World Bank drawing in climate funds?
Bretton Woods Update No. 73 Nov/Dec 2010
Plus: Low carbon options ensuring energy security and energy access for all; World Bank private sector approach under fire; World Bank programmes linked to political repression; Global battle for control of money: IMF flounders amid economic warfare; IMF economics put recovery at risk (not to mention people); Implementing IMF governance reform: Baby steps in slow motion; and more.
Allentown
Bill Gross (PIMCO) Dec 2010
The global economy is suffering from a lack of aggregate demand. With insufficient demand, nations compete furiously for their share of the diminishing growth pie. In the U.S. and Euroland, many policies only temporarily bolster consumption while failing to address the fundamental problem of developed economies: Job growth is moving inexorably to developing economies because they are more competitive. Unless developed economies learn to compete the old-fashioned way – by making more goods and making them better – the smart money will continue to move offshore to Asia, Brazil and their developing economy counterparts, both in asset and in currency space.
The Wisdom of the Smart Crowd
Foreign Policy Dec 2010
Want to know what Nobel winners and emerging power brokers think about the world's most pressing problems? So did we.
The Soft-Power Power
Susan Glasset & Celso Amorim (FP) Dec 2010
On Brazil's role as the rest rises.
What’s Missing from the QE2 Debate
John H. Makin (AEI) Dec 2010
Confidence in a sustainable global recovery is fragile. The sovereign-debt crisis continues in Europe, fears of inflation persist in China, and the U.S. economy remains weak. Unprecedented policy risks--both monetary and fiscal--abound as we move toward 2011. Deficit-reduction measures in the new Congress and pressure to scale back the second round of quantitative easing (QE2) could stunt U.S. economic growth and further dampen the global recovery.
Emerging Markets in the Global Economy
Finance and Development Dec 2010
Major emerging markets have exited from the global economic crisis in the driver’s seat. They are gaining in strength and prominence and helping the world recover from the recession that plagued advanced economies along with everyone else. This issue of F&D looks at the growing role of the emerging markets. Analysis by the IMF’s Ayhan Kose and Eswar Prasad, professor of trade policy at Cornell University, argues that their economic ascendance will enable emerging markets, such as Brazil, China, India, and Russia, to play a more significant part in global economic governance and take on more responsibility for economic and financial stability. And Vivek Arora and Athanasios Vamvakidis measure how China’s economy is increasingly affecting the rest of the world.
How the growth of emerging markets will strain global finance
Richard Dobbs, Susan Lund, and Andreas Schreiner (McKinsey Quarterly) Dec 2010
Surging demand for capital, led by developing economies, could put upward pressure on interest rates and crowd out some investment.
Asset Allocation: Does Macro Matter?
Sébastien Page, Mark A. Taborsky and Niels K. Pedersen (PIMCO) Dec 2010
A close look at the relationships between macroeconomic conditions and risk factor performance helps explain just why macro matters so much. While historical models can provide a good base case to formulate our investment views, we must consider the possibility that the relationships between macroeconomic expectations and risk factor returns might change going forward. In the current environment, it is more important than ever to “get macro right.” Our analysis also speaks to the importance of being tactical in asset allocation and anticipating market migrations.
The Best Way to Invest In Emerging Markets
Antoine van Agtmael (II) Dec 2010
Opportunities in 2011 and the threat of a bubble.
Inefficient Markets
Ed Thorp (Wilmott) Dec 2010
The "crash of '87" was the most extreme stock market price jump of the twentieth century. The S&P 500 Index fell over 20 per cent in one trading day, measured by the change in closing prices from Friday, October 16, 1987 to the close the following Monday, October 19. But if the market were close to efficient then both these closing prices must be, to good approximation, "correct." Let's see what this implies.
Industrial Policy Comes Out of the Cold
Justin Yifu Lin (Project Syndicate) Dec 1, 2010
One of the best-kept economic secrets was strongly reconfirmed in 2010: most countries, intentionally or not, pursue industrial policy. And, as economies around the world struggle to maintain or restore growth in 2011, it is likely to be under a brighter spotlight than ever before.
The 30 Most Dynamic Cities on Earth
Derek Thompson (Atlantic) Dec 1, 2010
Which metropolis is leading the world out of the recession? The answer is Istanbul—and the rest of the list is equally surprising.
Germany is right: bondholders must pay
Otmar Issing (FT) Dec 1, 2010
Default has to be credible – otherwise investors will have an incentive to buy bonds without taking into account the risks.
Dotcom boom’s shower of gold passes Wall Street by
Richard Waters (FT) Dec 1, 2010
Morgan Stanley internet analyst says that for internet investors, it’s 1997 all over again – only this time, the stakes are much higher.
WTO DG Lamy on Doha: It’s the Final Countdown
Bridges Weekly Trade News Digest Volume 14, Number 42 Dec 1, 2010
WTO members are set to launch an intensive series of negotiations as they seek to bring the long-overdue Doha Round of global trade talks to a close by the end of 2011. Pascal Lamy, director-general of the multilateral trade body, said Tuesday that the Group of 20 leading economies and the Asia-Pacific Economic Cooperation (APEC) forum, as well as leaders he had spoken with individually, had sent WTO members the “signals we need” to take the struggling negotiations into their final stage.
Unemployment Stoking Protectionism warns WTO
Bridges Weekly Trade News Digest Volume 14, Number 42 Dec 1, 2010
High unemployment in many countries is fuelling demand for protectionist measures, which could potentially threaten jobs and growth worldwide, a WTO report warned last week. The report, the global trade body’s latest on developments in the international trading environment, noted that trade has bounced back strongly this year, following a sharp contraction in 2009.
Making peace in the US-China trade war
Dean Baker (Guardian) Dec 1, 2010
We think of our trade imbalance as a bad thing. Looked at another way, China is paying US workers to take vacation
On Globalization
Dani Rodrik Dec 1, 2010
The history of globalisation goes back not just to 1980, not just to 1945, not just to the ‘first era of globalisation’ in the 19th century – but all the way back to the Mongol conquests and the inter-continental networks spawned throughout history.
Fiscal responsibility and global rebalancing
Janet Yellen (FRB) Dec 1, 2010
My remarks will focus on the challenges faced by U.S. policymakers as they confront the need to put fiscal policy on a sustainable track in the long term while providing support to the economy in the near term. I will also offer some thoughts on the recent actions undertaken by the Federal Reserve and on the implications of our nation's fiscal and monetary policy choices for the global economy.
No to Green Fundamentalism
Alain Juppe (Project Syndicate) Dec 1, 2010
People in poor parts of the world have a right to economic development so that they can produce their own food, gain access to clean water, live in adequate shelter, and have all the benefits represented by hospitals and schools. How, then, can some advocate limiting economic growth as a solution to the problem of global warming?
Bank bailout guarantees and public debt
Angelo Baglioni & Umberto Cherubini (VoxEU) Dec 1, 2010
Bailing out banks has put severe pressure on government finances, particularly in the Eurozone. This column compares 10 EU governments’ explicit bailout commitments with their expected liabilities. It shows that the Irish government’s commitments are an outlier. Faced with a systemic crisis, financial assistance from international institutions is unavoidable.
