News & Commentary:

November 2011 Archives


The Sick Man of Asia Foreign Affairs Subscription Required
Yanzhong Huang (FA) Nov 1, 2011
In their single-minded pursuit of economic growth, China's leaders have long overlooked public health -- which, by some measures, is now worse than under Mao. Despite recent reforms, China's citizens keep getting sicker, threatening the country's health-care system, the economy at large, and even the stability of the regime.

Is Indonesia Bound for the BRICs? Foreign Affairs Subscription Required
Karen Brooks (FA) Nov 1, 2011
As Indonesia hosts a number of high-level summits this year, it looks set to take its place among the world’s economic superstars. But celebrations are premature: although the country has made great strides, its gains are reversible. For the country to continue to prosper, Jakarta must address rampant corruption and poor governance.

Africa Unleashed Financial Times Subscription Required Recommended!
Edward Miguel (FA) Nov 1, 2011
Steven Radelet's accessible new book argues that much of the credit for Africa's recent economic boom goes to its increasingly open political systems. But Radelet fails to answer the deeper question: why some countries have managed to develop successful democracies while others have tried but failed.

Three Dangerous Myths about Monetary Policy
John H. Makin (AEI) Nov 1, 2011
As fears of another recession have mounted, so too have criticisms of the US Federal Reserve, including some irresponsible assertions that could endanger world markets if followed. Myths about the Fed include beliefs that (1) its highly accommodative posture will trigger higher inflation or even hyperinflation; (2) it enables expansionary fiscal policy and larger budget deficits; and (3) a gold standard would be the best policy to ensure price stability. Though higher inflation is a concern, the threat of deflation in this economic environment is far more worrisome, which explains the Fed’s sensible focus on price stability.

China's farming history now misapplied in Africa
William G Moseley (AT) Nov 1, 2011
China is being held up as an Asian agricultural tiger for the nations of sub-Saharan Africa to emulate. Africa's leaders ought to carefully study their comparative world history before accepting this advice.

Pennies from Heaven
Bill Gross (PIMCO) Nov 1, 2011
Growth is the commodity that the world is short of at the moment. Once interest rates inch close to zero and discounted future cash flows are elevated in price, it's difficult to generate much more return if economic growth doesn't follow. Equity markets should be dominated by dividend yields and the return of capital via share buybacks, as opposed to growth. In fixed income assets, we suggest that portfolios should avoid longer dated issues where inflation premiums dominate performance.

Can Europe's Divided House Stand?Foreign Affairs Subscription Required Foreign Affairs Subscription Required
Hugo Dixon (FA) Nov 1, 2011
Most pundits argue the eurozone has only two options: break up or create a fiscal union to match its monetary one. In fact, there's a third, and better, path: adopt tighter market discipline, bailing out illiquid countries while letting truly insolvent ones go bust. The result would be a collection of fitter economies and a Europe strong enough to play a big role on the world stage.

The impact of disaster expectations on asset prices
Christos Koulovatianos & Volker Wieland Nov 1, 2011
A stock-market collapse such as the one after the 2008 Lehman Brothers default is followed by more pessimistic assessments of the likelihood of future collapses in surveys and by lower price-dividend ratios. This column argues this reaction of expectations and asset prices can be explained by Bayesian decision theory. The key is to appreciate that market participants know little about the drivers of such crashes. They revise their beliefs and learn over time.

Striking Euro Gold (and Silver)
Harold James (Project Syndicate) Nov 1, 2011
The alternatives for Europe’s currency, the euro, seem increasingly limited to a desperate muddling through or a chaotic collapse. But there is a bolder and more productive approach that relies on past experience with multiple currencies.

The Birth of a Power Source
Roland Kupers (Project Syndicate) Nov 1, 2011
Some argue that the market, not governments, should decide which technologies come out ahead in the race to decarbonize the power system. But the market can work its magic only when individual companies are large enough to fund the early learning curve of a new technology until it becomes competitive.

A Slow-Growth America Can't Lead the World Wall Street Journal Subscription Required
John B. Taylor (WSJ) Nov 1, 2011
After World War II, the U.S. promoted international economic growth through reliance on the market and the incentives it provides. Times have changed.

Deal Breaker
Mohamed El-Erian (FP) Nov 1, 2011
How badly did Europe just bungle its best shot yet at avoiding economic catastrophe?

Merkel’s European Message
Jackson Janes (Globalist) Nov 1, 2011
Germany has to step up its game if Europe is to survive the most critical crisis it has ever faced. In the recent Brussels summit, Angela Merkel did precisely that.

Creditors can huff but they need debtors Financial Times Subscription Required
Martin Wolf (FT) Nov 1, 2011
As Greece seems about to prove, debtors are able to inflict a great deal of damage on everybody.

How to restore trust in the ECB Financial Times Subscription Required
Guntram Wolff (FT) Nov 1, 2011
If the incoming president fails to steer the right course, it may well lead to financial meltdown and the end of the euro.

How to Prop Up the Euro New York Times Subscription Required
Steven Rattner (NYT) Nov 1, 2011
European leaders have focused on treating the symptoms of what ails the common currency, rather than the disease itself.

The Sell Side Of Investment Banking Slowly Being Dismantled
Kenneth Rapoza (Forbes) Nov 1, 2011
In the war zone that is modern finance, the demise of Lehman Brothers in September 2008 was the shot heard ’round the world.

Seven Billion Humans: The World Fritz Haber Made
Martin Sieff (Globalist) Nov 2, 2011
The world’s population has just passed seven billion. At least one-third of that number, or over two billion humans, owe their lives to a man few of them have ever heard of: Fritz Haber.

The Shrinking North
Pierre Buhler (Project Syndicate) Nov 2, 2011
“Demography is destiny,” Auguste Comte is reported to have said. Today, his maxim appears to encapsulate the fate of a number of the world’s richest countries. Indeed, the United Nations Population Division’s recently released biennial World Population Prospects sheds new light on the debate – ongoing for over a decade – about the consequences of low fertility rates in many developed countries. And while the UN figures do not provide evidence that proves the grimmest forecasts of doomsayers, nor do they leave much room for optimism.

The ECB’s Risky Business
Daniel Gros (Project Syndicate) Nov 2, 2011
A central bank always has a crucial role to play in a financial crisis. But the ECB’s role within the eurozone nowadays is even more “central” than that of the Federal Reserve or the Bank of England, because it has been forced to substitute for the cross-border interbank market.

Why We Can't Escape the Eurocrisis Wall Street Journal Subscription Required
Gerald P. O'Driscoll (WSJ) Nov 2, 2011
EU and U.S. debt are interlinked through the banking system.

Time For a Tax on Speculation Wall Street Journal Subscription Required
Ralph Nader (WSJ) Nov 2, 2011
Even a small levy could help curb the destructive wheeling and dealing on Wall Street and raise hundreds of billions in revenue.

Rising Protectionist Pressures Cast Shadow on G-20 Agenda
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
With tomorrow marking the launch of the annual Group of 20 heads of state summit in Cannes, France, the international community is watching closely to see if the leaders of twenty major economies can make headway in resolving the European debt crisis amid new reports of growing trade protectionism.

WTO Accession Process Heats Up as Ministerial Approaches
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
Trade negotiators are making a concerted push to finalise Russia's entry to the WTO by the December Ministerial Conference, with reports emerging that Russia's long-standing disagreements with neighbour and WTO member Georgia could be resolved within days. The past weeks have also seen major strides in the accessions of Vanuatu and Samoa to the global trade body.

US House of Representatives Targets EU Aviation Emissions Scheme
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
The ongoing aviation emissions row between the EU and several non-EU countries took another twist last week, with the US House of Representatives passing a bill that would make it illegal for US airlines to comply with the controversial EU scheme. The move comes just weeks after the release of an official opinion from the European Court of Justice (ECJ) Advocate General, which found that the EU's plan to extend its emission trading system (ETS) to aviation was fully compatible with international law.

Peru Meeting Sees Progress in Trans-Pacific Trade Talks
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
Negotiators of a proposed Trans-Pacific Partnership (TPP) agreement are pushing to finalise an outline of the nine-country accord in time for next week's Asia-Pacific Economic Cooperation (APEC) Leaders' Meeting. The ninth round of talks for the TPP, held last week in Lima, Peru, reportedly saw progress in various areas; speculation is also growing over whether Japan might join the talks at the upcoming APEC summit.

Australian Cigarette Labelling Legislation Faces Renewed Controversy at WTO
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
A proposed Australian bill intended to make cigarette packaging less appealing to consumers and decrease tobacco consumption has once more met opposition at the WTO with a number of tobacco-producing developing countries, citing competitiveness concerns. The Australian government announced today that cigarette companies will be given additional time to comply with the public health measure, due to repeated delays in moving the legislation through Parliament.

US Eyes Deal Outside WTO on Environmental Goods, Services
Bridges Weekly Trade News Digest Volume 15, Number 37 Nov 2, 2011
The US will take advantage of several high-level meetings in Asia this month to address barriers to trade in environmental goods and services (EGS). Tensions between Washington and Beijing have been high in recent months as US lawmakers and manufacturers have increasingly sought action against China's green subsidies.

The world needs a Cannes-do summit Financial Times Subscription Required
FT Nov 2, 2011
The global economy is in peril. World leaders must rise to the challenge and take bold action now

Euro crisis reveals limits of US leadership Financial Times Subscription Required
Richard McGregor (FT) Nov 2, 2011
White House has watched the unravelling of deals to save the single currency with a mixture of despair, disbelief and helplessness.

Greece on the Brink New York Times Subscription Required
NYT Nov 2, 2011
Europe's leadership should have paid more attention to the distress of Greek citizens, not the bankers. It's not too late to avert a full meltdown.

With Vaccines, Bill Gates Changes The World Again
Matthew Herper (Forbes) Nov 2, 2011
Having prevented millions of deaths, the Microsoft mogul is determined to turn Malthus on his head by solving the global population problem.

The China surge
Brett Decker (WT) Nov 2, 2011
The economy is going gangbusters. Gross domestic product grew 9.1 percent in the third quarter of 2011; the currency is strengthening; wages are going up; people's standing of living is on the rise; and there's actually a shortage of workers to fill all the new manufacturing jobs in the expanding industrial sector. Over a 20-year stretch, annual economic growth has averaged more than 10 percent. Millions are moving out of poverty into the middle class. It's remarkable. Unfortunately, all this positive news is about the robust Chinese economy, not America's.

The Education Solution
Mahmoud Mohieldin (Project Syndicate) Nov 3, 2011
The global challenges that we face today are proof that we need a world of problem solvers – people who are productive, resilient, creative, and versatile enough with technology and culture to find solutions to the many challenges we face. Education helps to build that world.

The Revolt of the Debtors
Daniel Gros (Project Syndicate) Nov 3, 2011
Greek Prime Minister George Papandreou’s call for a referendum on the rescue package agreed at the eurozone summit in October has profound implications for European governance and the euro's future. Financial markets have reacted so strongly because investors now comprehend that “sovereign debt” is the debt of a sovereign that can simply decide not to pay.

A Gravity Test for the Euro
Kenneth Rogoff (Project Syndicate) Nov 3, 2011
There are plenty of vaguely-plausible reasons why the euro has remained so firm against the dollar throughout the euro crisis, at least so far. But, with so many forces arrayed against the current exchange rate, and little reason for it to be maintained, don’t count on this stability sticking around.

