News & Commentary:

January 2012 Archives


The next industrial revolution Recommended!
McKinsey Quarterly Jan 1, 2012
Economic advances now sweeping through China, India, and other emerging markets dwarf the pace and scale of the Western world's industrial transformation in the 18th and 19th centuries. As three billion more middle-class consumers join the global economy over the next two decades, the resource landscape will change profoundly: demand for many commodities will soar, and new technologies will be needed to counterbalance critical shortages of food, water, and other resources.

When Currencies Collapse Foreign Affairs Subscription Required Recommended!
Barry Eichengreen (FA) Jan 1, 2012
Confidence in the dollar and euro continue to falter, threatening the international monetary system. The world has faced such monetary collapse before: in the 1930s, with disastrous results, and less catastrophically in the 1970s. Understanding these two precedents is crucial to successfully navigating the crisis today.

The Failure of the Euro Foreign Affairs Subscription Required
Martin Feldstein (FA) Jan 1, 2012
The collapse of the euro is no accident; the seeds of the crisis were planted before the monetary union even began, argues a former chair of the Council of Economic Advisers. It never made sense to yoke so many different economies and cultures together—yet they now find themselves trapped in a union that leaves no means of escape.

The Democratic Malaise Foreign Affairs Subscription Required
Charles A. Kupchan (FA) Jan 1, 2012
The advanced industrial democracies are facing a crisis of governability. Globalization is widening the gap between what voters demand and what their governments can deliver. Unless the leading democracies can restore their political and economic solvency, the very model they represent may lose its allure.

The Myth of Europe
Gareth Harding (FP) Jan 1, 2012
The euro crisis isn't really about money. It's about the fiction that Europeans ever existed at all.

The future of prediction
Leon Neyfakh (Boston Globe) Jan 1, 2012
Taking stock of the new year means contemplating a blank slate. It means staring out into the unknown, more acutely aware than usual that we don’t know what will happen next. As we look ahead, we brace ourselves for the fact that every day of the next year will bring news. People we know will get engaged. There will be elections, military battles, and natural disasters. The world will change and our lives will change, and when it’s over we’ll look back and wonder if we could have seen any of it coming.

Mobilizing for a resource revolution
Richard Dobbs, Jeremy Oppenheim, and Fraser Thompson (McKinsey Quarterly) Jan 1, 2012
Over the next quarter century, the rise of three billion more middle-class consumers will strain natural resources. The race is on to boost resource supplies, overhaul their management, and change the game with new technologies.

China Says Yuan Will Be Fully Convertible Soon
Gordon Chang (Forbes) Jan 2, 2012
Central bank chief promises major currency liberalization.

Rethinking the Growth Imperative
Kenneth Rogoff (Project Syndicate) Jan 2, 2012
Modern macroeconomics often seems to treat rapid and stable economic growth as the be-all and end-all of policy. But, while that is the message from graduate classrooms to central-bank boardrooms to newspapers’ front pages, is it true?

India’s Anti-Corruption Contest
Shashi Tharoor (Project Syndicate) Jan 3, 2012
India ended 2011 amid political chaos, as the much-awaited “Lokpal Bill,” aimed at creating a strong, independent anti-corruption agency, collapsed amid a welter of recrimination in the parliament’s upper house. The episode, which leaves the bill in suspended animation, raises fundamental issues for Indian politics which will need to be addressed in the New Year.

The Decline and Fall of the Euro?
Daniel Gros (Project Syndicate) Jan 3, 2012
Great empires rarely succumb to outside attacks. But they often crumble under the weight of internal dissent – a vulnerability that seems to apply to the eurozone as well.

Happy 2012?
Charles Wyplosz (VoxEU) Jan 3, 2012
Another year, and the Eurozone crisis lingers on. This column asks why, and discusses what can be done. It proposes a solution that can be achieved without the pain of a new EU treaty.

Wages and productivity in the Eurozone
Ard den Reijer & Marga Peeters (VoxEU) Jan 3, 2012
While EU leaders are drafting a fiscal compact, the problem of intra-European real exchange-rate misalignments remains. This column argues that reducing imbalances implies a focus on competitiveness, and hence on the alignment of nominal-wage growth with labour-productivity growth.

Why We Are Uneasy About the Global Economy in 2012
Harold James (Bloomberg) Jan 3, 2012
The New Year opens with greater nervousness in financial markets and among policy makers than at any time since the Great Depression.

Protect HFT cheetahs from regulatory poachers Financial Times Subscription Required
Leo Melamed (FT) Jan 3, 2012
The speed of earth’s fastest animal is likened to the rapid hunt by ‘market cheetahs’ in finding micro dollars in milliseconds.

Don’t expect economic boost from cash-rich companies Financial Times Subscription Required
John Plender (FT) Jan 3, 2012
Developed world growth will continue in 2012 to be hostage to deleveraging process required to address huge debts piled up during credit bubble.

Schadenfreude Capitalism
Harold James (Project Syndicate) Jan 4, 2012
The protracted financial and economic crisis discredited first the American model of capitalism, then the European version, and now could undermine the Asian approach, too. Coming after the failure of state socialism, does this mean that there is no correct way of organizing an economy?

Global value chains are not all born identical: Evidence from France
Carlo Altomonte, Filippo di Mauro, Gianmarco I.P. Ottaviano, Armando Rungi & Vincent Vicard (VoxEU) Jan 4, 2012
Trade in today’s global economy is not a simple game of exchange-rate muddling. The complex web of global value chains ensures that products marked “Made in China” are often in fact made all over the world. This column looks at firm-level data from French firms between 2007 and 2009 and explores how their structure affects their behaviour, with insights for policymakers the world over.

How to stop the fire spreading in Europe’s banks Financial Times Subscription Required
Enrico Perotti (FT) Jan 4, 2012
Four years ago, the world’s banking system nearly burned down. Waiting for Basel III is not enough.

Global stocks best way to tap domestic EM growth Financial Times Subscription Required
Arjun Divecha (FT) Jan 4, 2012
One of the most compelling investment opportunities over the next few years is likely to be in companies that serve domestic demand in emerging markets.

Global Finance’s Supply-Chain Revolution
Andrew Sheng (Project Syndicate) Jan 5, 2012
As the 2008 financial crisis showed, a simple banking system based on collecting retail savings to fund the credit needs of borrowers has evolved into a highly complex – and global – supply chain. To restore trust and adapt to the growing needs of new markets, financial leaders must re-engineer it.

Where to Put Your Money in 2012 Wall Street Journal Subscription Required
Burton G. Malkiel (WSJ) Jan 5, 2012
U.S. stocks should produce returns of about 7% going forward, five points higher than the yield on safe bonds.

Meddling in credit swaps poses sizeable stability risks Financial Times Subscription Required
Henny Sender (FT) Jan 5, 2012
An attempt by regulators to intervene with initiatives such as making a Greek restructuring ‘voluntary’ will lead to unintended consequences.

Understanding Eurozone debt developments, nation by nation
Gianluca Cafiso (VoxEU) Jan 5, 2012
2011 was the year the Eurozone began to buckle. The weight of debt taken on following the global financial crisis two years earlier proved too much for some member countries. This column examines how debt-to-GDP ratios increased over that period, the reasons why some economies fared better than others, and what may be in store for debt in 2012 and beyond.

The long-run effects of the Scramble for Africa
Stelios Michalopoulos & Elias Papaioannou (VoxEU) Jan 6, 2012
The 'Scramble for Africa' – the artificial drawing of African political boundaries among European powers in the end of the 19th century – led to the partitioning of several ethnicities across newly created African states. This columns shows that partitioned ethnic groups have suffered significantly longer and more devastating civil wars. It also uncovers substantial spillovers as ethnic conflict spreads from the historical homeland of groups partitioned to nearby areas where non-split ethnicities reside.

Disease and development: Does living longer raise economic growth?
Matteo Cervellati & Uwe Sunde (VoxEU) Jan 6, 2012
Does rising life expectancy boost economic growth? Existing evidence is mixed, with the relationship appearing to change over time. This column presents recent research showing that living longer may have a negative effect on growth to begin with, but once fertility declines the effect becomes significantly positive. Moreover, higher life expectancy increases the probability of such a switch in fertility behaviour.