Fighting the Eurozone’s infectious disease
Guido Tabellini (VoxEU) Dec 1, 2010
The Irish bailout failed to stem contagion in the Eurozone. This column argues that the root cause was the separation of monetary policy (ECB) and fiscal policy (member states). If European authorities are unwilling to suspend this separation, the contagion will spread.
Sequential city growth
David Cuberes (VoxEU) Dec 1, 2010
How do cities develop and grow? This column presents historical data from a large number of cities in several countries. It finds that there are a few cities that grow much faster than the rest; the first cities to grow quickly are the largest; and this pattern of sequential city growth is more pronounced in periods of rapid growth in urban population.
Banks and capital markets as a coevolving financial system
Fenghua Song & Anjan Thakor (VoxEU) Dec 1, 2010
Banks and capital markets are often viewed as competitors within the financial system, with some suggesting that each develops at the expense of the other. This column argues that banks and markets exhibit three forms of interaction. They compete, they complement each other, and they coevolve.
Vote for agony
Economist Dec 2, 2010
Cutting public spending and raising taxes may not be as politically suicidal as it seems
Global: Damned If You Do - Or Don't
Gerard Minack (MS GEF) Dec 2, 2010
The obvious risk from sovereign stress is default. A more subtle risk is that the threat of sovereign stress encourages a too-rapid tightening of fiscal policy.
'Contagion' and Other Euro Myths
John H. Cochrane (WSJ) Dec 2, 2010
Restructuring short-term debt as long-term debt--which is what default really means--would hardly be the end of the world.
IMF reforms dodge reality
Joergen Oerstroem Moeller (AT) Dec 2, 2010
International Monetary Fund reforms giving more clout to Asian interests reflect the dissatisfaction with the present monetary system yet fail to address the underlying cause of distress. A start could be made by introducing a commodity basket as a base for international transactions, rather than the US dollar.
Currency clash has two sides
Kieran Osborne (AT) Dec 2, 2010
Complaints out of the United States that China is manipulating its currency tend too often to be little more than political posturing. Yet the issue, just as with every coin, has two sides - and the lack of balance has implications for investors.
The real Asian invasion
Francesco Sisci (AT) Dec 2, 2010
China's expression of territorial claims in Asia is one thing, but its footprint is not military. China is simply "invading" neighbors with its capital and goods. American pressure to revalue the yuan will help to further Chinese penetration and support the US being expelled from the region.
Europe’s leaders recoil from unity
Philip Stephens (FT) Dec 2, 2010
Angela Merkel is right. The EU as we know it would not long survive the implosion of its most ambitious project.
Wall Street owes its survival to the Fed
Sebastian Mallaby (FT) Dec 2, 2010
This week’s document dump from the Federal Reserve – a congressionally ordered “WikiLeak moment” – puts bargain-bail-out patter on Tarp in a new perspective.
Sunlight shows cracks in crisis rescue story
Frank Partnoy (FT) Dec 2, 2010
A troubling conclusion from the uploaded lending programme data is that it is now apparent that the Fed took on far more risk on less favourable terms.
The Euro at Mid-Crisis
Kenneth Rogoff (Project Syndicate) Dec 2, 2010
Now that the EU and the IMF have committed €85 billion to rescue Ireland’s troubled banks, European policymakers should start looking ahead more realistically. More denial won't prevent the most likely endgame: a wave of debt write-downs, similar to the one that finally wound up the Latin American debt crisis of the 1980’s.
Dealing with bad banks: Equipping the emergency room
Economist Dec 2, 2010
Europe draws up plans to let banks fail—just as it bails out Ireland's.
Facilitating Global Cooperation Key Priority for IMF
IMF Survey Dec 2, 2010
The IMF has just published its six-month official work program against the backdrop of continued volatility in the world's financial markets and an uneven global economic recovery.
Le Défi Chinois
Karl P. Sauvant & Ken Davies (Project Syndicate) Dec 2, 2010
So far, discussions about whether or not China should revalue its currency have focused almost exclusively on the exchange rate’s impact on China’s trade balance. But, in evaluating China’s currency policy, the effects of any change on the trade balance are no more important than the potential consequences for inward and outward direct investment.
When 'Buy American' harms America and the world's hungry
Christopher Barrett, Elizabeth Bageant and Erin Lentz (WP) Dec 3, 2010
There is no reason for high-seas piracy to be legislated from Washington.
The Supreme Strengths of Europe
Stephan Richter and Martin Sieff (Globalist) Dec 3, 2010
Despite its current debt crisis, just how could Europe be in a stronger position than the United States, China and India?
What China and India Could Do Together
Wendy Dobson (Globalist) Dec 3, 2010
What are the bright spots in the evolving bilateral relationship between the world's two most populous countries?
The currency wars
Laurent L Jacque (LMD) Dec 3, 2010
Once upon a time Bretton Woods ensured orderly exchange rates and the stability of the world economy. And then global currency trading mushroomed out of the control of nations' central banks. Can it still be contained and an all-out currency war averted?
Morgan Stanley: Getting back to business
Economist Dec 3, 2010
After failing to out-Goldman Goldman Sachs, Morgan Stanley hopes to reinvent itself as Wall Street’s client-friendly firm.
Capitalism: Getting it right
Martin Hutchinson (AT) Dec 3, 2010
The global financial crisis and the subsequent struggles of the United States and the United Kingdom to escape recession exposed the deep fault lines in their economies. The successes of Germany, Chile and Singapore - and China to some extent - point to far healthier ways of running a country.
De facto fiscal space and fiscal stimulus: Definition and assessment
Joshua Aizenman & Yothin Jinjarak (VoxEU) Dec 4, 2010
What factors determined the fiscal expansion seen in many developed countries in 2009? This column finds that greater de facto fiscal space prior to the global crisis, higher GDP per capita, more financial exposure to the US, and lower trade openness were all associated with a larger fiscal stimulus relative to GDP and that more open economies may have relied more on exchange-rate depreciation.
Europe’s Time to Learn
Harold James (Project Syndicate) Dec 3, 2010
In successive waves of painful crisis – in Latin America in the 1980’s, and in East Asia after 1997 – countries learned a better approach to economic policy and developed a more sustainable framework for managing public-sector debt. Today it is Europe’s turn.
What Size is the Fire Exit?
Daniel Gros (Project Syndicate) Dec 3, 2010
The situation in the eurozone for investors today resembles that of a crowded cinema with only one exit: everyone knows that in case of fire, only the first to leave will be safe. So, depending on the size of the exit, even the faintest whiff of smoke can trigger a stampede.
The Eurozone slides into a vicious cycle
Charles Wyplosz (VoxEU) Dec 3, 2010
The Eurozone crisis is not over. This column argues that the bailout of Greece and the €750 billion Special Purpose Vehicle set up in May 2010 was the first step down the slippery slope. The first and only possible remedy is to reconstruct the no-bailout clause and let markets discipline governments; the EU has proven that it cannot.
