come to move the World Bank out of the United States.

World Bank policies "enabling" African land grab
Bretton Woods Update No. 77 Sep 16, 2011
Plus: Bondholders vs the public: Outcry over IMF-EU eurozone loans; IFC helping Western multinationals exploit Ghana's water crisis; World Bank deaf on food speculation, vocal on financial instruments; IFC weakens World Bank's transparency commitment; and more.

Back to the Future?
Spyros Andreopoulos (MS GEF) Sep 16, 2011
History suggests that expansions don’t die young and economies don’t double-dip unless monetary or fiscal policy catalyse it.

Greece's inevitable fall
Nita Ghei (WT) Sep 16, 2011
Treasury Secretary Timothy F. Geithner hopped over the Atlantic to meet with his European counterparts Friday. Things are so desperate in the eurozone that the idea of a leveraged bailout fund, similar to the one used in the United States when it was hit by the collapse of Lehman Brothers in 2008, is on the table to address Europe's ongoing financial crisis.

Eurobonds without public guarantees: Insulating the financial sector from the European debt crisis
Thorsten Beck, Harald Uhlig & Wolf Wagner (VoxEU) Sep 17, 2011
While almost everyone is agreed that the Eurozone is in crisis, there is much less agreement about how to stop it. This column argues that policymakers should move beyond the current proposal for Eurobonds – something the authors label as “economically wrong and politically indefensible”. Instead, they call for “synthetic Eurobonds” that would insulate the financial sector – and much of the economy – from the current debt crisis.

Europe's currency crisis: How to save the euro
Economist Sep 17, 2011
It requires urgent action on a huge scale. Unless Germany rises to the challenge, disaster looms.

Reforming education: The great schools revolution
Economist Sep 17, 2011
Education remains the trickiest part of attempts to reform the public sector. But as ever more countries embark on it, some vital lessons are beginning to be learned

Time for a Smaller and Stronger Eurozone
Mohamed A. El-Erian (Handelsblatt/HuffPo) Sep 17, 2011
The euro is central to Europe's economic prosperity, financial stability and political harmony. Moreover, given America's own set of economic challenges, a well-anchored euro is critical to placing an increasingly multi-polar world economy back on the path of high growth and job creation.

Romney's China Blunder Wall Street Journal Subscription Required
WSJ Sep 17, 2011
Declaring Beijing a 'currency manipulator' is likely to backfire.

When Greece Defaults Wall Street Journal Subscription Required
Holman Jenkins (WSJ) Sep 17, 2011
Countries must be allowed to go broke if the euro zone is ever to have discipline.

A Pro-Trade Agenda for U.S. Jobs Wall Street Journal Subscription Required
Andrew A. Card, Thomas A. Daschle, Matthew J. Slaughter & Edward Alden (WSJ) Sep 17, 2011
Why let the European Union and China take the lead on trade opening with the fast-growing economies of Asia and Latin America?

How Can China Save Europe When It's Defaulting On Its Own Debt?
Gordon G. Chang (Forbes) Sep 18, 2011
The slowing Chinese economy threatens to cause a crippling wave of defaults on debts surreptitiously piled up by local government-controlled entities.

Reforming the international monetary system: Introducing a new eReport
Emmanuel Farhi, Pierre-Olivier Gourinchas & Hélène Rey (VoxEU) Sep 19, 2011
Some prominent economists argue that failures in the international monetary system are the root cause of the global crisis. This column introduces a new eReport arguing that, at the very least, the international monetary system is inefficient and destabilising for the global economy. It proposes a number of reforms, the common thread of which is to increase the conditional supply of liquidity and reduce its unconditional demand.

The world must insist that Europe act Financial Times Subscription Required
Lawrence Summers (FT) Sep 18, 2011
There must be a reduction in the financial autonomy of member states if the common currency is to survive.

Eurobonds and fiscal union are the only way out Financial Times Subscription Required
Wolfgang Münchau (FT) Sep 18, 2011
A periphery that includes Italy and Spain is too big to save with the current limited liability process.

Big Labor's Yanqui Imperialism Wall Street Journal Subscription Required
Anastasia O'Grady (WSJ) Sep 18, 2011
The U.S. trade representative is trying to deny due process to Guatemala in defiance of free-trade agreement rules.

The G-20 Must Get Serious New York Times Subscription Required
Gordon Brown, Filipe Gonzalez & Ernesto Zedillo (IHT/NYT) Sep 18, 2011
If the G-20 is going to tackle the root causes of the crisis, it should begin by loosening the strings that impede the I.M.F.

Countering the Contagious West
Mohamed A. El-Erian (Project Syndicate) Sep 19, 2011
In the world of old, the West’s economic malaise already would have pulled the rug from beneath most emerging-market countries. Today, however, these countries have considerable policy flexibility and greater latitude to act than they had in the past.

Who Will Eclipse America?
Simon Johnson (Project Syndicate) Sep 19, 2011
A few years ago, some regarded Japan as having overtaken the US, and Europe, too, was supposedly vying for global economic dominance. Now it's China's turn – and it suffers from the same vulnerabilities that have stymied Europe and Japan.

