A Strategic Economic Engagement
Henry M. Paulson, Jr. (Foreign Affairs) Sep/Oct 2008
The prosperity of the United States and China depends on helping China further integrate into the global economic system.
How Economics Can Defeat Corruption
Raymond Fisman and Edward Miguel (FT) Sep/Oct 2008
What's the dirtiest secret about corruption? Just how little we know about it. Luckily, a little economic detective work is all that's needed to expose the smuggling, cheating, and bribing that is hiding in plain sight.
Free Trade with a Human Face
Jorge Castañeda (Project Syndicate) Oct 2008
Although many Americans believe immigration is a domestic issue that should be excluded from talks with other governments, this is not a view held by other nations – or by the United States. Indeed, the US negotiated its first immigration deal in 1907, maintained for more than two decades a controversial treaty with Mexico covering immigration, and has kept up immigration talks and deals even with Fidel Castro since the early 1960’s.
The Geopolitical Consequences of the Financial Crisis
Harold James (Project Syndicate) Oct 2008
Worried investors and policymakers are becoming obsessed with Great Depression analogies. But the lesson of 1931 is only in part financial or economic. The 1931 crisis was so big and so destructive because it was a financial drama that played out on a geo-political stage.
Emerging Lessons from the Crisis
Eswar Prasad (Project Syndicate) Oct 2008
The US financial system is careening on the edge of a meltdown. All that has kept the much-vaunted font of global capitalism from sliding into cataclysm is the US government, which has effectively become the guarantor and lender of last resort.
Russia's Coming Financial Crash
Anders Åslund (Project Syndicate) Oct 2008
Today, the whole world is being hit by a tremendous financial crisis, but Russia is facing a perfect storm. The Russian stock market is in free fall, plummeting by 60% since May 19, a loss of $900 billion. And the plunge is accelerating. As a result, Russia’s economic growth is likely to fall sharply and suddenly.
Anatomy of a Crisis
Barry Eichengreen (Project Syndicate) Oct 2008
Getting out of our current financial mess requires understanding how we got into it in the first place. The fundamental cause, according to the likes of John McCain, was greed and corruption on Wall Street. Though not one to deny the existence of such base motives, I would insist that the crisis has its roots in key policy decisions stretching back over decades.
Marginalizing Malaria
Richard Feachem (Project Syndicate) Oct 2008
Last fall, Bill and Melinda Gates sent shock waves through the global health community when they announced the audacious goal of eradicating human malaria from the face of the planet. Nothing less, they urged, would be enough.
The Great Crash of China
Brian Klein (FEER) Oct 2008
China is widely believed to be immune from the economic shock waves making their way around the world from the U.S. to Europe and Japan. Although it is relatively unaffected by subprime mortgages and the credit crunch, China’s economy is actually facing a fundamental structural adjustment that has arrived much earlier than expected.
Can China Attract The World's Capital?
Ken DeWoskin (FEER) Oct 2008
Expect capital to flood to China following Wall Street's demise. But what investment environment to expect?
Ominous Signs From Dry Bulk
Charles de Trenck (FEER) Oct 2008
What falling shipping rates tell us about the global economy.
La Strada on Wall Street
Alfred Gusenbauer (Project Syndicate) Oct 2008
Apologists for neo-liberalism assume not only that states should be run like companies, but also that, as far as possible, they should not intervene in the economy. The market, they insist, regulates itself. But, more than 50 years ago, the Nobel laureate Paul Samuelson contradicted this idealization of markets in graphic terms: absolute freedom for the market will lead to Rockefeller’s dog getting the milk that a poor child needs for healthy development, not because of market failure, but because “goods are placed in the hands of those who pay the most for them.”
The Idle Fireman
Hector R. Torres (Project Syndicate) Oct 2008
One of the IMF’s main purposes is to “give confidence to members by making [its] general resources temporarily available to them.” However, its members are increasingly facing capital volatility, and there is a sharp decline in the use of Fund resources. Ironically, this is happening at a moment when the Fund should want to be lending: it is awash in liquidity and has almost no sources of income other than repayment of its loans.
Who Killed Wall Street?
Dani Rodrik (Project Syndicate) Oct 2008
You don’t have to break a sweat to be a finance skeptic these days. So let’s remind ourselves how compelling the logic of the financial innovation that led us to our current predicament seemed not too long ago.
Cut Now, Save Later
Thomas Palley (Project Syndicate) Oct 2008
Central banks around the world have finally reacted to the global financial crisis by engineering a coordinated half-point interest-rate cut. That is welcome, but far more is needed – and quickly. If implemented now, steep rate cuts can still have a significant positive effect. If delayed, their effect is likely to be minimal.
From Financial Meltdown to Global Depression?
Nouriel Roubini (Project Syndicate) Oct 2008
The rich world’s financial system is headed towards meltdown. Stock markets have been falling most days, money markets and credit markets have shut down as their interest-rate spreads skyrocket, and it is still too early to tell whether the raft of measures adopted by the United States and Europe will stem the bleeding on a sustained basis.
Plugging the Leaks
Hans-Werner Sinn (Project Syndicate) Oct 2008
With pain and misgiving, the United States Congress bailed out Wall Street in order to prevent a meltdown of America’s financial system. But the $700 billion to be used may flow into a leaky bucket, and so may the billions provided by governments throughout the world.
From Global Imbalances to Effective Global Governance
Michael Spence (Project Syndicate) Oct 2008
The current credit crisis has led to scaled-back projections for growth around the world. Governments and central banks are responding to damaged balance sheets and credit lockups in an attempt to limit extreme harm to their economies outside the financial sector.
Asian Alternatives to the G7 Bank Bailout
Abe De Ramos (Project Syndicate) Oct 2008
The trillion-dollar commitments made so far by governments, with the exception of Britain’s, have been biased toward restoring market confidence instead of healing the core of what ails banks. So it might be a good idea for them to look to Asia to help them get the job done, and to do it right, both in terms of strategy and funding.
Pelosi's Trade Priorities
WSJ Oct 1, 2008
She denies free trade to our ally in South America.
Into the land of the unknown
Economist Oct 1, 2008
Global market turmoil continues after the rejection of the mortgage-rescue plan in America
Outsourcing
Economist Oct 1, 2008
Outsourcing is a term used to describe almost any corporate activity that is managed by an outside vendor, from the running of the company’s cafeteria to the provision of courier services.
Open Letter to European leaders on Europe’s banking crisis: A call to action
Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz & Klaus F. Zimmermann (VoxEU) Oct 1, 2008
This is a once-in-a-lifetime crisis. Trust among financial institutions is disappearing; fear may spread. Last week’s US experience showed that saving one bank at a time won’t work. A systemic response is needed and in Europe this means an EU-led initiative to recapitalise the banking sector. Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.
Europe seeks a common stance on stanching bank crisis
IHT Oct 1, 2008
Shocked by the sudden exposure of their banks to the global financial crisis, European governments have begun discussing a far-reaching overhaul of rules for lenders that could change the regulatory landscape for Europe's banking sector.
Lesson from a crisis: When trust vanishes, begin worrying
David Leonhardt (IHT) Oct 1, 2008
In 1929, Meyer Mishkin owned a shop in New York that sold silk shirts to workingmen. When the stock market crashed that October, he turned to his son, then a student at City College, and offered a version of this sentiment: It serves those rich scoundrels right.