Ireland’s rescue package: Disaster for Ireland, bad omen for the Eurozone
Barry Eichengreen (VoxEU) Dec 3, 2010
Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the short run. The Eurozone had better have a Plan B for when the new Irish government rejects the package next year and imposes a haircut on Irish bank bondholders.
Currency war or currency tango?
Debojyoti Dey & Venkatachalam Shunmugam (VoxEU) Dec 3, 2010
Politicians, public servants, and commentators have been queuing up in recent months to raise their concerns about global imbalances, particularly the China-US imbalance. This column argues that while the two economies may present opposing public stances, they are quietly playing a tango that neither can step out of.
Where Are the Business Europhiles Now?
Holman W. Jenkins (WSJ) Dec 4, 2010
There is growing doubt that the euro, as currently constituted, serves the interests of economic growth.
Rescue-package debt seniority and the vicious cycle of rescues and emergencies
Daniel Gros (VoxEU) Dec 5, 2010
Despite its large size relative to the small Irish economy, last weekend’s bailout is not working. Risk premiums continue to rise. This column argues that part of the problem lies in a seemingly innocuous provision in the rescue facility that is to replace the current European Financial Stability Facility in 2013. The argument is tricky, but the heart of the problem is the insistence that rescue financing be senior to private debt while simultaneously ruling out rescheduling of short-term debt.
Big bang or endless crisis? Arguments for a big-bang solution to Eurozone problems
Daniel Gros (VoxEU) Dec 5, 2010
Muddling through isn’t working. This column argues that troubled Eurozone nations should simultaneously open restructuring talks while continuing to service their debts normally. Germany, France, and other core Eurozone nations would have to stand ready to recapitalise the banks most exposed to the restructured debt. The ECB would then stabilise the banking system and the EFSF would stabilise sovereign debt. This big bang could be prepared in a weekend; the market already seems to be pricing it in.
Globalisation’s impact on inflation in the European Union
Raphael Auer & Andreas Fischer (VoxEU) Dec 5, 2010
Over the past two decades, Western European trade has become increasingly integrated with emerging economies. This column uses a novel empirical technique to show that import competition from East Asian low-wage countries – in particular China – has dampened inflation in five Western European nations. Increased integration with Turkey and Central and Eastern Europe, meanwhile, has had little effect on inflation.
A hopeless Europe, unable to cope
Wolfgang Münchau (FT) Dec 5, 2010
The EU has a tendency to hype whatever it agrees. The markets first react with euphoria to the announcement, then with disappointment once they have read the small print.
E-bonds would end the crisis
Jean-Claude Juncker and Giulio Tremonti (FT) Dec 5, 2010
Europe must send a clear message to global markets and its own citizens of our political commitment to economic and monetary union, and the irreversibility of the euro.
The Big Uneasy
James Surowiecki (New Yorker) Dec 6, 2010
The German and Chinese governments, Republican congressmen, the liberal economist Joseph Stiglitz, and Sarah Palin don’t agree on much. But they’re united in their opposition to the Federal Reserve’s second round of quantitative easing—or, as it’s known, QE2.
A Fair Deal for Africa’s Resources
Nahas Angula (Project Syndicate) Dec 6, 2010
Many governments of resource-rich African countries lack the capacity to negotiate complex contracts with foreign investors. In the absence of a level playing field for negotiations, governments often deem contracts unfair – an outcome that benefits no one.
Alternatives to Austerity
Joseph E. Stiglitz (Project Syndicate) Dec 5, 2010
Rapid recession-fueled growth in public debt has led many governments to adopt austerity measures. But, for the US – and perhaps for some other countries – there is a better way to boost efficiency and promote growth, based on greater public investment and deep cuts in defense spending and corporate welfare.
African poverty: Falling faster than you think
Maxim Pinkovskiy & Xavier Sala-i-Martin (VoxEU) Dec 6, 2010
Sub-Saharan Africa has made little progress in reducing extreme poverty, according to the latest Millennium Development Report. This column presents evidence from 1970 to 2006 to the contrary.
Rekindling Growth in Low-Income Countries a Shared Responsibility
IMF Survey Dec 6, 2010
Low-income countries, including in sub-Saharan Africa, are recovering much better than during previous recessions. But years of progress have been lost because of the global economic crisis and the food and fuel crisis that preceded it.
Obama and Trade
WSJ Dec 6, 2010
The Korea pact is a step forward, but now the President has to sell it.
No escape from Europe’s debt woes
Gideon Rachman (FT) Dec 6, 2010
In Dubai last week, a group of Europeans discussed how the continent’s crisis might end. Usually, it is sensible for non-Europeans to head for the buffet as soon as somebody utters the words ‘Lisbon treaty’. But perhaps not this time. The whole world has an interest in Europe finding a way out of its financial labyrinth.
A growing crisis puts the euro in danger
Jean Pisani-Ferry (FT) Dec 6, 2010
Europe needs a strategy for growth in crisis-affected countries, before the euro is blamed for their difficulties.
Time to turn prop-trading poachers into gamekeepers
Francesco Guerrera (FT) Dec 6, 2010
Examining trading records and interviewing traders – just like banks’ risk officers do – should offer trained eyes enough clues about compliance with the Volcker rule.
Eurozone needs clarity from its policymakers
Jan Straatman (FT) Dec 6, 2010
ESM has a stronger focus on debt sustainability and more effective enforcement measures but volatility in the bond markets will continue.
What China Must Do To Cement Its Superpower Status
Shaun Rein (Forbes) Dec 6, 2010
It needs to overhaul its educational system.
PIGS Vs. APEs: Living on an Animal Farm (Part I)
Luis Francisco Martínez Montes (Globalist) Dec 6, 2010
Why the so-called PIGS (Portugal, Ireland/Italy, Greece and Spain) are often unfairly criticized for their lackluster economies and high debt levels.
Introducing the APEs: Anglo-Protestant Economies (Part II)
Luis Francisco Martínez Montes (Globalist) Dec 7, 2010
After focusing on the presumed misdeeds of the "PIGS," a focus on the financial weaknesses of the APEs (Anglo-Protestant Economies).
Recovery, Interrupted
Jomo Kwame Sundaram (Project Syndicate) Dec 7, 2010
With the exception of the US, G-7 leaders have pushed since mid-2010 for fiscal consolidation, overturning their earlier recovery efforts and urging austerity, despite the weakness of the recovery. But the logic of fiscal consolidation requires economies that have not recovered strongly to continue their efforts to stimulate growth.
China Needs a U.S. Lesson
Alberto Alesina and Luigi Zingales (Bloomberg) Dec 7, 2010
In his famous 1987 speech in Berlin, U.S. President Ronald Reagan delivered the exhortation to Soviet leader Mikhail Gorbachev: “Tear down this wall.” Contrary to everybody’s expectation, the wall started to come down only two years later. It is about time to give the same directive to communist China.
