News & Commentary:

December 2007 Archives


The Globalization Index 2007 Recommended!
Foreign Policy and A.T. Kearney Nov/Dec 2007
Globalization, so evident in daily life, is a fragile force.

How Slim Got Huge
Brian Winter (FP) Nov/Dec 2007
Bill Gates is no longer the world’s richest man. That honor now goes to Mexican billionaire Carlos Slim. But Slim’s incredible fortune—$59 billion and climbing—is more than a story of one man’s rise to riches. He is one of a growing number of tycoons from countries like China, India, and Russia who represent a new wave of wealth, power, and influence. Many are skilled businesspeople. But, in these fast-developing economies, being able to seize a political opportunity may count for a lot more.

The World’s Biggest Myth Foreign Policy Subscription Required
Pankaj Ghemawat (FP) Nov/Dec 2007
Some believe globalization is a force for good. Others see it as a global curse. These two camps agree on almost nothing, except that globalization leads to more market share for fewer players. In fact, they couldn’t be more wrong.

Failing small farmers: The World Bank and agriculture
Bretton Woods Update No. 58 Nov/Dec 2007
Plus: Fund fights capital controls, not turbulent capital markets; G7 calls for budget cut at the IMF; More IMF staff for poor countries; Inside the institutions: The IMF and financial sector reform; New Bank financing instruments: Who bears the risk; and More Bank 'aid for trade'.

Ignoring the Storm
Michel Rocard (Project Syndicate) Dec 2007
There is an urgent need for a global conference – a Bretton Woods II – to adopt strict rules to contain today’s wayward financial markets. Unfortunately, as the most recent G7 meeting showed, the world’s major governments are not yet ready to act.

Farewell to Development’s Old Divides
James D. Wolfensohn (Project Syndicate) Dec 2007
The notion of a divide between the rich north from the poor and developing south – for years a central concept in thinking about economic development – has been rendered obsolete by unprecedented levels of global growth and interdependence in the past two decades. As a result, the north-south divide has been replaced by a four-tier world with its own set of challenges.

Dollars and Depression
J. Bradford DeLong (Project Syndicate) Dec 2007
The falling dollar has emerged as a source of profound global macroeconomic distress. But, unless and until foreign savers and investors stop financing the US current-account deficit, the world economy may dodge a potential catastrophe.

The world’s new financial power brokers
Diana Farrell & Susan Lund (McKinsey Quarterly) Dec 2007
Four rising players will continue to grow in wealth and importance, even if interest rates rise and oil prices drop.

The Truth About Sovereign Wealth Funds Recommended!
Anders Åslund (FP) Dec 2007
Worried about oil-rich foreigners taking over your economy? You shouldn’t be. In reality, it is citizens of unaccountable, paternalistic regimes who stand to lose most when rulers play games with their national wealth.

The Globalization of Ethics
Hans Küng (Project Syndicate) Dec 2007
Asian and Western values are not nearly as far apart as many assume. On the contrary, core values, including the principle of humanity, the Golden Rule of Reciprocity, and ethical injunctions against killing, stealing, lying, and abusing sexuality, are shared by all of the world's major religions.

Dog days for the super dollar
Kenneth Rogoff (Project Syndicate) Dec 2007
The US currency's dominant status is being threatened both by the rise of other economies and its own innate instability

Is Wal-Mart Good for Asia?
Greg Rushford (FEER) Dec 2007
The positives and negatives of Wal-Mart's presence on the front lines of global retail.

Taking stock : Ten years after the Asian financial crisis Recommended!
Dominic Barton (McKinsey Quarterly) Dec 2007
The Asian financial system could become a full-fledged partner in the global triad of economic powerhouses, alongside Europe and the United States--but only if its regulatory systems, economic ministries, and financial institutions improve dramatically.

The Global Economy’s Inevitable Hard Landing
Nouriel Roubini (Project Syndicate) Dec 2007
In recent weeks, the global liquidity and credit crunch that started last August has become more severe. This is easy to show: in the United States, the euro zone, and the United Kingdom, spreads between Libor interest rates (at which banks lend to each other) and central bank interest rates – as well as government bonds – are extremely high, and have grown since the crisis began. This signals risk aversion and mistrust of counterparties.