SWFs retain appetite for old world trophy assets
Paul Betts (FT) Oct 1, 2008
Sovereign wealth funds from the Middle East and other emerging countries have been taking huge bets by buying large stakes in western financial institutions and industrial groups. Some may already be regretting them.
America's chance to kick its Asian addiction
David Pilling (FT) Oct 1, 2008
This is a story of Asian prudence versus US recklessness. Asians lived below their means so that Americans could live beyond theirs.
Harnessing windfall revenues in developing economies
Rick van der Ploeg & Anthony Venables (VoxEU) Oct 2, 2008
How should developing countries spend an unexpected surge in foreign assistance or natural resource revenues? This column makes the case for establishing a sovereign wealth fund and examines the market imperfections that may constrain such a policy.
Global: Time to Recalibrate Monetary Policy
Joachim Fels & Manoj Pradhan (MSDW) Oct 2, 2008
Central banks have been very active in providing much more liquidity, but have remained suspiciously silent about the future monetary policy stance. We expect this to change soon and stick to the idea that concerted rate cuts may be imminent.
Financial Stress Likely to Hit Real Economy Hard
IMF Survey Oct 2, 2008
Episodes of financial turmoil that are characterized by stress in commercial and investment banks are more likely to be associated with severe and protracted economic downturns, according to new IMF research.
Financial Crisis Likely to Worsen Economic Downturn
IMF Survey Oct 2, 2008
The current financial market meltdown in the United States and other advanced economies will likely lead to longer and deeper economic downturns in some of these countries, according to new IMF research on the impact of the shocks on the world economy.
Antidumping protection: Good for bad firms but bad for good firms
Hylke Vandenbussche (VoxEU) Oct 3, 2008
Antidumping duties have become the most frequently used instrument of trade protection. Antidumping protection can be “abused” to shelter uncompetitive domestic industries from more efficient rather than “unfair” foreign importers. This column shows that antidumping duties protect inefficient domestic firms and impede efficiency gains.
Blocked pipes
Economist Oct 2, 2008
When banks find it hard to borrow, so do the rest of us.
Explaining the dollar's resilience
Economist Oct 2, 2008
Why the greenback has so far withstood the panic in financial markets.
World on the edge
Economist Oct 2, 2008
Whatever happens in Congress, the crisis is now global; that means governments must work together
Cross-border banking
Economist Oct 2, 2008
A dangerous fault-line runs through European banking.
A taxonomy of bail-outs
Economist Oct 2, 2008
Governments in America and Europe scramble to rescue a collapsing.
Central banks lend to each other
Economist Oct 2, 2008
Central banks ease the market's pain.
Development Doesn't Require Big Government
William Easterly (WSJ) Oct 3, 2008
Poor countries are learning the wrong lessons from the crisis.
Dissecting the decoupling debate
M. Ayhan Kose, Christopher Otrok & Eswar Prasad (VoxEU) Oct 4, 2008
Paradoxically, global integration has made emerging markets less dependent on the fates of the industrial nations. Have they “decoupled” from industrial country business cycles enough to dodge the current financial turmoil? This column dissects the decoupling debate and explains why the quickly shifting structure of the global economy makes predicting spillovers very difficult.
Boomtown of Dubai Feels Effects of Global Crisis
NYT Oct 4, 2008
As recession looms in the West, cracks are appearing in the boom that has made Dubai a global byword for unfettered growth.
A global downturn in the power of the west
The international finance multiplier
Currencies: On the Vulnerability of EM Currencies
Currencies: Financial Assistance Plans and the Dollar
The financial crisis may hasten European integration but slow global banking
SARS Offers Lessons for Credit Panic
An Asia bond could save us from the dollar
A Day (Gasp) Like Any Other
The Testing Time
On the Politics of Financial Meltdowns: Part I
How risk sensitivity led to the greatest financial crisis of modern times
Next week’s annual meeting: How to restore IMF relevance
Five decades of evidence on financial crisis and recession: How long? How Deep?
How trade may raise wage inequality worldwide
A chance to crack down on Africa's loot-seeking elites
We're Not Headed for a Depression
Emerging Equity Markets Pulled Into Global Crisis
Need to Contain Crisis, Rethink Financial System
The Global Financial Crisis Was Not Made in Washington
Time for the G-7 To Step Up
A Deeper US Recession Goes Global
It is time for comprehensive rescues of financial systems
A master plan for China to bail out America
Trade and Raw Materials--Looking Ahead
On the Politics of Financial Meltdowns: Part II
Free Traitors
The credit crunch may cause another great depression
Simplified information for investors yesterday, catastrophic uncertainty today
Too many bankers?
Globalizing The Crisis Response
IMF Predicts Major Global Slowdown Amid Financial Crisis
What goes up…
Mandelson Steps Down as EU Trade Rep
World Bank Chief Calls for a 'New Multilateralism'
Modernizing Multilaterism and Markets
Global Crisis: How Far to Go? Part I
Rescuing our jobs and savings: What G7/8 leaders can do to solve the global credit crisis
Qu’ils mangent de la brioche: Europe and the eclipsed food crisis
No Depression: This Time, Uncle Sam Has Got Our Back
Global: The Great Monetary Easing
In Search of SWF
Quick, Forceful, Cooperative Action Needed on Crisis-IMF
Our Choice
Crisis marks out a new geopolitical order
Don’t Just Do Something, Talk
Moment of Truth
There's No Easy Way Out of the Bubble
Bad, or worse
Beyond Doha
Emerging economies to the rescue?
The outlook for outsourcing
Iceland in hot water
The banking crisis and the real economy
Fixing the world economy
Re-regulating finance
The Future of Financial Power
The Euro At 10: the Next Global Currency?
Global Crisis: How Far to Go? Part II
No more dithering
Emerging markets: Beware the backlash against capitalism
The Financial Decelerator
A Short Banking History of the United States
How do capital gains affect long run-current accounts?
Reserve accumulation and financial stability
Wall Street's Lemmings
IMF Welcomes Euro Zone Plan to Combat Crisis
Problems with suspending mark-to-market accounting rules
How to capitalise the banks and save finance
The shocking errors of Iceland's meltdown
The Next World War? It Could Be Financial
Bringing money markets back to life
Keep Your Money in the Market
Currencies: We Are in the Second Inning of the EM Currency Sell-off
Currencies: Heightened Alert on Many AXJ Currencies
A Second Bretton Woods
Contours of a Euro Bailout
Don't Let Sunspots or Headlines Make You Panic
World Must Act Together to Limit Crisis Damage-IMF
A light at the end of the tunnel?
IMF to Sharpen Assessment of Risks Facing Countries
Paul Krugman wins Nobel for economics
Bank bail-outs don't stop the flow of champagne
Is there time to avert a Minsky meltdown?