Sense and nonsense in the quantitative easing debate
John H Cochrane (VoxEU) Dec 7, 2010
Last month, the US Federal Reserve announced a new quantitative easing programme, in which it will inject money into the economy by buying up to $600 billion in long-term government bonds. This column argues that now is not the time to be buying back long-term debt. Given exceptionally low long-term rates, the US government should be issuing it instead.
A new deal for Eurozone growth and stability: An open letter to the President of the European Council
Giuliano Amato, Richard Baldwin, Daniel Gros, Stefano Micossi & Pier Carlo Padoan (VoxEU) Dec 7, 2010
The unfolding crisis in Europe has focused policymakers’ attention on reducing debt-to-GDP ratios. This open letter to the President of the European Council argues that, while the top part of that fraction is important, the most critical factor in the long run is the restoration of GDP growth – offering several policy recommendations to this end.
A Mexican Stand-Off in Cancun
Rupert Darwall (WSJ) Dec 7, 2010
Rich and poor nations have never agreed on CO2 cuts.
Sustainable Investment Holds Key to Growth in Low-Income Countries
IMF Survey Dec 7, 2010
Low-income countries are posed for a takeoff in growth over the next decade, and strategic investment in infrastructure can be the driver if countries finance it in a sustainable way, said panelists at an IMF conference.
Is there the will to save the eurozone?
Martin Wolf (FT) Dec 7, 2010
Unfortunately, only a crisis can answer that question, and this is the biggest for 80 years.
Rules to keep bankers honest
Adair Turner (FT) Dec 7, 2010
Banking is not like other sectors. Failure, or even the threat of failure offset by public intervention, carries huge economic costs quite different from non-banks.
Ireland should leave the euro
Megan Greene (FT) Dec 7, 2010
With a highly skilled labour force, open markets and a robust export sector, Dublin would have reasonably good prospects for growth if it withdrew from monetary union.
Spain — A Country Built on Sand? (Part III)
Luis Francisco Martínez Montes (Globalist) Dec 8, 2010
Spain's economy is not nearly as frail as its detractors would have us believe.
Doing Poorly by Doing Good
Raghuram Rajan (Project Syndicate) Dec 8, 2010
The new catchphrase in business seems to be “do well by doing good,” that is, boost profits by undertaking socially responsible activities. But, in much of the world, doing well still implies that you must be up to no good, especially if you are dealing with the poor.
In China, confidence clouded by apprehension
David Ignatius (WP) Dec 8, 2010
Domestic needs cloud China's foreign policy vision.
The Triple Comeback
Dominique Strauss-Kahn (IMF) Dec 8, 2010
The Impact of the Financial Crisis on global economic governance.
Obama Administration, South Korea Clinch Long-Awaited FTA
Bridges Weekly Trade News Digest, Volume 14, Number 43 Dec 8, 2010
The US and South Korea last week managed to resolve differences on auto and beef trade that had been bedevilling a long-awaited free trade agreement (FTA) for years, paving the way for a deal that would, if ratified, represent the Obama administration’s first such accord. Negotiators from the two countries hammered out the compromises last Friday in Columbia, Maryland, at the end of three days of discussions.
Climate Talks Looking Up as Ministers Get Down to Business
Bridges Weekly Trade News Digest, Volume 14, Number 43 Dec 8, 2010
As ministers begin their first formal negotiating sessions in Cancun, Mexico, many observers are cautiously optimistic that parties may be able to achieve consensus on a handful of key issues. However, the possibility of the sudden appearance of an insurmountable obstacle remains. Many now say the positive atmosphere surrounding the UNFCCC’s Sixteenth Conference of the Parties is mostly due to the low expectations seen in the lead up to the meeting. UN Secretary General Ban Ki Moon acknowledged yesterday, as he kicked off the COP’s high-level segment in Cancun, that the fanfare surrounding last year’s Copenhagen COP likely made goals difficult to achieve. “There was high expectation,” he said. “Maybe too high.”
Goods Council Delays Implementation of Trade Concessions for Pakistan
Bridges Weekly Trade News Digest, Volume 14, Number 43 Dec 8, 2010
Meeting on 30 November, the WTO Council for Trade in Goods was unable to agree on a waiver for an EU package of trade concessions for Pakistan, set to enter into force on 1 January 2011. Certain countries requested additional consultations, due to concerns over impacts on their own export sectors and systemic implications for the multilateral trade system. This leaves the package of concessions in limbo at least until April 2011, when the Goods Council next convenes.
China takes a short-cut to power
John Gapper (FT) Dec 8, 2010
China is accelerating its economic advance by digesting others’ intellectual property. This is not as effective as real innovation.
How west can reverse a decade of decline
Gordon Brown (FT) Dec 8, 2010
A failed euro would now be an economic and political disaster, with repercussions well beyond Europe.
Euro's woes should spark monetary system rethink
Ousmène Mandeng (FT) Dec 8, 2010
The currency's woes have significant international repercussions.
A Sound Trade Deal With South Korea
NYT Dec 8, 2010
Jobs and national security are two of the reasons why Congress should approve the free trade agreement with Seoul.
Is the WHO Becoming Irrelevant?
Jack C. Chow (FP) Dec 8, 2010
Haiti's cholera crisis highlights why the world's premier public health organization must change or die.
Who gains from a revaluation of China’s currency?
Uri Dadush (VoxEU) Dec 9, 2010
If China appreciates its currency, who will gain and who will lose out? This column argues that the single greatest beneficiary from a gradual renminbi revaluation, accompanied by measures to stimulate demand, will be China itself. Ironically, the US, which has been leading the charge on renminbi appreciation, would likely be among the losers. Certainly, a very large one-off revaluation that disrupts China’s growth hurts everyone.
Europe’s Inevitable Haircut
Barry Eichengreen (Project Syndicate) Dec 9, 2010
The eurozone's crisis countries - Portugal, Ireland, Spain, and Greece - have no currency to devalue to regain competitiveness, so they must devalue internally, through painful wage and budget cuts. But internal devaluation can work only if the value of debts, where it already represents a heavy burden, is reduced.
How Europe Can Muddle Through Its Crisis
Jacob Funk Kirkegaard (PIIE) Dec 9, 2010
As Europe's financial market contagion spreads to systemically important eurozone members, the region is echoing with "end-game scenarios" and demands for major new steps by European policymakers. Among these would be a European "fiscal transfer union," a new common eurozone bond, action by the European Central Bank (ECB) to monetize sovereign debts, and finally a eurozone breakup itself.
A risen China reaches for power
Philip Stephens (FT) Dec 9, 2010
Beijing used to protest it would not disturb the international order. Now, it looks as if it is formulating an Asian Monroe doctrine.
Bond plan could end the euro crisis
Wolfgang Münchau (FT) Dec 9, 2010
Once the eurozone reaches the moment of truth, it may not be in a position to agree a fiscal union, simply because it may not be physically possible. Jean-Claude Juncker’s and Giulio Tremonti’s proposal for a common European bond would start the process.
China's listed banks still at behest of state
Harry Sender (FT) Dec 9, 2010
Even after listing, Chinese banks remain arms of the state. The boards of directors are just window dressing.