Getting to Yes (Again) with Germany
Marc Flandreau (Project Syndicate) Sep 19, 2011
Europe’s slow-motion sovereign-debt crisis may appear unique, but it is not. Just a few decades ago, Europe had the Exchange Rate Mechanism, which collapsed during a crisis very much akin to the one afflicting the eurozone today.

How to Prevent a Depression
Nouriel Roubini (Project Syndicate) Sep 19, 2011
The risks of an economic and financial crisis worse than the previous one – now involving not just the private sector, but also near-insolvent sovereigns – are significant. So, what can be done to minimize the fallout of another economic contraction and prevent a deeper depression and financial meltdown?

Strong Nations, Not Greece, Should Exit Euro
Ramesh Ponnuru (Bloomberg) Sep 19, 2011
Europeans can’t say they weren’t warned. For a decade before the euro was launched, critics -- and many economists -- argued that one currency wouldn’t fit all, or even most, of the nations of the European Union.

Why the Global Economic Recovery is in Trouble
Eswar Prasad & Karim Foda (Brookings) Sep 19, 2011
The world economy has hit a rough patch on the road to recovery and is in danger of skidding off course.

The single currency’s true fatal flaw Financial Times Subscription Required
Gideon Rachman (FT) Sep 19, 2011
The euro’s lack of a common identity is the fatal flaw that may sink the common currency.

Lagarde must rebalance her biased Fund Financial Times Subscription Required
Mario Blejer (FT) Sep 19, 2011
IMF financial favouritism towards Europe is already undermining its legitimacy in emerging markets.

Emerging stocks offer better returns and less risk Financial Times Subscription Required
Burton G Malkiel (FT) Sep 19, 2011
While correlations have increased between national markets, differences between their performances will grow.

Questioning Indonesia's place in the world
Yasmi Adriansyah (AT) Sep 20, 2011
Indonesia's lack of influence in the global political-economic arena belies its size and abundant natural and human resources. Numerous internal challenges that typically face developing nations are to blame, but by tackling the most daunting - corruption, rule of law and poverty - Jakarta can prove that the country is headed towards greater power status.

Decision Time for the Eurozone
Yannos Papantoniou (Project Syndicate) Sep 20, 2011
Germany’s arguments against the introducing Eurobonds, expanding the eurozone’s bailout fund, and instituting a comprehensive system of economic governance are transparent and easy to understand. But are they right?

The Consequences of Angela Merkel
Robert Skidelsky (Project Syndicate) Sep 20, 2011
Germany has been leading the opposition in the EU to any write-down of troubled eurozone members’ sovereign debt. But German Chancellor Angela Merkel should consider that, following World War I, her country was in a similar position – and the result for Germany, Europe, and the world was hardly optimal.

Rethinking central banking
Barry Eichengreen, Eswar Prasad & Raghuram Rajan (VoxEU) Sep 20, 2011
Central banks have massively broadened their remit in recent crisis-laden years, but the standard analytic framework – ‘flexible inflation targeting’ – has not changed. This column argues that it is time to properly flesh out an alternative framework. Financial stability should be an explicit mandate of central banks, and international coordination among central banks should be boosted by forming a small group of systemically significant central banks that regularly meets and issues reports to the G20 on their financial-stability policies.

Why Greece Won't Reform Wall Street Journal Subscription Required
Takis Michas (WSJ) Sep 20, 2011
Over the past year the government hasn't laid off a single civil servant.

Weak and Bumpy Global Recovery Ahead
IMF Survey Sep 20, 2011
The global economic recovery is slowing, and the world economy is in a dangerous new phase, the IMF says in its latest forecast. The IMF’s World Economic Outlook says strong, coordinated action is necessary to avert a decade of lost growth in the advanced economies.

overnments Confront Policy Dilemma on Debt, Growth
IMF Survey Sep 20, 2011
Governments around the world face a dilemma — how to reduce debts and deficits, and support growth and employment as anxious financial markets rattle the global economic recovery. Read the latest edition of the IMF's Fiscal Monitor for the full story.

Why breaking up is so hard to do Financial Times Subscription Required
Martin Wolf (FT) Sep 20, 2011
The eurozone cannot stay where it is, cannot undo what it has done and finds it traumatic to go forward.

Eurozone crisis has making of horror sequel Financial Times Subscription Required
Alan Beattie (FT) Sep 20, 2011
Government credit risks, shaky asset markets and slowing growth look like creating a 2008 crisis follow-up: ‘This Time It’s Sovereign’.

Why the BRICS won't 'save' Europe
Pepe Escobar (AT) Sep 21, 2011
As national egoism drags Western Europe into the financial mire, a cavalry of emerging economies made up of Brazil, Russia, India, China and South Africa is mulling a bailout that could also accelerate the rise of the BRICS in global influence. However, while China is still smarting over the economic impact of the Libyan bombings, other BRICS say helping Europe would simply be a poor investment.