Global Crisis: How Far to Go? Part III
Episode V: Expectations strike back
Krugman Helped Us Understand Trade
Global Bailout
Escape from the Depreciating Dollar
Forceful Action Needed to Contain Crisis, Panel Agrees
Making the World Safe for Sovereign Wealth Funds
Governments have at last thrown the world a lifeline
Wealth Funds Group Publishes 24-Point Voluntary Principles
Risky business
Lamy Calls for Summit on Trade Finance amid Global Credit Crisis
Everything You Need to Know About the Financial Crisis
The truth behind the Asian fairy tale
Meltdown From Across the Atlantic
Global: When the Dust Settles
Future Role of IMF Debated As Financial Crisis Takes Toll
IMF ready to help stabilise Ukraine
Hedge funds in grip of vicious selling cycle
We need to guard against destructive creation
The Lion, the Bull and the Bears
The European response to the crisis: Not quite there yet
Bond Trading, Not Bailout, Is How to Rescue Banks
Out of the Ashes
Reasons to be nervous about foreign banks
The capital providers recoil
Calamity averted, but the credit crisis continues
Capitalism at bay
A short history of modern finance
The Great Iceland Meltdown
An international perspective on the US bailout
NAFTA-Plus
Currencies: De Facto Dollar Zone versus De Facto Euro Zone
Currencies: The EM Currency Storm Moves to Eastern Europe
The Fund must be a global asset manager
Idea of sovereign wealth funds divides Europeans
The world wakes from the wish-dream of decoupling
High Food, Fuel Prices a Threat Where Protection Limited
Developing Countries Need Strategy to Face Global Crisis Impact
Surplus capital is not for wimps after all
The Fund faces up to competition
Taming Wild Markets (Part I)
Taming Wild Markets (Part II)
Derivatives and Mass Financial Destruction
How to protect the poor from food price shocks
Circumventing the IMF: International Principles Needed for Regional Financial Rescues
US to host G20 world summit over crisis
Global financial crisis has one beneficiary: The dollar
How the financial crisis is changing China
China, an Engine of Growth, Faces a Global Slump
Gulf to the US: Thanks, But No Thanks
WTO Farm Talks Sputter into Action
WIPO Committee on Traditional Knowledge Fails to Agree on Course of Future Work
From capital inflow bonanza to financial crash: Danger ahead for emerging markets
Proposition: It would be a mistake to regulate the financial system heavily after the crisis
Global: Do Global Financial Assistance Plans Menace Inflation and Sovereign Debt?
The incredible shrinking funds
Alpha and style persistence for currency managers
Globalisation and the new nationalism collide
The Fund must act to protect emerging markets
Frozen credit markets come back to life
Troubled trade in Asia
Embarrassing news for the IMF
Emerging markets and the financial storm
Gold Standard Is Wrong Salve for Global Ills
West is in talks on credit to aid poorer nations
Little hope on trade
The Financial Crisis and Emerging Markets
Resolving the “arbitrage paradox” in foreign exchange markets
Democratisation and growth: A within-country comparison approach
To Counter Problems of Food Aid, Try Spuds
Some currencies plunge as stocks sink worldwide
The mother of all currency crises
As China Goes, So Goes ...
The Widening Gyre
Financial crisis management: Lessons from Japan’s lost decade
Currencies: Europe More Exposed to EM Bank Debt than the US or Japan
Currencies: No Differentiation in the Sell-Off
Crunch time for democracy?
Into the breach
Sold to the brave
Fears grow over rise of the yen
The best recipe for avoiding a global recession
Foreign Aid: What Works and What Doesn't
European securitisation and the possible revival of financial innovation
Preventing a global slump must be the priority
Strategies to End the Crisis
Why Asia stays calm in the storm
America must lead a rescue of emerging economies
Finishing the WTO trade negotiations would help the world economy
The IMF Will Not Run Out of Resources
Brussels must start issuing sovereign debt
Two Cheers for the Euro
That sinking feeling
The myth of diversification: All bets are off
Emerging-market bail-outs: Unfunded mandate
Iceland’s banking collapse: Predicable end and lessons for other vulnerable nations
A call for a European Financial Stability Fund
China moves to centre stage
Amid the turmoil, do not forget the poor
Cost of resolving the crisis: Lessons from 35 years of crises
Emerging or Submerging?
Dominique Moïsi Oct 5, 2008
Fear is in the west and hope is in the east, so we are equipped in very different ways to face this crisis.
Paul Krugman (NYT) Oct 5, 2008
Back in the day, economists used to talk about the foreign trade multiplier — international business cycle linkages via flows of goods and services. The basic idea was that since one country’s imports are other countries’ exports, a recession in one country would be transmitted to the rest of the world as slumping demand here led to an export plunge abroad. That’s not what’s happening now, or at least not yet.
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 6, 2008
Most EM economies run C/A deficits, which we believe makes them vulnerable to sharp changes in capital flow trends. Further, in difficult times, EM investors tend to seek protection in the dollar. Moreover, a sharp fall in capital inflows could lead to policy conflicts, possibly further undermining domestic demand.
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 6, 2008
In this note, we challenge several widely held presumptions by investors regarding financial assistance plans and currencies. Among other conclusions, we find that (1) large debt issuance may not have a lasting impact on interest rates in the US; (2) there will likely be no monetisation associated with financial assistance plans; and (3) the dollar should not be adversely affected by TARP.
Avinash Persaud (VoxEU) Oct 6, 2008
The liabilities of the biggest US bank equal half the US tax revenues; the ratios in Europe are bigger. Deutsche Bank’s liabilities are one and a half times Germany’s annual tax revenue; Barclays' are twice Britain’s. This crisis will either leave European financial integration in tatters or quicken the development of European fiscal capacity. European integration is a historical process that routinely stumbles upon crises that threaten to destroy it, only to find that it has been deepened by the crisis.
Kevin Hassett (Bloomberg) Oct 6, 2008
This is what a panic looks like.
Thaksin Shinawatra (FT) Oct 6, 2008
Asia's reserves could be turned into Asia bonds that, without losing value, could stimulate trade and investment in Asia.
Joe Nocera (NYT) Oct 6, 2008
This crisis doesn't wear you down over time. It hits you over the head with a two-by-four on a daily basis.
David Brooks (NYT) Oct 6, 2008
Today, world leaders have to figure out how to stabilize economies amid volatile global capital flows. This test is rooted in a shift in economic power.
Raj Desai (Globalist) Oct 6, 2008
What can the United States learn from the crises that have roiled emerging markets?
Avinash Persaud (VoxEU) Oct 7, 2008
Subprime mortgages account for less than 1% of the world’s debt stock. How could they cause the greatest financial crisis in modern times? “Risk sensitivity” is this column’s answer. Regulators gave bankers incentives to combine bad loans with good ones and securitise the package in complex structures. The inseparability of the suspect parts meant problems with one package questioned the value of all packages. The least liquid banks failed, triggering a vicious cycle of fear and failure.
Barry Eichengreen (VoxEU) Oct 7, 2008
Global crises used to remind us why we have the IMF. If the Fund doesn’t come up with some new ideas for how to handle this one, it may remind us why it has become increasingly unimportant. The IMF could reassert its relevance by aiding middle-income countries caught up in the crisis with new ideas on how to link emergency lending with policy adjustment.