European banks: The last idealists
Economist Dec 9, 2010
Europe’s banks are built for a single currency zone. What happens if parts of it default or leave?
Economics focus: All pain, no gain?
Economist Dec 9, 2010
In a single currency it is hard to become more competitive and repay your debts.
The world economy: Three-way split
Economist Dec 9, 2010
America, the euro zone and the emerging world are heading in different directions.
Growth ahead, but hurdles too
Mitch Moxley (AT) Dec 10, 2010
China's stellar economic growth since the 2008 financial crisis is set to take an even more spectacular trajectory in the next 10 to 15 years, according to Justin Yifu Lin, the first Chinese citizen to serve as chief economist of the World Bank. Others see an inevitable crash.
The Eurozone in bad need of a psychiatrist
Stefano Micossi (VoxEU) Dec 10, 2010
Nightmares of the Eurozone are back to haunt policymakers. This column senses something surreal. The leaders scramble to prevent disaster at the last minute, only to be seen the next minute reverting back to the behaviour that brought them to the edge of despair in the first place. It argues that the Eurozone may be more in need of a psychiatrist than a financial guru.
Not Heard at the G-20
Mauricio Cardenas, Luis Carranza & Andres Velasco (Project Syndicate) Dec 10, 2010
If the G-20 wants to play a major role in the post-crisis global decision-making process, the issue of legitimacy vis-a-vis the smaller emerging countries needs to be addressed now. The best solution would be to allow these countries to take a rotating seat at the G-20 table.
Thinking the Unthinkable in Europe
Dani Rodrik (Project Syndicate) Dec 10, 2010
When Greece was bailed out by a joint eurozone-IMF rescue package back in May, it was clear that the deal had bought only a temporary respite. Now, with Ireland’s troubles threatening to spill over to Portugal, Spain, and even Italy, the other shoe has dropped, and it is time to rethink the viability of Europe’s currency union.
No, You Can't
Bjørn Lomborg (Project Syndicate) Dec 10, 2010
For years now, climate activists from Al Gore to Leonardo DiCaprio have argued that individual actions like driving more economical cars and using more efficient light bulbs are a crucial element in the effort to address global warming. That is entirely wrong, as new research shows.
China: Property Bubble in the Making?
IMF Survey Dec 10, 2010
Many China watchers suggest the world's second largest economy is in danger of hosting the next giant property bubble. With China acting as a key engine of global growth, a bursting of any such bubble would be a pop heard around the world. Ashvin Ahuja, an economist with the IMF, has made a study of property prices in the country and has found some evidence of inflated property prices.
Global: 2011 Outlook: Rebalancing, Reflation and Reconciliation
Joachim Fels (MS GEF) Dec 10, 2010
We think the global macro debate in 2011 will revolve around three ‘Rs’ – rebalancing, reflation and reconciliation.
Eastern Promise
Benjamin A Shobert (AT) Dec 11, 2010
The Chinese Dream: The Rise of the World's Largest Middle Class and What It Means to You by Helen Wang The author argues that the mainland's rising middle class is essential to the economic health of both China and the United States, as well as to China's future political liberalization. Underneath all this, her book also strikes a poignant note about America's lost optimism.
The saving grace of markets
Chan Akya (AT) Dec 11, 2010
Short-sellers aren't evil. Cynics and skeptics aren't bad people. A failure to toe a government's line of thinking isn't a crime. Fallacies spread by those in power are falling away, with lies being exposed and wrong-doers punished - at least in the markets; in turn changing government behavior.
Stocks and shocks: New evidence on global equity returns
Charles W. Calomiris, Inessa Love & Maria Soledad Martinez Peria (VoxEU) Dec 11, 2010
Autumn 2008 was calamitous for global equities. This column presents data on stock returns from over 17,000 firms in 44 countries suggesting that the decline in share prices was associated with three separate and identifiable “shock factors”: the fall in global demand, the contraction of credit supply, and the selling pressure on equity as investors were forced to unload some of their holdings.
Monitoring and managing global imbalances
Luiz de Mello, Pier Carlo Padoan & Linda Rousová (VoxEU) Dec 12, 2010
Are global imbalances sustainable? This column analyses nearly 160 current-account reversals across 101 countries between 1971 and 2007. It argues that with the right policy framework, external imbalances can be monitored and, to some extent, managed.
How a mini fiscal union could end instability
Wolfgang Münchau (FT) Dec 12, 2010
The return of investor confidence requires clarity about the future of the euro and the future institutional set-up, which is why the debate about fiscal union is so important.
China learns to play, and win, by the rules
Jonathan Holslag (FT) Dec 12, 2010
The climate summit in Cancún is just one example of China’s diplomats exploiting international institutions to defend vital interests.
As China Rolls Ahead, Fear Follows
NYT Dec 12, 2010
Some economists worry that inflation, government debt and asset bubbles could stall China next year.
Eurozone crisis: Structural reforms and country risk
Miguel Cardoso & Rafael Doménech (VoxEU) Dec 13, 2010
Are concerns over the sustainability of sovereign debt in Europe justified? This column presents data covering 16 developed countries including Greece, Italy, Portugal, and Spain. It shows that these countries have worryingly low levels of human capital and income per head and argues that policymakers in these countries should press ahead with reforms to reassure investors of their future growth potential.
The Democracy Recession
WSJ Dec 13, 2010
Political freedom is in retreat in much of the world.
Sovereign Debt: Reality Finally Hits "Rich" Countries
Beat Guldimann and Alex Jurshevski (Project Syndicate) Dec 13, 2010
How is the current economic recovery different from previous recoveries — and what political changes are necessary for the global economy to heal?
The Missing Link Between Dutch Disease and Growth
Nicolas Magud and Sebastian Sosa (RGE) Dec 13, 2010
When and Why Worry About Real Exchange Rate Appreciation?
Small loans can end global poverty
Abhijit Banerjee, Pranab Bardhan, Esther Duflo, Erica Field, Dean Karlan, Asim Khwaja, Dilip Mookherjee, Rohini Pande and Raghuram Rajan (FT) Dec 13, 2010
The crisis in India is leading to a growing sense that microfinance itself is a flawed idea. This is badly misguided.
Europe must buck short-term tendencies
Mario Monti (FT) Dec 13, 2010
A new system of governance has a number of shortcomings, which unless addressed, will be exposed to the very illness policymakers are trying to eradicate.
LatAm lessons for eurozone to avoid lost decade
Komal Sri-Kumar (FT) Dec 13, 2010
Periphery countries must accept debt reduction and their creditors will find 'haircuts' are necessary.
Why Investors Need China in Their Portfolios
Burton G. Malkiel (WSJ) Dec 13, 2010
China represents more than 10% of the world's GDP, adjusted for purchasing power, but few investors have anywhere near a 10% China allocation.
New Policy Paradigms for a New World
Dominique Strauss-Kahn (Project Syndicate) Dec 13, 2010
One principal policy failure in the run-up to the recent crisis was a lack of imagination: we failed to appreciate just how intricate the global economic and financial web had become. Let our next failing not be the result of a lack of cooperation.
