It's Still the One
Daniel Yergin (FP) Sep/Oct 2009
Oil's very future is being seriously questioned, debated, and challenged. The author of an acclaimed history explains why, just as we need more oil than ever, it is changing faster than we can keep up with.
Subpriming the Pump
Mahmoud A. El-Gamal and Amy Myers Jaffe (FP) Sep/Oct 2009
Oil wealth used to hurt only those who had it. Now, it’s hurting everyone.
The Devil’s Excrement
Moises Naim (FP) Sep/Oct 2009
Can oil-rich countries avoid the resource curse?
The Dollar Dilemma
Barry Eichengreen (Foreign Affairs) Sep/Oct 2009
The economic crisis is hurting the world's top currency. But the pound, the yen, the euro, the renminbi, and the IMF's accounting currency are no match for the dollar. At least for now.
Low and Behold
Edward L. Morse (Foregn Affairs) Sep/Oct 2009
Despite common assumptions, oil prices are likely to remain low for a while: key producers, especially Saudi Arabia, have been boosting their production, and demand growth in top consumers like the United States and China will be more modest than expected.
G20 versus UN: the battle continues
Bretton Woods Update No.67 Sep/Oct 2009
Plus: IFC backs out of palm oil; Jockeying for position over World Bank's role as climate talks near; Rebranding hides little change for IMF lending; Flexibility or seeds of new crisis?: IFIs debt framework revised; and more.
The Path of True Recovery Is Never Smooth
Adam S. Posen (PIIE) Oct 2009
It takes a lot of repeated policy errors to keep a market economy down. For all the talk about Japan in the 1990s being a lost decade, or tracing an "L-shape" (i.e., down and then flat in terms of growth), the actual pattern was that of a sawtooth. Economic recoveries after the initial shock from the bubble bursting were recurrently cut off by macro policy tightening or financial system neglect. Looking at the US and other economies in the Great Depression shows much the same pattern—notably the recovery in the United States once stimulative policy kicked in and the banking panic ended, and a sharp reversal in 1937–38 when policy was prematurely tightened. Absent those kinds of policy mistakes, if you are not Zimbabwe or North Korea—in other words, if you're an economy with rule of law, property rights, basic market structures, and price stability—the nature of things is that the economy tends to bounce back.
The Government Debt Bomb
Michael Boskin (Project Syndicate) Oct 2009
As economies around the world return to growth after the deepest recession in a generation, renewed attention is being paid to enormous fiscal deficits and vast expansions of government debt. This year’s projected deficits (as a share of GDP) are estimated to be a remarkable 13.5% for the United States, twice the previous record at the depth of the horrific early 1980’s recession. Among other major economies: the United Kingdom, 14.4%; France, 8.2%; India, 8.0%; Japan, 7.4%; Italy, 5.4%; Germany, 4.7%; China 4.2%; and Canada, 2.4%.
No Time to Slacken
Kofi A. Annan, Amartya Sen and Michel Camdessus (Project Syndicate) Oct 2009
Almost six months ago, at a moment of great alarm about the global financial and economic crisis, G-20 leaders met for a historic summit in London. Their collective commitments to stimulate, regulate and restructure global economic activity helped to calm nerves around the world.
China’s Dollar Problem
Kenneth Rogoff (Project Syndicate) Oct 2009
When will China finally realize that it cannot accumulate dollars forever? It already has more than $2 trillion. Do the Chinese really want to be sitting on $4 trillion in another five to 10 years? With the United States government staring at the long-term costs of the financial bailout, as well as inexorably rising entitlement costs, shouldn’t the Chinese worry about a repeat of Europe’s experience from the 1970’s?
Economic theory and the financial crisis
Eric Maskin (The Browser) Oct 2009
Nobel Prize winning economist Eric Maskin is the Albert O Hirschman Professor of Social Science at the Institute of Advanced Study in Princeton. Along with Leonid Hurwicz and Roger Myerson, he was awarded the Nobel Memorial Prize in economics in 2007 for his contribution to mechanism design theory. Maskin says that economic theory actually did a very good job of anticipating the financial crisis. He argues that policymakers had better start paying attention if they want to prevent, or at least mitigate, future crises.
The good, the bad and the ugly ...
With Privilege Comes…?
Richard Clarida (PIMCO) Oct 2009
Because of its “exorbitant privilege” as the provider of the global reserve currency, the U.S. tends to reap a capital gain when the dollar depreciates.