Islamic Finance Unbound
Mahmoud Mohieldin (Project Syndicate) Jan 6, 2012
While uncertainty roils global markets and many investors are in full retreat, Islamic financial assets are growing exponentially. Though it needs to address several regulatory issues, Islamic finance has the potential to promote greater stability throughout the Muslim world.

Can Europe Save the Euro — and Itself?
Tom Buerkle (II) Jan 6, 2011
Why EU leaders are finding it so difficult to contain the debt crisis and prevent the collapse of the single currency.

Migrants' New Paths Reshaping Latin America New York Times Subscription Required
NYT Jan 6, 2012
In Mexico and Latin America, old migratory patterns are changing as migrants move to a wider range of cities and countries, creating regional challenges and opportunities.

Cross-border banking and national supervision – could it work?
Thorsten Beck, Radomir Todorov & Wolf Wagner (VoxEU) Jan 7, 2012
The global crisis has pushed government finances to breaking point. Forced to bailout their domestic banks, they have come to realise some harsh truths in the words: “Banks are international in life and national in death”. This column explores whether a supranational financial supervisor might be able to alleviate the pressures on national regulators and governments, particularly in Europe, and what barriers lie in the way.

What China Can Teach Europe New York Times Subscription Required
Daniel A. Bell (NYT) Jan 7, 2012
Competition among the huge cities in China is an important reason for the country's economic dynamism.

The Myth of Japan's Failure New York Times Subscription Required
Eamonn Fingleton (NYT) Jan 7, 2012
Instead of feeling sorry for Japan, the United States should look to it as a model for economic recovery.

The Other Reason Europe Is Going Broke New York Times Subscription Required
Adam Davidson (NYT) Jan 7, 2012
Forget austerity, sovereign debt and the euro. Europe has a much deeper problem, and it has been going on for decades.

Sean Quinn and Ireland's Boom and Bust New York Times Subscription Required
Doreen Carvajal (NYT) Jan 7, 2012
In many ways, Sean Quinn, once the richest man in Ireland, personified the nation's boom. Now, he has come to personify its bust.

Current woes call for smart reinvention not destruction Financial Times Subscription Required
Lawrence Summers (FT) Jan 8, 2012
I suspect that if and when macro-economic policies are appropriately adjusted, much of the contemporary concern will fade away.

A bank run for the benefit of its owners? Dream on Financial Times Subscription Required
Robert Jenkins (FT) Jan 8, 2012
There is only one not-so-small problem: loyal shareholders – you – have made no money.

Amid Economic Strife, Greeks Look to Farming Past New York Times Subscription Required
NYT Jan 8, 2012
As Greece's economy plunges and unemployment rises, many Greeks are fleeing to the countryside and looking to the nation's rich agricultural past as a guide to the future.

Haiti Can Be Rich Again New York Times Subscription Required
Laurent Dubois & Deborah Jenson (NYT) Jan 8, 2012
Haiti should look to the past, and the system of small farms and the decentralized economy that once provided Haitians with dignity, autonomy and wealth.

China’s coming slump?
Robert J. Samuelson (WP) Jan 8, 2012
Warning signs exist of a “hard landing.”

How Wall Street Turned a Crisis Into a Cartel
William D. Cohan (Bloomberg) Dec 8, 2012
Almost 65 years ago, in 1947, the U.S. government sued 17 leading Wall Street investment banks, charging them with effectively colluding in violation of antitrust laws.

An Exit Strategy From the Euro Wall Street Journal Subscription Required
Robert Barro (WSJ) Jan 9, 2012
The euro can be phased out the same way Europe's individual currencies were. The bonds of troubled member states would benefit as a result.

Argentina's Capital Flight Wall Street Journal Subscription Required
Mary Anastasia O'Grady (WSJ) Jan 9, 2012
The government clamps down as the economy deteriorates and capital attempts to flee the country.

Investing in a 'Fat Tail' World Wall Street Journal Subscription Required
Mohamed El-Erian (WSJ) Jan 9, 2012
By pushing interest rates to very low levels, central banks are pushing investors out the risk spectrum.

Beyond fiscal federalism: What will it take to save to euro?
Giancarlo Corsetti & Hashem Pesaran (VoxEU) Dec 9, 2012
High debt levels, house price booms, uncompetitive labour markets – the list of possible reasons why some European countries are facing the wrath of the market are many. This column argues that they all boil down to one measure – inflation. Using the inflation differentials as a guide is the first step to seeing what countries need to adjust – and by how much.

Bilateralism, Multilateralism, and Trade Rules
Carolyn L. Evans (FRBSF) Dec 9, 2012
Since 2001, countries around the world have been working on crafting a new global pact to liberalize trade. Despite the difficulties of completing such a multilateral agreement, it remains a worthwhile goal for two reasons. First, a global pact offers cost and efficiency benefits that can't be achieved under the kinds of agreements among smaller groups of countries that have proliferated in recent years. Second, a global agreement presents a unique opportunity to optimize the use of the world's resources, thereby improving well-being around the world.

Why I’m feeling strangely Austrian Financial Times Subscription Required
Gideon Rachman (FT) Jan 9, 2012
The failure of the hard left to capitalise on the economic crisis testifies to how profoundly communism has been discredited.

A letter to capitalists from Adam Smith Financial Times Subscription Required
David Rubenstein (FT) Jan 9, 2012
The markets’ harsh solutions will be borne disproportionately by the disadvantaged. This is not good for capitalism.

China and India: right policy, wrong place Financial Times Subscription Required
Arvind Subramanian (FT) Jan 9, 2012
The two countries should consider reversing roles when it comes to economic policy in the domain of foreign capital.

Emerging markets’ golden age is at an end Financial Times Subscription Required
Peter Tasker (FT) Jan 9, 2012
Re-inflating burst bubbles is easier said than done while the ‘equity gap‘ offers its own challenges.

Crunch Time for the Euro Is Not Far Off New York Times Subscription Required
Noah Barkin (NYT/Reuters) Jan 9, 2012
The coming months will be decisive in determining whether European leaders can hold their increasingly fragile currency bloc together.

China's new role in the making of Europe
David Gosset (AT) Jan 10, 2012
If China opts to support the eurozone it will become a significant investor in European integration, while helping to create a world where the United States dollar loses absolute pre-eminence. The level of Sino-European interdependence achieved during China's renaissance will likely accelerate as Europe better understands China's governance and as Beijing greater appreciates the complexities of the continent.

Odds in Africa's Favor as Continent Walks Economic Tightrope
IMF Survey Jan 10, 2012
The big question for sub-Saharan Africa in 2012 is whether the region can sustain its recent strong growth despite a stalling global economy. The odds seem in its favor. But the costs of a fall from its tightrope 2011 performance remain disconcertingly high.

Global Imbalances and Domestic Inequality
Kemal Dervis (Project Syndicate) Jan 10, 2012
Despite years of official talk about addressing global current-account imbalances, they remained one of the world’s main economic concerns in 2011. Indeed, some are increasing again, alongside inequality in many countries – a link that is no accident.

Has production become more fragmented? International vs domestic perspectives
Thibault Fally (VoxEU) Jan 10, 2012
As the oft-cited iPhone example illustrates, production has become increasingly fragmented across countries. This column presents recent research, however, suggesting that this trend may be reversing for manufacturing plants in the US. It shows that intermediate goods account for a decreasing fraction of output value, while industries that are closer to the final consumer contribute to an increasing share of GDP.

Why the euro needs Eurobonds: Hundreds of years of reasons
Christophe Chamley (VoxEU) Jan 10, 2012
Is it time for Eurobonds? This column argues that Eurobonds have always been the right solution. Every successful union throughout history has needed to create a proper financial instrument of sovereign debt – and the Eurozone is no different.

Hopes in emerging countries Financial Times Subscription Required
Martin Wolf (FT) Jan 10, 2012
The speed of convergence in incomes per head is driving extraordinary divergence in growth between incumbents and newcomers.