A fiscal union for the euro: Some lessons from history
Michael Bordo, Lars Jonung & Agnieszka Markiewicz (VoxEU) Sep 21, 2011
The single European currency is the first of its kind – a union where monetary policy is decided centrally and fiscal policy decided nationally – something that many argue is the root cause of its troubles. This column looks to history to find examples of federal states with a common currency but without the frailties currently being exposed in the Eurozone. The main lesson: No bailouts.

Why China Is a Financial Midget Wall Street Journal Subscription Required
Jonathan Anderson (WSJ) Sep 21, 2011
Beijing's economic model will prevent the yuan from replacing the dollar as the world's reserve currency.

Global Financial System Risks Escalate
IMF Survey Sep 21, 2011
Financial stability risks have risen sharply in recent months, as slower economic growth, financial market turbulence in Europe, and the credit downgrade of the United States have weighed on the global financial system, the IMF says in its latest Global Financial Stability Report.

IMF Tries to Assess Risks for Low-Income Countries
IMF Survey Sep 21, 2011
With advanced economies under pressure, the IMF is stepping up its analysis of ricks spreading to low-income countries.

WTO Public Forum Draws Civil Society to Geneva
Bridges Weekly Trade News Digest, Volume 15, Number 31 Sep 21, 2011
With the shadow of Doha and the ongoing financial crisis hovering in the background, an estimated 1500 representatives from civil society, academia, business, government, and the media flocked to the WTO's Geneva headquarters this week for a series of over forty sessions centred on the future of the multilateral trading system. Talks at the 19-21 September meetings were organised around this year's Public Forum theme, "seeking answers to global trade challenges."

Panel Rules US 'Dolphin Safe' Label Too Trade Restrictive
Bridges Weekly Trade News Digest, Volume 15, Number 31 Sep 21, 2011
The US' "dolphin safe"labelling practice for tuna products have been deemed WTO illegal, according to a ruling issued on Thursday 8 September. The panel ruled that the label - which is meant to inform consumers on the use of dolphin-friendly fishing practices - was unnecessarily trade restrictive. However, the three-member panel disagreed with the complainant Mexico that the label also discriminated against Mexican tuna on the basis of nationality.

Trans-Pacific Talks Inch Forward at Chicago Meeting
Bridges Weekly Trade News Digest, Volume 15, Number 31 Sep 21, 2011
The eighth round of talks for the proposed nine-country Trans-Pacific Partnership agreement showed movement in several areas, according to reports, with negotiators now ready to address "sensitive areas." The negotiations, held in the US city of Chicago on 9-15 September, also drew pro-labour activists pushing for strong labour standards, and saw the US present a drugs plan for discussion. Negotiators are aiming to have an outline of an agreement by November's Asia Pacific Economic Cooperation (APEC) Leaders' meeting.

Bonn Climate Discussions Touch on Trade Topics
Bridges Weekly Trade News Digest, Volume 15, Number 31 Sep 21, 2011
Delegates and experts gathered this week in Bonn, Germany at the headquarters of the United Nations Convention Framework for Climate Change (UNFCCC) to discuss the possible negative impacts that arise from actions to address climate change.

G-20 Set to Share Farm Data, Ag Research
Bridges Weekly Trade News Digest, Volume 15, Number 31 Sep 21, 2011
Efforts toward establishing a new agricultural market information system and improved attention on agricultural research for development kept officials from the Group of 20 financial powers busy last week. Keeping to the schedule outlined by Agriculture Ministers in a June 2011 Action Plan, the group is moving quickly to address various areas of global agricultural policy in advance of the November gathering of G-20 heads of state.

Brazil will fight back against the currency manipulators Financial Times Subscription Required
Dilma Rousseff (FT) Sep 21, 2011
Trade and exchange rate protectionism have devastating effects for all but especially for developing countriee.

Spain, not Greece, may be biggest eurozone threat Financial Times Subscription Required
Charles Dumas (FT) Sep 21, 2011
Chances of a Spanish asset price slide and banking crisis are high.

Europe’s Triple Threat
Michael Boskin (Project Syndicate) Sep 22, 2011
Europe is suffering from simultaneous sovereign-debt, banking, and currency crises, forcing policymakers to use all vehicles at their disposal – including the ECB, the IMF, and the European Financial Stability Facility – in a desperate attempt to stem the financial panic, contagion, and risk of recession. But are they going about it in the right way?

The Unexamined Crisis
Luigi Zingales (Project Syndicate) Sep 22, 2011
Three years have now passed since the collapse of Lehman Brothers, which triggered the start of the most acute phase of the 2007-2008 financial crisis. But the financial world is no safer today, because the data needed to identify what caused the crisis have been withheld.

Do mutual funds make crises worse?
Claudio Raddatz & Sergio Schmukler (VoxEU) Sep 22, 2011
As the financial crisis spread throughout the world, attention fixed on those working in the stock and bond markets, with many accusing them of making the crisis worse. This column looks at data on international mutual funds since 1996 and finds that when there is a crisis, equity funds tend to amplify the shock by acting procyclically, while bond funds transmit the crisis across countries by acting countercyclically.