On the tradeoff between growth and stability
Alexander Popov & Frank Smets (VoxEU) Nov 3, 2011
Well-developed financial systems play a crucial role in stimulating growth but are associated with more frequent financial shocks and higher macroeconomic risk, as the financial crisis of 2007–09 reminded us. This column argues that the goal of financial regulation must be to reduce systemic risk without eliminating the financial sector’s contribution to long-term economic growth.

Toward a More Muscular Surveillance Process at the International Monetary Fund
Edwin M. Truman (PIIE) Nov 3, 2011
In the blinding fog of the continuing European sovereign debt crisis, the International Monetary Fund (IMF) released its latest triennial surveillance review (TSR) on October 31st. The IMF proposes to take important further steps forward in response to criticisms that its past surveillance practices were lax and incomplete. It is now up to the management, staff, and members of the Fund to deliver changes promised in the TSR.

The Globalization of Protest
Joseph E. Stiglitz (Project Syndicate) Nov 3, 2011
With globalization and modern technology, social movements can transcend borders as rapidly as ideas can. And social protest has found fertile ground everywhere: a sense that the “system” has failed, and the conviction that even in a democracy, the electoral process will not set things right – at least not without strong pressure from the street.

The dragon is no white knight
Jian Junbo (AT) Nov 3, 2011
China's response to the advances of debt-stricken European Union leaders has been positive. With the EU as China's biggest trading partner and as holder of the world's biggest foreign reserves, Beijing has every reason for concern, but is unlikely to be a philanthropist. Caution is the order of the day, and while diplomatic niceties fade, only national interests are permanent.

Shorting Greece — Or the World?
Beat Guldimann (Globalist) Nov 3, 2011
Greece’s prime minister shocked the world by initially deciding to put the country’s bailout to a referendum. The possibility of investors armed with advance knowledge of the decision making billions of dollars in one fell swoop.

Mr. Draghi Makes a Start New York Times Subscription Required
NYT Nov 3, 2011
The European Central Bank made a sensible decision to cut the euro-zone's interest rate, but there is a lot more it can do to shore up the weak economies.

Subprime moment looms for 'risk-free' sovereign debt Financial Times Subscription Required
Gillian Tett (FT) Nov 3, 2011
The assumption that has been a pillar of the regulatory structure and the operations of many central banks is looking decidedly wobbly.

An EU architect calls for two-speed union Financial Times Subscription Required
Jean-Claude Piris (FT) Nov 3, 2011
A two-speed EU with an avant-garde group based on the 17 euro members could pave the way for greater legitimacy.

Don’t put banks on a starvation diet Financial Times Subscription Required
Jon Pain (FT) Nov 3, 2011
Economic growth is critical. Fears of banks being forced to shrink lending have more substance than the authorities admit.

A Beijing cabby’s view of the world Financial Times Subscription Required
Philip Stephens (FT) Nov 3, 2011
China’s policy is poised between eagerness to be recognised as a great power and concern about domestic stability.

Banking Federalism Key to Euro Area Survival
Nicolas Véron (PIIE/EM) Nov 3, 2011
Banking system dysfunction has been at the core of the euro area crisis. There are two main issues. First, trust has remained elusive since before the Lehman shock of 2008, as policymakers have refused to identify the weak spots in Europe's banking system in spite of annual half-hearted stress tests since 2009. Dexia, which passed last July's test with flying colors (10.4 percent core equity ratio under adverse scenario assumptions) before collapsing last month, is the latest symbol of this complacency.

The Tobin Tax Mirage Wall Street Journal Subscription Required
WSJ Nov 4, 2011
Sarkozy and Merkel lean on Obama for a levy on financial transactions.

Vote, then spend, then pay
Reuven Brenner (AT) Nov 5, 2011
The possibility of an "austerity referendum" in Greece now appears to buried, yet holding such a vote could be greatly beneficial to the European Union as a whole if it led to more "direct democracy" on how politicians spend cash as well as on whether debts should be paid

Europe's New Message: My Way or the Drachma Highway
Jacob Funk Kirkegaard (PIIE) Nov 4, 2011
The drama surrounding Prime Minister George Papandreou's proposal to hold a referendum on Greece's acceptance of its bailout package, followed by his change of mind, has had the positive outcome he apparently intended. Though messy, his tactics have broadened the political support for the International Monetary Fund (IMF) reform program in Greece. That much became clear when the main Greek opposition party, New Democracy, declared its broad political support for the IMF program. It looks likely that Papandreou's days as prime minister are numbered, and that he will likely step down to make room for a short-term caretaker government, perhaps led by a technocrat, such as former European Central Bank (ECB) vice president Lukas Papademos. But it matters less now who is Greek prime minister, as the two main parties are both committed to pursuing the IMF program path. As a result, the eventual disbursement of the next IMF tranche looks quite certain, eliminating any risk of an imminent Greek default. Even new elections in Greece should not be a particular concern, with both the mainstream parties now committed to reform.

Denying Imbalances, G20 Risks Chaos – Part I
Shen Dingli (YaleGlobal) Nov 4, 2011
After the Asian financial crisis in 1997-98, a group of developed and emerging economies came together as the G20 to stabilize global financial markets. With widening imbalances caused by huge trade surpluses on the part of some nations while others drown in debt, the global economy is perilously close to chaos. Now the eurozone – specifically and immediately, Greece and Italy – is in danger of default. In crafting a €1 trillion rescue fund, Europe’s leaders look to China as a white knight who could rescue the euro. This YaleGlobal series examines the challenges in stabilizing the global economy. In the first article, Shen Dingli of Fudan University insists that cooperation is essential to easing massive imbalances.

The Greek revolt: Good news for Europe
Charles Wyplosz (VoxEU) Nov 4, 2011
Greek Prime Minister Papandreou made a stand this week. Even though he was backed down, this column argues that he did the EZ a favour by providing an opportunity to change course. One way or another, a disorderly Greek default is in the cards with its attendant contagion. At that point a real solution is inevitable – one that requires EZ leaders and the ECB to play on the same side with credible rules for all.

When offshoring backfires
Xiaole Wu & Fuqiang Zhang (VoxEU) Nov 5, 2011
As the global economic downturn grinds on, more companies are acknowledging that labour costs aren’t always the most important factor when deciding where to build their next factory. This column argues that, in times of recession, some companies find that bringing their business home can give them a competitive edge.

The rise of Qatar: Pygmy with the punch of a giant
Economist Nov 5, 2011
The burgeoning influence of Qatar in the Arab world arouses admiration, suspicion and puzzlement. But its motives are mainly pragmatic.

Brazil’s economy: The devil in the deep-sea oil
Economist Nov 5, 2011
Unless the government restrains itself, an oil boom risks feeding Brazil’s vices.

What caused the financial crisis? The Big Lie goes viral
Barry Ritholtz (WP) Nov 5, 2011
I have a fairly simple approach to investing: Start with data and objective evidence to determine the dominant elements driving the market action right now. Figure out what objective reality is beneath all of the noise. Use that information to try to make intelligent investing decisions.

And Now for Something Different New York Times Subscription Required
Carol Giacomo (NYT) Nov 5, 2011
America's economic and trade discussion will shift to the Pacific Rim when President Obama begins a trip to Asia Saturday.

Alms From China New York Times Subscription Required
NYT Nov 5, 2011
The European Union does not need China to pay for its bailout. The main roadblock to fixing Europe's mess is a lack of political will to use the resources it has.

Is It a Crisis? Maybe So, if You're a King New York Times Subscription Required
Anand Giridharadas (IHT/NYT) Nov 5, 2011
A dramatic shifting of power or an economic realignment can be viewed as a calamity by those with much to lose. But to others engaged in or benefiting from change, it looks like something else.

Saving Russia from itself
Vladislav L. Inozemtsev (WP) Nov 6, 2011
The key is full integration into the E.U.

An unbridged divide takes its toll Financial Times Subscription Required
Edward Luce (FT) Nov 6, 2011
America’s infrastructure is fast descending to second world status. The US spends just 2 per cent of its gross domestic product on roads, dams, bridges, energy and water systems.

Summitry again proves its own irrelevance Financial Times Subscription Required
Wolfgang Münchau (FT) Nov 6, 2011
Each G20 gathering, like those of Europe’s leaders, promises solutions and fails to deliver. The parallels are remarkable.

To Draghi, it is numbers rather than nationality that matter Financial Times Subscription Required
Gianni Riotta (FT) Nov 6, 2011
To save the euro, and Italy, the ECB head will work as a cunning Frenchman, an ambitious Spaniard, a sceptical German.

All Roads Lead to (Ancient) Rome
Gilles Bransbourg (Newsweek) Nov 6, 2011
The old empire could teach us a thing or two about the euro and its flaws.

19th century lessons for EZ crisis management
Adalbert Winkler (VoxEU) Nov 6, 2011
The Eurozone crisis is escalating as governments have failed dismally in their attempts to restore confidence. This column argues that the interventions have been too little and too weak, leaving the EZ crisis with no end in sight. To back up its case it looks at 19th century finance in the US.

From ‘Made in China’ to ‘Bought in China’
J. Gabriel Boylan (Boston Globe) Nov 6, 2011
The global market shifts toward a new consumer base.

Eurozone crisis: Credibility is not everything
Paolo Manasse (VoxEU) Nov 7, 2011
Changes in the Italian government are driven by the country’s dire debt situation. This column, which updates a 31 October column that illustrated the unsustainability of Italian debt, argues that Berlusconi’s departure is necessary but far from sufficient. Drastic, but evenly distributed measures of consolidation and reform are necessary.

Argentina's latest looming crisis
Eduardo Levy Yeyati (VoxEU) Nov 7, 2011
Argentina's economic woes are always a topical subject, and a particular relevant example for the Eurozone current crisis. This column weighs up Argentina's post-election outlook from a balanced perspective.

End Bonuses for Bankers New York Times Subscription Required
Nicholas Nassim Taleb (NYT) Nov 7, 2011
Any person who takes risks that might lead to a government bailout - that is, any employee of a bank - should be paid no more than a civil servant.

A Free-Trade Plan to Save Japan Wall Street Journal Subscription Required
George Melloan (WSJ) Nov 7, 2011
The mercantilist Japan Inc. model is worn out.

What Moves the Interest Rate Term Structure?
Michael Bauer (FRBSF) Nov 7, 2011
To understand the effects of news on bond markets, it is instructive to look beyond individual maturities and consider the entire term structure of interest rates. For example, unexpected changes in monthly nonfarm payroll employment numbers cause large movements at short and medium maturities, but do not affect long-term interest rates. Inflation news affects the long end of the term structure. Monetary policy actions vary in their effects on interest rates, but cause volatility at all maturities, including distant forward rates.

Saving the euro is the wrong goal Financial Times Subscription Required
Gideon Rachman (FT) Nov 7, 2011
While politicians may come and go, European leaders insist that one thing will remain eternal – the euro.

The real Greek tragedy – its rapacious oligarchs Financial Times Subscription Required
Misha Glenny (FT) Nov 7, 2011
With the domestic economy in free fall,they are waiting to pounce on the state assets the government must privatise.

Greek default within the euro is the only real option Financial Times Subscription Required
Robert Jenkins (FT) Nov 7, 2011
Euro leadership must make now clear what the consequences of a Greek exit from the euro would be.

Don’t panic, China’s economy is not on the rocks yet Financial Times Subscription Required
Michael Pettis (FT) Nov 7, 2011
Beijing must get serious about transferring wealth from the state to the household sector

To the Jobless Economy
Martin Ford (Project Syndicate) Nov 7, 2011
Nearly all economic forecasts agree that high unemployment in much of the developed world will most likely persist for years to come. But, given improvements in computers, robotic technologies, and other forms of job automation, even this dire projection underestimate future unemployment rates.