Sovereign Impunity
WSJ Dec 1, 2007
There's a difference between Abu Dhabi now and Japan in the 1980s.

The Dollar Is Falling, and That’s Good News
Tyler Cowen (NYT) Dec 2, 2007
Anxiety about the dollar continues to spread. The falling greenback is often seen as a sign of an impending recession or the fall of the United States from global leadership.

Ending Famine, Simply by Ignoring the Experts
NYT Dec 2, 2007
Malawi's turnaround was fueled by fertilizer subsidies.

Subprime Series, Part 4: Monetary policy and risk taking
Stephen Cecchetti (VoxEU) Dec 3, 2007
The final essay examines whether central bank actions have created moral hazard, encouraging asset managers to take on more risk than is in society’s interest; the answer is “no”.

Innovating Our Way to Financial Crisis
Paul Krugman (NYT) Dec 3, 2007
The financial crisis that began late last summer, then took a brief vacation in September and October, is back with a vengeance.

For nations, small is beautiful
Gideon Rachman (FT) Dec 3, 2007
Europe seems intent on slicing itself up into ever smaller pieces. In the next month, Kosovo is likely to declare independence – making it the seventh new country to emerge from the wreckage of Yugoslavia. The Soviet Union has given way to 15 new states. Even in western Europe, there is talk of Belgium dividing in two, while a pro-independence party has taken power in Scotland.

Job-creating offshoring?
Mitsuyo Ando & Fukunari Kimura (VoxEU) Dec 4, 2007
Offshoring is not new. Kudoka (hollowing-out due to offshoring) has worried Japan since the 1980s. Evidence from Japan presented in a new CEPR Policy Insight suggests that offshoring may help create domestic jobs, especially for SMEs.

Anti-immigrant sentiments
Esther Duflo (VoxEU) Dec 4, 2007
Resentment of immigrants is hard to explain on economic grounds, according to research on US data, and recent work on British data finds no real difference in assimilation rates between Muslim immigrants and other immigrants. Populist rhetoric may do more to create a rift than any religious or cultural feeling these immigrants have brought with them and transferred to their children.

Ancient income inequality
Peter H. Lindert, Branko Milanovic & Jeffrey G. Williamson Dec 5, 2007
Is inequality largely the result of the Industrial Revolution? Or were ancient incomes as unequal as they are today in poor pre-industrial societies? Looking at pre-industrial inequality from the Roman Empire in 14 AD to British India in 1947 generates new insights into the inequality and economic development connection over the very long run.

Why the climate change wolf is so hard to kill off
Martin Wolf (FT) Dec 4, 2007
The point of the story of the boy who cried wolf is that, finally, a wolf did appear. I feel the same way about the intellectual heirs of Thomas Malthus. Malthusians have finally found a wolf called climate change. Many now agree. But it is far away and coming slowly. “If the worst comes to the worst,” mutter the rich to themselves, “we can always let our children cope.”

Europe's trade chief rounds on Clinton
FT Dec 5, 2007
Hillary Clinton, the Democratic frontrunner in the US presidential campaign, came under fire from Europe's top trade negotiator for suggesting that, if elected, she might not press hard for a new global trade pact.

Goldman’s glory may be short-lived
John Gapper (FT) Dec 5, 2007
When a company is doing noticeably better than competitors in its industry there are three possible explanations: skill, luck or edge.

WTO Negotiators Look to 2008, Though Doha Deal Prospects Remain Slim
BRIDGES Weekly Trade News Digest - Vol. 11, Number 42 Dec 5, 2007
Until recently, trade officials from many governments were warning that the Doha Round trade talks would die or go into indefinite hibernation without a breakthrough agreement on cutting tariffs and subsidies by the end of the year. The troubled WTO negotiations now look set to remain alive, if not quite kicking, into 2008, despite the unusually early start to the US election campaign.