South-South investment, institutional quality, and natural resources
Mariya Aleksynska & Olena Havrylchyk (VoxEU) Sep 22, 2011
Foreign direct investment is a vital tool for building infrastructure and raising economic activity in the world’s poorer countries. This column describes the emergence of FDI between developing and transition economies (the South). It argues that these are different from traditional North-South flows. Although investors from the South are sometimes deterred by countries that have bad institutions, this is often outweighed by the presence of natural resources.

Wanted: a plan to save Europe Financial Times Subscription Required
Philip Stephens (FT) Sep 22, 2011
The unravelling of what old-fashioned Europeans of a certain age call solidarity began well before the onset of the present crisis.

LatAm lessons show eurozone must prepare for worst Financial Times Subscription Required
Dominic Rossi (FT) Sep 22, 2011
Before southern Europe can return to growth we need private sector involvement rather than offer it a means of escape by buying up bonds.

Who Really Gains from the Euro?
Alfred Steinherr (Globalist) Sep 22, 2011
How the euro crisis has turned the potential benefits of the euro for the South into a substantial loss for everybody.

The Great Debt Scare
Robert J. Shiller (Project Syndicate) Sep 23, 2011
Most confidence indices today are based on survey questions that ask respondents to assess the economy today or in the near future. But what today's debt fears in Europe and the US really reflect – and what is holding back consumption and investment – is widespread anxiety about long-term economic prospects.

Big Reform in Small Packages
Jean Pisani-Ferry (Project Syndicate) Sep 23, 2011
The French presidency of the G-20 has selected reform of the international monetary system as its main priority for the Cannes summit in November. But the effort is bound to be a long march, so the appropriateness of small steps should be assessed from a perspective covering at least the next 10-15 years.

Argentina’s Bumpy Ride
Andres Velasco (Project Syndicate) Sep 23, 2011
The question making the rounds in Argentina nowadays is whether the period of plenty since the country's default a decade ago is coming to an end. With imports still growing strongly and commodity prices beginning to fall as a result of the world slowdown, the country's trade surplus is disappearing quickly, while inflation is rising sharply.

Currency wars
Uri Dadush & Vera Eidelman (VoxEU) Sep 23, 2011
Currency wars are a pressing concern in the international arena. This column introduces a new online book that argues the real cause of today’s currency tensions are misguided domestic policies in the world’s major economies. The cure is not to overhaul the exchange-rate system – which has worked well during a global crisis. The solution lies in incremental change by the US, the EU, and China.

Basel III is an overdue step in the right direction
Avinash Persaud (VoxEU) Sep 23, 2011
The financial crisis revealed substantive problems that need to be solved, especially in the banking sector. This column argues that Basel III, the new accord on international banking, is an overdue step in the right direction. It should be defended against attempts by bankers and their friends to cut it down, dilute it, and postpone it.

All Eyes on Europe
Mark R. Kiesel (PIMCO) Sep 23, 2011
The longer policymakers wait, the more likely Europe’s financial crisis will deteriorate. The risk of a global liquidity trap has also increased as many healthy balance sheets around the world are also refusing to engage. Germany and other strong sovereign balance sheet nations in Europe have to make a choice: continue to provide financial assistance to countries with more debt and assist in helping to restructure the debt of some European peripheral countries, or potentially move forward with a smaller, stronger group of countries - or at the extreme walk away from the Euro and the European Union all together. Without bold and coordinated action from European policymakers and the ECB, we can expect financial markets remain on edge; causing volatility to remain elevated until equity capital is injected into weaker European banks and permanent term financing is provided to those solvent European peripheral sovereign countries. We believe investors should wait to see whether policymakers can be effective in formulating a coordinated and credible solution for Europe before taking on more risk. In the near term, we favor focus on maintaining higher-than-normal cash balances, investments in areas with strong fundamentals and balance sheets and staying defensive in non-cyclical sectors as well as in investments senior in the capital structure.

Emerging Asia’s Fortunes Still Closely Tied to West’s
IMF Survey Sep 23, 2011
Emerging Asia has weathered the global financial crisis relatively strongly, prompting some suggestions that its economy has decoupled from that of the developed world. But speakers at a recent conference said the region’s well being remains strongly influenced by the fate of advanced countries.

Debt Levels Alone Don’t Tell the Whole Story New York Times Subscription Required
Floyd Norris (NYT) Sep 23, 2011
Ireland's low level of government indebtedness in 2007 gave little indication of the financial trauma the country would undergo.

G20: onus on eurozone to find crisis solution
Emerging Markets Sep 23, 2011
World financial leaders on Friday urged swift action on the European debt crisis, but stressed that responsibility lay with eurozone politicans to find an immediate solution.