The Two-Stage De-Risking of Banks
Mohamed El-Erian (PIMCO) Oct 2009
Banks are in no position to assume the critical hand-off from government stimulus.
The Case for an Orderly Resolution Regime for Systemically-Important Financial Institutions
H. Rodgin Cohen and Morris Goldstein (PIIE) Oct 2009
The Obama Administration has proposed—as a fundamental part of its comprehensive program for financial regulatory reform—that the US government be given special authority to resolve a nonbank financial institution if its failure could have serious systemic effects. The FDIC has long had such resolution authority for banks. Under the proposed new resolution authority, the US government would be allowed to place a failing, Systemically-Important Financial Institution (SIFI) into conservatorship or receivership, and then to administer its orderly reorganization or wind-down. Any financial institution—be it a securities firm, an insurance company, a hedge fund, a private equity firm, or a bank holding company—which is not now subject to the resolution authority of the FDIC would be covered if its failure poses systemic risk. In this paper, the authors answer three key questions about such a new Orderly Resolution Regime (ORR) for SIFIs.
Wall Street Needs More Skin in the Game
Peter Weinberg (WSJ) Oct 1, 2009
Partnerships were one way of aligning the interests of money managers and investors.
Global: As the Policy Cycle Turns
Joachim Fels (MS GEF) Oct 1, 2009
As more and more central banks start to hike rates over the next 3-6 months and others begin to sound more hawkish, the market consensus that all will continue to be well on the liquidity front could easily be challenged in the coming months.
Global Recovery Under Way but Likely to Be Slow, Says IMF
IMF Survey Oct 1, 2009
After a deep recession, global economic growth has turned positive, driven by wide-ranging, coordinated public intervention that has supported demand and reduced uncertainty and systemic risk in financial markets, according to the IMF's latest report on the global economy.
China moves into reserve position
Laurence Brahm (AT) Oct 1, 2009
China's leaders react to change, rather than orchestrate it. They are also pragmatic, learning from the country's economic transformation that there are no global models, but that each country knows what works best for it. Right now, what's best for China is to become the reserve bank to the International Monetary Fund.
The long climb
Economist Oct 1, 2009
The world economy is recovering from financial disaster. But it will not return to normal as we know it.
After the storm
Economist Oct 1, 2009
The new economic landscape will be grim unless policymakers act to foster growth.
A blow to the Anglo-Saxon model
Economist Oct 1, 2009
The Anglo-Saxon model has taken a knock.
Incentives for financial regulators
Beatrice Weder di Mauro (Economist) Oct 1, 2009
Financial regulators need better incentives.
Economic governance and emerging markets
Economist Oct 1, 2009
The face of global economic governance is changing.
Reviving innovation and trade
Economist Oct 1, 2009
Can governments help revive innovation and trade?
Fossil relics
Economist Oct 2, 2009
The G20 will end subsidies on fossil fuels.
More capital will not stop the next crisis
Raghuram Rajan (FT) Oct 1, 2009
The emphasis should be placed on 'contingent capital' infused when the institution or system is in trouble.
A cool look at the current deficit hysteria
Samuel Brittan (FT) Oct 1, 2009
In the early Victorian period the debt ratio was nearly 200 per cent and almost reached that level again in the early 1920s.
The case for issuing SDRs regularly
John Williamson (VoxEU) Oct 2, 2009
Do IMF special drawing rights have a role in international financial reform? This column argues that SDRs should play a large role in providing additional international liquidity, substituting for a substantial share of countries’ reserve currency holdings. It says that SDR allocation offers the surest way of reducing the inconsistency in payments objectives that currently looks to be the biggest obstacle to a strong recovery in the global economy
Free Trade Has Enriched the World with More than Diverse Goods
Daniel Griswold (YaleGlobal) Oct 2, 2009
The populists attacking globalization get it wrong again.
Black holes and financial crises
Marcus Miller (VoxEU) Oct 3, 2009
A bursting economy-wide asset bubble could be the economic equivalent of a collapsing supernova – the “black hole” of mass insolvency threatening to swallow whole sectors of an over-leveraged economy. This column outlines the role for government rescues in response to a vicious deleveraging spiral, though they raise moral hazard concerns.
Trade protection, prosperity, and freedom
Jean-Pierre Chauffour (VoxEU) Oct 3, 2009
World leaders have violated their repeated pledges to resist protectionist pressures. This column says that fighting protectionism is both an economic imperative and a moral responsibility to make sure that the darkest hours of the 20th century do not repeat themselves.