Falling currency gives eurozone a lift Financial Times Subscription Required
Ralph Atkins (FT) Jan 10, 2012
The euro’s value may be easing what could prove a prolonged recession, especially in southern Europe, where austerity is squeezing demand.

The Failure of Governance in a Hyperconnected World New York Times Subscription Required
Lee Howell (NYT) Jan 10, 2012
The Global Risks 2012 report explores dystopian threats, system safeguards and the Internet.

Europe: Breaking the Spell of the Euro Crisis
Elga Bartsch, Daniele Antonucci, Olivier Bizimana, Jonathan Ashworth, Anselm Karitter & Tomasz Pietrzak (MS GEF) Jan 10, 2012
2012 should be another challenging year for the euro area – probably the most challenging year yet.

Europe’s Vicious Spirals
Barry Eichengreen (Project Syndicate) Jan 11, 2012
While 2011 was supposed to be the year when European leaders finally got a grip on events, the eurozone’s problems went from bad to worse. The problem is not just that Europe faces a sovereign-debt crisis, but also that it faces a growth crisis, which worsens the debt problem.

Why Development Aid is Not Enough
Erik Solheim (Project Syndicate) Jan 11, 2012
We must be careful not to fool ourselves into believing that the Millennium Development Goals can be achieved through development aid alone. The wider politics of poverty must be placed at the top of the international agenda, along with the three factors most critical to development: climate, conflict, and capital.

The Perils of Europe’s Navel Gazing
Ana Palacio (Project Syndicate) Jan 11, 2012
Economic problems constitutes only a part of the eurozone’s troubles. The euro crisis is, above all, a reflection of deep-seated weaknesses in European institutions and the fabric of European society.

Stop coddling Europe’s banks
Morris Goldstein (VoxEU) Jan 11, 2012
Throughout the European debt soap opera, Europe’s leaders have expressed their willingness to “do whatever it takes” to restore stability and save the euro. This column argues that, too often, policymakers have in fact been “doing whatever it takes” to serve the banks.

Is a European Tobin tax likely to be efficient?
Donato Masciandaro & Francesco Passarelli (VoxEU) Jan 11, 2012
Italy’s prime minister, Mario Monti, is the latest in a growing line of senior public figures to support the idea of a financial transaction tax - also known as a Tobin tax or Robin Hood tax. Rather than give a case for or against, this column looks at what the realistic options are and asks whether they will be better for Europe, or worse.

Europe Weird and New Wall Street Journal Subscription Required
WSJ Jan 11, 2012
Below-zero bond yields and other signs of the Apocalypse.

EU Aviation Emissions Levy Ruled Lawful by European Court as Measure Enters into Force
Bridges Weekly Trade News Digest, Volume 16, Number 1 Jan 11, 2012
The ongoing battle over aviation emissions reached new heights over the past few weeks, with the European Court of Justice (ECJ) ruling on 21 December that the inclusion of aviation in the EU Emissions Trading System (ETS) is indeed valid. In response, China's four major airlines threatened last week not to pay the charge under the EU scheme, while the US airline industry group that helped launch the legal challenge has pledged to consider other options to fight the plan.

US-China Solar Subsidies Spat Sparks Interest from New Players
Bridges Weekly Trade News Digest, Volume 16, Number 1 Jan 11, 2012
The trade row between the US and China over renewable energy trade policies could soon see additional players join the mix, with recent reports suggesting that India might launch its own anti-dumping probe into Chinese solar imports later this month. Meanwhile, Solarworld AG - one of Germany's largest solar products manufacturers - is now planning to launch a case in Europe against Chinese competitors, according to the company's top official.

Rio+20 Draft Outcome Document Released
Bridges Weekly Trade News Digest, Volume 16, Number 1 Jan 11, 2012
The preparations for the June 2012 meeting marking 20 years since the Earth Summit in Rio de Janeiro, Brazil are progressing, with parties set to start negotiating a 'zero draft' of outcomes. The document, circulated among UN member states, was officially released on 10 January in New York.

Disputes Roundup: Beijing Introduces New Rare Earths Export Quota; DSB Busy Post-Ministerial
Bridges Weekly Trade News Digest, Volume 16, Number 1 Jan 11, 2012
The contentious rare earths debate took another twist as 2011 came to a close, with China announcing in late December a new export quota for the precious materials. Meanwhile, trade lawyers in Geneva remained hard at work over the holiday season, with the WTO Dispute Settlement Body meeting twice over issues such as distilled spirits and country-of-origin labelling laws. Washington has also submitted an appeal to the global trade body regarding a panel decision from last autumn regarding the US' ban of clove cigarettes.

US Election Year Focuses Spotlight on China Currency, Trade
Bridges Weekly Trade News Digest, Volume 16, Number 1 Jan 11, 2012
With the US presidential election less than twelve months away, the US-China trade relationship - especially regarding Beijing's strict control of its currency - continues to find itself in the spotlight. Reports have emerged that the White House is planning to launch a task force this month to enforce US trade rules, focusing primarily on China, while Treasury Secretary Timothy Geithner is in Beijing this week to discuss currency and other trade matters with high-level Chinese officials.

West needs to go back to capitalist basics Financial Times Subscription Required
Mahathir Mohamad (FT) Jan 11, 2012
Europe needs to look east for solutions if it wants to resolve its debt and financial crisis.

How we can avoid another Mediterranean crisis Financial Times Subscription Required
Edmund Phelps (FT) Jan 11, 2012
Italy, Portugal and Greece must do without the deals that made state borrowing so cheap for them.

The Perils of 2012
Joseph E. Stiglitz (Project Syndicate) Jan 12, 2012
The pragmatic commitment to growth that one sees in Asia and other emerging markets today stands in contrast to the West’s misguided policies, which, driven by ideology and vested interests, almost seem to reflect a commitment not to grow. As a result, global economic rebalancing is likely to accelerate, almost inevitably giving rise to political tensions.

The Straits of America
Nouriel Roubini (Project Syndicate) Jan 12, 2012
Macroeconomic indicators for the US have been better than expected for the last few months. But, despite the favorable data, US economic growth will remain weak and below trend throughout 2012.

The uncoupling of decoupling: Latin America’s experience
Luciano Cohan & Eduardo Levy Yeyati (VoxEU) Jan 12, 2012
Four years ago, there was growing support for the idea of ‘decoupling’ – that emerging markets were becoming less affected by business cycle swings in developed economies. Then came the global crisis. Focusing on Latin America, this column argues that the 2010s will be a far harder decade. But that might not be such a bad thing if it forces these economies to look again at their growth strategies.

Will House Prices Keep Falling?
IMF Survey Jan 12, 2012
Globally, house prices remain in the doldrums. After a decade of boom, the global house price index peaked in the fourth quarter of 2007 and since then has fallen or remained flat, according to IMF research.

How Merchants of Venice Calculated Exchange Rates
Christine Riggle (Bloomberg) Jan 12, 2012
Determining the exchange rate from dollars to euros for that trip you're taking to Italy now takes a matter of seconds with an online currency converter. But that wasn't always the case.

Merkel Is Wrong About EU Fiscal Regulation
Erik Jones (FA) Jan 12, 2012
The problem isn't weak EU economic policy, it is that no country has reason to live up to its obligations or to force its partners to do the same. What Europe really needs is a sovereign credit club; at the cost of accepting certain performance standards, countries would join to get access to low-cost capital.

The market still has no rivals Financial Times Subscription Required
Samuel Brittan (FT) Jan 12, 2012
Capitalism is a means to freedom and prosperity and not an end in itself – but it does not preclude regulation.

Planning for the worst is the best way to save the eurozone Financial Times Subscription Required
Jens Nordvig (FT) Jan 12, 2012
Investors are exiting eurozone bond markets. A contingency plan for a break-up is needed to stop the capital flight.

You may not want to ... but it is time to hug a hedgie Financial Times Subscription Required
Sebastian Mallaby (FT) Jan , 2012
Yes, hedge-fund moguls should be taxed more. But unequal distribution must be separated from how to secure growth.