A game of catch-up
Economist Sep 24, 2011
The shift in economic power from West to East is accelerating, says John O’Sullivan. The rich world will lose some of its privileges

Row erupts over eurozone crisis response
Emerging Markets Sep 24, 2011
Global finance leaders clashed over how to resolve the European sovereign debt crisis at the IMF meetings in Washington this weekend

World powers seek to contain Europe debt crisis
Harry Dunphy & Gabriele Steinhauser (Businessweek) Sep 24, 2011
Under pressure from skeptical financial markets, the world's economic powers scrambled on Saturday for ways to keep Europe's debt crisis from spiraling out of control.

Germany's Love for Greece New York Times Subscription Required
Todd G. Buchholz (NYT) Sep 25, 2011
Why are Germans willing to reach deep into their pockets for many billions of euros to bail out Zorba the Greek and his lackadaisical neighbors?

Euro Zone Death Trip New York Times Subscription Required
Paul Krugman (NYT) Sep 25, 2011
There is a frightening gap between what the euro needs to survive and what the policy elites are willing to do.

Zero hour for the euro Financial Times Subscription Required
Wolfgang Münchau (FT) Sep 25, 2011
The world’s inability to shake of the economic downturn and contagion in Italy have changed the nature of the eurozone crisis.

A bail-out by Bric nations would leave Europe even worse off Financial Times Subscription Required
Michael Pettis (FT) Sep 25, 2011
Turning to foreign sources of capital will only hurt growth and make it harder than ever to resolve the debt crisis.

Africa Faces 'Considerable Risks' From Global Downturn
IMF Survey Sep 25, 2011
African economies face considerable risks from a renewed global economic downturn, African finance ministers tell a Washington news briefing. They add that the continent’s economies are still on the recovery path from the previous global crisis and are in the process of restoring critical economic buffers.

Decisive Action Needed in Europe to Restore Confidence - IMF
IMF Survey Sep 25, 2011
The economic situation in Europe has deteriorated markedly in the past few months, and the economy is now experiencing a significant slowdown, Antonio Borges, the IMF’s Director for Europe, says.

Global Action for Global Recovery
Christine Lagarde (Project Syndicate) Sep 25, 2011
The global economy has entered a dangerous new phase, and, while there is a path to sustained recovery, it is narrowing. To navigate it, we need strong political will around the world – leadership over brinksmanship, cooperation over competition, and action over reaction.

High volatility breeds high correlation: New analysis of European bank stock prices
Kamil Yilmaz (VoxEU) Sep 25, 2011
The IMF claims that European banks are in need of capital injections; the ECB disagrees. This column looks at the issue from a different angle. It uses daily bank stock price data to calculate a volatility connectedness index as a measure of how shocks to bank share prices are spread to others. As of 7 September, the index reached its historical high, indicating that major European bank stocks are connected in a state of high volatility.

Europe’s danger zone
Robert J. Samuelson (WP) Sep 25, 2011
Are we repeating the mistakes of the 1930s?

China’s Escalation up the Value Chain: From Low-Cost Manufacturers to World Leaders?
Vladimir Cara and Ewan Markson-Brown (PIMCO) Sep 26, 2011
China's focus on low-cost manufacturing is going to be difficult to maintain due to changes in China's demographics over the next several years and what many view as the inevitable appreciation of the renminbi. As labour demographics change, China could suffer a double whammy of a falling savings rate and a diminishing labour force. The size of its domestic market allows China to spend more on research and development (R&D) and so potentially build technology and scale more quickly than many foreign competitors. In particular, we have identified wheel loaders and excavators as two sectors where we expect the Chinese to successfully migrate up the value chain.

The IMF must stop playing second fiddle in Europe Financial Times Subscription Required
Raghuram Rajan (FT) Sep 26, 2011
The world has to recognise that the eurozone’s problems are now too big for the eurozone alone to deal with. And it has an institution that can channel help: the IMF.

More QE will give us more inflation, not growth Financial Times Subscription Required
Andrew Sentance (FT) Sep 26, 2011
Western economies must adjust to the post-financial crisis reality.

Lessons for Greece From a Decade Ago
Martin Essex (WSJ) Sep 26, 2011
The top woman at the International Monetary Fund once said that if a country finds itself with a truly unbearable debt burden, then one way or another that debt will have to be restructured.

'Boomerang' by Michael Lewis - Review New York Times Subscription Required
Michiko Kakutani (NYT) Sep 26, 2011
In "Boomerang" Michael Lewis lucidly captures the utter folly and madness that spread across both sides of the Atlantic during the last decade, creating the international debt crisis.

A failsafe way to end the Eurozone crisis
Charles Wyplosz (VoxEU) Sep 26, 2011
Last weekend, Eurozone policymakers were shaken into admitting that something more needs to be done to save the Eurozone and avoid a major crisis that would reverberate around the world. This column proposes a three-step solution to finally end the crisis.

A Global Agenda for Seven Billion
Ban Ki-moon (Project Syndicate) Sep 26, 2011
Late next month, a child will be born – the 7th billion citizen of planet Earth. We will never know the circumstances into which he or she was born, but we do know the global imperatives that this child, and future generations, will face.