Global: Global Re-Easing
Spyros Andreopoulos & Manoj Pradhan (MS GEF) Nov 7, 2011
We expect G4 central banks as well as a host of EM central banks to ease monetary policy further over the coming months.

The Edge of the Abyss: Can Restoring Italy's Credibility Spur Eurozone Reform?
Carlo Bastasin (Brookings/Il Sole 24 Ore) Nov 7, 2011
Political credibility is at the core of the Italy's financial crisis. It is time for the country to resort to external authorities to cut debt and implement needed reforms.

Toward a Pacific-Oriented America? (Part I)
Ira Straus (Globalist) Nov 7, 2011
Conventional wisdom holds that the United States is shifting from an Atlantic to an Asia-Pacific orientation. But the United States has long been developing its Pacific links. It has been doing so on the basis of its primary Atlantic links and roots, not as a separate world.

The Optical Illusion of Western Decline (Part II)
Ira Straus (Globalist) Nov 8, 2011
It has become fashionable to suggest that the West is fading in the face of a resurgent Asia. This notion falls flat when developed Asia is properly considered as part of the West.

Europe’s Darkness at Noon
Barry Eichengreen (Project Syndicate) Nov 8, 2011
It may be hard to imagine that Europe’s crisis could worsen, but it just has. The Greek crisis will not go away until there is reason to hope that Greece can revive economic growth, while Italy and Portugal are heading into the same trap.

Poor countries or poor people? The new geography of global poverty
Ravi Kanbur & Andy Sumner (VoxEU) Nov 8, 2011
Many poor people no longer live in poor countries. Of the 10 countries that contribute most to global poverty, six are middle-income countries. For many aid organisations, ‘middle-income’ means they no longer qualify for the same financial aid. This column argues that such a policy would be failing up to a billion people.

Iceland’s programme with the IMF 2008–11
Friðrik Már Baldursson (VoxEU) Nov 8, 2011
During the global crisis, Iceland was hit by the biggest banking crisis any country has ever suffered. This column reviews the role of the IMF in Iceland’s recovery. It argues that the IMF programme was not perfectly designed but successful. Iceland re-entered capital markets less than three years after the crisis.

The myth of financial innovation and the Great Moderation
Wouter den Haan & Vincent Sterk (VoxEU) Nov 8, 2011
Financial institutions played a leading role in the global crisis, and policymakers are under pressure to do something about them. This column argues that before any draconian measures are passed, we need to be reminded of the benefits of the financial sector and the innovation it provides.

Unfinished business? The WTO’s Doha Development Agenda
Will Martin & Aaditya Mattoo (VoxEU) Nov 8, 2011
A recent G20 communiqué on the Doha Development Agenda has got economists excited. According to a new book introduced in this column, negotiators now have an opportunity to critically assess what is on the table and to develop a more relevant agenda and more effective ways of achieving reforms. The book aims to provide empirical evidence to inform the choices ahead.

Push on for Tobin tax
Cleo Fatoorehchi (AT) Nov 8, 2011
Barely half the member countries attending the Group of 20 Cannes summit backed plans for a financial transactions tax that could raise money for any number of purposes, including debt payment or development of poor countries. Yet the supporters of the "Tobin tax" hope for further progress by year end.

What do we want from Wall Street?
Spengler (AT) Nov 8, 2011
In the banking world after the 2008 financial Armageddon, exotic securities are extinct, proprietary trading is a shadow of its former self. While weakened managers won't take on risk or lend, that is what is needed to promote economic growth. Investors too need to size up what may lurk on bank balance sheets. Transparency and a fix of the broken system of assessing credit risk could help restore back-to-basics banking, and give the market the means to punish Wall Street gamblers.

Thinking through the unthinkable Financial Times Subscription Required
Martin Wolf (FT) Nov 8, 2011
The fundamental difficulty throughout has been the failure to understand the nature of the eurozone crisis.

The free market secret of the Arab revolutions Financial Times Subscription Required
Hernando de Soto (FT) Nov 8, 2011
Market forces have come to the Arab world, even if governments did not invite them in.

Eurozone exits and defaults may be only escape Financial Times Subscription Required
John Plender (FT) Nov 8, 2011
The ECB wants struggling nations to reform their way out of the debt crisis but structural changes take time and nervous markets cannot wait.

Known Unknowns
Neel Kashkari (PIMCO) Nov 8, 2011
It’s important to distinguish thoughtful commentators discussing knowable economic topics from entertainers throwing darts. We believe investment managers can analyze numerous data sources and apply lessons learned from past economic cycles to make reasonable assessments about the global economic outlook. We also believe managers can make reasonable judgments about asset classes over the long term and, through rigorous bottom-up research, develop an edge regarding the outlook for individual companies. However, the market as a whole is much better at aggregating all the information that could affect any of the thousands of companies in the stock market than any investor could possibly be. Hence predictions of where the stock market will close on a given date are likely to be wrong.

Is Now the Right Time to Hedge Tail Risk?
Vineer Bhansali, Tina Adatia and Jeroen van Bezooijen (PIMCO) Nov 8, 2011
The recent volatility has driven up the price of tail risk hedges, leaving many investors to wonder if this is a good time to buy tail risk instruments. Not all hedges have equally increased in value, giving investors the option to reduce the cost of their hedges by considering both direct and indirect hedges. Tail risk hedging may allow certain investors to maintain an allocation to risk assets where they might otherwise deem the position to be too risky and it can also help stabilize portfolios on a mark-to-market basis. Depending on risk tolerances and market views, investors may decide to either start implementing hedges now, phase the tail risk strategy in over a period of time, or put the infrastructure in place now and defer implementation until market conditions change.

America at a global crossroads
Frank Carlucci, Lee H. Hamilton and Tom Ridge (WT) Nov 8, 2011
Even as Americans are understandably focused internally on getting our economic and fiscal houses in order, we are constantly reminded that the rest of the world is not standing still. A debt crisis in Europe could drag down an already struggling U.S. economy. China is using its new wealth to modernize its military and expand its influence around Asia. The Arab awakening is ushering in a new political era throughout the Middle East. War and famine are ravaging the Horn of Africa.

Money over democracy
Harold Meyerson (WP) Nov 8, 2011
EU debt crisis imperils self-determination.

The elusive Chinese Consumer
John Berthelsen (Asia Sentinel) Nov 8, 2011
Are they finally starting to show their faces?

Chipping away at public debt
Anna Ivanova, Edouard Martin & Paolo Mauro (VoxEU) Nov 9, 2011
Fiscal consolidation is just one of the many ugly phases that we will have to get used to in the coming years. Yet how can governments reduce their debts without making things even uglier? This column argues that although today’s debts are the highest since World War II, there is much to be learned from previous attempts.

A European Redemption Pact
Peter Bofinger, Lars P Feld, Wolfgang Franz, Christoph M Schmidt & Beatrice Weder di Mauro (VoxEU) Nov 9, 2011
The EZ crisis has taken a turn for the worse. This column, the joint work of the five members of the ‘German Council of Economic Experts’, proposes a novel solution to the crisis – the European Redemption Pact and an associated European Redemption Fund. This would – like Eurobonds – create a joint debt vehicle, but unlike Eurobonds it would be temporary, say 25 years. Its aim would be to ease down the current unsustainable levels while implementing credible fiscal policy reforms in all EZ nations.

Eurozone crisis: Credibility is not everything
Paolo Manasse (VoxEU) Nov 9, 2011
Changes in the Italian government are driven by the country’s dire debt situation. This column, which updates a 31 October column that illustrated the unsustainability of Italian debt, argues that Berlusconi’s departure is necessary but far from sufficient. Drastic, but evenly distributed measures of consolidation and reform are necessary.

Spatial frictions
Kristian Behrens, Giordano Mion, Yasusada Murata & Jens Südekum (VoxEU) Nov 9, 2011
People spend years of their lives shuffling from city to city and countless amounts of money sending goods along similar journeys – a result of so-called ‘spatial frictions’. This columns asks whether these frictions matter for the size distribution of cities, the sizes of individual cities, and the productivity of cities. The short answers are: no, yes, and it depends.

Manufacturing is special
Dani Rodrik (VoxEU) Nov 9, 2011
Poor countries have access to world markets and rich countries’ technologies. In principle, they should catch up. Yet the record belies this expectation. But this column argues labour productivity in manufacturing displays a clear tendency towards convergence, unconditional on the countries’ institutions or policies. The policies that matter for growth are thus those that bear on the reallocation of labour from nonconvergence to convergence activities.

Clear thinking about economic policy
David Backus & Thomas F Cooley (VoxEU) Nov 9, 2011
For some, the fiscal problems in the US and Europe are a case of bad politics getting in the way of good economics. This column argues that there was plenty of bad economics as well. It looks at the work of the two recent Nobel Laureates in offering some clear thinking.

IMF surveillance of the Eurozone: Quo Vadis?
Jean Pisani-Ferry, André Sapir & Guntram Wolff (VoxEU) Nov 9, 2011
Europe’s surveillance of its highly-indebted countries has come under strong criticism. But these countries were also under the watch of another institution, the IMF. This column presents a report showing that the Fund is hardly without fault itself.

What is holding Italy back?
Daniel Gros (VoxEU) Nov 9, 2011
As Italy’s debt crisis enters the danger zone the question arises: Can Italy ever overcome its decade-old growth slump? This column shows that Italy’s growth fundamentals are all in pretty good shape, except one - good governance. Worldwide Governance Indicators show a dramatic worsening during the Berlusconi governments especially when it comes to the rule of law, government effectiveness, and control of corruption. Progress on improving these might in the end be more important for growth than the reforms the EU demands.

Europe’s Next Nightmare
Dani Rodrik (Project Syndicate) Nov 9, 2011
The economic ramifications of a full-blown Greek default are terrifying, but the political consequences could be far worse. A chaotic eurozone breakup would destabilize not only the highly-indebted European periphery, but also core countries like France and Germany.

From Berlusconi to Draghi
Paolo Messa (Project Syndicate) Nov 9, 2011
Greece may be the fuse, but is Italy the bomb that will blow up Europe? While a political crisis is likely to erupt in the near term, it is impossible to predict whether Italy faces an interim government until 2013 or snap elections in early 2012 – or, more importantly, how the next government will deal with Mario Draghi, the European Central Bank's new president.

Russia sidelined on eurocrisis
Pavel K Baev (AT) Nov 9, 2011
Dmitry Medvedev was among those attending the Group of 20 summit in Cannes last week, but the Russian president had even less to offer than other world leaders as they struggled to come to agreement on reaching a solution to the eurozone debt crisis.

The short, sharp life of 'Chinese century'
Nick Ottens (AT) Nov 9, 2011
This has been billed as "China's century", as the country overtakes the United States as the world's biggest economy. But with its widespread poverty, citizens' growing aspirations, rising wage costs and inconsistent legal system, it will be quite a feat if it ends up as tomorrow's superpower.

Consensus Remains Elusive as WTO Ministerial Looms
Bridges Weekly Trade News Digest, Volume 15, Number 38 Nov 9, 2011
WTO members are struggling to find consensus on a host of topics as the 15-17 December ministerial meeting draws nearer. Despite a plethora of proposals on possible non-Doha work, ranging from least developed country (LDC) accessions through to humanitarian food aid, deep-seated divisions between members continue to stymie progress on even a low-ambition outcome for the gathering, sources say.