UN Climate Summit in Bali Underway; Several Trade Ministers to Attend
BRIDGES Weekly Trade News Digest - Vol. 11, Number 42 Dec 5, 2007
Government officials from around the world are meeting at a United Nations conference in Bali to develop a blueprint for starting negotiations on a new treaty to protect the global climate from greenhouse gas emissions.

Draft Rules Text Would Ban Wide Range of Fisheries Subsidies
BRIDGES Weekly Trade News Digest - Vol. 11, Number 42 Dec 5, 2007
A new potential basis for negotiating future WTO rules on subsidy spending would ban a wide range of government payments to the fisheries sector that conservationists blame for promoting the wide-scale depletion of marine fish stocks.

Ag Chair Presents New Proposals on Developing Countries' 'Special Products'
BRIDGES Weekly Trade News Digest - Vol. 11, Number 42 Dec 5, 2007
The chair of the WTO agriculture negotiations has suggested a new set of potential parameters for the number and treatment of the 'special' farm products that developing countries will be able to slate for shallower tariff cuts based on food security, livelihood security and rural development grounds.

Not Yet for the Euro
Adam S. Posen (PIIE) Dec 5, 2007
It will take much more than appreciation for the euro to take over from the US dollar as the global currency.

After China, Vietnam Will Be World's Factory
Andy Mukherjee (Bloomberg) Dec 6, 2007
The 4 million motorcycles on the streets of Ho Chi Minh City offer a remarkable -- if somewhat noisy -- testimony to the prosperity that beckons Vietnam.

Uncertainty' Just Another Word for Lots to Lose
Caroline Baum (Bloomberg) Dec 6, 2007
Central bankers loathe uncertainty.

World Bank Grinches Wall Street Journal Subscription Required
WSJ Dec 6, 2007
Wolfowitz isn't the Grinch of the World Bank's traditional holiday party.

Trade Resolve Wall Street Journal Subscription Required
WSJ Dec 6, 2007
Negotiation really can work to resolve differences.

Development research as if extreme poverty mattered
Dean Karlan & Sendhil Mullainathan Dec 7, 2007
A group of young(ish) scholars are revolutionising development economics using new data sets, randomised trials and the best available economic theory to find out exactly what works and why. Here is an example of some motivating questions about microfinance product design.

Middle East must loosen ties to the dollar
Gerard Lyons (FT) Dec 6, 2007
The region should shift from the dollar peg to managing exchange rates against a basket of currencies.

IMF Plans to Cut Jobs, Lift Income Wall Street Journal Subscription Required
WSJ Dec 7, 2007
The new chief of the International Monetary Fund, in his initial bid to remake the institution and reduce its deficits, plans to cut the staff by as much as 15%, including the first significant round of layoffs since the IMF was founded in 1945.

U.S. Agency's Slow Pace Endangers Foreign Aid
NYT Dec 7, 2007
The Millennium Challenge Corporation, a federal agency set up almost four years ago to reinvent foreign aid, has taken longer than expected to help poor, well-governed countries.

Freeing Up Green Trade Wall Street Journal Subscription Required
Susan Schwab & Peter Mandelson (WSJ) Dec 7, 2007
Slashing tariffs will help reduce emissions.

Strauss-Kahn Seeks to Quickly Refocus IMF
IMF Survey Dec 7, 2007
Dominique Strauss-Kahn, who took over as Managing Director of the IMF in November, has initiated a process to swiftly overhaul the institution to make it more effective. He has launched an internal reform effort aimed at tackling what he describes as "the twin issues of the Fund's relevance and legitimacy, and the Fund's financial soundness."

Currencies: The US S&L Crisis, 1991 Recession and the Dollar
Stephen Jen (MSDW) Dec 7, 2007
The US economy is facing a real shock from the deepening housing recession and a nominal shock from the full-blown credit crunch. There are no exact historical parallels, but the S&L Crisis that plagued US policy makers from the mid-1980s to the mid-1990s and the recession of 1991 may be related historical benchmarks worth examining. In this note, we take a first look at these two episodes, with a view to formulating an opinion on how the dollar might be affected by the current crisis.