Stijn Claessens, M. Ayhan Kose & Marco E. Terrones (VoxEU) Oct 7, 2008
The house and equity price busts on top of a credit crunch make this an unprecedented crisis for the modern US economy; its real economy effects are thus difficult to assess. This column provides insights based on evidence from 122 recessions in 21 advanced nations since 1960. Findings suggest recessions in such circumstances are much costlier and slightly longer. But the outcome can be affected by policy and it’s high time that policymakers act swiftly and decisively.
Paolo Epifani & Gino Gancia (VoxEU) Oct 7, 2008
Wage inequality between skilled and unskilled workers has increased in recent years, particularly in countries that opened their markets to international trade. This column explains how trade may push up the demand for skilled workers worldwide by creating larger international markets for differentiated goods.
Paul Collier (Guardian) Oct 7, 2008
A silver lining in this grim economic cloud is an opportunity to clean up the banks and halt the corrupt capital flight.
Gary S. Becker (WSJ) Oct 7, 2008
No, this isn't the crisis that kills global capitalism.
IMF Survey Oct 7, 2008
After more than a year of small spillovers from financial turmoil in advanced economies, equities in emerging markets succumbed to financial distress. However, unlike in past crises, the size of the spillover has not been uniform, the IMF says in a new report.
IMF Survey Oct 7, 2008
The financial turmoil will require a comprehensive effort by national authorities to restore confidence, get credit markets functioning properly again, and produce longer-term policies to rebuild the system.
Edwin M. Truman (PIIE) Oct 7, 2008
Later this week, finance ministers and central bank governors from around the world will assemble in Washington for the IMF and World Bank annual meetings. To a man (and a few women) they will be tempted to take a leaf from the playbook of the US presidential candidates and blame Washington for all the economic and financial the problems facing the world.
Simon Johnson (PIIE) Oct 7, 2008
All eyes turn to Washington this week for the annual meetings of the International Monetary Fund and the World Bank. Also in attendance will be finance ministers and central bankers from around the world (up to 185 of them, plus entourages).
Richard Berner (MSDW) Oct 7, 2008
The US recession now threatens to go global, with industrial economies on the brink, and trade and financial shocks threatening the developing world.
Martin Wolf (FT) Oct 7, 2008
The time for a higgledy-piggledy, institution-by-institution and country-by-country approach is over. So what should be done? In a word, 'everything'. But first of all, the panic must be dealt with.
Arvind Subramanian (FT) Oct 7, 2008
Beijing would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates.
Claude Barfield (AEI) Oct 7, 2008
Exporting nations need to understand that the negative consequences from the imposition of export restrictions will often outweigh the short-term gains.
Raj Desai (Globalist) Oct 7, 2008
What features of governments make recovery more or less likely?
Christopher Hayes (TNR) Oct 8, 2008
Mainstream economists reconsider globalization.
Nicholas Bloom (VoxEU) Oct 8, 2008
The crisis is shaping up to be a perfect storm – a huge surge in uncertainty that is generating a rapid slow-down in activity, a collapse of banking preventing many of the few remaining firms and consumers that want to invest from doing so, and a shift in the political landscape locking in the damage through protectionism and anti-competitive policies.
Marco Pagano (VoxEU) Oct 8, 2008
By simplifying the information they transmitted to investors, banks managed to expand the market for the structured bonds that they issued. But this has also led to a catastrophic uncertainty that paralyses markets and even affects policy choices. The choice of opacity by issuers and rating companies has been socially harmful and should have been constrained much more tightly by regulation. Until today, though, few believed that transparency could be worth as much as 5% of US GDP.
Esther Duflo (VoxEU) Oct 8, 2008
With its relatively high wages, the financial sector has, over the last two decades, attracted many brilliant minds, probably too many. The current financial crisis could lead to a better allocation of talent where creative energies would be socially more useful.
C. Fred Bergsten and Arvind Subramanian (WP) Oct 8, 2008
The financial crisis has gone global. Stock indexes have fallen and credit markets are seizing up around the world. In recent days, as most Americans focused on the political drama of the rescue package, a number of European banks have failed or been taken over. Several in Russia and Eastern Europe are teetering on the verge of insolvency. Many Latin American countries are newly vulnerable because foreign banks are big players there. Few nations can escape the financial contagion.
IMF Survey Oct 8, 2008
The world economy is decelerating quickly-buffeted by an extraordinary financial shock and by still-high energy and commodity prices-and many advanced economies are close to or moving into recession, the IMF says in its latest World Economic Outlook.
Economist Oct 8, 2008
The great commodity-price slump.
BRIDGES Weekly Trade News Digest - Vol. 12, Number 33 Oct 8, 2008
Two months after the collapse of world trade talks at the WTO, EU Trade Commissioner Peter Mandelson, a key player in those negotiations, announced he would step down from his post as Europe's chief trade official to join the cabinet of embattled British Prime Minister Gordon Brown.
BRIDGES Weekly Trade News Digest - Vol. 12, Number 33 Oct 8, 2008
World Bank President Robert Zoellick called for the break-up of the G-7 and the creation of "a new multilateral framework" on Monday, saying that the global financial crisis has shown that world leaders need to adopt a more flexible and inclusive approach to managing the global economy.
Robert Zoellick (Globalist) Oct 8, 2008
Can the international community create a network that fits the new global economy?
Branko Milanovic (YaleGlobal) Oct 8, 2008
Mistrust over lending grips the globe, but a wiser, more nimble US could emerge from the chaos
Richard Baldwin & Barry Eichengreen (VoxEU) Oct 9, 2008
Without rapid and coordinated action by G7/8 leaders, this financial crisis could turn into a jobs crisis, a pension crisis and much more. This column introduces a collection essays by leading economists on what the G7/8 leaders should do this weekend. The dozen essays present a remarkable consensus on a few points: we need immediate, coordinated global action that includes recapitalisation of the banks.
Juan Delgado & Indhira Santos (VoxEU) Oct 9, 2008
The financial crisis has turned attention away from the food crisis. Low- and middle-income countries face significant challenges, and this column proposes EU policy changes that could help.
Laurence J. Kotlikoff and Perry Mehrling (WP) Oct 9, 2008
Global markets have not been reassured by the coordinated interest rate cuts of several central banks or by recent congressional action, but they should be. Our bet is that financial markets will return to normal in short order and that the U.S. economy will squeak by with a moderate recession. Recapitalizing the banks and working out mortgages will take time, but the financial system will not collapse -- the government won't let it.
Joachim Fels (MSDW) Oct 9, 2008
This was the first fully coordinated and synchronous rate cut by a number of major central banks. The monetary policy action reduces the risk of a 1930s-style depression, though we still believe that we are heading into a global recession. If markets don’t stabilise, the global central bank could strike again.
Douglas Rediker and Heidi Crebo-Rediker (TNR) Oct 9, 2008
The U.S. is in desperate need of foreign capital. So why are we pushing away sovereign wealth funds?
IMF Survey Oct 9, 2008
The problems in the financial markets and in the global economy can be solved "if we act quickly, forcefully, and cooperatively," IMF Managing Director Dominique Strauss-Kahn says, adding that the international financial architecture has failed to adapt to globalized financial markets.
Nouriel Roubini (Forbes) Oct 9, 2008
Last week, I suggested the need for a coordinated monetary policy rate cut. That cut arrived yesterday, with the Fed, the European Central Bank and other central banks cutting their policy rates by 50 basis points (bps).