US, China Face Off Over APEC Goals
Bridges Weekly Trade News Digest, Volume 15, Number 38 Nov 9, 2011
The annual week-long gathering of leaders and ministers from 21 Asia-Pacific countries kicked off yesterday in the US state of Hawaii, amid public disagreements between the US and China over the terms of a proposed "green growth" plan. The framework for a proposed nine-country Trans-Pacific trade accord is also expected to be unveiled during the talks.

G-20 Calls for New, "Credible" Approaches on Doha
Bridges Weekly Trade News Digest, Volume 15, Number 38 Nov 9, 2011
Upon finishing two days of high-level talks in Cannes, France, leaders from the Group of 20 major economies have instructed their trade ministers to pursue "fresh, credible" approaches to resolving the impasse in the WTO's Doha negotiations at the upcoming December ministerial.

Climate Finance Efforts See Progress on International, Domestic Fronts
Bridges Weekly Trade News Digest, Volume 15, Number 38 Nov 9, 2011
The promise made two years ago in Copenhagen, Denmark by developed countries to prioritise climate finance received renewed backing at this year's G-20 summit in Cannes, France. Questions regarding how much funding, how the funds are managed and disbursed, and where the funds come from, however, remain unresolved.

China needs more than a five-year charm offensive Financial Times Subscription Required
David Pilling (FT) Nov 9, 2011
For millions of people the attraction of the US is in its ability to tolerate – even encourage – an alternative view.

Europe: rise of the calculating machine Financial Times Subscription Required
Robert Shrimsley (FT) Nov 9, 2011
Apparently, the answer to the huge problems of the eurozone is the replacement of elected premiers with economic experts.

It’s time for you to fire the silver bullet, Mr Draghi Financial Times Subscription Required
Alexander Friedman (FT) Nov 9, 2011
The European Central Bank must take up the challenge as Europe’s lender of last resort.

How Greece Could Leave the Euro New York Times Subscription Required
Stergios Skaperdas (NYT) Nov 9, 2011
For Greece, defaulting and returning to the drachma offers a better chance of economic growth and employment than staying the course.

Can the W.T.O. Change Russia? New York Times Subscription Required
Dominic Fean (NYT) Nov 9, 2011
Putin & Co. tend to see the World Trade Organization as a political tool rather than a means to stimulate trade. But for Russia's economy to modernize, they'll have to adapt.

Italy on the brink
Nita Ghei (WT) Nov 9, 2011
The next domino is about to fall in the European debt crisis, and it's the biggest yet. Greece, Portugal and Ireland have already received bailouts from the European Union and the International Monetary Fund (IMF). There's no pot of rescue money big enough to save the European Union's third-largest economy, Italy.

When Markets Are Hostage to Politics
Lubos Pastor and Pietro Veronesi (Bloomberg) Nov 9, 2011
Politics are dominating financial markets. Day after day, prices react to news about what governments around the world have done or might do.

The Undeserving One Percent?
Raghuram Rajan (Project Syndicate) Nov 10, 2011
Reading some economists, it might seem that the answer to all current problems is to tax the richest 1% and redistribute to everyone else. But if governments tax their rich more, they should do it with the aim of improving access and opportunity for all, rather than as a punitive measure to rectify some imagined wrong.

Determinants of trade-policy responses to the 2008 financial crisis
Yue Cui, Kishore Gawande & Bernard Hoekman (VoxEU) Nov 10, 2011
The Great Trade Collapse of 2008–09 did not give rise to rampant protectionism. This column examines the determinants of the observed pattern of trade-policy responses to the 2008 crisis, using data for seven large emerging markets that have a history of active use of trade policy. Vertical specialisation is found to be the most powerful economic factor determining trade-policy responses.

Europe's Entitlement Reckoning Wall Street Journal Subscription Required
WSJ Nov 10, 2011
From Greece to Italy to France, the welfare state is in crisis.

Should Some Bankers Be Prosecuted?
Jeff Madrick and Frank Partnoy (NYRB) Nov 10, 2011
Federal agencies have launched few serious lawsuits against the major financial firms that participated in the collapse, and not a single criminal charge has been filed against anyone at a major bank. The federal government has been far more active in rescuing bankers than prosecuting them.

China looks at life after euro
Antoaneta Becker (AT) Nov 10, 2011
China is admonishing the European Union for having "thrown its principles out of the window", a turn around from times not long ago when mandarins in Brussels lectured Beijing on its economic management. It is busy too drawing up contingency plans for the break up of the eurozone.

Cogs of China’s credit machine are grinding more slowly Financial Times Subscription Required
Henny Sender (FT) Nov 10, 2011
Beijing’s tight money policy has given rise to more money games, speculation, and corruption, though the effects are only now beginning to become evident

Asia Propels Recovery But Vulnerable to Euro Crisis
IMF Survey Nov 10, 2011
Asia plays a key role in the global recovery, but the region could be badly impacted if the crisis in Europe deepens, said the IMF chief, Christine Lagarde during a four-day trip to Asia.

Now, Italy Is in Turmoil New York Times Subscription Required
NYT Nov 10, 2011
Europe's central bank must step in to stop the widening debt crisis that is threatening to engulf Italy and perhaps bring down the euro.

Legends of the Fail New York Times Subscription Required
Paul Krugman (NYT) Nov 10, 2011
With Italy following Greece off a cliff, it's hard to see how the euro can survive. Now that the euro project is on the rocks, what lessons should we draw?

U.S. Should Study China, Not Fear Its Rise
Jonathan Alter (Bloomberg) Nov 10, 2011
Today’s surging China doesn’t seem interested in war or politics, only economic growth. China, undergoing one of the great transformations in human history, should be a source of fascination and study for the U.S. -- not fear.

Down with the Eurozone
Nouriel Roubini (Project Syndicate) Nov 11, 2011
Germany and the ECB have less power over the eurozone's peripheral countries than they seem to believe. If they continue to insist on concentrating all the pain of economic adjustment in the periphery, the monetary union’s slow-developing train wreck will accelerate as peripheral countries default and revert to national currencies.

Supply-side policies and the zero lower bound
Jesús Fernández-Villaverde & Juan F Rubio-Ramirez (VoxEU) Nov 11, 2011
With nominal interest rates in many western countries at or approaching the zero lower bound, economists are calling for more quantitative easing or greater fiscal expansions to generate inflation, reduce real interest rates, and rejuvenate the economy. But what if these policies fail? Or are no longer possible? This column outlines a third way: supply-side policies.

Airline alliances: Open the skies
Economist Nov 12, 2011
Regulators have been too soft on the big transatlantic carriers.

The only way to save the eurozone from collapse Financial Times Subscription Required
Wolfgang Münchau (FT) Nov 13, 2011
The introduction of a Eurobond would catalyse further political integration.

Italians want a comeback, not decline Financial Times Subscription Required
Beppe Severgnini (FT) Nov 13, 2011
Italy’s loss of credibility has been dramatic. Markets don’t trust us any longer. It is time to prove them wrong.

Greece Can Leave The Euro, But It Will Never Escape It
John Tamny (Forbes) Nov 13, 2011
Even if it reintroduced the drachma, Greek debt would still be denominated in the common European currency, and businesses would likely still be forced to borrow in euros as well.

Global: The Mistakes of Others
Spyros Andreopoulos (MS GEF) Nov 14, 2011
Similar initial conditions to Japan’s ‘lost decade’ should not mean the US will go down the same path.

Financial Sector Reform Vital to Rebalance, Sustain China's Growth
IMF Survey Nov 14, 2011
With China's economy booming over the last two decades, faster reform of the country’s financial system is essential to sustain strong economic growth, support rising domestic demand, and keep risks at bay, according to the International Monetary Fund.

Look behind you, Lucas and Mario Financial Times Subscription Required
Gideon Rachman (FT) Nov 14, 2011
Europe, and the world, must hope that Lucas Papademos and Mario Monti can work miracles. For if the technocrats fail to do so, the extremists are waiting in the wings.

IMF must rekindle its old strengths and glory Financial Times Subscription Required
William Rhodes (FT) Nov 14, 2011
The problem is that the fund allowed itself to become more of a minor player rather than an anchor as contagion spread across Europe.

Greek lessons in the financial crisis Financial Times Subscription Required
John McDermott (FT) Nov 14, 2011
Papademos’s required reading in Harvard was crisis fodder but was he letting students off lightly than Larry Summers

A metallic riff for our times Financial Times Subscription Required
Brian Groom (FT) Nov 14, 2011
As manufacturing’s recovery stalls amid turmoil in European markets, heavy metal looks a more assured export.

Europe's largest banks have become too big to save Financial Times Subscription Required
Jim Millstein (FT) Nov 14, 2011
Not only are some banks too big to fail and too big to save, they are also too big to manage.

Twenty Years After the Demise of the Soviet Union: A Chinese Perspective (Part I)
Wu Jianmin (Globalist) Nov 14, 2011
How did the fall of the USSR give rise to a global order characterized by peace and economic development?

Another Bipolar World Order (Part II)
Wu Jianmin (Globalist) Nov 15, 2011
The competition between peace and development on the one hand, and conflict and confrontation on the other, will determine the destiny of mankind in the 21st century.

America in the Asian Century
Dominique Moisi (Project Syndicate) Nov 15, 2011
Paradoxically, only a more confident America can accept a reduced global status, because reconciling oneself to change is always easier once one has taken the steps needed to adjust to it. Fortunately, America has a much-needed opportunity to refocus on itself – to recover its inner strength without withdrawing from the world.

Europe's Crisis: Beyond Finance
George Friedman (Stratfor) Nov 15, 2011
Everyone is wondering about the next disaster to befall Europe. Italy is one focus; Spain is also a possibility. But these crises already are under way. Instead, the next crisis will be political, not in the sense of what conventional politician is going to become prime minister, but in the deeper sense of whether Europe’s political elite can retain power, or whether new political forces are going to emerge that will completely reshape the European political landscape. If this happens, it will be by far the most important consequence of the European financial crisis.

The trilemma in China and India
Joshua Aizenman & Rajeswari Sengupta (VoxEU) Nov 15, 2011
Emerging markets face what some economists are calling a trilemma. They cannot simultaneously target exchange-rate stability, conduct an independent monetary policy, and have full financial integration. So what to do? This column looks at how Asia’s giants are responding – and in different ways.

Can Mario Monti Rescue Italy?
Paolo Manasse (FA) Nov 15, 2011
The new government must quickly enact unpopular reforms to right the country's economy. This may cost its leaders their careers, but a consensus plan would be toothless and would come too late. Read

The Greek Haircut and Europe's Shared Responsibility
Abraham Newman (FA) Nov 15, 2011
The euro crisis is not a simple story of Greek sinners and German saints. In fact, imposing austerity on the eurozone's periphery alone will accomplish little. To save the continent, its richer countries and private investors must share in the sacrifice.

Europe must not allow Rome to burn Financial Times Subscription Required
Martin Wolf (FT) Nov 15, 2011
With the new government in Italy, the eurozone has what may turn out to be a last chance to put out the fire.

Take flight from Europe's policy food fight Financial Times Subscription Required
Bill Gross (FT) Nov 15, 2011
Deleveraging, fiscal tightening and potential defaults are on the horizon, and investors should be in 'risk off' mode.

Is GLD Really As Good As Gold?
Agustino Fontevecchia (Forbes) Nov 15, 2011
The ETF has become one of the most popular ways to gain exposure to the yellow metal, raising questions about its impact on the market.

Who will rescue Europe?
Robert J. Samuelson (WP) Nov 15, 2011
The IMF goes missing.