Africa’s Stolen History
Juliet Torome (Project Syndicate) Jan 13, 2012
Western museums and private collections are full of artifacts that were pillaged from Africa during the slave trade and colonial periods. Until Africans start to recognize the value of their own history, their cultures' artistic output will continue to be up for grabs.

Mind over Market
Michael Spence (Project Syndicate) Jan 13, 2012
Most societies have important economic and other objectives that markets and competition are not designed to achieve. In today’s rapidly globalizing world, the most important of these objectives – expressed in various ways through the political and policymaking process in a wide range of countries – are stability, distributional equity, and sustainability.

Leaderless Global Governance
Dani Rodrik (Project Syndicate) Jan 13, 2012
Too much global political capital nowadays is wasted on harmonizing policies that don't need it, and not enough is spent on harmonizing those that do. Over-ambitious and misdirected efforts at global governance will not serve us well at a time when global leadership and cooperation are bound to remain in limited supply.

The Economics of Disaster
Justin Yifu Lin & Apurva Sanghi (Project Syndicate) Jan 13, 2012
Exactly two years ago, on January 12, 2010, Haiti was struck by a devastating earthquake that killed more than 220,000 people and shattered the country’s prospects. The lesson of that catastrophe was clear: natural hazards are inevitable, but at every level we have the power to ensure that they do not become unnatural disasters.

What will India look like in 2025?
Ejaz Ghani (VoxEU) Jan 13, 2012
What will India and other South Asian countries look like in 2025? The optimistic view is that India will achieve double digit growth rates but the pessimistic view is that growth will be derailed by several transformational challenges. This column introduces a new book asking what the story between now and 2025 might involve, and what can be done to reshape tomorrow.

Global: 2012: Split Down the Middle
Manoj Pradhan (MS GEF) Jan 13, 2012
We expect 2012 to be a story of two halves for the EM world: downside risks to growth in 1H before better growth in 2H, due in part to policy easing.

Democracy in Distress
Dominique Moisi (Project Syndicate) Jan 13, 2012
Is democratic time too slow to respond to crises, and too short to plan for the long term? At a time of deepening economic and social crisis in much of the world’s rich democracies, that question is more relevant than ever.

A Long Bleak Winter New York Times Subscription Required
NYT Jan 13, 2012
After a few weeks of calm, austerity measures freeze the weakened European economies. It is time to shift course.

How much do international reserves buffer terms-of-trade shocks?
Joshua Aizenman, Sebastian Edwards & Daniel Riera-Crichton (VoxEU) Jan 14, 2012
Last year’s surge in commodity prices was a reminder, if we needed one, of the problems caused by terms-of-trade volatility in emerging economies. This column looks at the real exchange rate adjustments to commodity terms-of-trade shocks in the region exposed to the highest volatility – Latin America. It finds that active reserve management not only lowers the short-run impact of shocks, but also substantially reduces real exchange rate volatility.

The Empires Strike Back New York Times Subscription Required
Soner Cagaptay (NYT) Jan 14, 2012
Two former imperial powers, France and Turkey, are vying to exert their political influence over Arab countries in upheaval.

What Does Wall Street Do for You? New York Times Subscription Required
Adam Davidson (NYT) Jan 14, 2012
More than you think. Without it, the 99 percent would be a whole lot poorer, and there definitely wouldn't be any good goat cheese.

After the downgrades comes the downward spiral Financial Times Subscription Required
Wolfgang Münchau (FT) Jan 15, 2012
Standard & Poor’s has shaped expectations of the geography of a eurozone break-up.

Dollar Parity May Be Euro Salvation
Ricardo Caballero and Francesco Giavazzi (Bloomberg) Jan 15, 2012
The euro has dropped about 13 percent against the dollar since the sovereign-debt crisis hit Italy seven months ago. To a large extent, the decline reflects the increased likelihood of an Italian default, which would destroy the single currency.

Behind the ECB’s Wall of Money
Benedicta Marzinotto (Project Syndicate) Jan 16, 2012
The "wall of money" that the ECB unleashed to markets just before Christmas will have a huge influence on Europe's economy, and an even larger impact on its politics. This approach to ending the eurozone's sovereign-debt might work, but it could also destroy the single market.

How to Create a Depression
Martin Feldstein (Project Syndicate) Jan 16, 2012
European political leaders may be about to agree to a fiscal plan which, if implemented, could push Europe into a major depression. It would be much smarter to focus on the difference between cyclical and structural deficits, and to allow deficits that result from so-called "automatic stabilizers."

Why expect S&P, Moody’s, or Fitch to know it's junk when expert musicians can't tell a Stradivarius from a fiddle?
Victor Ginsburgh (VoxEU) Jan 16, 2012
Economists have shown that wine tasters can’t tell Bordeaux from budget plonk, movie critics are prone to giving biased reviews, and Olympic judges are often judging what’s best for them to say rather than what’s in front of them. This column asks why we should expect credit-rating agencies, with their own unique set of ignorance and incentives, to be any different.

Downgrading Europe Wall Street Journal Subscription Required
WSJ Jan 16, 2011
S&P discovers the euro-zone's debt problem.

Tale of two small countries
Richard Rahn (WT) Jan 16, 2012
Cayman is rich, and Belize is poor. Why? Both are small Caribbean countries with the same climate and roughly the same mixed racial heritage, and both were English-speaking British colonies. Belize (the former British Honduras) received its independence in 1981, while Cayman is still not fully independent but is self-governing at the local level, with its own currency, laws and regulations.

A Bank Chief Stays Ahead of Crises New York Times Subscription Required
NYT Jan 16, 2012
Zeti Akhtar Aziz, the Malaysian central banker, was among the first to raise interest rates after the global financial crisis and is now taking on excessive household borrowing.

America, Greece and a world on fire Financial Times Subscription Required
(FT) Jan 16, 2012
A Greek economic crisis is threatening Europe but the US has no intention of leading the rescue mission, writes Gideon Rachman

The oil hawks are living in cloud cuckoo land Financial Times Subscription Required
Nick Butler (FT) Jan 16, 2012
The main worry for oil producers is that prices will fall. Three factors support this view: supply, demand and politics.

The price of austerity for indebted Greece Financial Times Subscription Required
Iannis Mourmouras (FT) Jan 16, 2012
Taking permanent austerity measures to reduce a cyclical deficit will only deepen and prolong a recession.

IMF delivers harsh truth from Planet Earth Financial Times Subscription Required
Alan Beattle (FT) Jan 16, 2012
Fund’s role in the Greek crisis has mainly been to bear inconvenient arithmetic to eurozone authorities and bondholders.

Banking on a European family fable Financial Times Subscription Required
Patrick Jenkins (FT) Jan 16, 2012
Those in power must now take charge – at the IMF, across the eurozone, and crucially among the bondholders. All we need is good leadership.

Policy shifts – a buy signal for Europe equities Financial Times Subscription Required
Komal Sri-Kumar (FT) Jan 16, 2012
Investors should consider moves to market-orientated policies as a buy signal for European debt and equities.

Southern Resilience
Paulo M. Levy (Project Syndicate) Jan 17, 2012
Latin America’s resilience in the aftermath of the 2008 financial crisis has been remarkable. But, as the world economy faces renewed uncertainty, the region must find new strategies to reduce the impact of potentially volatile financial markets and protracted stagnation in the world’s richest economies.

The unexplained part of public debt
Camila FS Campos, Dany Jaimovich & Ugo Panizza (VoxEU) Jan 17, 2012
How do countries get into debt? And how does this debt rise so fast? The short answer may be obvious, but this column shows that the longer answer certainly isn’t.

Dusk, Dawn, and High Noon: Demographic Trends Forecast Next Phases for China, India, and the United States Recommended!
Martin C. Libicki and Julie DaVanzo (Rand Review) Jan 17, 2012
In the decades ahead, China and India will have the most to gain or to lose, and the United States will continue to have the most to protect and to defend.