The Historical Origins of Africa’s Underdevelopment
Nathan Nunn (VoXEU) Dec 8, 2007
Slavery, according to historical accounts, played an important role in Africa’s underdevelopment. It fostered ethnic fractionalisation and undermined effective states. The largest numbers of slaves were taken from areas that were the most underdeveloped politically at the end of the 19th century and are the most ethnically fragmented today. Recent research suggests that without the slave trades, 72% of Africa’s income gap with the rest of the world would not exist today.

China Shrinks
Eduardo Porter (NYT) Dec 9, 2007
If China is less wealthy, and less a rival, maybe some members of the United States Congress will not press it so hard to revalue its exchange rate.

Mean times Recommended!
Economist Dec 9, 2007
Why credit spreads revert to the middle

Cooling China Wall Street Journal Subscription Required
Michael Pettis (WSJ) Dec 10, 2007
Only depegging the currency will help.

More Farm Follies
WP Dec 10, 2007
After much arcane political wrangling and procedural disputation, the Senate began debating a new five-year farm bill on Friday. Much of the price tag, projected at $288 billion, is accounted for by food stamps and other nutrition programs, but tens of billions of dollars in subsidies to farmers are included, too. Notwithstanding the fact that crop prices are surging and farmers are doing well, supporters of the bill, both in the Senate and the House, are hoping to enact this gigantic Christmas present with as little fuss as possible.

Subprime surprise: UBS writes down $10 billion
IHT Dec 10, 2007
The Swiss bank also obtained an emergency capital injection from the Singapore government and a Middle Eastern investor.

Global: Recession Coming
Richard Berner & David Greenlaw (MSDW) Dec 10, 2007
We expect no growth in overall GDP for the year ending in the third quarter of 2008 and corporate earnings to contract by 5-10% over that longer period.

A new global database on migrant stocks
L Alan Winters (VoxEU) Dec 11, 2007
Migration matters and will matter more as the lopsidedness of the world age-profile works its way through into labour and product markets. Surprisingly, there has been no global dataset on migration stocks until now. A new CEPR Policy Insight introduces a new such database maintained at the University of Sussex.

Europe needs a single financial rule book
Tommaso Padoa-Schioppa (FT) Dec 10, 2007
The supervisory system is still unable to respond effectively to the challenges of a largely integrated market

Singapore to the Rescue Wall Street Journal Subscription Required
WSJ Dec 11, 2007
UBS's cure for its subprime woes.

How to Solve the Problem of the Dollar
C. Fred Bergsten (PIIE) Dec 11, 2007
Many dollar holders clearly want to diversify into other currencies. Since foreign dollar holdings total at least $20,000 billion, even a modest realization of these desires could produce a free fall of the US currency and huge disruptions to markets and the world economy. There is only one solution to this dilemma that would satisfy all parties: creation of a substitution account at the International Monetary Fund (IMF) through which unwanted dollars could be converted into special drawing rights (SDR), the international money created initially by the fund in 1969. Instead of converting dollars into other currencies through the market, depressing the former and strengthening the latter, official holders could deposit their unwanted holdings in a special account at the IMF. A substitution account would not solve all international monetary problems nor would it suffice to restore a stable global financial system. But early adoption of a substitution account would minimize the risks of adjustment of the present imbalances and the inevitable structural shift to a bipolar monetary system based on the euro as well as the dollar.

Why the credit squeeze is a turning point for the world Recommended!
Martin Wolf (FT) Dec 11, 2007
The credit crisis may be just as important a watershed for financial markets and the world economy as the emerging market financial crises of 1997 and 1998 and the bubble in technology stocks that burst in 2000.