Searching for international contagion in the 2008 financial crisis
Andrew K. Rose & Mark M. Spiegel (VoxEU) Oct 3, 2009
The 2008 financial crisis is sometimes characterised as one where financial difficulties in the US spread to the rest of the world. But is there clear evidence of such international contagion? This column reports research indicating that neither financial nor trade linkages to the US help explain the cross-country incidence of the crisis. If anything, countries more exposed to the US seem to have fared better.
From Negotiating Table to Sweat Shop
William Bernstein (WP) Oct 4, 2009
In "Misadventures of the Most Favored Nations," former Post reporter Paul Blustein extols one of the dream's key tenets, free trade among nations, in this tale about the bureaucracy advancing it: the World Trade Organization.
Asia Leading Global Recovery, Says IMF
IMF Survey Oct 4, 2009
Asia is emerging from the global recession faster and stronger than any other region, but a top IMF official warns against a premature withdrawal of stimulus measures, and underlines the Fund's committment to the region.
Declare victory – and fight on
Erik Berglöf (VoxEU) Oct 5, 2009
Europe’s banking system did not collapse, and the twin-crisis curse – calamity in both banking and currencies – did not appear, but this is no time for resting on laurels. The ERBD’s Chief Economist argues that Europe’s “muddle-through cooperation” on financial institutions (Vienna Initiative) needs continued political support as do reforms of long-run fiscal positions and financial regulation.
Capital market theory after the efficient market hypothesis
Dimitri Vayanos & Paul Woolley (VoxEU) Oct 5, 2009
Have capital market booms and crashes discredited the efficient market hypothesis? This column says yes and suggests a new model that explains asset pricing in terms of a battle between fair value and momentum driven by principal-agent issues. Investment agents’ rational profit seeking gives rise to mispricing and volatility.
How the Fed Can Avoid the Next Bubble
Ian Bremmer & Nouriel Roubini (WSJ) Oct 5, 2009
The central bank needs to watch asset prices and raise rates quickly when it decides the time is right.
Finding a route to recovery and reform gets tough now
Martin Wolf (FT) Oct 6, 2009
The economy is back on track, but it is too soon to celebrate victory. Rebalancing, reform and regulation are still needed, none of which will be easy. Resistance from the banks is already threatening to poison the political debate.
Markets after the age of efficiency
John Kay (FT) Oct 6, 2009
If markets are informationally efficient, why is there so much trade between people who take different views of the same future? If the theory were true, the activities it purports to explain would barely exist.
Insight: Crisis breeds short memories
Stephen Roach (FT) Oct 6, 2009
Hope always seems to spring eternal in liquidity-driven financial markets. That is very much the case today in the aftermath of the biggest liquidity injection in modern history.
Brazil Plans Doha Meeting for Nov. as US Kicks Off Bilateral Talks
Bridges Weekly Trade News Digest Vol 13, No 33 Oct 7, 2009
Brazil, the EU and the US are engaging in high-level political manoeuvres on the WTO's Doha Round of trade talks this week, maintaining at least some of the momentum generated by the G20's recent call for swift progress in the negotiations. Meanwhile, trade officials back at WTO headquarters in Geneva continue to plough through some of the technical details of the talks.
Fiddling with accounting rules won’t fix the banks
Harry Huizinga & Luc Laeven (VoxEU) Oct 7, 2009
The financial crisis has reinvigorated a debate on the effectiveness of our accounting and regulatory frameworks. This column shows that banks, hoping to preserve their book capital, use accounting discretion to systematically understate the impairment of their real-estate-related assets. But the accounting reforms announced thus far are exacerbating the gap between book and market values.
The crisis demands we finish what we started
Christine Lagarde (FT) Oct 7, 2009
We have gone halfway. We can go back – or go forward to continue building a better and safer financial future.
The Weak-Dollar Threat to Prosperity
David Malpass (WSJ) Oct 7, 2009
Measured in euros, U.S. per capita GDP is down 25% since 2000.
The Once and Future Global Imbalance
Philip I. Levy (FP) Oct 7, 2009
Recent gatherings of top global leaders have stressed the need to fix global imbalances. They are right about the need for change but wrong in their belief that pressure from international organizations will get them the change they want.
Does Asia's Rebound Signal A Return To Stellar Growth?