Thick as BRICS
Jorge G. Castañeda (Project Syndicate) Sep 26, 2011
On the UN resolution establishing a no-fly zone and civilian protection in Libya, Brazil, along with three of the other “BRICS” (and world power wannabes) – Russia, India, and China – abstained. Now Brazil and other large Latin American countries are showing a similar lack of leadership on the question of statehood for Palestine.

Europe’s High-Risk Gamble
Martin Feldstein (Project Syndicate) Sep 27, 2011
The markets are fully aware that Greece, being insolvent, will eventually default. Why, then, are political leaders in France and Germany trying so hard to prevent – or, more accurately, to postpone – the inevitable?

China: From imitator to innovator?
Markus Eberhardt, Christian Helmers & Zhihong Yu (VoxEU) Sep 27, 2011
The number of domestic patent filings in China increased at an annual rate of 35% from 1999 to 2006. But the reasons behind this ‘patent explosion’ are unclear. By compiling a new dataset of 20,000 Chinese manufacturing firms, this column shows that the explosion has been ignited by the ICT sector.

A Fannie Mae for Europe's Bonds? Wall Street Journal Subscription Required
WSJ Sep 27, 2011
The latest idea to avoid facing Greek facts.

China’s African Mischief
Yuriko Koike (Project Syndicate) Sep 28, 2011
As Libya’s National Transitional Council attempts to establish a functioning government for a newly liberated country, the truth about what went on under Muammar el-Qaddafi’s regime is starting to come to light. Some of the dirtiest secrets, it turns out, involved China.

Greece: The sudden stop that wasn’t
Aaron Tornell & Frank Westermann (VoxEU) Sep 28, 2011
With economists’ eyes fixed squarely on Greece, this column tries to solve a puzzle. Since 2008, tens of billions of euros have fled Greek bank accounts. Yet somehow the country still has a current-account deficit. Where has this money come from?

Special economic zones: What have we learned?
Thomas Farole (VoxEU) Sep 28, 2011
As competition for FDI and trade share intensifies in a tightening global environment, more and more countries are looking at the potential of special economic zones to kickstart growth. But China aside, do these zones work? This column asks: what have we learned from the experiences of developing countries over recent decades?

Fear and loathing in the eurozone Financial Times Subscription Required
Martin Wolf (FT) Sep 27, 2011
The eurozone has still to decide what it will be when it grows up. But first it needs to reach that stage. The costs of a meltdown would be too grave to contemplate.

Only a finance minister and full fiscal union will do Financial Times Subscription Required
Guy Verhofstadt (FT) Sep 27, 2011
What voters and taxpayers expect from their leaders are practical and achievable solutions to the eurozone crisis.

Long-term investors would benefit from Tobin tax Financial Times Subscription Required
John Plender (FT) Sep 27, 2011
The case for throwing sand in the wheels is greater because today's markets are excessively fast but their claim to be efficient is open to question.

New Analysis Should be Staple of IMF Toolkit—Experts
IMF Survey Sep 27, 2011
New reports by the IMF dedicated to analyzing the economic flows and risks between countries are a welcome addition to the institution’s policy advice and crisis prevention work, experts agree at a seminar convened on the sidelines of the IMF-World Bank Annual Meetings.

Flexible Policies Key to Success in Fragile States
IMF Survey Sep 27, 2011
The IMF can do more to help fragile states recover from war, disasters, and social distress by adopting a more flexible approach that reflects the unique challenges these countries face, said experts at a seminar on the sidelines of the IMF-World Bank Annual Meetings.

Restoring Confidence in Government Finances Critical
IMF Survey Sep 27, 2011
Policymakers need to restore confidence in government balance sheets by cutting debts and deficits while supporting growth, according to experts meeting alongside global officials during the Annual Meetings of the IMF and World Bank.

Resource-rich Countries Can Learn from History, Says Collier
IMF Survey Sep 27, 2011
African countries endowed with mineral and other natural wealth could learn from the past and rise from their low-income status through better management of their natural resources, says economist Paul Collier, adding that resource revenues can help Africa finance its own development.

Middle East Needs Jobs, Governance to Fulfill Promise of Arab Spring
IMF Survey Sep 27, 2011
The Middle East needs more jobs, better governance, and a strong civil society in order for the transformation that began with the Arab Spring movement to thrive in the long term, panelists said at an IMF seminar.

Ben Bernanke Deserves a Break Wall Street Journal Subscription Required
Alan Blinder (WSJ) Sep 28, 2011
The Fed chief pulled off a sleeper version of QE3 despite opposition at the central bank and in Congress.

G-20 Proposal Seeks to Prevent Extreme Hunger in West Africa
Bridges Weekly Trade News Digest Volume 15, Number 32 Sep 28, 2011
A leaked proposal on a regional system of reserves, which was prepared by the UN World Food Programme (WFP) for the Group of 20 leading economies, has laid out how the Economic Community Of West African States (ECOWAS) could react to prevent the worst cases of hunger. Finance and development co-operation ministers from the G-20 economies discussed the document this past week on the margins of the World Bank and International Monetary Fund (IMF) Annual Meetings in Washington.