Plan B for Greece Wall Street Journal Subscription Required
WSJ Jan 17, 2012
A way for Athens to restructure its debt, stay in the euro and avoid a disorderly default.

Why the super-Marios need help Financial Times Subscription Required
Martin Wolf (FT) Jan 17, 2012
The costs of failure are so large that the possibility of domestic and eurozone reform must be kept alive.

Europe’s regions go it alone at their peril Financial Times Subscription Required
Tony Barber (FT) Jan 17, 2012
The sovereign debt and banking crises demonstrate there is no plausible substitute for central authorities armed with the strongest possible powers to prevent financial meltdown.

Forecasting toolkit challenged by 'new abnormal' Financial Times Subscription Required
John Plender (FT) Jan 17, 2012
The current crisis appears to have made conventional analysis redundant with observers condemned time and again to be wrong.

Don't give up on world trade talks
Sherman Katz and Gary Hufbauer (WT) Jan 17, 2012
In December, 154 countries of the World Trade Organization agreed they needed "new ideas" to break the stalemate after 10 years of negotiations to lower trade barriers - the ill-starred Doha Development Round. Since presidential election years in the United States and leadership transitions in China are fallow times for new initiatives, 2012 is a good time to think creatively.

The Political Origins of Hungary's Economic Crisis
Clemens Höges (Spiegel) Jan 17, 2012
Hungarian Prime Minister Viktor Orbán came into power on a wave of political disillusionment. But his policies have not only caused many to question his commitment to democracy, but have also steered Hungary to the brink of insolvency.
Holman W. Jenkins (WSJ) Jan 18, 2012
The housing bust is well understood; the global financial panic isn't.

Does Austerity Promote Economic Growth?
Robert J. Shiller (Project Syndicate) Jan 18, 2012
Policymakers cannot afford to wait decades for economists to figure out definitively how government austerity affects growth. But, judging by the evidence that we have, austerity programs in Europe and elsewhere appear likely to yield disappointing results.

The Arab Spring’s Balance Sheet
Wadah Khanfar (Project Syndicate) Jan 18, 2012
As the Arab world's old regimes vanish, the region’s entire value system, forged by autocracy, is also being transformed. But, if the Arab Spring fails from lack of external support, the result will not be dictatorships that are loyal to the West, but rather a tsunami of rage that will spare no one.

Choosing an investment strategy for an inefficient world
Dimitri Vayanos & Paul Woolley (VoxEU) Jan 18, 2012
According to classical economics, there are no gains to be made in an efficient market. Yet markets are often far from efficient and the gains are often far from insignificant. So should investors follow the herd or rely on best guesses of fair value? This column argues that the optimal strategy depends on whether you are in for the short or long term.

The spread of civil war
Maarten Bosker & Joppe de Ree (VoxEU) Jan 18, 2012
Civil wars are devastating to a country’s development perspectives. What’s more, they often spread across borders. But this column argues that only ethnic civil wars pose a significant threat to neighbouring countries’ stability. Countries with ethnic links to a neighbouring ethnic conflict see their chances of experiencing civil conflict increase by six percentage points.

Chinese Dragon To Unshackle Renminbi?
Axel Merk (Merk Insights) Jan 18, 2012
With the Year of the Dragon around the corner, will the renminbi be unshackled? Will there be a surge in domestic consumption, or will a housing bust weigh on the economy, dragging down global economic growth? To understand how dynamics may play out in China, try to put yourself into the shoes of the proverbial Chinese consumer. Better yet, put yourself into hundreds of millions of such shoes.

White House Push to Streamline Federal Government Sparks Trade Questions
Bridges Weekly Trade News Digest Volume 16, Number 2 Jan 18, 2012
US President Barack Obama is seeking congressional authority to reorganise the federal government, starting with various commerce and trade-related agencies, including the Office of the US Trade Representative. The 13 January announcement has observers questioning what such a move could mean for US trade policy, and whether this merger would even receive congressional approval during what is expected to be a contentious election year.

Obama Blocks Proposed Canada-US Oil Pipeline
Bridges Weekly Trade News Digest Volume 16, Number 2 Jan 18, 2012
US President Barack Obama has rejected a plan for the building of a multi-billion dollar pipeline that would have carried crude oil from Canada to the US state of Texas. The 18 January announcement came after weeks of debate over the economic and environmental implications of the proposed Canada-US oil sands pipeline, with an array of interested groups weighing in on the pros and cons of the massive infrastructure project.

Anti-Piracy Legislation Stirs Up Controversy in Washington
Bridges Weekly Trade News Digest Volume 16, Number 2 Jan 18, 2012
Two bills in the US Congress intended to curtail piracy on the internet came under heavy fire this week, with Wikipedia suspending its services for 24 hours and the White House making clear that it would not support the legislation as it stands, forcing lawmakers to reconsider the extent of the bills' provisions.

Washington-Brussels Tension Grows Over Aviation Emissions Levy
Bridges Weekly Trade News Digest Volume 16, Number 2 Jan 18, 2012
The controversy over the inclusion of aviation in the EU Emissions Trading System (ETS) continues to build, with the EU telling US Secretary of State Hillary Clinton last week that the 27-member bloc does not intend to abandon its plan until a global solution to the carbon problem is found. Meanwhile, with the scheme having entered into force on 1 January, many major airlines are racing to take advantage of emissions permit prices, which have hit record lows.

Brazilian Ethanol Industry to Receive Billions in Loans
Bridges Weekly Trade News Digest Volume 16, Number 2 Jan 18, 2012
The Brazilian Development Bank announced last week a programme to finance low cost loans for farmers of sugarcane and producers of ethanol. The tropical country is seeking to boost biofuel production in the wake of ethanol tariffs and subsidies expiring in the US, another leading producer.

Long march ahead to a truly capitalist China Financial Times Subscription Required
Qin Xiao (FT) Jan 18, 2012
Sent to Inner Mongolia to be re-educated, I realised that ideological fervour masked intrinsic flaws in our planned economy.

Trust no one with your money is the tragic legacy of the crisis Financial Times Subscription Required
Satyajit Das (FT) Jan 18, 2012
A lack of trust in money and traditional currencies is encouraging interest in the Bavarian Chiemgauer and the Lewes Pound.

Equities will look more attractive later in 2012 Financial Times Subscription Required
Bob Parker (FT) Jan 18, 2012
What further catalysts are required to boost markets.

A Mess on the Ladder of Success New York Times Subscription Required
Adam Davidson (NYT) Jan 18, 2012
The new divide in America is between a smaller mobile class and one that can't quite pack up and go.

ECB Loosening Could Ensure Italy's Fiscal Rigor
Luigi Zingales (Bloomberg) Jan 18, 2012
There is a time for everything, it says in Ecclesiastes, and a season for every activity. Now is the time for the European Central Bank to loosen its monetary policy.

Financial Crisis Account Flunks Reality Check
Jonathan Weil (Bloomberg) Jan 19, 2012
If you and I were in a bar together, and you suffered a nasty bump on your head when I accidentally whacked you with a pool cue, there probably would be no disputing that my action caused your harm. But for my careless swing of the stick, the injury wouldn’t have happened.

Downgrade the rating agencies Financial Times Subscription Required
Philip Stephens (FT) Jan 19, 2012

Too Big to Fail undermines the free market faith Financial Times Subscription Required
Otmar Issing (FT) Jan 19, 2012
The challenge of strengthening the fundamentals of market economies and free societies continues.

US debt reduction has a long way to go Financial Times Subscription Required
Gillian Tett (FT) Jan 19, 2012
Not everybody can try to grow their way out of trouble by exporting at the same time.

Triple A judgment is mixed blessing for Berlin Financial Times Subscription Required
Quentin Peel (FT) Jan 19, 2012
By suggesting its partners are less credit-worthy, S&P has underlined Germany’s lonely role as the anchor of stability for the eurozone

Solar Panels: An Emerging U.S.-China Trade Dispute? Recommended!
John Mathews (Globalist) Jan 19, 2012
When it comes to renewable energy, China is successfully using strategies for building markets that were pioneered by the United States. This is no reason for the Obama Administration to start a trade dispute.