Philip Stephens (FT) Oct 9, 2008
The west speaks with awe of the pace of China's rise, of India's emergence as a geopolitical player, of the growing global roles of Brazil and South Africa. Yet it should no longer assume the global order will be forged on its own terms.
Slavoj Žižek (LRB) Oct 9, 2008
One of the most striking things about the reaction to the current financial meltdown is that, as one of the participants put it: ‘No one really knows what to do.’ The reason is that expectations are part of the game: how the market reacts to a particular intervention depends not only on how much bankers and traders trust the interventions, but even more on how much they think others will trust them. Keynes compared the stock market to a competition in which the participants have to pick several pretty girls from a hundred photographs: ‘It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligence to anticipating what average opinion expects the average opinion to be.‘ We are forced to make choices without having the knowledge that would enable us to make them; or, as John Gray has put it: ‘We are forced to live as if we were free.’
Paul Krugman (NYT) Oct 9, 2008
If a new rescue plan is not announced this weekend, the world economy may experience its worst slump since the Great Depression.
Vernon Smith (WSJ) Oct 9, 2008
Treasury doesn't know much about running a 'reverse auction.'
Economist Oct 9, 2008
A global recession is almost certainly on the way.
Economist Oct 9, 2008
Freer trade is under threat—but not for the usual reasons.
Economist Oct 9, 2008
Will emerging economies change the shape of global finance?
Economist Oct 9, 2008
How the financial crisis will affect the outsourcing industry.
Economist Oct 9, 2008
How a banking crisis brought down a small economy.
Economist Oct 9, 2008
The banking crisis overflows into the real economy.
Economist Oct 9, 2008
More than a new capitalism, the world needs a new multilateralism.
Economist Oct 9, 2008
How far should finance be re-regulated?
Anne-Marie Slaughter (CFR) Oct 9, 2008
The long-term geopolitical implications of the credit crisis and the future of U.S. financial power internationally
Dominique Strauss-Kahn (IMF) Oct 10, 2008
We are facing a very serious situation this week in the financial markets and in the global economy. We have some hard choices to make, and we must start making them very soon. Because of this, I will use the bulk of my time today to talk to you about what needs to be done to contain the crisis, and about its implications for the global economy.
Manu Bhaskaran (YaleGlobal) Oct 10, 2008
Falling export demand could rattle Asian countries, but most are resilient enough to survive
Angel Ubide (VoxEU) Oct 10, 2008
Policy has been reactive and reluctant, and politics have trumped efficiency and common sense. There are three steps that must be applied quickly and decisively: close the bad or small banks; recapitalize the good or too big to fail banks; and remove the bad assets from the system so that banks can return to lending.
Erik Berglöf & Raghuram Rajan (VoxEU) Oct 10, 2008
Financial institutions and sensible regulation have made great strides in emerging markets, but this column warns that the current crisis may cause emerging markets to re-enact internal battles for their economic souls that we thought had been conclusively decided. Developed country leaders should not fan the flames of anti-market sentiments.
WP Oct 10, 2008
Fed Chairman Bernanke has a strategy to stave off another depression, but he can't do it alone.
WSJ Oct 10, 2008
Why our system is prone to panics.
Cédric Tille (VoxEU) Oct 11, 2008
There has been a lively debate over the sustainability of global imbalances in recent years. This column argues that capital gains on international assets and liabilities are an important ingredient in any assessment of the sustainability of global imbalances.
Maurice Obstfeld, Jay C. Shambaugh & Alan Taylor (VoxEU) Oct 11, 2008
Developing country central banks’ unprecedented accumulation of foreign reserves lies at the heart of global imbalances, but the trend has puzzled international macroeconomists. This column explains the great accumulation as a response to the dangers of financial instability.
Cass R. Sunstein (TNR) Oct 11, 2008
It is impossible to understand the current financial crisis without exploring the dynamics of informational cascades.
IMF Survey Oct 12, 2008
IMF Managing Director Dominique Strauss-Kahn welcomes a plan by the 15 European countries that use the euro to halt the financial crisis and says the U.S. rescue plan should be implemented "the sooner the better."
Avinash Persaud (VoxEU) Oct 12, 2008
The US Economic Emergency Act of 2008 allows the SEC to suspend mark-to-market accounting rules. But a blanket suspension would be counter-productive. Crises are times when uncertainty quickly turns to panic. Now is not the time to increase uncertainty by changing accounting standards. This column proposes an alternative: mark-to-funding.
George Soros (FT) Oct 12, 2008
The international financial system needs repairing, but there are grounds for optimism.
Richard Portes (FT) Oct 12, 2008
Politicians should not become central bank governors. David Oddsson is part of the problem and should resign now.
Peter Boone and Simon Johnson (PIIE) Oct 12, 2008
The global financial outlook grows more dire by the day: The United States has been forced to shore up Wall Street, and European governments are bailing out numerous commercial banks. Even more alarmingly, the government of Iceland is presiding over a massive default by all the country's major banks. This troubling development points not only to an even more painful recession than anticipated, but also to the urgent need for international coordination to avoid something worse: all-out financial warfare.
Javier Suarez (VoxEU) Oct 13, 2008
Government guarantees are no substitute for supervision – they are a complement. Free from short-term liquidity pressures, supervisors should focus on banks’ long-term prospects and limit their behaviour or encourage restructuring as needed.
Burton G. Malkiel (WSJ) Oct 13, 2008
We've been through ups and downs before.
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 13, 2008
We remain very worried about most EM currencies and believe that the violent sell-offs in some EM currencies in recent weeks mark only the beginning of what is likely to be a multi-month process. We see the EM currency sell-off materializing in several stages.
Stephen Jen & Stewart Newnham (MSDW) Oct 13, 2008
We turned bearish on AXJ currencies on May 1, 2008, and have become even more bearish, now that the world is falling into a synchronized recession.
Richard Phillips (Globalist) Oct 13, 2008
With the world economy on fire, what are the two most important steps needed to get to safer shores?
Ashutosh Sheshabalaya (Globalist) Oct 14, 2008
Will the current financial crisis be remembered as an earthquake or a tremor?
Kevin A. Hassett (AEI) Oct 14, 2008
That financial events and freakish sunspot behavior are coinciding will doubtlessly encourage nonsensical speculation by astrologers.
IMF Survey Oct 13, 2008
Coordinated global action is starting to reverse the tide of the financial crisis, but governments also need to "deploy all instruments" to limit damage to the real economy, IMF Managing Director Dominique Strauss-Kahn tells world financial leaders meeting in Washington
Economist Oct 13, 2008
Concerted action is taken around the world to rescue the financial system.
IMF Survey Oct 13, 2008
The IMF will sharpen its risk analysis and focus more on linkages between the financial sector and the real economy, as well as cross-country analysis, as part of a new set of priorities for its surveillance of the global and national economies.
IHT Oct 13, 2008
The Princeton professor and outspoken columnist for The New York Times and the International Herald Tribune received the award for his work on international trade.
Paul Betts (FT) Oct 13, 2008
Two of Europe's biggest casualties of the financial crisis felt there was no good reason to cancel extravagant bashes in one of the Mediterranean's flashiest belle époque watering holes.