How to safeguard savers in a banking crisis
John Kay (FT) Dec 11, 2007
It should not be the FSA's job to stop banks doing foolish things, or the BoE's job to free banks of the consequences of doing foolish things, says John Kay

Labor's Global Push
Harold Meyerson (WP) Dec 11, 2007
"We haven't been reacting quickly enough," says Guy Ryder, who heads a newly merged global union federation, the International Trade Union Conference. "That's a fair criticism."

Global Economy Likely to Slow More
John Lipsky (IMF Survey) Dec 11, 2007
World growth is slowing because of a combination of higher world oil prices, recent financial market turbulence, and a U.S. slowdown. It is more urgent than ever that key economies take action to reduce global imbalances.

Central banks pumping billions into world financial system
IHT Dec 12, 2007
Central banks in Europe and North America moved Wednesday to increase the amount of money they could lend to banks and to make it more readily available in an attempt to ease the credit squeeze.

Workers of the New World unite!
John Gapper Read (FT) Dec 12, 2007
The US has one of the lowest rates of union membership in the industrialised world. How, then, to account for the sudden upsurge in labour militancy in the unlikely quarter of the television and film industries?

The helicopters start to drop money
Martin Wolf (FT) Dec 12, 2007
The money to be dropped by central banks now is not that large. But if this does not work, writes Martin Wolf, more will surely follow.

Trade Ministers Discuss Links Between Commerce and Climate Change in Bali
BRIDGES Weekly Trade News Digest - Vol. 11, Number 43 Dec 12, 2007
International cooperation and a multilateral framework to address greenhouse gas emissions are a prerequisite for effective global economic governance, trade ministers from several major economies said during a weekend meeting on the margins of the United Nations climate change conference in Bali.

More African Countries Sign EPAs with EU, As Leaders Quarrel at Lisbon Summit
BRIDGES Weekly Trade News Digest - Vol. 11, Number 43 Dec 12, 2007
More African countries have moved to sign provisional Economic Partnership Agreements (EPAs) with the EU, even as African and European leaders clashed over trade relations and human rights during a weekend summit in Lisbon.

The End of Globalization?
Gabor Steingart (Spiegel) Dec 12, 2007
A major beneficiary of free trade - the US - now expresses doubt.

Common Currency Caveat
Eckart Woertz (Khaleej Times) Dec 12, 2007
Six nations in the Persian Gulf prepare to launch a common market and economic integration.

How Not to Fix the Economy Wall Street Journal Subscription Required
Michael J. Boskin (WSJ) Dec 13, 2007
We can absorb the subprime losses if we don't fall for bad ideas like protectionism.

A dirty job, but someone has to do it
Economist Dec 13, 2007
The central banks weigh in. But will co-ordinated intervention stop the credit crisis?

Emerging-market billionaires turn to philanthropy
IHT Dec 13, 2007
The global wealth boom has created a new breed of billionaire in countries like Turkey, India, Mexico and Russia. Now, a number of them are using their wealth to bolster their standing and push for social changes.

'Modest progress' in U.S.-China trade talks
IHT Dec 13, 2007
Though concrete steps were made on food safety, energy and environmental cooperation, U.S. concerns remain, particular in regard to what the U.S. sees as China's 'economic nationalism.'

U.S. Trade Policy: The Emergence of Regional and Bilateral Alternatives to Multilateralism
Claude Barfield (AEI) Dec 13, 2007
Considering new U.S. domestic political realities, diplomatic and security imperatives will pose a huge challenge for the next president and Congress as they attempt to advance national interests.

Dollar signs
Howard M. Wachtel (LAT) Dec 14, 2007
The greenback's tarnished status as a reserve currency carries a warning for the U.S.

Third time lucky for scheme to support dollar?
James M. Boughton (IMF) Dec 14, 2007
Fred Bergsten ("How to solve the problem of the dollar", December 11) claims boldly that only one remedy to the collapsing US dollar would "satisfy all parties". His gold-and-silver bullet is a "substitution account" at the International Monetary Fund, an excellent idea that was thoroughly debated twice before being sadly and quietly buried, first in 1974 and again in 1980. Might the proposal succeed today, though it failed twice a generation ago?