WTO, World Bank Chiefs Caution against Protectionism amid Reports of Slowing Trade Growth
Bridges Weekly Trade News Digest Volume 15, Number 32 Sep 28, 2011
On Friday 23 September, WTO economists announced that their April trade forecasts would have to be adjusted downward, with trade growth proving slower than their already conservative estimates from five months ago. The scaled back estimates - and resulting calls to countries to withstand protectionist pressures - come amid widespread fears of a global financial slowdown, a topic that has dominated discussions from the World Bank-International Monetary Fund (IMF) Annual Meetings to the Group of 20 finance ministers' gatherings during the past week.

Brazil Pushes Forward with Currency Discussion at WTO
Bridges Weekly Trade News Digest Volume 15, Number 32 Sep 28, 2011
The long-running debate over the impact of currency exchange rates on international trade took another turn last week, as Brazil submitted a proposal to the WTO asking for the examination of possible trade tools for responding to currency fluctuations. The submission comes in the midst of Brasilia's efforts to stem the growing flow of imports into the Brazilian economy.

WTO Disputes Roundup: White House Surprises by Challenging Chinese Poultry Duties
Bridges Weekly Trade News Digest Volume 15, Number 32 Sep 28, 2011
WTO dispute settlement stays high on the trade agenda as members introduce new cases, panels, and appeals. After two years of tit-for-tat anti-dumping politics by the US and China, Washington surprised the trade community last week when announcing a formal dispute on Chinese poultry duties. Meanwhile the Philippines confirmed expert predictions when appealing a panel decision on spirits taxes issued earlier this summer.

IP Reform Can Spur Growth, Innovation in Digital Age, Says Author of UK Government-Commissioned Study
Bridges Weekly Trade News Digest Volume 15, Number 32 Sep 28, 2011
On Friday 23 September, Ian Hargreaves, author of a recent government-commissioned UK Intellectual Property Review that has received significant attention in UK media and economic circles, addressed a WIPO Symposium of Intellectual Property Authorities to outline the benefits of a plan for intellectual property reform that could have major national - and possibly international - implications. The session, moderated by WIPO's Director General Francis Gurry, also featured John Alty, Controller General of the UK Intellectual Property Office.

To Ease the Crisis, Tax Financial Transactions New York Times Subscription Required
Philippe Douste-Blazy (NYT) Sep 28, 2011
Governments, both rich and poor, urgently need a way to calm speculation in the financial markets and to raise revenue.

India’s abject return to talk of Hindu growth rates Financial Times Subscription Required
James Lamont (FT) Sep 28, 2011
India urgently needs new direction – and Manmohan Singh urgently needs to salvage what until a year ago could have been seen as a near Nehruvian legacy.

When a strong currency is not a badge of pride Financial Times Subscription Required
Peter Tasker (FT) Sep 28, 2011
The global financial crisis changed hard money orthodoxy. Suddenly policymakers were hit by anaemic demand and de-leveraging.

Germany, do your duty and save the euro today Financial Times Subscription Required
Mario Monti (FT) Sep 28, 2011
The euro is proving it can gradually transform economies in a way which corresponds to German inspirations and shared European values.

Super-charged eurozone fund won't solve crisis Financial Times Subscription Required
Satyajit Das (FT) Sep 28, 2011
A leveraged EFSF would dig itself into an even deeper hole – and in any case it does not have €440bn on tap.

America’s Free-Trade Abdication
Jagdish Bhagwati (Project Syndicate) Sep 28, 2011
The indifference and apathy that one finds in Washington on the Doha Round of global trade talks mark the end of the post-1945 era of US leadership on multilateral free trade. Instead, the Obama administration confines itself to promoting bilateral agreements with Colombia and other emerging-market countries.

The Road from Depression
George Soros (Project Syndicate) Sep 28, 2011
Financial markets are driving the world towards another Great Depression, with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation, but, contrary to prevailing wisdom, they can regain it.

Can China Rescue Europe?
Minxin Pei (Project Syndicate) Sep 28, 2011
Some have called upon major emerging countries, and on China in particular, to step up and use their huge foreign-exchange reserves to purchase the debt of crisis-ravaged countries, such as Greece, Italy, and Spain. China can't rescue Europe by itself, but it certainly has the means – and the incentive – to help.

Euro Area's Rescue Options Shrinking
Anil Kashyap (Bloomberg) Sep 28, 2011
One of the benefits of being an academic economist is that market participants and government officials will often tell you what they think in relatively frank terms. Here is what I learned in dozens of meetings last week in Frankfurt, Madrid and London.

Last Chance to Save the Euro Wall Street Journal Subscription Required
John H. Cochrane (WSJ) Sep 29, 2011
A Greek default won't destroy Europe's currency. Bailouts will.

Will India overtake China in the next decade?
Ganeshan Wignaraja (VoxEU) Sep 29, 2011
With the global economy in the treatment room, Asia’s economic giants are under examination as among the few exciting sources of world trade and growth. This column summarises the results of research on reforms, regionalism, and exports in China and India. It finds that China is likely to remain ahead in world trade in the next decade, although India has the opportunity to narrow the gap using policy measures.