Repairing the Global Plumbing
Mohamed A. El-Erian (Project Syndicate) Jan 19, 2012
More than three years after the global financial crisis, the world still has a nasty plumbing problem: credit pipes remain clogged, and only central banks are working to clear them. Fortunately, it is not too late to build broader pipes that compliment and replace the damaged infrastructure.

Working out of debt
Karen Croxson, Susan Lund, and Charles Roxburgh (McKinsey Quarterly) Jan 19, 2012
An update of our research on the efforts of developed countries to work out from under a massive overhang of debt shows how uneven progress has been. US households have made the greatest gains so far.

Global: G3 Central Banks: Constitutional Questions
Spyros Andreopoulos & Sung Woen Kang (MS GEF) Jan 20, 2012
If societal preferences towards inflation were to change, central bank constitutions would likely be flexible enough to accommodate this.

Will Emerging Markets Fall in 2012?
Jeffrey Frankel (Project Syndicate) Jan 20, 2012
While emerging markets have far outperformed industrialized countries in recent years, many investors are concerned that these countries could be due for a fall in 2012, triggered by Europe’s woes or a hard landing in China. The timing of emerging-market crises suggests that they might be right to worry.

The IMF money grab
WT Jan 20, 2012
The World Bank is pessimistic about global economic prospects. Last week, the bank's forecasters projected lower growth in the year ahead for both developing and developed countries. The European economy, wracked by the continuing debt crisis, is expected to shrink 0.3 percent.

Egypt's Economic Crisis New York Times Subscription Required
NYT Jan 20, 2012
Worsening economic conditions are sabotaging hopes for a democratic future. The new government must make reforms if it wants to spur investment and growth.

The visible hand Economist Subscription Required
Economist Jan 21, 2012
The crisis of Western liberal capitalism has coincided with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge

The euro crisis returns: Salve Italia Economist Subscription Required
Economist Jan 21, 2012
If Germany’s Angela Merkel wants to save the euro, she must do more for Italy’s Mario Monti.

Lifting the curtain on corruption in developing countries
Benjamin Olken & Rohini Pande (VoxEU) Jan 21, 2012
Recent innovations in methodology have sparked a remarkable expansion in economists’ ability to measure corruption. This column reviews these new techniques, which range from inferring corrupt links from stock prices to attempting to observe bribes undercover. It concludes that, while corruption is prevalent in poor countries, there remains little consensus about its magnitude or the best way to fight it.

Impact evaluation in trade: Time for a cultural revolution?
Olivier Cadot, Ana M Fernandes, Julien Gourdon & Aaditya Mattoo Jan 21, 2012
With finances getter ever tighter in developed countries, policymakers are starting to ask whether giving money to developing countries can still be justified. Taking the example of Aid for Trade, billions have been spent with little robust evidence of its effectiveness. This column argues that trade policy needs to learn from other development work and start with rigorous impact evaluations – otherwise the best programmes could easily get cut.

IMF should stay out of the eurozone crisis Financial Times Subscription Required
Wolfgang Münchau (FT) Jan 22, 2012
Considering how rich the eurozone is, the request to involve the fund in a hypothetical rescue is morally reprehensible.

Sustaining China’s Economic Growth after the Global Financial Crisis Financial Times Subscription Required
Simon Rabinovitch (FT) Jan 22, 2012
Nicholas Lardy’s account of China’s economy is dry but nonetheless important.

Europe's Debt Crisis Is Still Likely to End Badly
Simon Johnson (Bloomberg) Jan 22, 2012
There are two main schools of thought on what may happen next with Europe’s debt crisis. Some well-informed people strongly believe that everything will work out just fine, and without much of an economic slowdown. Other, equally well-informed people believe just as strongly that the euro area will break apart in a traumatic manner. When it comes to predicting Europe’s future, not many people occupy the middle ground.

The fallacy of moving the over-the-counter derivatives market to central counterparties
Manmohan Singh (VoxEU) Jan 22, 2012
Regulators around the world are looking to regulate derivatives. This column argues, however, that current proposals for centralised counterparties are misguided. Instead of reducing risk in the notorious over-the-counter derivatives markets, they may simply shift it around. It calls for a tax on the derivative liabilities of large banks to tackle the problem at its source.

Lagarde Calls For Urgent Action So 2012 Can Be ‘Year of Healing’
IMF Survey Jan 23, 2012
IMF Managing Director Christine Lagarde called on the international community to take urgent collective action to save the world economy from a downward spiral. Europe, which is at the center of global concerns, needs stronger growth, larger firewalls, and deeper integration, she said.

Mispricing of sovereign risk and multiple equilibria in the Eurozone
Paul De Grauwe & Yuemei Ji (VoxEU) Jan 23, 2012
Economists now agree that markets were wrong in placing the same risk premium on Greek bonds as on German bonds. But this column adds that today the same markets are also wrong in overestimating the risk that the periphery countries will default. Policymakers looking to calm such skittish markets should take note.

Are China and India converging?
Ejaz Ghani (VoxEU) Jan 23, 2012
Mention China and India to economists and their first thought will be rapid growth. Their second thought might be how differently the two economies are achieving this: China through manufacturing, India through services. This column asks whether that stereotype may be changing.

Economic uncertainty is no excuse for inaction Financial Times Subscription Required
Lawrence Summers (FT) Jan 23, 2012
The simple fact is that markets agree with business – increasing demand is the way back to economic health.

Remembering Deng in our era of crony compitalism Financial Times Subscription Required
Minxin Pei (FT) Jan 23, 2012
As long as pro-market changes are a means to preserve the political monopoly of the CCP, such reforms will fail.

Timely Greek lessons on the eurozone crisis Financial Times Subscription Required
George Provopoulos (FT) Jan 23, 2012
The potential of our economy is vast.As growth resumes and tax collections rise, recent tax rises can be reversed.

The world’s hunger for public goods Financial Times Subscription Required
Martin Wolf (FT) Jan 24, 2012
It is unclear whether today’s states can – or will be allowed to – provide the goods we now demand.

A blueprint for Germany to save the eurozone Financial Times Subscription Required
Robert Zoellick (FT) Jan 24, 2012
Rather than be dragged grudgingly to help bit-by-bit at the last moment, Berlin should issue a revival plan for Europe.

Equities can outstrip bonds in a liquidity trap Financial Times Subscription Required
Gavyn Davies (FT) Jan 24, 2012
If yields begin to rise to a more normal level, capital losses could be very large.

Sheikhs fall in love with renminbi
M K Bhadrakumar (AT) Jan 24, 2012
A currency swap that puts more of the Chinese currency in the vaults of Persian Gulf countries almost went unnoticed as Chinese Premier Wen Jiabao scouted the region last week for friendship, not oil - to paraphrase his words. As they wake up to bypassing the US dollar as an intermediary in their oil trade with Asia, Gulf leaders know that in a volatile world the "people's currency" smells as comforting as a cup of fresh Arabica.

Capital inflows, exchange-rate flexibility, and credit booms
Nicolas Magud, Carmen M Reinhart & Esteban R Vesperoni (VoxEU) Jan 24, 2012
The prospect of expansionary monetary policy in Europe and elsewhere has triggered memories of hot flows of money, credit booms, and instability in emerging economies. This column shows that during capital-inflow bonanzas credit grows more rapidly and its composition tilts to foreign currency more markedly in economies with less flexible exchange-rate regimes. It proposes policies to help mitigate the boom and bust in these countries.
Why, after their ill-starred role in bringing the financial house down, does anyone still take them even faintly seriously.

Taking Back Globalization
Olivier De Schutter (Project Syndicate) Jan 25, 2012
At Davos this year, the world’s economic and political leaders stand warned: do globalization better, or it will be derailed by the growing legions of the discontented. That means finally going beyond trade deficits and debt ratios to pay attention to the wider imbalances generated by unfettered globalization.