Epitaph to a Smear Wall Street Journal Subscription Required
WSJ Dec 14, 2007
The World Bank clears Shaha Riza, not that it'll say so.

Is trade war with China credible?
Simon J Evenett (VoxEU) Dec 15, 2007
If the US and EU continue down the path of confronting China directly, they will face a choice between piecemeal trade actions that highlights the divergence between their words and deeds, or the imposition of a blatantly WTO-illegal restriction on Chinese exports that would ruin their reputations as good WTO members.

Money Goes Far in New York, if You're European
NYT Dec 15, 2007
With the dollar near its lowest rate ever against the euro, many Europeans are looking at the United States as a cheap place to flex their strong currency.

Our Misplaced Yuan Worries Wall Street Journal Subscription Required
Charles Wolf Jr (WSJ) Dec 15, 2007
China's currency is not the cause of the trade imbalance.

Hold tight, the central banks have no plan
Wolfgang Munchau (FT) Dec 16, 2007
A hypothetical increase in inflation targets would turn the current turmoil into an uncontrolled financial crisis.

Joint Central Banks action on subprime crisis: FAQs
Stephen Cecchetti (VoxEU) Dec 16, 2007
The financial crisis of 2007 is bringing out the creative side of the worlds central bankers. Finding traditional instruments wanting, they spent the last month or so fashioning new tools and resurrecting old ones. Here are the FAQs on what they did, why and what it might mean.

Manoj Pradhan (MSDW) Dec 16, 2007
The term premium on Treasury bonds and Bunds had reached what I thought were unsustainably low levels at the end of last year (see The Term Premium: A Puzzle Inside a Riddle Wrapped in an Enigma, December 19, 2006). In line with the thesis of the argument, bond yields and term premiums moved up — that is, until the onset of the sub-prime crisis. Since July, the entrenched problems in the money market, slowing growth and a considerable flight-to-safety bid have pushed Treasury yields below bond yields in the relatively unscathed euro area. Term premium estimates in the US reflect this move, but only because the models that generate these estimates are not equipped to account for the flight-to-safety bid. Controlling for such price action, the term premium is probably higher, reflecting the increased uncertainty in growth, as well as conditions that foster growth.

A Retrospective on 2007: Another Weak Dollar Year
Stephen Jen (MSDW) Dec 16, 2007
This has been an extraordinary year. While we were cyclically bearish on the dollar, we grossly underestimated the magnitude of the dollar descent, particularly the move in EUR/USD from 1.36 to 1.49 in late summer. Further, we did not foresee the severity of the dislocations in the credit and money markets, although we, along with most analysts and investors, understood that the credit markets stood out at the start of the year as being mispriced, in contrast to equities or bonds. In short, we misjudged the intensity of the market violence.

2008: The Year of Recoupling
Global Economics Team (MSDW) Dec 16, 2007
Our baseline outlook points to continued global expansion through 2009, but with a pronounced slowing next year. Courtesy of the turmoil in global credit markets, and paced by a mild US recession and slower growth in Europe and Japan, we are forecasting a downshift to 4.3% growth in 2008. While still well above the 45-year growth trend of 3.7%, such an outcome may feel downright sluggish following the 4.9% average pace over the 2003-07 period — the strongest half-decade stretch of global growth on record. The outcome can hardly be called a soft landing with the US in a recession, however mild, and considerable risks remain. With policy offsetting, however, we expect a re-acceleration to 4.9% global growth in 2009.

Bold Action: Central Banks Likely to Succeed
Global Strategy and Economics Teams (MSDW) Dec 16, 2007
Coordinated central bank actions to ease liquidity strains in money markets in our view will ultimately have significant positive implications for financial markets and the economy. Yet financial markets have yawned at the moves. If we’re right, despite near-term risks, opportunities are emerging in US equity and credit markets.

Plus ça change: Subprime crisis and historical lessons
Michael Bordo (VoxEU) Dec 17, 2007
There is a strong tendency in the media and policy circles to view each crisis as totally new and unexpected. Financial crises, however, are as old as financial markets. Here are the lessons drawn by one of the world’s leading economic historians of financial crises.