George Magnus (FT) Oct 13, 2008
Only an immediate and global government attack on the causes of instability can avert a systemic banking failure.
Scott B. MacDonald (YaleGlobal) Oct 13, 2008
Europe's leaders model global leadership with a coordinated bank rescue.
Micael Castanheira (VoxEU) Oct 14, 2008
Fears that the present crisis might reach 1930s proportions risk becoming a self-fulfilling prophecy. To quell them, we must anchor expectations in the right direction. This column advocates a temporary but aggressive expansionary fiscal policy to rebuild confidence. We need to exploit the stability pact in a different way: for the next two years, the pact should constrain national governments to significantly increase all deficits, beyond 3% if needed.
David R. Henderson (WSJ) Oct 14, 2008
Everyone should learn about comparative advantage.
WP Oct 14, 2008
Major governments at last embrace a common strategy for rescuing the international financial system.
Llewellyn H. Rockwell, Jr. (Mises Daily) Oct 14, 2008
For believers in liberty and sound economics, it has been a series of devastating weeks. The crisis of fiat money, long foretold by the Austrian school, finally came. But there turns out to be no great satisfaction in saying "I told you so."
IMF Survey Oct 14, 2008
Policymakers must act quickly and forcefully, with a coordinated and comprehensive package, to contain the crisis that has frozen credit markets in most advanced economies and threatens a global recession, financial experts agreed at a seminar during the IMF-World Bank Annual Meetings.
Edwin M. Truman (PIIE) Oct 14, 2008
Although the weekend gathering of finance ministers and central bankers in Washington was, until Monday, filled with doom and gloom, one event was very encouraging. The International Working Group (IWG) of sovereign wealth funds (SWFs) unveiled their voluntary Generally Accepted Principles and Practices (GAPP)—the Santiago Principles. The GAPP is a solid piece of work that should help to dispel some of the mystery and suspicion surrounding SWFs. The International Monetary Fund deserves substantial praise for facilitating an agreement in the IWG in a remarkably short period of time.
Martin Wolf (FT) Oct 14, 2008
Policymakers finally realised that a plan for dealing with such a severe financial crisis must contain those elements that are individually necessary and collectively sufficient. The announced programmes are, in scale and construction, what is needed.
IMF Survey Oct 15, 2008
The International Working Group of Sovereign Wealth Funds (IWG) publishes a set of 24 voluntary principles designed to ensure an open international investment environment. The IWG also starts examining the creation of a permanent international body to represent sovereign wealth funds.
Kenneth Arrow (Guardian) Oct 15, 2008
The root of this financial crisis is the tension between wanting to spread risk and not understanding its consequences.
BRIDGES Weekly Trade News Digest - Vol. 12, Number 34 Oct 15, 2008
WTO Director-General Pascal Lamy has called for the heads of international financial institutions, regional development banks and major commercial banks to meet at WTO headquarters in Geneva next month to discuss how the global financial crisis is affecting developing countries' ability to participate in international trade.
Doug Diamond and Anil Kashyap (NYT) Oct 15, 2008
Why the stock market is erratic, what the government is doing, why the private market cannot do this, the difficulty of valuing bank assets, and more.
David Pilling (FT) Oct 15, 2008
When the waters recede they will reveal a global landscape in which Asia, though damaged, looks more solid than the west.
NYT Oct 16, 2008
In our interconnected world, the American financial crisis quickly became a worldwide financial crisis. Here are four accounts of how the economic meltdown felt in Europe.
Joachim Fels (MSDW) Oct 16, 2008
The recent massive policy action should be successful in stabilising banks and financial markets. A 1930s-style depression looks less likely now. But the rich economies are still heading into a wok-shaped recession. Most central banks will likely cut rates further. This supports our strategists’ call for a further steepening of yield curves in Europe and the US.
IMF Survey Oct 16, 2008
Amid hectic meetings of world leaders trying to stem the collapse of the financial system, leading economists and politicians are debating the IMF's future role and governance in a reformed financial order.
FT Oct 16, 2008
The credit crisis deepened as Hungary and Ukraine turned to international institutions in an effort to avoid following Iceland into financial turmoil and US industrial production suffered its largest monthly decline since 1974.
FT Oct 16, 2008
Hedge funds rush to sell holdings to return money to worried investors has triggered further price declines and prompted more withdrawals
Jagdish Bhagwati (FT) Oct 16, 2008
Failure to think about the downside results from the 'Wall Street-Treasury Complex' – which shares optimistic scenarios.
Eduardo Porter (NYT) Oct 16, 2008
Investors seem to be relying on the same primitive emotion that made our forebears on the savanna bolt when approached by a hungry lion: fear.
Marco Pagano (VoxEU) Oct 17, 2008
EU leaders have agreed on a bail-out plan but much is still unknown about its details. How will governments act as equity shareholders? Who will deal with cross-border banks? This column discusses the need for a Euro-area bank supervisory authority, as financial integration has outpaced regulatory integration.
Sandy Lewis (Bloomberg) Oct 17, 2008
U.S. Treasury Secretary Henry Paulson's big mistake was to cast his $700 billion financial rescue plan of the financial industry as a bailout.
Gordon Brown (WP) Oct 17, 2008
The financial crisis is also an opportunity to create new rules for our global economy.
Economist Oct 16, 2008
The ugly side of international banking.
Economist Oct 16, 2008
Will private equity and sovereign wealth funds invest in banks?
Economist Oct 16, 2008
Meltdown may have been averted. But the crunch is not over.
Economist Oct 16, 2008
What went wrong and, rather more importantly for the future, what did not.
Economist Oct 16, 2008
The crash has been blamed on cheap money, Asian savings and greedy bankers. For many people, deregulation is the prime suspect.
Thomas L. Friedman (NYT) Oct 18, 2008
Globalization giveth. Globalization taketh away. And now, we have to hope, that globalization will saveth.
Romain Rancière, Aaron Tornell & Frank Westermann (VoxEU) Oct 20, 2008
The current credit crisis has prompted many calls for regulation to prevent such an event from ever happening again. This column defends a financial system that engenders systemic risk. Economies that risk occasional credit crises enjoy higher long-run growth, and the cost of the US bailout is well within historical norms.
WSJ Oct 20, 2008
Canada looks to Europe in anticipation of Obama protectionism.
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 20, 2008
Cross-border risk-reduction is one reason for dollar strength. Among the fundamental factors supporting the dollar, we believe the trend improvement in the C/A balance of the de facto dollar zone is crucial. In a year’s time, the de facto dollar zone could be better financed than the de facto euro zone.
Stephen Jen, Spyros Andreopoulos & Ronny Rehn (MSDW) Oct 20, 2008
Capital flows to EM will fall due to the global recession. Eastern European (EE) currencies will likely experience great pressure, partly due to their large C/A deficits, plus a serious currency mismatch. The falling EUR protected EE currencies from July to September, but we see strong downside risks ahead.
Michael Bordo and Harold James (FT) Oct 20, 2008
The IMF could be a powerful stabiliser in markets if it managed some reserve assets of the surplus countries.
IHT Oct 21, 2008
With some European corporate gems trading at beaten-down prices because of recent market turbulence, President Nicolas Sarkozy of France on Tuesday suggested that European leaders should set up their own sovereign wealth funds to buy stakes in crucial industries to shield them from potential foreign raiders.