China and the Rules of Trade
WSJ Nov 15, 2011
Obama is frustrated with China but makes the wrong demands.

China’s poisonous exports
Brett M. Decker and William C. Triplett II (WT) Nov 15, 2011
PRC products aren’t just cheap, they’re dangerous.

To Increase Jobs, Increase Economic Freedom Wall Street Journal Subscription Required
John Mackey (WSJ) Nov 16, 2011
Business is not a zero-sum game struggling over a fixed pie. Instead it grows and makes the total pie larger, creating value for all of its major stakeholders, including employees and communities.

Green Growth, China Currency Take Centre Stage at APEC Meet
Bridges Weekly Trade News Digest, Volume 15, Number 39 Nov 16, 2011
Leaders from the 21 member economies of the Asia-Pacific Economic Cooperation (APEC) forum gathered in the US state of Hawaii last weekend, resolving to boost regional trade and reduce tariffs on environmental goods and services. The ongoing disagreements between Washington and Beijing over China's currency practices also played out publicly at the event, with US President Barack Obama urging that "enough is enough."

Russia Quickly Closes in on WTO Entry
Bridges Weekly Trade News Digest, Volume 15, Number 39 Nov 16, 2011
After an 18-year process, Russia now appears set to join the WTO, with the Formal Working Party finishing its negotiations on 10 November. Negotiators have forwarded the Russian accession accord to the upcoming December ministerial conference, where trade ministers will vote on the package.

Framework for Trans-Pacific Pact Announced; New Countries Express Interest
Bridges Weekly Trade News Digest, Volume 15, Number 39 Nov 16, 2011
Leaders of the nine countries negotiating the Trans-Pacific Partnership (TPP) Agreement announced a broad outline for the proposed accord at this weekend's gathering of Asia-Pacific leaders. Canada, Japan, and Mexico also stated their interest in joining the negotiations at the meet, held in the US state of Hawaii.

Disputes Roundup: Tuna Appeal at WTO Likely; Animal Welfare Groups Petition Obama
Bridges Weekly Trade News Digest, Volume 15, Number 39 Nov 16, 2011
The long-running dispute between the US and Mexico over Washington's 'dolphin safe' labelling practice for tuna products is likely to see a WTO appeal, after the two parties together asked for an extension of the appeals deadline. Meanwhile, animal welfare and consumer advocacy groups in Washington are urging the US to look into options outside the global trade body for resolving the trade row.

Cotton: African Exporters Seek Subsidy Freeze
Bridges Weekly Trade News Digest, Volume 15, Number 39 Nov 16, 2011
The US and EU should freeze trade-distorting support for cotton at current historically-low levels, West African exporting countries have argued in a WTO proposal. The proposal was discussed informally last Friday among some of the members concerned.

This Week in the Great Depression
hilip Scranton (Bloomberg) Nov 16, 2011
Welcome to "This Week in the Great Depression." It's the fall of 1931, and Britain just weeks ago abandoned the gold standard. Nervous dollar holders have made a raid on U.S. bullion, with almost $450 million earmarked for shipment in less than a month.

How America should adjust to the Pacific century Financial Times Subscription Required
David Pilling (FT) Nov 16, 2011
China has stirred from its slumbers and the US now has a significant rival, if not yet globally, then certainly in Asia.

Europe cannot endure a rift between ins and outs Financial Times Subscription Required
Marek Belka (FT) Nov 16, 2011
European leaders’ efforts to save the euro will be wasted if they divide between those inside and outside the single currency.

Policymakers need to act with Lehman-style urgency Financial Times Subscription Required
Richard Milne (FT) Nov 16, 2011
Looked at through wholesale funding, the eurozone crisis suggests a number of parallels between its problems and the banks in 2008.

Europe's Contagion New York Times Subscription Required
NYT Nov 16, 2011
The debt crisis is no longer just a problem for Greece or Italy but is spreading through the entire euro zone.

Painful Euro Crisis and Lessons for the World – Part I
Jacob Funk Kirkegaard (YaleGlobal) Nov 16, 2011
As the world watches, Europe battles to contain burgeoning debt and restore confidence

A new era for commodities
Richard Dobbs, Jeremy Oppenheim, and Fraser Thompson (McKinsey Quarterly) Nov 17, 2011
Cheap resources underpinned economic growth for much of the 20th century. New analysis suggests the 21st will be different.

The Culture War Over Europe's Money Wall Street Journal Subscription Required
Walter Russell Mead (WSJ) Nov 17, 2011
The Germans are richer and more stubborn.The French are flashier and faster on their feet.

Why Only Germany Can Fix the Euro
Matthias Matthijs and Mark Blyth (FA) Nov 17, 2011
Reading Kindleberger in Berlin.

One professor to another: listen to the people, or fail Financial Times Subscription Required
Michael Ignatieff (FT) Nov 17, 2011
Repairing Italy and Greece will take a long time. Turning to experts to solve problems of legitimacy and consent is a sign, not of strength, but weakness.

Germany is not for turning on how to save the euro Financial Times Subscription Required
Guido Westerwelle (FT) Nov 17, 2011
We need to provide for the future. Sound budgeting is not a German idée fixe based on our historical experience of hyperinflation.

Now is the time to go back to square one Financial Times Subscription Required
Martin Jacomb (FT) Nov 17, 2011
Currency unions have been dissolved before. The process is messy but the effect beneficial.

Policymakers need to act with Lehman-style urgency Financial Times Subscription Required
Richard Milne (FT) Nov 17, 2011
Looked at through wholesale funding, the eurozone crisis suggests a number of parallels between its problems and the banks in 2008

Analyst's Longtime Skepticism on Euro Gains Traction New York Times Subscription Required
NYT Nov 17, 2011
Bernard Connolly's proposition that foisting a common currency upon many disparate nation states would end in ruin is getting a much wider hearing.

ECB crisis actions: The printing press perspective
Hans-Werner Sinn (VoxEU) Nov 18, 2011
The first major crisis in the era of independent central banks is severely testing that independence – nowhere more so than the Eurozone. This column argues that the ECB is monetising the sovereign debt – a view widely held in Germany. It argues that the ECB is the Eurozone’s economic government with the power to enforce comprehensive rescue measures, up to and including a fiscal transfer union.

An open letter to Dr Jens Weidmann
Charles Wyplosz (VoxEU) Nov 18, 2011
The EZ crisis is approaching a tipping point beyond which market panic and slow government reaction threaten to create a generation-defining loss of jobs, savings, and pensions. This open letter to the president of the German central bank presents arguments that counter German objections to using the Eurozone’s last remaining defence against economic calamity – the ECB.

Apocalypto for Bondholders? Wall Street Journal Subscription Required
WSJ Nov 18, 2011
A Mexican bankruptcy ambushes U.S. investors.

The G20 in Cannes: They came in search of growth – and didn’t find it
Klaus Deutsch (DB Research) Nov 18, 2011
Only rarely since 1975 have summit meetings of the world’s major economic powers seen such long documents approved as was the case in Cannes. The summit conclusions could also be published as a book, but readers would find the content difficult to fathom. That wasn’t how it was meant to be. Such summits are supposed to provide political leadership, enable compromises to be reached between the leading powers and boost the momentum behind the technical work of the specialist committees. Sometimes miracles do happen at such meetings, sometimes the homework does at least get completed, and sometimes both things fail to be achieved. Cannes will probably go down in history as a summit that sought to achieve a growth turnaround – but failed – and where there was no trace of a miracle.

The Anatomy of Global Economic Uncertainty
Mohamed A. El-Erian (Project Syndicate) Nov 18, 2011
The sense of uncertainty prevailing in the West is palpable, and rightly so: People are worried about their future, with a record number now fearing that their children may end up worse off than them. Unfortunately, things will become even more unsettling in the months and years ahead.

Painful Euro Crisis and Lessons for the World – Part II
Joergen Oerstroem Moeller (YaleGlobal) Nov 18, 2011
To secure credit, Europe finds global financial markets no longer attuned to Western interests

The Failed Political Economy of the Euro Crisis
Anders Åslund (PIIE) Nov 18, 2011
The euro crisis has been extensively discussed in terms of economics, finance, political intrigues, and European institutions, but a key aspect—the political economy of the crisis—has received little attention. Politicians and social scientists from emerging economies, not least from Eastern Europe, look with amazement at this oversight.

Rising debt, rising China
Reince Priebus (WT) Nov 18, 2011
Among President Obama's many broken promises, none is as obvious as his failure to slow the growth of the nation's debt. Instead of cutting annual deficits in half, as promised, he racked up record annual deficits and rapidly accelerated our accumulation of debt, which recently surpassed an unthinkable $15 trillion.

France's fragile AAA rating
Nita Ghei (WT) Nov 18, 2011
Once mighty Old World economies may fall as the eurozone debt crisis continues to spread. On Nov. 10, Standard and Poor's accidentally issued a warning message to subscribers that France's prized AAA credit rating was to be downgraded. S&P apologized for the "technical error," but it's becoming increasingly apparent the French have a AAA rating in name only.

Young hold 'euro crisis' key
Reuven Brenner (AT) Nov 19, 2011
The "euro crisis" is not at core a currency problem but one of a period of lucky demographics coming to an end, with the costs continuing. The solution lies in incentives that would enable the younger, entrepreneurial generation to finance their dreams or for those people to flow where capital becomes more available to them.

The world economy: The magic of diasporas Economist Subscription Required
Economist Nov 19, 2011
Immigrant networks are a rare bright spark in the world economy. Rich countries should welcome them.

The European Central Bank: Brink think Economist Subscription Required
Economist Nov 19, 2011
The Bundesbank’s chief and the ECB’s Italian president have much in common.

Does openness generate growth? Reconciling the experiences of Mexico and China
Timothy Kehoe & Kim Ruhl (VoxEU) Nov 19, 2011
In 1985, Mexico opened itself to trade and investment. In recent years, China has followed the same path with much more impressive results. But this column argues that the slow growth and crises that Mexico experienced after the initial boom should act as a warning to those optimistic about China.

Why the retirement age varies across countries
Philip Sauré & Hosny Zoabi (VoxEU) Nov 19, 2011
In Mexico, the average male worker retires at 75. In Bulgaria, he does so at 58. This column argues that an economy’s composition of occupations matters for its average effective retirement age as the nature of different occupations leads workers to retire at different ages. It suggests the differences in occupational composition explain up to 40% of the observed cross-country variation in retirement age.

Welcome to a future built in BRICs
Jim O'Neill (Telegraph) Nov 19, 2011
After 10 years of emerging market growth it is time for a new world order – with the BRICs taking their rightful place at the top table.

Deutsche Bank Could Transfer Contagion
Simon Johnson (Bloomberg) Nov 20, 2011
You’ve probably never heard of Taunus Corp., but according to the Federal Reserve, it’s the U.S.’s eighth-largest bank holding company. Taunus, it turns out, is the North American subsidiary of Germany’s Deutsche Bank AG (DBK), with assets of just over $380 billion.

Austerity alone can’t save the euro Financial Times Subscription Required
Wolfgang Münchau (FT) Nov 20, 2011
The survival of the euro will now depend on whether Angela Merkel or Mario Draghi, or both, will blink.

China keen to avoid domestic backlash Financial Times Subscription Required
Jamil Anderlini (FT) Nov 20, 2011
China has to worry about a backlash in public opinion that could result from rescuing what they perceive to be coddled, lazy Europeans.

How China Can Defeat America New York Times Subscription Required
Yan Zuetong (NYT) Nov 20, 2011
For China to replace America as the preeminent global power, it will have to win hearts and minds at home and abroad.