Asia Must Protect Growth, Guard Against Inflation, says IMF
IMF Survey Sep 29, 2011
Against the background of a threatened global slowdown, Asian policymakers face the challenge of safeguarding growth while remaining vigilant against the risk of inflation, the head of the Asia and Pacific Department for the IMF said.

Eurozone debt debacle
Nita Ghei (WT) Sep 29, 2011
Germany's finance minister wants no more advice from the United States. He called the Obama administration's suggestion that the European Union needs to be ready to dole out trillions to bail out member nations a "stupid idea." At least one country has learned the folly of attempting to spend one's way out of debt. It hasn't sunk in with others yet.

Growth Risks, Policy Polarization and Rethinking Returns
Saumil H. Parikh (PIMCO) Sep 29, 2011
Over the next 12 to 18 months, we expect the global economy to expand at a very modest real rate of 1% to 1.5% Global imbalances have continued to rise in the post financial crisis environment, global leaders continue to fail in their policy coordination efforts, and deleveraging and reregulation continue to be critical over the course of our cyclical horizon. We are transitioning into a world where we believe the incentives of policymakers and the divisiveness of politics will become the predominant drivers of investment returns and economics.

Missed Opportunities on Trade and Jobs
C. Fred Bergsten (PIIE) Sep 29, 2011
By taking three steps to improve the United States’ trade imbalance and boost exports, President Obama and Congress can create three to four million jobs at no cost to the Federal Budget. First, the United States must, in effect, weaken the dollar by 10 to 20 percent—an action that would by itself produce one million.

Europe’s threat to U.S.
Michael Gerson (WP) Sep 29, 2011
Collapse there would threaten recovery here.

How to stop a second Great Depression Financial Times Subscription Required
George Soros (FT) Sep 29, 2011
The authorities need to regain control of the financial situation, which they can do by following a three-step plan.

Behind the Wheel, Moving Up New York Times Subscription Required
Siddhartha Deb (NYT) Sep 29, 2011
For India's middle class, cars are the emblem of economic aspiration.

The Strengths of Europe
Stephan Richter and Martin Sieff (Globalist) Sep 29, 2011
In what ways is Europe in a stronger position than the United States, China and India?

Risky Business
William D. Cohan (FP) Sep 29, 2011
Goldman Sachs and other big banks are taking a beating. But have they learned any lessons at all from the financial crisis?

Can FDI help developing countries upgrade export quality?
Torfinn Harding & Beata Javorcik (VoxEU) Sep 30, 2011
A large literature documents the benefits brought by foreign direct investment to recipient countries in terms of productivity and economic growth. This column argues that another effect is the boosting of the quality of exports. It shows that investment promotion leads to more inflows of FDI, which in turn allow developing countries to upgrade their export basket.

The fiscal stimulus of 2009-10: trade openness, fiscal space, and exchange-rate adjustment
Joshua Aizenman & Yothin Jinjarak (VoxEU) Sep 30, 2011
In the immediate fallout from the global crisis, governments around the world responded by spending big. Yet despite the talk of international coordination, this wasn’t the case in all countries. This column explores why. It finds that trade openness, fiscal space, and exchange-rate policy played a pivotal role.

Financial transaction tax: Feasible and desirable if done right
Avinash Persaud (VoxEU) Sep 30, 2011
The ‘Tobin tax’ has once again appeared in the headlines having been proposed by the European Commission and opposed by the US. This column argues that such taxes are more feasible than most think when they are linked to legal enforceability, and that the burden would be disproportionately borne by high-frequency traders that provide liquidity only when the markets don’t really need it.

Globalization’s Government
Jeffrey D. Sachs (Project Syndicate) Sep 30, 2011
In the era of globalization, we need more government, not less. Yet the role of government also needs to be modernized, in line with the specific challenges posed by an interconnected world economy.

China’s Landing – Soft not Hard
Stephen S. Roach (Project Syndicate) Sep 30, 2011
China’s economy is slowing, which is no surprise for an export-led economy that is dependent on faltering global demand. But China’s looming slowdown is likely to be both manageable and welcome, with fears of a hard landing overblown.

The “Asset Crisis” of Emerging Economies
Yu Yongding (Project Syndicate) Sep 30, 2011
Rather than confronting a debt crisis, as in 1997-98, emerging-market economies now face an “asset crisis,” but they will suffer the same result: great capital losses on their foreign-exchange reserves. Indeed, the magnitude of the losses will be on par with that of Asian financial crisis, if not higher.

Missed Opportunities on Trade and Jobs
C. Fred Bergsten (PIIE) Sep 30, 2011
By taking three steps to improve the United States' trade imbalance and boost exports, President Obama and Congress can create three to four million jobs at no cost to the Federal Budget.

Global: Is EM Growth at Risk?
Manoj Pradhan (MS GEF) Sep 30, 2011
EM growth will not be immune to the downside in DM growth that appears to become more entrenched with each day that passes without a convincing policy response.

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