Fiscal Follies
Nouriel Roubini (Project Syndicate) Dec 13, 2010
The fiscal stimulus measures widely implemented during the 2008-09 global recession helped prevent the Great Recession from turning into another Great Depression in 2010. But the abrupt shift in many advanced countries to front-loaded fiscal austerity will increase the risk in 2011 that a double-dip recession could lead to disorderly sovereign and private-sector defaults.
Global: Higher for Longer
Manoj Pradhan (MS GEF) Dec 14, 2010
2010 has been exceptional for EM economies. 2011 is likely to be slightly different.
The Risk Tsunami
Michael Spence (Project Syndicate) Dec 14, 2010
Several significant risks to global economic stability and prosperity must be addressed urgently. And yet the G-20's cooperative approach at the outset of the crisis is devolving into an array of often-heedless unilateral actions by its members.
Why rising rates are good news
Martin Wolf (FT) Dec 14, 2010
What is happening is a move towards normalisation.
Europe should rescue banks before states
George Soros (FT) Dec 14, 2010
It is better to inject equity into the banking system now rather than later and it is better to do it on a European basis.
Germany must lead fightback
Frank-Walter Steinmeier and Peer Steinbrück (FT) Dec 14, 2010
We need combination of haircut for debtholders, debt guarantees for stable countries and limited introduction of Euro-wide bonds accompanied by more aligned fiscal policies.
Seven notches on the Chinese doorpost
David Pilling (FT) Dec 15, 2010
This was the year China’s economy surpassed Japan’s, a moment that will ensure 2010 a place in history books. But in other ways too, the past year will be seen as crucial in China’s renaissance.
Commodities likely to earn their keep next year
Gavyn Davies (FT) Dec 15, 2010
Investor holdings of commodities represent under 0.5 per cent of global financial wealth – there is an enormous distance to go before institutions are likely to be satiated.
Asia’s Fragile Special Relationship
Jaswant Singh (Project Syndicate) Dec 15, 2010
The relationship between the world’s two most populous countries and largest emerging economies, India and China, that will increasingly set much of the global agenda. But China seems unable to grasp the strategic importance of ties with India, and in fact is undermining the goal of cooperation.
The Frontiers of Power
Malavika Jain Bambawale (Project Syndicate) Dec 15, 2010
Renewable energy technologies are invaluable to those who live outside the boundaries of power grids, and tens of millions of rural households around the world are served by such technologies. But this translates into a mere drop in the ocean, leaving the vast majority isolated and excluded from economic opportunity.
E-bonds: Europe’s own subprime teaser rates
Ricardo Cabral (VoxEU) Dec 15, 2010
Jean-Claude Juncker and Giulio Tremonti have recently proposed the creation of a European Debt Agency that would enable each EU country able to issue “European bonds” of up to 40% of GDP. This column argues that while the proposal is a brilliant piece of economic reengineering in favour of the Eurozone creditor countries, especially Germany and France, cooperation would be better for all.
Preferential trade, beneficial outcomes?
Marco Fugazza & Alessandro Nicita (VoxEU) Dec 15, 2010
The multilateral trading system of the GATT and WTO is rapidly being replaced by a system dominated by preferential trade agreements. This column argues that this new system is complex in nature and provides a novel assessment of the implications for signatory countries and third parties.
Voodoo Economics Revisited
Simon Johnson (Project Syndicate) Dec 15, 2010
There is no sign yet that either the Democrats or the Republicans are ready for an adult conversation about fiscal consolidation in the US. Both parties’ leaders will get there – but only when dragged, kicking and screaming, by the financial markets.
Investors Are Flocking to Emerging-Markets Bonds
Laurie Kaplan Singh (II) Dec 15, 2010
Dissatisfaction with low interest rates and sluggish growth in the developed world is luring bond investors to emerging markets. But do the risks outweigh the rewards?
A Survival Strategy for the Eurozone
Nouriel Roubini (Project Syndicate) Dec 16, 2010
In the next few months, it will become clear whether European policymakers can compromise and implement reforms that dampen the threat of a eurozone breakup. Either the EU moves in the direction of a more stable equilibrium of closer integration, or the risk of an unstable and disorderly breakup scenario will rise significantly.
New Europe’s Surprising Resilience
Anders Åslund (Project Syndicate) Dec 16, 2010
Two years ago, five of the ten new East European EU appeared to be devastated by the global financial crisis, with social unrest, huge devaluations, and populist protests looming. Yet no disaster ensued, and today all of these countries are returning to financial health and economic growth without significant disruption.
My name is Bond, Euro Bond
Paolo Manasse (VoxEU) Dec 16, 2010
The recent proposal by Luxembourg’s prime minister Jean-Claude Juncker and the Italian finance minister, Giulio Tremonti to provide European governments with Eurobonds has sparked debate. According to this column, it will help through financing infrastructure and increasing market liquidity. But because it requires highly-indebted countries to surrender a large chunk of fiscal sovereignty, it is a good idea whose time has not yet come.
Saving jobs or saving institutions?
Tito Boeri (VoxEU) Dec 16, 2010
Today the European Council meets to discuss a new package on economic governance. While this column praises the proposal’s acknowledgement of the dangers associated with external imbalances as well as fiscal imbalances, it is concerned about the approach to public and private debt, in particular the apparent weak stance towards the Stability and Growth Pact. Lessons from the Eurozone crisis do not appear to be learned.
On the way to a new global balance
Philip Stephens (FT) Dec 16, 2010
Two centuries of western hegemony are coming to a close rather earlier than many had imagined. The transition to a new order is likely to see more rivalry and competition than co-operation.
Europe cannot default its way back to health
Lorenzo Bini Smaghi (FT) Dec 16, 2010
Attentive observers will not fail to notice that this path tends be taken where democracy has rather shallow roots.
Emu’s critics will eat their words again
Klaus Regling (FT) Dec 16, 2010
The euro is the most advanced stage of integration in Europe. It is now necessary strengthen the economic governance and macro-economic surveillance.
The world's biggest economy: Dating game
Economist Dec 16, 2010
When will China overtake America?
The redistribution of hope
Economist Dec 16, 2010
Down in the West, up in the East.
Global: 2011 Outlook: Rebalancing, Reflation and Reconciliation
Joachim Fels (MS GEF) Dec 17, 2010
We think the global macro debate in 2011 will revolve around three ‘Rs’ – rebalancing, reflation and reconciliation.
Global: Emerging Markets: Higher for Longer
Manoj Pradhan (MS GEF) Dec 17, 2010
2010 has been exceptional for EM economies. 2011 is likely to be slightly different.
Toward a United States of Europe
Brian M. Carney and Anne Jolis (WSJ) Dec 17, 2010
French Finance Minister Christine Lagarde tells the Journal it will take much stronger fiscal and economic coordination among EU member states for the euro to work.
Counterpoint: A Break From the Euro
Harald Benink (NYT) Dec 17, 2010
There is an alternative to "muddling through" the currency crisis: Allow the weak euro-zone countries to exit the euro for the next 10 years.