Central Bankers: Stop Dithering. Do Something. New York Times Subscription Required
Adam Posen (NYT) Nov 20, 2011
The right thing to do right now is for the Federal Reserve and the European Central Bank to engage in further monetary stimulus.

Boring, Cruel Euro Romantics New York Times Subscription Required
Paul Krugman (NYT) Nov 20, 2011
Understanding the architects of the European disaster.

Bailout of First Resort Wall Street Journal Subscription Required
WSJ Nov 21, 2011
Europe's central bank can't save spendthrift governments.

Why the ECB Won't (and Shouldn't) Just Print
John P. Hussman (Hussman Funds) Nov 21, 2011
Over the past week, we've heard all sorts of propositions that the European Central Bank (ECB) "must" begin printing money to bail out Italy and other countries, because "there is no other option." There are three basic difficulties with this idea.

Trade tensions mount: The 10th Global Trade Alert report
Simon J Evenett (VoxEU) Nov 21, 2011
The last Global Trade Alert report back in July 2011 raised concerns that a deteriorating macroeconomic climate would lead to greater protectionism. The fear has come to pass. This column, which introduces the latest GTA report, shows that the incidence of protectionism in the third quarter of 2011 is as high as during the most troubling of 2009, when protectionist fears were at their peak. Several large trading nations have taken across-the-board measures that adversely affect many trading partners. The world trading system may face its greatest test in the year ahead.

Welcome to Eurotaly: If Italy falls, so does Europe
Paolo Manasse & Giulio Trigilia (VoxEU) Nov 21, 2011
Ever since the collapse of Lehman Brothers, contagion has become the stuff of policymakers' nightmares. In recent weeks, with the very real prospect of default by European countries, the sleepless nights are returning. This column provides evidence that markets are bundling all European countries together. They believe that if Italy defaults, it would mean the end of the euro and no country would be left unscathed.

Can Italy Be Saved?
Michael Spence (Project Syndicate) Nov 21, 2011
As the economist Mario Monti assembles Italy’s next government, much is at stake for the country, for Europe, and for the global economy. Only bold commitments by both the EU and Italy can prevent an extremely bad outcome – and ensure a relatively favorable one.

The Future of Development Aid
Sri Mulyani Indrawati (Project Syndicate) Nov 21, 2011
Effective aid to poor countries works wonders: in the last 25 years, the share of poor people in developing countries has been cut by half, and the last decade has witnessed impressive development successes in countries once thought beyond help. But, while these results are promising, much remains to be done.

The markets are not the monster Financial Times Subscription Required
Gideon Rachman (FT) Nov 21, 2011
The markets are not the enemy of European politicians. In fact, they are all that stands between political leaders and angry citizens.

Only way to stop the run on eurozone debt Financial Times Subscription Required
George Soros and Peter Bofinger (FT) Nov 21, 2011
The asymmetry is not in the statutes of the ECB but in the minds of Germans, traumatised by hyperinflation.

It’s too early for a Brady plan for Greece Financial Times Subscription Required
Guillermo Ortiz (FT) Nov 21, 2011
Now is the time for the ECB to step outside of orthodox monetary policy and reassure markets that it will provide funding to solvent sovereign credits.

Critics of credit default swaps have got it wrong Financial Times Subscription Required
Conrad Voldstad (FT) Nov 21, 2011
Critics of the product have misunderstood the fundamental difference between CDS and insurance

European bailout is a cop-out
Michael Taube (WT) Nov 21, 2011
Recent economic turmoil in Greece and Italy has frustrated investors and creditors, caused political upheaval and created increasingly unstable European markets. While that's all unfortunate, the massive bailout pledge simply isn't the answer to solve the region's financial woes.

Financial Markets as Drug Pushers
Stephan Richter (Globalist) Nov 21, 2011
Could the misdeeds of markets cause a rupture in the acceptance of market institutions?

It might not be an Asian century after all
Spengler (AT) Nov 22, 2011
Demographics, resistance to democracy and complacency about its visible success all risk taking the steam out of China's rising trajectory. If Beijing erroneously concludes from the United States's financial crash that a command economy is in its interests, and regards America as an enemy rather than as an unthreatening rival, it will decline. The greatest challenge is not American strength but American weakness. (Nov 21, '11)

Development Cooperation under Siege
Jomo Kwame Sundaram (Project Syndicate) Nov 22, 2011
Globalization has helped to integrate developing countries into the world economy, but now that very integration is becoming a threat in the wake of the financial crisis. With the increasing likelihood of protracted stagnation in most rich countries, the prospects for development look poor.

Asia’s Month of Milestones
Gareth Evans (Project Syndicate) Nov 22, 2011
In recent weeks, nervousness about the rise of China has seen a fundamental strategic repositioning by the Asia-Pacific region’s major players, with President Barack Obama vowing to reassert US power and interests there. But, while concerns about China's behavior should be a part of US allies' strategic planning, they should not be exaggerated.

Official forecasts: Building confidence one interval at a time
Charles F Manski (VoxEU) Nov 22, 2011
Policymakers and the media often rely on official estimates. But with policies that are so complex and often untested, these estimates are at best rough guesses – so why not be honest about it? This column calls for confidence intervals to be used in future policy debates.

What is the contribution of the financial sector?
Andrew G Haldane & Vasileios Madouros (VoxEU) Nov 22, 2011
While few would argue that the financial crisis has not brought the real economy down with it, there is considerably less clarity about what the positive contribution of the financial sector is during normal times. This lead commentary in the current Vox debate on the issue focuses on the value-added of risk and government subsidies in national accounting, and makes an important distinction between risk-taking and risk management.

The dynamics of firm lobbying
William Kerr, William Lincoln & Prachi Mishra (VoxEU) Nov 22, 2011
Lobbying is a primary avenue through which firms attempt to change policy. But only a few big firms lobby and lobbying is highly persistent over time. This column argues that entry costs to the political process help explain these facts. It provides evidence from a change in immigration policy that induced firms that were already lobbying and were sensitive to the policy changes to switch from lobbying on other issues towards immigration while other firms did not enter the lobbying process.

How much capital do European banks need?
Viral Acharya, Dirk Schoenmaker & Sascha Steffen (VoxEU) Nov 22, 2011
The lack of market confidence in European banks is fed by the uncertainty about Eurozone sovereign debt. This column argues governments and banking supervisors should agree a recapitalisation package well before Christmas. It adds that the required amount to be raised by each bank should be presented as a euro amount and not as a ratio so as not to tempt banks to cut down assets instead of raising capital.

What next for the WTO: Challenges for the WTO's eighth ministerial conference
John Weekes (VoxEU) Nov 23, 2011
Next month the World Trade Organisation holds its eighth ministerial conference. This column by a veteran of trade negotiations sets the scene – documenting the WTO’s achievements and the challenges ahead.

To the eurozone: advance or risk ruin Financial Times Subscription Required
Martin Wolf (FT) Nov 22, 2011
The absence of shared political culture, a common political process and effective constitutional structures is an obstacle to enduring success.

It’s madness to follow a martingale betting strategy in Europe Financial Times Subscription Required
John Kay (FT) Nov 22, 2011
The wise person’s reaction to the casino is not to go there; if you do, leave while you are ahead, and if you cannot do so, accept a small loss.

Risks emerging from shadows look worryingly like 2008 Financial Times Subscription Required
John Plender (FT) Nov 22, 2011
A less noticed throw back to pre-crisis days concerns the structure of the financial system – the shadow banking system is in great shape.

Does Europe Have a Korean Option?
Simon Johnson (Project Syndicate) Nov 23, 2011
The eurozone could learn from the experience of Korea, which came through its crisis in the late 1990's more quickly than anyone expected, combining sensible reforms with a rapid recovery. The key was a large depreciation of the currency, the won – just as depreciation of the euro seems to be one likely way that the eurozone will turn the corner.

Sovereign spreads and banks’ fragility
Ashoka Mody & Damiano Sandri (VoxEU) Nov 23, 2011
European policymakers are confronting a heightened crisis characterised by a perverse and seemingly intractable interplay between sovereign debt pressures and financial-sector fragilities. This column argues that the payoffs from strengthening banks’ balance-sheets can still be large and, therefore, fiscal support is merited. But a more resolute strategy for winding down banks is also needed.

WTO Govt Procurement Talks Continue; New Draft Decisions Tabled for Ministerial
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
With the WTO Ministerial Conference less than four weeks away, delegations are making a concerted push to finalise a plurilateral agreement that would liberalise access to billions of dollars worth of public procurement contracts for 42 countries. Meanwhile, three draft decisions - two on intellectual property issues, one on least developed country accessions - for the December ministerial gathering have also seen progress in recent weeks.

Canada, Mexico Defeat US Country of Origin Label at WTO
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
The US' country-of-origin labelling (COOL) requirements for livestock and meat exports have been deemed WTO illegal, according to a ruling issued on Friday 18 November (DS384, 386). The three-member panel found that the label, which was challenged by both Canada and Mexico at the global trade body in 2008, was too trade restrictive, in addition to discriminating on the basis of nationality.

Korean Lawmakers Ratify US FTA
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
In a surprise plenary session of the South Korean National Assembly on Tuesday 22 November, the ruling Grand National Party (GNP) pushed through the ratification of the US-Korea Free Trade Agreement, despite chaos in the assembly room and protests on the streets. The controversial trade pact, originally negotiated in 2007, was signed into law in Washington this past October.

WTO Debates Food Security as Import Bills Soar
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
Food import bills are set to reach a new height of US$1.29 trillion this year, a specialised UN agency told WTO members at a meeting of the global trade body last week.

WIPO Development Ctte Agrees on South-South Project, Considers External Review
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
The World Intellectual Property Organization's Committee on Development and Intellectual Property (CDIP) reviewed last week the implementation of the WIPO Development Agenda recommendations, which were adopted in 2007 with the aim of "enhancing the development dimension of the organisation's activities." The committee also reached agreement on a South-South co-operation project that had led to the suspension of the previous session of the CDIP, and examined an external review of WIPO's technical assistance.

Failure of US 'Super Committee' Puts Farm Bill Process on Hold
Bridges Weekly Trade News Digest, Volume 15, Number 40 Nov 23, 2011
Congressional leaders have called quits on an effort to cut the US fiscal deficit in time for a self-imposed 23 November deadline. The recent push to develop a plan for curbing farm spending has, as a result, been set aside.

Fifty Years Later, the IP, Technology Transfer, and Development Debate Lives On
Ahmed Abdel Latif and Pedro Roffe (Bridges Weekly) Nov 24, 2011
The ongoing debate over intellectual property, technology transfer, and development in light of the fifty-year anniversary of Brazil submitting a draft resolution on the subject to the UN General Assembly.

The next agro-industrial revolution Recommended!
McKinsey Quarterly Nov 23, 2011
Resource prices are rising and becoming more volatile. Without a resource revolution, we all face the prospect of damage to global growth, welfare, and the environment.

Financial Reform: Unfinished Business
Paul Volcker (NYRB) Nov 24, 2011
One thing is sure: We can no longer rely on ad hoc responses in dealing with increasingly frequent, complex, and dangerous financial breakdowns. Structural change is necessary.

Services without Tears
Jeffrey D. Sachs (Project Syndicate) Nov 24, 2011
A famous claim in economics is that the costs of services (such as health care and education) tend to increase relative to the costs of goods (such as food, oil, and machinery). But a sharp decline in the costs of health care, education, and other services is now possible, thanks to the ongoing revolution in information and communications technology.