Global food supply is dwindling rapidly, UN agency warns
IHT Dec 17, 2007
Shrinking reserves, rising prices and unpredictable weather may create "perfect storm" for world's hungry.

Free Trade Zones Ease Passage of Counterfeit Drugs
NYT Dec 17, 2007
Counterfeiters use free trade zones to hide a drug's provenance or to make or relabel adulterated products.

Hedge Fund Wizards
Dean P. Foster and H. Peyton Young (WP) Dec 18, 2007
Scarcely a day goes by without another story of some large hedge fund blowing up due to bad bets. While many of the latest hedge fund casualties are linked to the subprime mortgage crisis, investors should not be lulled into thinking that the problem will be solved once the mortgage mess is mopped up.

Amber Waves of Green Wall Street Journal Subscription Required
WSJ Dec 18, 2007
The Senate votes to keep subsidies for super-rich farmers.

World Bankruptcy Wall Street Journal Subscription Required
WSJ Dec 18, 2007
Another anti-anticorruption coup.

ECB pumps record ?348 billion into money markets
IHT Dec 18, 2007
The Bank of England also made a cash infusion Tuesday while warning of a "self-reinforcing" downward spiral in credit.

Lessons from the North Atlantic financial crisis
Willem Buiter (VoxEU) Dec 19, 2007
What caused the current North Atlantic financial crisis, how can it be fixed and how can the likelihood of future crises be reduced? This column introduces a new CEPR Policy Insight, 'Lessons from the 2007 Financial Crisis', which addresses these issues at length.

Cape Verde Joins The WTO As Members Look Ahead To 2008
BRIDGES Weekly Trade News Digest - Vol. 11, Number 44 Dec 19, 2007
Cape Verde is the newest member to accede to the WTO, following approval on 18 December by the General Council, the WTO's top permanent decision-making body. Director-General Pascal Lamy welcomed Cape Verde's accession as "adding another valuable member to the family" and bringing the WTO "another step closer to universal membership."

Fisheries Subsidies Text Represents a Strong Starting Point, Say Delegates
BRIDGES Weekly Trade News Digest - Vol. 11, Number 44 Dec 19, 2007
WTO Members expressed overall satisfaction with a set of potential multilateral disciplines on fisheries subsidy spending put forward by the Chair of the Doha Round rules talks, during the negotiating committee's meetings on 12 and 14 December.

The dollar and the world economy
Economist Dec 19, 2007
Why the dollar should stabilise next year.

The dangers of living in a zero-sum world economy
Martin Wolf (FT) Dec 19, 2007
It is vital for hopes of peace to sustain the positive-sum world economy in which everybody can become better off, but no less vital to tackle the environmental challenges it has thrown up. The condition for success is investment in human ingenuity.

Morgan Stanley taps China for $5bn
FT Dec 19, 2007
Morgan Stanley became the third top bank in a month to raise capital from a sovereign wealth fund after announcing higher-than-expected writedowns of $9.4bn because of subprime losses.

EU agrees to tone down plan on opening the wine industry
IHT Dec 19, 2007
Plans to uproot thousands of hectares of grape vines, drain Europe's "lake" of surplus wine and expose producers to the chill winds of global competition have been watered down after a rebellion by several EU countries.

Trade Beefs
WSJ Dec 20, 2007
A case study in how special interests are blocking the U.S.-Korea FTA.

Saudis plan huge sovereign wealth fund
FT Dec 21, 2007
Saudi Arabia plans to establish a sovereign wealth fund that is expected to dwarf Abu Dhabi’s $900bn and become the largest in the world.

No more easy cash: banks must take their losses
Charles Wyplosz (FT) Dec 20, 2007
The willingness of central banks to provide liquidity at low cost is allowing shareholders to delay the time of reckoning.