India’s Year of Living Stagnantly
Jaswant Singh (Project Syndicate) Jan 25, 2012
Last year, India's GDP growth decelerated, manufacturing plummeted, and corruption grew uncontrollably, while the government failed to enact even a single piece of legislation, much less undertake any economic reforms, control inflation, or address widespread civil disorder. Will 2012 prove to be a year of renewal for India, or another annus horribilis?

New Year, Same Crisis
George Soros (Project Syndicate) Jan 25, 2012
The measures introduced by the European Central Bank last December have relieved the liquidity problems of European banks, but have not cured the financing disadvantage of the highly indebted member states. Since high-risk premiums on government bonds endanger the capital adequacy of banks, half a solution is not enough.

The Eurozone’s Strategy of Pain
Jean Pisani-Ferry (Project Syndicate) Jan 25, 2012
For the third year in a row, the eurozone is the weakest link in the world economy, with concerns mounting about its very viability. But the eurozone is doubling down on austerity, reasoning that no pain in Southern Europe would mean no gain in reform and adjustment.

Strong Dollar Advocates Make a Weak Case
Evan A. Schnidman and Daniel J. Nadler (Bloomberg) Jan 25, 2012
In almost every recent Republican presidential debate, some candidates have advocated for a “strong dollar.” What gets lost in this clamor is any discussion of winners and losers from a strong U.S. currency, and the recent correlation between the greenback’s strength and declines in the stock market.

Economics for the Long Run Wall Street Journal Subscription Required
John Taylor (WSJ) Jan 25, 2012
Individuals should be free to decide what to produce and consume, and their decisions should be made within a predictable policy framework based on the rule of law.

Lagarde for $1 Trillion Wall Street Journal Subscription Required
WSJ Jan 25, 2012
The IMF isn't worth the raise it's asking for.

Obama Takes Aim at China Trade Practices, Pushes for Clean Energy
Bridges Weekly Trade News Digest, Volume 16, Number 3 Jan 25, 2012
Beijing's trade policies once again came under fire in Washington on Tuesday evening, as US President Barack Obama pledged in his annual State of the Union address to "do more" to ensure a level playing field for US products. With the November presidential election in his sights, clean energy is also set to be high on the White House agenda, with Obama asking Congress to "double-down on a clean energy industry that's never been more promising."

WTO Members Look to Davos for Post-Ministerial Way Forward
Bridges Weekly Trade News Digest, Volume 16, Number 3 Jan 25, 2012
The annual World Economic Forum kicked off earlier today, bringing together policymakers and business leaders against the backdrop of renewed fears of a global economic slowdown. With the 2011 WTO Ministerial Conference now in the rear-view mirror, trade ministers are regrouping informally this weekend to discuss the way forward for the global trade body in 2012.

Ag Ministers: Sustainable Farming Key to Tackling Hunger
Bridges Weekly Trade News Digest, Volume 16, Number 3 Jan 25, 2012
Agriculture must become more sustainable if it is to help end hunger and malnutrition, farm ministers said on Saturday 21 January in Berlin.

US, Mexico to Fight Another Round in Tuna Dispute
Bridges Weekly Trade News Digest, Volume 16, Number 3 Jan 25, 2012
The United States on Friday filed an appeal in its WTO dispute with Mexico over "dolphin-safe" labelling for tuna products sold in the US (DS381). The 20 January decision came only two days before the final appeal deadline; a counter-appeal is expected from Mexico City before the week's end.

Disputes Roundup: Airbus, Renewable Energy Cases Move Forward at WTO
Bridges Weekly Trade News Digest, Volume 16, Number 3 Jan 25, 2012
With 2012 still in its infancy, two high-stakes trade cases are already set to take major strides in the coming months. At its second meeting of the year, the WTO's Dispute Settlement Body (DSB) established a panel to hear the EU's complaint against the Canadian province of Ontario's green energy support programme. A week prior, EU and US officials met in Geneva to discuss Brussels' claim of having eliminated subsidies to civil aircraft manufacturer Airbus that had been deemed WTO illegal.

The coming resolution of the Eurozone crisis
Fred Bergsten & Jacob Funk Kirkegaard (VoxEU) Jan 26, 2012
Policy reactions to the Eurozone crisis are seen by many as short-sighted, incoherent, and driven by political expediency. This column disagrees. What we are seeing is a game of chicken among the key political and economic powers in Europe. As the crash looms ever closer, the right deals will be struck and Europe will emerge stronger and with its currency intact.

Surges in capital flows to emerging markets: Causes and policy implications
Atish R Ghosh & Mahvash Saeed Qureshi (VoxEU) Jan 26, 2012
In the immediate aftermath of the global financial crisis, there was a rapid surge in net capital flows to emerging market economies. The subsequent decline in recent months has been even more rapid. Looking at data on 56 emerging market economies between 1980 and 2009, this column examines the causes of the mercurial movement of capital flows across countries and outlines the implications for policy.

Meddle with the market at your peril Financial Times Subscription Required
Alan Greenspan (FT) Jan 25, 2012
No other system, from Fabian socialism to Soviet-style communism, has met its people’s needs.

How to pull Italy and Spain back from the precipice Financial Times Subscription Required
George Soros (FT) Jan 25, 2012
Under my proposal, the ECB and the EFSF could do what the ECB cannot do on its own: act as a lender of last resort.

China’s Connectivity Revolution
Stephen S. Roach (Project Syndicate) Jan 26, 2012
Long the most fragmented nation on earth, a new connectivity is bringing China together as never before. Its Internet community is expanding at hyper speed, with profound implications for the Chinese economy, to say nothing of the country’s social norms and politics.

Why Capital Flows Uphill
Keyu Jin (Project Syndicate) Jan 26, 2012
One would expect fast growing, capital-scarce (and young) developing countries to be importing capital from the rest of world to finance consumption and investment. So, why are they sending capital to richer countries, instead?

Ron Paul, the Fed and the Need for a Stable Dollar Wall Street Journal Subscription Required
David Malpass (WSJ) Jan 26, 2012
The central bank should take note when a popular presidential contender calls for limits on its power.

How to equip the IMF for the crises of our time Financial Times Subscription Required
Lorenzo Bini Smaghi (FT) Jan 26, 2012
Since the G7 dissolved, and the G20 is not yet an adequate successor, the world seems dangerously without guidance.

Neil Buckley (FT) Jan 26, 2012
Vienna 2.0 plan faces headwinds in its bid to ensure west European banks do not cut off credit in the east as they rebuild balance sheets

Europe could learn from US debt scramble Financial Times Subscription Required
Gillian Tett (FT) Jan 26, 2012
When default loomed America’s banks and government collaborated to prepare for the worst and that ‘dry run’ offers valuable lessons for the eurozone.

At Davos, Debating Capitalism's Future New York Times Subscription Required
Ed Miliband (NYT) Jan 26, 2012
Some still believe that all governments can do is get out of the way. Others know there is a real role for governments in setting the right rules for future success.

A Crisis in Two Narratives
Raghuram Rajan (Project Syndicate) Jan 27, 2012
With the world’s industrial democracies in crisis, two competing narratives of its sources – and appropriate remedies – are emerging. For better or worse, the narrative that persuades these countries’ governments and publics will determine their future – and that of the global economy.

Latin America’s Stymied Innovators
Andrés Velasco (Project Syndicate) Jan 27, 2012
The main challenge facing Latin America is to transform its huge natural-resource wealth into the kind of wealth that does not run out, because it is constantly enlarged by human creativity. Indeed, if a diversified economy is the best predictor of future growth, Asia will grow much faster than Latin America for decades to come.

The Brain-Drain Panic Returns
Jagdish Bhagwati (Project Syndicate) Jan 27, 2012
While developed countries are angst-ridden over mostly illegal immigration by unskilled workers from developing countries, a different set of concerns has surfaced in Africa, in particular, over the legal outflow of skilled people to developed countries. But these concerns are misplaced.

Rogue aid: Should we fear China’s aid programme?
Axel Dreher & Andreas Fuchs (VoxEU) Jan 27, 2012
China is often accused of providing ‘rogue aid’. China is said to be more interested in securing natural resources, export markets, and political alliances than concerned about the development of needy countries This column looks at the data on China’s aid allocations between 1996 and 2005. It finds that China is in fact no more self-serving than most Western donors.