Dark trading, visible fragmentation and market quality
Frank de Jong, Hans Degryse & Vincent van Kervel (VoxEU) Nov 24, 2011
Financial innovation has brought about several new ways to trade equities: electronically, over-the-counter, through broker-dealer networks, and so on. But not all of the transactions are transparent, with many barely visible to outsiders – a practice known as ‘dark’ trades. This column finds that, in general, more ways to trade is a benefit, except when the trades are dark.

Sovereign debt, government myopia, and the financial sector
Viral Acharya & Raghuram Rajan (VoxEU) Nov 24, 2011
Why do governments repay external borrowing? This column argues that myopic governments seeking popularity do not default when they are poor because they would lose access to debt markets and be forced to reduce spending. And they do not default when rich because of the adverse consequences to the domestic financial sector. This explains why governments continue servicing debt when default is beneficial for the country.

A three-pillar plan to underpin a new fiscal union Financial Times Subscription Required
Manfred Schepers (FT) Nov 23, 2011
Eurozone crisis is chance for radical action.

Why Europe’s leaders welcome Monti Financial Times Subscription Required
Tony Barber (FT) Nov 23, 2011
If the centre-left is likely to be little better than Berlusconi at reforming Italy, then technocracy has an irresistible appeal.

Time for sovereigns to swallow their medicine Financial Times Subscription Required
Sharon Bowles (FT) Nov 23, 2011
Governments have broken sovereign bond markets through excessive debt, and saying sorry and promising better behaviour is not enough.

Imagining a Post-Dollar World
H.W. Brands (Globalist) Nov 23, 2011
Are the dollar's days as the global reserve currency numbered? Imagine a post-dollar world.

Europe Crisis Reflects Deeper Ideological Divide
Eric Fine (Bloomberg) Nov 24, 2011
The crisis gripping Europe reflects a much larger problem: The world’s policy makers have fundamentally opposing views of how to manage their currencies and economies. Unfortunately, there’s no happy solution.

A story of Brics without mortar Financial Times Subscription Required
Philip Stephens (FT) Nov 24, 2011
Slotting rising states into neat categories betrays a western-centric world view that now obscures more than it illuminates.

Germany is the real winner in a transfer union Financial Times Subscription Required
Sebastian Mallaby (FT) Nov 24, 2011
Ireland and Spain suffered property and banking busts at least partly because monetary policy was too German.

The theme park tiger economy Financial Times Subscription Required
Patti Waldmeir (FT) Nov 24, 2011
The middle class enjoys itself in similar ways around the world, but this was a ‘weekend break’ with Chinese characteristics.

How the WTO Can Change the Game for Russia
Anders Åslund (Moscow Times/PIIE) Nov 24, 2011
On November 10, the World Trade Organization (WTO) Working Party for Russia's accession to that organization finally approved the country for membership after 18 years of negotiations. On December 15–17, the WTO ministerial conference in Geneva will also approve Russia's bid. Then, the State Duma has six months to ratify the membership, and then, one month later, Russia will formally be a member.

The Road to 2050 (Part I)
Ian Johnson (Globalist) Nov 24, 2011
The world is struggling to contend with unacceptably high levels of poverty, an unstable global economic system, a shortage of employment, and dangerous environmental stresses. To confront these challenges, we need a more human-centered economics — and new institutions that guide us towards a more stable and secure future.

Real Values and Their Role in Global Governance (Part II)
Ian Johnson (Globalist) Nov 25, 2011
We are entering into uncharted territory where non-linearity, shocks and surprises will become the norm. But it is also a world where creative and enlightened public policy and corporate actions can move us towards a future of which we can be proud.

Jobs for Justice
Andrés Velasco (Project Syndicate) Nov 25, 2011
Inequality almost everywhere, including China, has become so extreme that it must be reduced. In the not-so-rich countries of the global south, much inequality is the consequence of an old problem: lack of employment opportunities for the poor.

The Hour of the Technocrats
Jeffrey Frankel (Project Syndicate) Nov 25, 2011
Greece and Italy, desperate after their gridlocked political systems left them mired in debt and crisis, have both chosen technocratic economists rather than politicians to lead new governments. It is not a lack of political ability that will stymie them, but rather a lack of political power.

Europe’s Last Best Chance
Michael Boskin (Project Syndicate) Nov 25, 2011
The social insurance systems in Europe and elsewhere are failing because they have promised too much, to too many, for too long. Greece and Italy, along with the rest of the EU, will demonstrate whether democracies with heavily benefit-dependent populations can rein in the welfare state's excesses.

Trade agreements and 21st century trade: A new Policy Insight
Gianluca Orefice & Nadia Rocha (VoxEU) Nov 25, 2011
What is the relationship between deep preferential trade agreements and international production-sharing? This column introduces a new CEPR Policy Insight providing new evidence on the effects of deep integration on production networks trade and on the impact that production networks trade has on the likelihood of signing deeper agreements.

How Germany could save the euro
John Muellbauer (VoxEU) Nov 25, 2011
For months economists have been arguing that Germany holds the key to ending the Eurozone crisis. Should it relax its anti-inflation stance and allow the ECB to inflate away sovereign debt? Or should it write a cheque of its own to the EFSF? Neither, says this column. There is a simple solution, if only Eurozone leaders can see it. Eurobonds are the answer – but with conditions.

Ten years of Doha: What to show and what to look forward to
Lionel Fontagné (VoxEU) Nov 25, 2011
The Doha Round of multilateral trade negotiations has passed its ten-year anniversary unspectacularly and the question is now how to salvage a decade of frustrating progress. Yet even with a new ‘Ministerial’ of the World Trade Organisation being held in mid-December, this column argues that an interim agreement for poor countries and trade is sadly out of reach.

Europe: After the crisis
Charles A.E. Goodhart (VoxEU) Nov 25, 2011
The Eurozone could come to tatters temporarily. But the European ideal is so powerful that crisis and division will not permanently prevail. European leaders absorbed previous crises and bounced back to drive the European project forward. The same may happen again. This column discusses how the political and economic underpinning of the Eurozone must change to avoid future crises.

Memo to Europe: Forget the War Wall Street Journal Subscription Required
Holman Jenkins (WSJ) Nov 25, 2011
Has Germany realized there's no solution without sovereign default?

Europe's IMF End-Run Wall Street Journal Subscription Required
WSJ Nov 25, 2011
Germany rejects the latest scheme to tap the ECB for bailouts.

Economics focus: House of horrors, part 2
Economist Nov 26, 2011
The bursting of the global housing bubble is only halfway through.

India’s currency: Rupee and the bears Economist Subscription Required
Economist Nov 26, 2011
What the mini-run on the rupee says about India.

Europe needs institutional creativity
Nicolas Véron (VoxEU) Nov 26, 2011
When US President Barack Obama met German Chancellor Angela Merkel earlier this month, his advice was reportedly, “I guess you guys have to be creative here”. This column wholeheartedly agrees – and lays out where that creativity is sorely needed.

Tax evasion: Why the crackdown comes at a cost
Bruce Blonigen, Lindsay Oldenski & Nicholas Sly (VoxEU) Nov 26, 2011
The most recent G20 summit led to a multilateral agreement to facilitate information sharing between tax agencies, with the US currently negotiating bilateral tax treaties with the tax havens of Switzerland and Luxembourg. But before celebrations begin, this column points out that cracking down on tax evasion comes at a cost. International investment may well suffer.

Global Governance and the Role of Markets (Part III)
Ian Johnson (Globalist) Nov 26, 2011
There are few who do not now believe that our market systems, and the banking and financial services that underpin them, are in need of attention. Failure to correct the excesses of the past decade will decrease trust, increase social disharmony and lead to undesirable outcomes.

EU's democratic deficit
John R. Bolton (WT) Nov 26, 2011
The crisis of the euro, the common currency of 17 European Union members, continues unabated. Because of massive, sustained budget deficits by several eurozone countries, some could default on their sovereign debt obligations, or the euro itself might disintegrate, profoundly affecting the EU's political and economic future.

Croatia, the next Greece
Jeffrey T. Kuhner (WT) Nov 26, 2011
Croatia is on the verge of national surrender. This small Balkan nation is poised to follow the disastrous path of Greece - dramatically affecting European and U.S. taxpayers. On Dec. 4, Croatians will hold parliamentary elections. The ruling Croatian Democratic Union, known by its acronym HDZ, is expected to lose - and rightly so.

International capital flows and the role of volatility regimes
Ashoka Mody &Antu Panini Murshid (VoxEU) Nov 27, 2011
Recent commentary has suggested that capital inflows – long considered a positive for growth – may actually be doing more harm than good. This column presents new evidence reinforcing the conventional interpretation. It finds that volatility is the determining factor. With volatility below a threshold, an inflow of foreign capital promotes growth. But during periods of volatile growth, the effect is opposite.

The eurozone really has only days to avoid collapse Financial Times Subscription Required
Wolfgang Münchau (FT) Nov 27, 2011
Angela Merkel can get her fiscal union, but in return she will now have to accept a eurobond. If both can be agreed, the problem is solved.

China can help west build economic growth Financial Times Subscription Required
Lou Jiwei (FT) Nov 27, 2011
Infrastructure spending is an important way to boost consumption and it also acts as a spur to economic growth.

Time to end the taboo and have an industrial policy again Financial Times Subscription Required
Diane Coyle and Paola Subacchi (FT) Nov 27, 2011
There are also fundamental weaknesses in skills, infrastructure and the structure of the British economy.

Can China Rescue Its Economy?
Gordon G. Chang (Forbes) Nov 27, 2011
Beijing is bound to go back to pump-priming tactics, but with inflation running high and elevated levels of debt, it has little room to operate.

Is China a market economy?
Bernard O’Connor (VoxEU) Nov 27, 2011
Is China a market economy? This legal question matters as antidumping and anti-subsidies laws apply differently to market economies. This column deconstructs the myth that China will automatically get market-economy status at the WTO in 2016 and argues that if China wants the EU to recognise it as a market economy it should comply with the explicit criteria in EU law.

The Euro Area Is Coming to an End
Peter Boone and Simon Johnson (Bloomberg) Nov 27, 2011
Investors sent Europe’s politicians a painful message last week when Germany had a seriously disappointing government bond auction. It was unable to sell more than a third of the benchmark 10-year bonds it had sought to auction off on Nov. 23, and interest rates on 30-year German debt rose from 2.61 percent to 2.83 percent. The message? Germany is no longer a safe haven.

Employment and Ecology: The Twin Challenges for Humanity (Part IV)
Ian Johnson (Globalist) Nov 28, 2011
Between now and mid-century, the global community will have to face the twin challenges of providing jobs and protecting the planet's natural resources. Taking steps to address these challenges will amount to making a big investment in our self-preservation, peace and security.

The German Hour
Jean Pisani-Ferry (Project Syndicate) Nov 28, 2011
A series of events over the last few weeks have set in motion a downward spiral for the eurozone. Unless officials – especially German officials – act fast, financial markets’ verdict will be ruthless.

Chocolate-Fueled Growth
Kandeh K. Yumkella (Project Syndicate) Nov 28, 2011
An agribusiness development strategy focused on higher-value output and stronger productivity growth throughout the value chain represents one of the best opportunities for rapid and broad-based economic growth and wealth creation in Africa. It also may be one of the few local pathways out of poverty for small farmers.