Martin Wolf (FT) Oct 21, 2008
The worst consequences of the banking crisis – a true depression – have been avoided. But the impact of the implosion of what economist Nouriel Roubini calls "the largest leveraged asset bubble and credit bubble in history" is hitting real economies hard.
IMF Survey Oct 21, 2008
Inflation has been rising in the Pacific Islands on the back of strong increases in commodity prices. Although commodity prices have declined from recent peaks, food and fuel prices remain a concern in the islands as most have only limited social protection systems.
IMF Survey Oct 21, 2008
Low-income countries should position themselves to respond to ripple effects from the global financial crisis, developing country ministers said during the IMF-World Bank Annual Meetings. They urged donors to fulfill aid commitments and pledged steps to improve their economies on their own.
John Kay (FT) Oct 21, 2008
In good times, you may feel you do not need it and may resent paying for it. In bad times, you can never have enough.
David Rothkopf (FT) Oct 21, 2008
As other countries face crisis, how many will turn to western institutions and how many will explore other options.
Bernard Wasow (Globalist) Oct 21, 2008
How did complicated financial instruments lead to the U.S. mortgage meltdown?
Bernard Wasow (Globalist) Oct 22, 2008
How should financial instruments be regulated to prevent future meltdowns?
Darrell Duffie (WSJ) Oct 22, 2008
Complex financial products can be useful if regulated properly.
Nora Lustig (VoxEU) Oct 22, 2008
Sharp increases in world food prices over the last few years have impoverished millions. This column outlines the inadequacy of many countries’ safety nets and proposes means by which the international community might help poor consumers cope with rising food prices.
C. Randall Henning (PIIE) Oct 22, 2008
In recent weeks, several governments stricken with financial emergencies have tried to circumvent the International Monetary Fund (IMF) by turning to Russia, China, Saudi Arabia, and other reserve-rich states for crisis finance. These moves underscore the need for common acceptance of a set of principles to guide bilateral and regional responses to countries requiring liquidity and balance-of-payments support during the present crisis. Such principles should be discussed and adopted at the high-level meetings scheduled over the coming weeks as part of the international response to the financial crisis.
FT Oct 22, 2008
Global stock markets plunged as the White House said it would invite world leaders to a global financial summit next month, 11 days after the US presidential election.
IHT Oct 22, 2008
Analysts see the dollar's rebound as a sign of 'real panic and risk aversion,' as the real economy weakens.
Geoff Dyer (FT) Oct 22, 2008
The growth machine that has got China this far needs to be retooled if it is to keep up its remarkable record.
NYT Oct 22, 2008
As demand for its exports weakens, China hopes to prevent the financial crisis from derailing its economic miracle.
Dilip Hiro (YaleGlobal) Oct 22, 2008
Sovereign wealth funds of the Middle East avoid US equities.
BRIDGES Weekly Trade News Digest Vol. 12, Number 35 Oct 23, 2008
Senior officials met with the chair of the WTO's agriculture committee this week to informally exchange ideas on how to reach a compromise on liberalising trade in the agriculture sector, one of the pillars of the WTO's Doha Round. The chair, Ambassador Crawford Falconer (New Zealand), has recently put a wide variety of issues on the table in an attempt to revive the negotiations, which have been stalemated since the failure of ministerial-level talks at the end of July.
BRIDGES Weekly Trade News Digest Vol. 12, Number 35 Oct 23, 2008
Despite intense negotiations that carried on late into Friday evening, the WIPO Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore (IGC) failed to agree on modalities for future work. Initially, countries seemed willing to work out an intersessional mechanism to facilitate progress on a range of issues on which they have had long standing disagreements. However, and notwithstanding the close involvement of WIPO's new Director General Francis Gurry, strong differences among member states resulted in a deadlock.
Carmen M. Reinhart & Vincent Reinhart Oct 23, 2008
The standard pattern: capital flows into the new “hot” nation, but then stop or reverses forcing painful adjustment. This column presents research based on such episodes from 181 nations during 1980-2007 and for a subset of 66 nations for the 1960-2007 period. If the pattern of the past few decades holds true, emerging market economies may be facing a darkening future.
Myron S. Scholes & Joseph E. Stiglitz (Economist) Oct 23, 2008
As the financial crisis deepens, calls to re-regulate the world's financial industry are growing louder. After several decades of financial deregulation, is government re-regulation now necessary to improve the stability and functioning of the financial system? Or would re-regulation make a bad situation worse, by slowing financial innovation, introducing perverse incentives and perhaps even increasing risks?
Richard Berner, David Greenlaw & David Miles (MSDW) Oct 23, 2008
If government rescue plans are successful, the intrinsic value of the financial institutions that receive help rises along with their contribution to economic activity, and such investments can - to a large extent (and maybe completely) - pay for themselves.
Economist Oct 23, 2008
High borrowing and the credit crisis are bad enough for hedge funds. Panicky clients are worse.
Richard M. Levich & Momtchil Pojarliev (VoxEU) Oct 24, 2008
Institutional investors are increasingly turning to currency traders. This column confirms that past performance is no guarantee of future returns. But there is evidence that managers have a tendency to persistently use the same investment strategy, suggesting that investors may wish to diversify across currency managers.
Philip Stephens (FT) Oct 23, 2008
Why, just as they are becoming great powers, should China, India and the rest surrender sovereignty? As for the rich nations, they are all for a more inclusive global order as long as the addition of new members to the club in no way dilutes their own authority.
William Rhodes (FT) Oct 23, 2008
The impact of the global liquidity crisis on these economies could eradicate the progress made in the past decade.
Economist Oct 23, 2008
Trust and money are beginning to run through the system again.
Economist Oct 23, 2008
The credit crisis is hitting Asia where it most hurts—trade.
Economist Oct 23, 2008
The fund is back. It needs to keep alert.
Economist Oct 23, 2008
How the emerging world copes with the tempest will affect the world economy and politics for a long time.
Michael R. Sesit (Bloomberg) Oct 24, 2008
Bretton Woods is like the memory of an old flame: She seems to become more beautiful as time passes.
IHT Oct 24, 2008
With the financial crisis engulfing developing countries, Western officials are weighing coordinated action to try to stabilize these economies.
Economist Oct 24, 2008
The European Union is making little progress on a new generation of free-trade agreements with Asia
Arvind Subramanian (PIIE) Oct 24, 2008
The financial crisis has now caught up with emerging markets—with a vengeance. Wherever you look, in Eastern Europe and the Baltics, Latin America or Asia, the financial carnage is evident. Even China, the most immune to contagion, is going to see its growth decline from 12 percent to 9 percent. Elsewhere, panic in global financial markets has compelled the International Monetary Fund (IMF), which previously was trying to adapt to a no-crisis world, back in the lending and financial rescue business. While the IMF engages in talks with Hungary, Iceland, Ukraine, Pakistan, and other countries, the United States and its European partners have begun discussions about stepping in with credit lifelines to middle income developing countries in desperate need of dollar loans to avoid default.