Does morality affect economic performance? Empirical evidence
Guido Tabellini (VoxEU) Dec 22, 2007
Morality – defined as individual values and convictions about the scope of application of norms of good conduct – is an important factor in individual behaviour and thus economic outcomes. Such values evolve slowly so they are an important channel through which distant political history can influence current economic performance. Here is new evidence supporting this view.

Zero Hour Wall Street Journal Subscription Required
WSJ Dec 22, 2007
A trade showdown over dumping.

Trade and Prosperity
NYT Dec 23, 2007
A protectionist agenda would do little to protect American workers from the disruptions wrought by trade, technology and other economic forces.

MIT spinoff's little green laptop computers a hit in remote Peruvian village
IHT Dec 24, 2007
Doubts about whether poor, rural children can benefit from quirky computers evaporate quickly in an Andean village, where 50 children got machines from the One Laptop Per Child project months ago.

Doubts Engulf an American Aid Plan for Pakistan
NYT Dec 24, 2007
The ambitious $750 million five-year plan is imperiled by unresolved questions about whether the money could fall into the wrong hands in the restive region.

History lessons Recommended!
Economist Dec 24, 2007
Watch politics and price-earnings ratios.

The End of Free Trade
Robert J. Samuelson (WP) Dec 26, 2007
Even as countries become more economically interdependent, they're also growing more nationalistic.

Living With 'Sovereign Wealth' Wall Street Journal Subscription Required
Holman W. Jenkins Jr (WSJ) Dec 26, 2007
Just wait till the biggest SWF is Social Security.

Chinese goods transform life in Southeast Asia
IHT Dec 26, 2007
Cheap Chinese products are flooding China's southern neighbors, and consumers in Myanmar, Laos, Vietnam and Cambodia are laying out the welcome mat.

Aid losing to hunger in Darfur, UN reports
IHT Dec 26, 2007
Child malnutrition rates have increased sharply in Darfur, even though it is home to the world's largest aid operation, according to a new United Nations report.

Business in 2008: A year for the brave and wealthy
John Gapper (FT) Dec 26, 2007
This is not going to be an easy year for many companies. The common theme is that the landscape is more treacherous than a year ago.

A Global Trek to Poor Nations, From Poorer Ones
NYT Dec 27, 2007
Across the developing world, migrants move to other poor countries nearly as often as they move to rich ones.

A Rescue Plan for the Dollar Wall Street Journal Subscription Required
Ronald McKinnon & Steve H. Hanke (WSJ) Dec 27, 2007
Forget China bashing. What's needed is coordinated central bank intervention.

Asia in 2008: Its rise is a global good
Victor Mallet (FT) Dec 27, 2007
If communists, tyrants or authoritarians think they can modernise their economies without unleashing political reform, they are deceiving themselves.

Trade revives in former Soviet bloc, but imbalance raises concern
IHT Dec 27, 2007
Eastern Europe is selling consumer and durable goods to Russia, buy buying mainly Russian energy in return, cementing dependency.

Trouble With Trade
Paul Krugman (NYT) Dec 28, 2007
For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net.

China Lets Currency Appreciate a Bit Faster
NYT Dec 29, 2007
China's currency rose steeply against the dollar this week, feeding speculation that Chinese authorities were allowing their currency to appreciate more rapidly.

Euro gains on dollar in official reserves
FT Dec 30, 2007
The euro has fast gained ground against the dollar in international foreign exchange reserves in recent months, according to official statistics highlighting the currency's growing global importance.

China's central bank chief reaffirms tight money policy for 2008
Reuters/IHT Dec 30, 2007
China's central bank will implement a tight monetary policy in 2008, using a range of tools to keep a check on liquidity, the central bank governor, Zhou Xiaochuan, reaffirmed.

China sovereign wealth fund to put $20bn into CDB
FT Dec 31, 2007
Beijing said a unit of its new $200bn sovereign wealth fund would inject $20bn into China Development Bank in a move intended to smooth the policy lender's transformation into a commercially-oriented institution.

Putting a Plague in Perspective
Daniel Halperin (NYT) Dec 31, 2007
Could American foreign assistance to fight AIDS be better spent elsewhere?

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