Global: The Confluence of Liquidity and Macro Policies
Manoj Pradhan (MS GEF) Jan 27, 2012
Despite their best efforts, central banks in the DM as well as EM world have been unable to make a distinction between liquidity and macro policy.

Foreign banks: New data on trends and effects
Stijn Claessens & Neeltje van Horen (VoxEU) Jan 28, 2012
Foreign banks on domestic soil have always been controversial. This column presents a newly collected, comprehensive database on bank ownership for 137 countries over the period 1995–2009. It shows that current market shares of foreign banks average 20% in OECD countries and 50% elsewhere. In developing countries, however, foreign bank presence is correlated with less private credit.

Restoring Confidence Crucial to Rebuilding World Recovery
IMF Survey Jan 28, 2012
Rapidly restoring confidence in both Europe and globally is crucial to protecting the battered international financial system and rebuilding the ailing recovery, threatened particularly by strains within the euro zone, panelists at a discussion on the global economic outlook say in Davos.

The euro crisis: Greece and the euro Economist Subscription Required
Economist Jan 28, 2012
Uncertainty about whether Greece will stay in the euro is crippling its prospects.

The End of Japanese Mercantilism Wall Street Journal Subscription Required
George Melloan (WSJ) Jan 29, 2012
The government-industry alliance that supposedly made Japan an export machine was overrated even in the 1980s.

Does the renminbi matter? Evidence from China’s disaggregated processed exports
Willem Thorbecke (VoxEU) Jan 29, 2012
Understanding China’s economy is becoming as difficult as it is important. This is particularly the case for China’s exports and its exchange rate, which have been the source of controversy and intense debate in recent years. Shedding light on the issue, this column disaggregates China’s processing trade, with some surprising implications for policy in the region and elsewhere.

Knowledge lies at the heart of western capitalism Financial Times Subscription Required
Hernando de Soto (FT) Jan 29, 2012
Knowing who owned – and owed – what and where, and fixing that information in public records, made it possible for investors to locate suppliers, infer value and take risks.

Fiscal treaty could trigger a debt explosion Financial Times Subscription Required
Wolfgang Münchau (FT) Jan 29, 2012
If Spain follows Greece and ignores what happened in Japan, a prolonged recession is the most likely result.

Come On, China, Buy Our Stuff! New York Times Subscription Required
Adam Davidson (NYT) Jan 29, 2012
The fastest-growing middle class in history was supposed to benefit everyone. Here's what went wrong.

The Austerity Debacle New York Times Subscription Required
Paul Krugman (NYT) Jan 29, 2012
Look at Britain to see the tragic effects of a very bad idea.

Is Modern Finance Ruining Modern Art? (Part 1)
Mark C. Taylor (Bloomberg) Jan 29, 2012
Art and money have always been inseparable. As Andy Warhol declared almost four decades ago, “Business art is the step that comes after Art.” During the past several decades, however, this relationship has been transformed by the appearance of a new form of capitalism: finance capitalism.

Is Modern Finance Ruining Modern Art? (Part 2)
Mark C. Taylor (Bloomberg) Jan 30, 2012
In ways that are not immediately obvious, today’s overheated art market can help us understand the recent collapse of the overleveraged global economy. Though few have made the connection, developments in the art market have been following the changing investment strategies in financial markets. The global growth in the art market parallels the worldwide spread of finance capitalism. In recent years, the value of art assets has often risen faster than the value of real estate or financial assets.

Rattling the Renminbi
Yu Yongding (Project Syndicate) Jan 30, 2012
From July 2005 until this past December, China’s renminbi appreciated steadily. So why, if China was still running a decent current-account surplus and a long-term capital surplus, did the currency suddenly depreciate, forcing the PBoC to intervene to prevent it from falling further?

Austerity vs. Europe
Javier Solana (Project Syndicate) Jan 30, 2012
Ominously, the same arguments that turned the 1929 financial crisis into the Great Depression are being used today in favor of austerity at all costs. All of Europe must agree on a short-term growth strategy – and implement it quickly.

‘Davos consensus’ under siege Financial Times Subscription Required
Gideon Rachman (FT) Jan 30, 2012
Both the American president and the French would-be president were stressing measures that call key elements of globalisation into question.

Banks must reclaim their proper role Financial Times Subscription Required
Paul Tucker (FT) Jan 30, 2012
Central banks should play a more active role in fostering robust practices in repo and other short-term markets.

Budget overlord will not solve eurozone woes Financial Times Subscription Required
Alan Beattie (FT) Jan 30, 2012
German plan may go down well with voters but is not a coherent response to what went wrong with the currency and how this can be fixed.

Europe needs to flex its muscles with banks Financial Times Subscription Required
Karel Lannoo (FT) Jan 30, 2012
Capital Requirements Directive IV, which implements Basel III in EU law, is the most substantial of all the post-crisis regulatory measures

A Change in the Asian Equation New York Times Subscription Required
Emily Kaiser (NYT) Jan 30, 2012
Instead of lowering interest rates, which may have unintended consequences when the Fed is on extended hold, it may make more sense for some economies to tinker with currency exchange rates.

Blaming Capitalism for Corporatism
Edmund S. Phelps & Saifedean Ammous (Project Syndicate) Jan 31, 2012
The future of capitalism is again a question. Will it survive the ongoing crisis in its current form? If not, will it transform itself or will government take the lead?

The Chancellor Who Played with Fire
Joschka Fischer (Project Syndicate) Jan 31, 2012
If Angela Merkel is unlucky, the eurozone crisis will come to a head at the start of the German election year in 2013, rendering moot all previous calculations, because, despite Germans’ frustration with Europe, the electorate would punish severely those who allowed Europe to fail. And Merkel seems willing to do just that.

Sustainable Humanity
Jeffrey D. Sachs (Project Syndicate) Jan 31, 2012
Sustainable development means inclusive economic growth that protects the earth’s vital resources. Yet achieving it will be a matter not only of technology, market incentives, and appropriate regulations; we must embrace sustainable development as a common commitment to decency for all human beings, today and in the future.

Foreign banks and the global financial crisis: Investment and lending behaviour
Stijn Claessens & Neeltje van Horen (VoxEU) Jan 31, 2012
How did foreign banks adjust their investment and lending decisions during the global financial crisis? This column uses a new and comprehensive database to show that the crisis dramatically halted foreign direct investment in banking and that foreign banks often cut back on lending more than their domestic competitors. While exits have so far been limited, this is likely to change in the coming years.

Currency Wars
Doug French (Mises Daily) Jan 31, 2012
The talk is all about jobs, jobs, jobs in Washington and on the campaign trail as the unemployment rate continues to be elevated and long-term unemployment is higher than ever. Since getting government out of the way isn't an option, late last year congressional leaders decided to turn up the volume while crying that American workers are being damaged by China's undervalued currency — the renminbi (or yuan).

Europe is stuck on life support Financial Times Subscription Required
Martin Wolf (FT) Jan 31, 2012
The ECB has saved the eurozone from a heart attack. But its members face a long convalescence.

Free-market evangelists face a lonely fate Financial Times Subscription Required
David Rothkopf (FT) Jan 31, 2012
A global consensus is likely to emerge that there should be a greater role for the state in the marketplace.

Opportunities for Asia in Europe bank crisis Financial Times Subscription Required
Henny Sender (FT) Jan 31, 2012
Local lenders have the chance to transform the region’s credit landscape.

Sustainable Humanity
Jeffrey D. Sachs (Project Syndicate) Jan 31, 2012
Sustainable development means inclusive economic growth that protects the earth’s vital resources. Yet achieving it will be a matter not only of technology, market incentives, and appropriate regulations; we must embrace sustainable development as a common commitment to decency for all human beings, today and in the future.

A World Community in Denial
Chandran Nair (Globalist) Jan 31, 2012
How do you say to billions of Asians and Africans that they cannot have it all because the economic model of the West is flawed?

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