The Dollar’s Long Tail
Sanjeev Sanyal (Project Syndicate) Nov 28, 2011
Even if China replaces the US as the world’s largest economy within a decade, a global anchor currency can be more resilient than the economic and geopolitical dominance of its country of origin. That is why the dollar will most likely remain the dominant global currency long after the US has been surpassed.

Another Asian Wake-Up Call
Stephen S. Roach (Project Syndicate) Nov 28, 2011
For the second time in three years, global economic recovery is at risk, with the crisis in 2008, triggered by subprime crisis made in America, now followed by Europe's sovereign-debt crisis. The alarm bells should be ringing loud and clear across Asia – an export-led region that cannot afford to ignore repeated shocks to its two largest sources of external demand.

Why the ECB refuses to be a lender of last resort
Paul De Grauwe (VoxEU) Nov 28, 2011
The euro has a matter of weeks to save itself, with several institutions now preparing for its collapse. Given this, why does the ECB still refuse to bail out Europe’s heavily indebted countries? This column provides an explanation. It says that the ECB may well be behaving rationally but adds that such behaviour is also foolish – and dangerous.

The future of saving rates in Asia
Charles Yuji Horioka & Akiko Terada-Hagiwara (VoxEU) Nov 28, 2011
Emerging Asia's economies have contributed to both global imbalances and the global saving glut with current-account surpluses caused by buoyant saving and stagnant investment. This column examines the cause of these trends and argues that in Asia as a whole the situation may remain the same in the next 20 years unless governments promote financial-sector development and improvements in social safety nets, both of which will reduce the need for precautionary saving.

How the Dollar Rules by Fiat Wall Street Journal Subscription Required
James Grant (WSJ) Nov 28, 2011
How did the dollar become the world's principal currency and what is its future?

The Rising Fear in Bank Stock Prices Wall Street Journal Subscription Required
Andrew Atkeson & William E. Simon (WSJ) Nov 28, 2011
Markets are signalling investors' worries about the soundness of bank balance sheets and the adequacy of bank capital.

I fear Germany’s power less than her inactivity Financial Times Subscription Required
Radoslaw Sikorski (FT) Nov 28, 2011
The break-up of the eurozone would be a crisis of apocalyptic proportions, going beyond our financial system.

Don’t admit defeat – fiscal union can still work Financial Times Subscription Required
Jean Pisani-Ferry (FT) Nov 28, 2011
The unilateral surrender of budgetary sovereignty is not something democratic countries will easily agree to.

Low growth and high debt is the sovereign curse Financial Times Subscription Required
Satyajit Das (FT) Nov 28, 2011
Given that the economic growth of recent years was fuelled by debt, the problems are compounded.

Germany Cuts Off Its Nose New York Times Subscription Required
Joe Nocera (NYT) Nov 28, 2011
Self-righteousness is blinding Germans, and Americans, from making sensible policy decisions.

Saving the Euro Will Mean Worse Trouble for Europe
Vivien A. Schmidt (FA) Nov 28, 2011
Markets are reeling because Europe's leaders have only offered up half-measures to resolve the crisis. Not until Brussels, Paris, and Berlin realize the fundamental flaw in their current approach -- a lack of real political and economic integration across the eurozone -- will there be an end in sight. Read

Are the BRIC currencies set to become reserve currencies?
Markus Jaeger (DB Research) Nov 28, 2011
Global FX reserves are denominated in only a handful of currencies. For a currency to become a major reserve currency, it has to be underpinned by liquid, large and highly-rated bond markets. None of the BRIC can at present aspire to major reserve currency status given global FX reserves worth USD 10 tr. Only the RMB has the potential to become a major, albeit not the dominant, reserve currency by 2030. The USD will continue to benefit from incumbency, and is therefore unlikely to be displaced as the “dominant” reserve currency, assuming the government manages to put debt back on a sustainable path.

Elected Dirty Dealers
Luigi Zingales (Project Syndicate) Nov 29, 2011
The US Congress, like legislatures elsewhere, effectively exempts itself from the normal rules of insider trading. But the real issue is not just insider trading – it's that Congress and other legislatures live by rules that are very different from those imposed on ordinary citizens.

The China Bears’ Feeble Growl
Yu Yongding (Project Syndicate) Nov 29, 2011
In recent months, bearish sentiment about the Chinese economy has surged. But, despite serious problems with local debt, housing prices, and underground credit networks, China's economy remains strong.

Europe is Not the United States
Martin Feldstein (Project Syndicate) Nov 29, 2011
A key argument made by European officials and other defenders of the euro has been that, because a single currency works well in the US, it should work well in Europe as well. But, while both are large, continental, and diverse economies, the similarities end there.

Why the ECB needs to care about financial stability
Guido Tabellini (VoxEU) Nov 29, 2011
Last week’s failed auction of German debt showed that none would be immune from a blow-up of the Eurozone, and that normal central banks act as lenders of last resort to their governments. This column argues that unless the ECB starts to care explicitly about financial stability, the troubles will only get worse.

Can austerity be self-defeating?
Daniel Gros (VoxEU) Nov 29, 2011
With European governments cutting back on spending, many are asking whether this could make matters worse. In the UK for instance, recent OECD estimates suggest that ‘austerity’ will lead to another recession, which in turn may lead to a higher debt-to-GDP ratio than before. As the debate heats up, this column provides some cool economic logic.

What the IMF should tell Europe Financial Times Subscription Required
Martin Wolf (FT) Nov 29, 2011
It is time for John Maynard Keynes’ ‘ruthless truth-telling’ – that EU’s choice is between bad and calamitous alternatives.

Time to act – Italy must restructure its debt Financial Times Subscription Required
Nouriel Roubini (FT) Nov 29, 2011
The austerity that the ECB and Germany are imposing on Rome will turn recession into depression.

Shorter risk cycles are the new paradigm Financial Times Subscription Required
Sushil Wadhwani (FT) Nov 29, 2011
Random shocks can tip stall-speed economies into recession.

Europe's Currency Road to Nowhere
Austan Goolsbee (WSJ) Nov 29, 2011
The euro has punished Southern Europe the way China's currency has hurt the United States.

Matthew Yglesias (Slate) Nov 29, 2011
The terrifying new theory that the European economic crisis could devastate the U.S.

Deadlock in Durban
Jagdish Bhagwati (Project Syndicate) Nov 30, 2011
The 17th conference of the UN Framework Convention on Climate Change, popularly known as COP-17, is taking place in Durban, South Africa at a critical moment, as the historic 1997 Kyoto Protocol is set to expire next year. But, like the last two climate-change conferences, COP-17 can be expected to spend much and produce little.

China, Inc. Goes Global
Karl P. Sauvant (Project Syndicate) Nov 30, 2011
China’s economy is now taking its next great leap forward: with labor costs rising and the renminbi appreciating, parts of its manufacturing sector are now moving up the value-added chain and out of the country. The China challenge is now a global one.

The ECB as a fully political player
Jacob Funk Kirkegaard (VoxEU) Nov 30, 2011
The ECB seems to be in the background during this crisis – almost helpless due to Treaty obligations and dogmatic adherence to old monetary theories. This column argues that quite the opposite is true. The ECB is a full-blooded political actor engaging in a strategy aimed at forcing EU political leaders to embrace fiscal rectitude and a quantum leap forward in European integration.

The EFSF: Unfinished business
Bálint Horváth & Harry Huizinga (VoxEU) Nov 30, 2011
The European Financial Stability Facility was set up eighteen months ago as a response to the then Greek sovereign debt crisis. This column looks at the effect of the fund on the financial system in particular bank shareholders, the holders of bank bonds, and the holders of sovereign debts.

Greece: The way forward
Michael G Jacobides, Richard Portes & Dimitri Vayanos (VoxEU) Nov 30, 2011
After a period of intense political turmoil, Greece has converged on a coalition government tasked with implementing reforms. This column argues Greece should now change from fiscal targets and debt restructuring to operational restructuring. It proposes three independent authorities with tight governance and accountability to manage healthcare procurement, monitor structural reforms, and fight corruption.

Outline of December Ministerial Begins Taking Shape
Bridges Weekly Trade News Digest, Volume 15, Number 41 Nov 30, 2011
With barely two weeks left until the WTO Ministerial Conference, potential outcomes for the three-day event are now beginning to emerge. Delegates have spent the past week engaged in intense consultations in advance of today's formal meeting of the General Council, with members seemingly ready to forward draft decisions and elements for political guidance to trade ministers for the December gathering.

US, China Renewable Energy Trade Row Heats Up
Bridges Weekly Trade News Digest, Volume 15, Number 41 Nov 30, 2011
In the latest salvo in the ongoing US-China spat over renewable energy trade policies, Beijing announced on Friday 25 November that it would be launching an investigation into Washington's support of its renewable energy sector. Meanwhile, leaders from China's biggest solar companies have publicly rejected a US trade complaint accusing China of dumping solar panels into the US market.

Food Security: WTO Deadline Prompts Scramble for Consensus
Bridges Weekly Trade News Digest, Volume 15, Number 41 Nov 30, 2011
Consultations on food security, export restrictions, and other unresolved issues continued at the WTO's formal General Council meeting on Wednesday 30 November, as members sought out consensus ahead of the global trade body's ministerial meeting in two week's time.

Brussels Launches Probe into US Bioethanol Imports
Bridges Weekly Trade News Digest, Volume 15, Number 41 Nov 30, 2011
On Friday 25 November, the European Commission announced that it had begun anti-dumping and countervailing duty proceedings for US bioethanol imports. The Commission's investigations - informed by applicable WTO agreements - follow a formal complaint that was filed by the EU bioethanol industry association, ePure, last month.

Italy can save its sovereignty and the euro Financial Times Subscription Required
Martin Feldstein (FT) Nov 30, 2011
The political upheavals in Greece suggest what would happen elsewhere if Brussels came to dominate national policy.

The epic euro crisis disaster movie Financial Times Subscription Required
Robert Shrimsley (FT) Nov 30, 2011
Mayday calls from a sinking ship in the latest not-so-far-fetched bloc-buster movie.

What the IMF should tell Europe Financial Times Subscription Required
Martin Wolf (FT) Nov 30, 2011
It is time for John Maynard Keynes’ ‘ruthless truth-telling’ – that EU’s choice is between bad and calamitous alternatives.

Moral hazard will result from ECB bond buying Financial Times Subscription Required
Otmar Issing (FT) Nov 30, 2011
Bank will lose credibility if it becomes the ultimate buyer of public debt.

New Warnings of Euro Zone Danger New York Times Subscription Required
Steven Erlanger (NYT) Nov 30, 2011
In Europe there are growing concerns that even an aggressive intervention by the European Central Bank will not be enough to stabilize the markets and preserve the euro.

Eurozone free-fall
Nita Ghei (WT) Nov 30, 2011
There's no end in sight for Europe's debt crisis - unless it is the end of the euro itself. The finance ministers of the 17 eurozone countries are meeting in Brussels this week, desperate to come up with a solution as Italy heads toward financial chaos. The world's central banks, spearheaded by the Federal Reserve, are coordinating efforts to provide liquidity to global markets.

A Political Solution for the Euro? Wall Street Journal Subscription Required
George Melloan (WSJ) Nov 30, 2011
Germany is right to demand that the worst-run nations submit to fiscal discipline in exchange for financial aid.

China's Superior Economic Model Wall Street Journal Subscription Required
Andy Stern (WSJ) Nov 31, 2011
The free-market fundamentalist economic model is being thrown onto the trash heap of history.

Betting on Central Banks Wall Street Journal Subscription Required
WSJ Nov 31, 2011
A short-term liquidity reprieve is not the end of Europe's mess.

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