Farooq Akram, Dagfinn Rime & Lucio Sarno (VoxEU) Oct 25, 2008
If markets are efficient, then there are no exploitable arbitrage opportunities. But if no one engages in arbitrage, then what eliminates such exploitable opportunities? This column puts international financial markets under the microscope and shows that arbitrage opportunities exist, but they are usually eliminated in less than five minutes. Such micro-arbitrage makes the assumption of no arbitrage safe for those looking at the bigger picture.
Elias Papaioannou & Gregorios Siourounis (VoxEU) Oct 25, 2008
Cross-country comparisons have produced little evidence that democracy improves economic growth. This column summarises research using within-country comparisons over time to show that democratising countries realise higher long-run growth after the volatile transition period. Democracy’s value may lie in its dynamic aspects.
NYT Oct 25, 2008
Food scientists are proposing a novel solution for the global food crisis: Let them eat potatoes.
IHT Oct 26, 2008
The turmoil in currency markets has prompted talk of a coordinated intervention by leading industrial countries.
Paul Krugman (NYT) Oct 26, 2008
I invented currency crises. No, really — not the thing itself, of course, but I did publish the first paper in the modern academic literature on the subject, back in 1979. And as I like to say, business has been good ever since.
NYT Oct 26, 2008
China is now in a position to pick up some of the slack in the economy: selling more of its own goods at home and buying more from the rest of the world.
Paul Krugman (NYT) Oct 26, 2008
The troubles in the banking system, hedge funds and emerging markets are mutually reinforcing. Bad news begets bad news, and the circle of pain just keeps getting wider.
Keiichiro Kobayashi (VoxEU) Oct 27, 2008
Japan’s banking crisis of the late 1990s and early 2000s offer critical lessons on how to deal with the current financial crisis. This column warns against relying on fiscal stimulus, stresses the importance of recapitalising viable bank but letting the ‘zombie banks’ go bust to boost certainty about financial firms’ solvency. In order to avoid a vicious cycle of steady economic decline as in Japan, the G8 and emerging economies should create a "Financial System Stabilisation Fund".
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 27, 2008
European and UK banks have five times as much exposure to EM than the US or Japan, with most lending going to East European (EE) economies. They have the biggest loan books in Asia, Latam and EE. Potential problems in Asia or Latam should also undermine the EUR and GBP more than the USD or JPY.
Stephen Jen & Spyros Andreopoulos (MSDW) Oct 27, 2008
We expect to see further pressure on virtually all EM currencies. It is global fundamentals that matter in the sell-off stage of the cycle, while country fundamentals only matter in the recovery phase. Many EM currencies will overshoot but eventually recover, while some currencies may never recover the nominal levels prior to the shock.
Economist Oct 27, 2008
How the economic crisis may also be bad news for democracy.
Economist Oct 27, 2008
The IMF helps eastern Europe's two most vulnerable economies. Will it stop the rot?
Economist Oct 27, 2008
There are more buyers about than you think.
FT Oct 27, 2008
The possibility that Japan could be forced to intervene to slow the currency's rise grew after investors ignored a warning from the Group of Seven about "excessive volatility".
Jeffrey Sachs (FT) Oct 27, 2008
The US Federal Reserve, European Central Bank and Bank of Japan should extend swap lines to all main emerging markets.
Nicholas Eberstadt & Carol C. Adelman (AEI) Oct 27, 2008
U.S. foreign aid needs a new business model that fits the realities of today's global economic picture.
John Kiff, Paul Mills & Carolyne Spackman (VoxEU) Oct 28, 2008
Securitisation volumes have plummeted in the wake of the subprime crisis. As a result, banks are keeping more loans on their balance sheets and tightening lending standards. This column reviews the factors that have led to this virtual market shutdown and suggests structural changes, in the form of simpler and more transparent products trading at wider spreads, will be required to revive securitisation.
Martin Wolf (FT) Oct 28, 2008
Choosing to risk such an outcome would be like deciding to let a city burn in order to punish someone who smoked in bed. Everything possible must be done to prevent the inescapable recession from turning into something worse.
Peter Morici (Globalist) Oct 28, 2008
How should the United States solve its systemic economic woes?
Kishore Mahbubani (FT) Oct 28, 2008
The Asian economies' growing interdependence will act as a pillar of stability and growth for the world.
George Soros (FT) Oct 28, 2008
It is time to start thinking about creating special drawing rights or some other form of international reserves.
Axel Dreher, Andreas Fuchs, Stephan Klasen, Andreas Moxnes & Jan-Egbert Sturm (VoxEU) Oct 29, 2008
With the world slipping into a recession of unknown magnitude, protectionist temptations appear across the globe. This column argues that finishing the Doha Round WTO negotiations would both provide a boost to the world economy and send a strong signal that beggar-thy-neighbour policies are not on the table this time.
Edwin M. Truman (PIIE) Oct 29, 2008
The International Monetary Fund (IMF) has suddenly reopened a traditional line of business: large-scale lending programs (Iceland, Ukraine, Hungary, Pakistan, and counting). As global recession spreads across the world and increases in virulence, the Fund likely will be lending again for years. Simultaneously, talk has shifted from the world economy not needing the IMF as an international lending institution any more to the IMF not having enough resources to lend and make a difference. The first view was wrong, and the second view is wrong.
Daniel Gros and Stefano Micossi (FT) Oct 29, 2008
EU countries will not be able to compete until they develop a unified market for bonds denominated in euros.
Peter Rashish (Globalist) Oct 29, 2008
How has the euro promoted stability during the current financial crisis?
Economist Oct 30, 2008
The financial crisis finally catches up with Japan.
Economist Oct 30, 2008
Spreading the risk has spread the losses.
Economist Oct 30, 2008
The IMF adopts a more flexible approach.
Willem Buiter & Anne Sibert (VoxEU) Oct 30, 2008
In the first half of 2008, Buiter and Sibert were invited to study Iceland’s financial problems. They identified the “vulnerable quartet” of (1) a small country with (2) a large banks, (3) its own currency and (4) limited fiscal capacity – a quartet that meant Iceland’s banking model was not viable. How right they were. This column summarises the report, which is now available as CEPR Policy Insight No. 26 with an October 2008 update.
Daniel Gros & Stefano Micossi (VoxEU) Oct 30, 2008
The euro is plunging and EU banks are coming under renewed pressure. There is a strong demand for ‘European’ bonds as well as a need for massive government capital infusions to prevent the crisis from getting worse in the banking sector and the European periphery. This is why the EU should set up a massive European Financial Stability Fund.
Economist Oct 30, 2008
In a whirl of financial summitry, China ponders how to wield its new-found clout.
Kofi Annan, Michel Camdessus and Robert Rubin (FT) Oct 30, 2008
Rich nations must not use the crisis as a pretext for abandoning developing nations.
Luc Laeven (VoxEU) Oct 31, 2008
A new IMF database, which covers the universe of systemic banking crises from 1970 to 2007, shows that the average fiscal cost was about 15% of GDP, or three times the US’s $700 billion. This column points out that quick action often lowers the ultimate cost. Moreover wishful thinking teamed with regulatory forbearance and bank liquidity plans often raises the cost by delaying vital, but politically painful, government action.
Martin Hutchinson (Globalist) Oct 31, 2008
After the global financial crisis, what will be the fate of emerging economies?
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