Banks and capital markets: A two-way nexus
Biagio Bossone (VoxEU) Dec 18, 2010
How do banks and capital markets interact? This column brings together evidence to show that banks and capital markets, rather than simply being competitors, are in fact complements to each other – a finding that has implications for policy.
China’s soaring foreign trade: Made in Britain, c. 1840?
Wolfgang Keller, Ben Li & Carol H Shiue (VoxEU) Dec 19, 2010
The growing power of Chinese trade is almost daily news. This column argues that China’s role in world trade today is shaped in part by the post-1978 market reforms and in part by the Western invasion in the 19th century. Following the Opium Wars, China was forced to open its borders, providing the bedrock of technology and infrastructure that supported its future growth.
The European debt crisis: Worrisome delusions
Charles Wyplosz (VoxEU) Dec 19, 2010
Lorenzo Bini-Smaghi – Member of the ECB's Executive Board – has produced a brilliant defence of the no-default strategy currently pursued by the Eurozone authorities. This column argues that instead of ruling out highly plausible outcomes, the ECB should explain how it will react if defaults happen. By not making adequate preparations, it may be raising the odds of a very bad scenario.
Beijing must tackle economic challenges
George Magnus (FT) Dec 19, 2010
Deep-seated insecurity and intransigence are not auspicious for dealing with rising cyclical and credit inflation.
Beijing must tackle economic challenges
George Magnus (FT) Dec 20, 2010
Deep-seated insecurity and intransigence are not auspicious for dealing with rising cyclical and credit inflation.
Towards a more balanced economic bloc
Crispin Odey (FT) Dec 20, 2010
As markets test the 'do anything' resolve of central bankers, a message of cheer for investors in the eurozone.
The Case Against Floating Currencies
Manuel Hinds (WSJ) Dec 20, 2010
Monetary fragmentation is inconsistent with the globalization of business.
Europe's Single Bailout Zone
WSJ Dec 20, 2010
The moves toward a fiscal union mean German taxpayers have become the lenders of last resort.
Is Regulation Really for Sale?
Howard Davies (Project Syndicate) Dec 20, 2010
In narratives of the financial crisis, regulatory capture is often an important part of the story. But, while the revolving door between regulators and the financial industry is a cause for concern - as is intellectual capture - regulators were not surrogate lobbyists.
European bank stress tests: Third time lucky?
Nicolas Véron (VoxEU) Dec 20, 2010
While politicians have hailed the bailouts of Greece and Ireland as necessary and responsible, there are many who feel that burdening taxpayers is grossly unfair. This column argues that Europe’s governments should lead a process of ruthless triage, recapitalisation, and restructuring of the region’s most important banks. It adds that while this will be extremely disruptive, the alternative may threaten the political fabric of the EU.
Currency tensions: What historical parallels teach us
Uri Dadush & Vera Eidelman (VoxEU) Dec 20, 2010
Today’s currency tensions are the result of a complex set of forces arising from the Great Recession. This column presents lessons from the break-up of the gold standard and of the fixed-rate dollar standard. While competitive devaluations are less likely today than is commonly feared, there is no room for complacency.
Middle Class and Globalization: A Big Power Comparison (Part I)
Stephan Richter (Globalist) Dec 20, 2010
In this time of economic strife, which nation stands to lose the most compared to its own expectations, projected path and historic experiences?
Middle Class and Globalization: A Historical Perspective (Part II)
Stephan Richter (Globalist) Dec 21, 2010
Is the United States is finally getting serious about reinvigorating its middle class?
The Fallen Heroes of the Financial Crisis
Jean-Paul Fitoussi (Project Syndicate) Dec 21, 2010
When the scale of the financial crisis became clear last year, many were certain that it would be managed badly. But, in view of the vilification nowadays of those who pulled the world economy back from the abyss, perhaps we should be grateful that it was managed at all.
Eurozone crises left to fester
Daniel Gros (VoxEU) Dec 21, 2010
Last week's meeting of the European Council were ushered in with optimism and the hope that Europe's leaders would take steps towards greater stability. This column argues that no such steps were taken, that there is really no change to the status quo, and that – under these conditions – the crisis is likely to fester indefinitely
The eurozone needs more than discipline from Germany
Martin Wolf (FT) Dec 21, 2010
The German government surely does intend to do what is needed to keep the eurozone together. But the eurozone it has in mind will be desperately uncomfortable for many members.
The eurozone deserves a common bond
Manfred Schepers (FT) Dec 21, 2010
The single currency zone must enable its members to benefit from common issuance.
Going against the flow: Dealing with capital flows to emerging markets
Anton Korinek (VoxEU) Dec 22, 2010
Capital flows to emerging markets are controversial territory. This column argues that they create externalities that make the recipient economies more vulnerable to financial fragility and crises. It adds that policymakers can make their economies better off by regulating and discouraging the use of risky forms of external finance – in particular short-term dollar-denominated debts.
Austerity, Bono and a culture of cuts
Michael Holman (FT) Dec 22, 2010
Thank goodness, the IMF and the bank don’t bother us in Africa as much as they used to. Instead they now watch Ireland – just like they used to watch us.
The US-China Dialogue of the Deaf
George Soros (Project Syndicate) Dec 22, 2010
In 2010, economic conflict between the US and China became one of the most worrying global developments. Unless both countries adopt economic policies that are in their own interest, and begin cooperating to ensure global stability, their conflict will become increasingly geopolitical in 2011 and beyond.
Europe’s Instability Mechanism
Hans-Werner Sinn (Project Syndicate) Dec 22, 2010
The new European Stability Mechanism may stabilize Europe in the short run and help it to withstand better the current speculative attacks on the euro. But while financial contagion today is limited to bank interaction, the EU’s measures have broadened the channels for contagion to include government budgets.
Crisis protectionism: The observed trade impact
Christian Henn & Brad McDonald (VoxEU) Dec 22, 2010
The independent Global Trade Alert has identified hundreds of protectionist measures since its launch in 2008. This column argues that the protectionist measures are associated with substantial changes in bilateral trade flows. It adds that border measures and behind-the-border measures, including bailouts and subsidies, contribute equally to an annual aggregate trade distortion of at least $35 billion.
Cancun Climate Summit Exceeds Low Expectations, But Sidesteps Trade Issues
Bridges Weekly Trade News Digest Volume 14, Number 44 Dec 22, 2010
The United Nations climate summit that finished in Cancun this month surpassed low expectations when governments struck a deal that keeps alive efforts for a multilateral response to tackle climate change.
General Council: Lamy Calls on Members to Abandon ‘Red Lines’ in Pursuit of Doha Deal
Bridges Weekly Trade News Digest Volume 14, Number 44 Dec 22, 2010
2006, 2007, 2008, and now, 2011. Trade negotiators at the WTO in Geneva will begin the new year with another push for an agreement in the long-struggling Doha Round negotiations, which have languished for the past two years. Succeeding where they have previously failed will hinge upon whether they are able to “move out of their comfort zones” and make new concessions, WTO Director-General Pascal Lamy told members of the global trade body last week.
LDCs Need New Approach to Development Policy, Say Experts
Bridges Weekly Trade News Digest Volume 14, Number 44 Dec 22, 2010
The world’s poorest countries and the international community urgently need to revise their approach to development policy. Or so believe many economic, trade, and development experts looking ahead to a high-profile United Nations summit on least-developed countries (UNLDC IV) in Istanbul next May.
WTO Ag Talks To “Hit the Ground Running” in January – Chair
Bridges Weekly Trade News Digest Volume 14, Number 44 Dec 22, 2010
Farm trade negotiators must “hit the ground running” when they have s return to the WTO in January, the chair of the Doha Round agriculture talks warned last week. However, with no new signs of whether major players can offer new concessions, delegates are hovering between renewed hope and scepticism on the prospects for any breakthrough in the troubled multilateral negotiations.
High Corruption and Low Growth Spoil 2010 for Russia
Anders Åslund (PIIE) Dec 22, 2010
When Russian leaders review the country's economic development in 2010, they can only be disappointed. There were no great economic disasters, but Russia has clearly underperformed its peers. Until 2008, the favorite Russian measuring mark was other BRIC countries, but that is no longer so. In 2009, Russia did worse than all other Group of 20 countries, with gross domestic product plunging 7.9 percent. This year, growth will be about 4 percent, less than half of India's and China's.
India and Currency Wars
Sujata Srinivasan (Forbes) Dec 22, 2010
Every country manipulates currency to ensure that its economic model doesn't get hit. In today's world that may not be such a good idea.
The crisis that knows no end
Hossein Askari and Noureddine Krichene (AT) Dec 23, 2010
Three years since the onset of the financial crisis, its resolution is far from secure and the destruction caused remains for all to see. Leaders in the United States and Europe desperately need a big dose of political courage, starting with recognition that our financial system does not produce goods that we need for our survival.
Europe’s Financial Alchemy
Luigi Zingales (Project Syndicate) Dec 23, 2010
It is universally recognized that a key factor behind the financial crisis was the diffusion of collateralized debt obligations, which transformed lower-rated debt into highly rated debt. And now Europe has embraced this egregious financial alchemy, in the form of the European Financial Stability Facility.
The Making of International Monetary Reform
Jean Pisani-Ferry (Project Syndicate) Dec 23, 2010
The run-up to the G-20 summit in Seoul was marred by a series of currency controversies, bringing international monetary reform to the fore. But the task is anything but simple: the subject is abstruse, and no one outside academia has taken any interest in it for the last 20 years.
How not to fall foul of the model makers
Gillian Tett (FT) Dec 23, 2010
In spite of all the missteps, there is still plenty of "idolatry" about: just look at the current crop of investment bank forecasts, or the arcane rows over models used to gauge the macro-economic impact of the Basel rules.
Eurozone crisis: We knew all we needed to know
Geoffrey R D Underhill (VoxEU) Dec 23, 2010
Many policymakers have reacted to both the financial crisis and the recent Eurozone sovereign debt problems as though they were unexpected. This column argues that we knew more than enough to anticipate both problems, that the evidence was easily accessible. The institutional and political weaknesses of the Eurozone were hardly a mystery.
The $4 trillion question: What explains FX growth?
Michael R King & Dagfinn Rime (VoxEU) Dec 23, 2010
Daily average foreign exchange market turnover reached $4 trillion in April 2010, 20% higher than in 2007. This column describes how recent growth is largely due to the increased trading activity of “other financial institutions”, which include high-frequency traders, banks trading as clients of the biggest dealers, and online trading by retail investors.
Services trade liberalisation and regulatory reform: Re-invigorating international cooperation
Bernard Hoekman & Aaditya Mattoo (VoxEU) Dec 24, 2010
Trade in services is blighted by restrictive policy and is consequently one of the central issues in the Doha trade negotiations. Yet this column argues that even the best offers put forward are twice as restrictive as current policy and will generate no additional market openings. This column provides two proposals that aim to enhance the prospects of correcting this.
Does corruption sand or grease the wheels of economic growth?
Nauro F Campos & Ralitza Dimova (VoxEU) Dec 24, 2010
Does corruption sand or grease the wheels of economic growth? This column reviews recent research that uses meta-analysis techniques to try to provide more concrete answers to this old-age question. From a unique, comprehensive data base of 460 estimates of the impact of corruption on growth from 41 studies, the main conclusion that emerges is that there is little support for the “greasing the wheels” hypothesis.
China's Real-Estate Frenzy
Hugo Restall (WSJ) Dec 26, 2010
Rising property prices and a torrid pace of lending are signals of an inflationary bubble.
Future shock? Welcome to the new Middle Ages
Parag Khanna (FT) Dec 28, 2010
The 21st century will resemble nothing more than the 12th.
Don’t expect markets to bend it like Beckham
John Kay (FT) Dec 28, 2010
In business and finance, as in sport, you can anticipate the result or understand the outcome only by appreciating the imperfections.
Expect some answers from the eurozone
Wolfgang Münchau (FT) Dec 29, 2010
The euro, even if it survives the year, will remain a source of political, economic and financial instability for the eurozone itself and the world as a whole.
Seven bets for a better year for business in 2011
John Gapper (FT) Dec 29, 2010
Despite all the uncertainty, business should be optimistic about what next year holds. With that in mind, here are seven predictions for the business world in 2011.
A bad year for global governance
FT Dec 29, 2010
The world did not rise above short-term crisis policies.
Reuniting Korea: Parallel economies
Economist Dec 29, 2010
What the North and South Koreans can learn from the reunification of Germany.
A Time to Spend
J. Bradford DeLong (Project Syndicate) Dec 29, 2010
The more that governments have worried about enabling future moral hazard by excessive bailouts and sought to stem the rise in public debt, the worse their countries’ economies have performed. And the more that they have focused on policies to put people back to work in the short run, the better their economies have done.
Getting Corruption Right
(Project Syndicate) Dec 29, 2010
Transparency International and occasionally the World Bank like to rank countries by their degree of corruption, with the media then ceaselessly citing where each country stands. But cultural differences between countries undermine the legitimacy of such rankings.
The Mistaken Attack on Outsourcing
Mihir Desai (WSJ) Dec 29, 2010
When American firms grow abroad, they also grow domestically.
Urbanizing China
Fan Gang (Project Syndicate) Dec 30, 2010
Most countries at a stage of development similar to China's experienced faster urbanization than industrialization. But the reverse is true in China, largely because the system of land tenure ensures that the reservoir of labor for industrialization and urbanization remains located in country villages, rather than in city slums.
Two-speed Recovery to Extend into 2011, Says IMF
IMF Survey Dec 30, 2010
The two-speed global economic recovery is likely to dominate 2011, with weak growth in advanced economies barely enough to bring down unemployment and emerging markets facing the challenges of success, including how to avoid overheating and handle strong capital inflows, says IMF Chief Economist Olivier Blanchard.
Firsts in 2010
Globalist Dec 30, 2010
As the world bids farewell to 2010, we take a look at the "firsts" in economics, politics, technology and demographics that occurred this year.