Nouriel Roubini (Forbes) Oct 8, 2009
An economic survey of a continent.
Is China a bubble economy?
Economist Oct 8, 2009
Not yet. But China will look dangerously frothy unless the yuan is allowed to rise
At last a defence of Wall Street
Economist Oct 8, 2009
On reflection, bank bosses were mostly stupid, not venal.
Investors had little choice but to keep on dancing
Chrystia Freeland (FT) Oct 8, 2009
The boom – and the inevitable bust – happened because investors obeyed the logic of financial markets.
We need an orderly way to let institutions fail
Arthur Levitt (FT) Oct 8, 2009
To avoid another financial crisis, we must find a process that includes the efficient and orderly write-down of assets and restructuring of debt, and draws on public funds only as a last resort.
The World Bank and IMF
Economist Oct 8, 2009
Battles over money and power in Istanbul.
Bullion bulls
Economist Oct 8, 2009
A weak dollar explains the rising price of gold.
Currency fiddlers wrong to cry foul
Peter Morici (AT) Oct 9, 2009
China and other countries seeking an end to the US dollar's status in global commerce should stop crying foul as the dollar's value slides. Instead, they should abandon currency manipulation and let their populations purchase more US goods and services.
Dollar exit for oil trade?
F William Engdahl (AT) Oct 9, 2009
A further shadow has been cast over the future of the US dollar on reports that Arab oil producers and customers including China and Japan may soon use other means of settling their huge fuel accounts.
Twenty-five percent of US jobs are offshorable
Alan S. Blinder (VoxEU) Oct 9, 2009
Fear of offshoring may force its way back onto policy agendas soon. This column uses a survey of individual workers to measure the offshorability of particular jobs and says that about 25% of US jobs are offshorable. Surprisingly, routine tasks are not more offshorable but those held by more educated workers are.
The Dollar Adrift
WSJ Oct 9, 2009
A global vote of non-confidence.
Global: Up but Not Tight
Spyros Andreopoulos, Joachim Fels & Manoj Pradhan (MS GEF) Oct 9, 2009
With the RBA the first G10 central bank to raise rates and a Norges Bank hike imminent, in our view, the monetary policy cycle has started turning. Both early hikers are moving while output is still below-trend and inflation below-target. This could herald a new era of central banks ‘leaning against the wind’.
When Emotions Move the Markets
Conrad de Aenlle (NYT) Oct 10, 2009
When a herding instinct grips investors, some fund managers identify the pattern and try to trade against it.
Making the case for a weaker dollar
Wolfgang Münchau (FT) Oct 11, 2009
Imagine a world with a small current account deficit in the US, a somewhat larger deficit in the eurozone and a not too excessive Asian surplus. In the long run, such a world would require significant reform of the monetary system. But in the short term, a fall in the dollar would help.
To avoid crises, we need more transparency
Lloyd Blankfein (FT) Oct 12, 2009
The importance of fair value accounting to responsible systemic risk management is hard to overstate.
A Nobel for Practical Economics
David Henderson (WSJ) Oct 12, 2009
One winner helped us understand the social benefits of mergers, the other how to take care of common resources.
The rumours of the dollar's death are much exaggerated
Martin Wolf (FT) Oct 13, 2009
Recent figures have proved that the dollar's fall is a symptom of success, not of failure. All the same, the dollar-based global monetary system is defective. It would be good to start building alternative arrangements.
Wall Street Smarts
Calvin Trillin (NYT) Oct 13, 2009
A theory about why the financial system nearly collapsed seemed too good to be true, but it was hard to find any flaws in it.
The effectiveness of central bank swap agreement as a crisis-fighting tool
Raphael Auer & Sébastien Kraenzlin (VoxEU) Oct 14, 2009
The world’s major central banks used underpublicised swap agreement to address mismatches in their currency-specific liquidity needs during the crisis. This column says these measures where highly effective and came at a very low cost.
The Message of Dollar Disdain
Judy Shelton (WSJ) Oct 14, 2009
With U.S. debt set to exceed 100% of GDP in 2011, it's no wonder people are looking for alternative ways to preserve wealth.
Who'll Rein In Wall St.?
Harold Meyerson (WP) Oct 14, 2009
The folks who keep the profits and give us the risk are winning a battle against reform.
Bangkok Climate Talks See Little Progress as December Deadline Nears
Bridges Weekly Trade News Digest, Volume 13, Number 35 Oct 14, 2009
The most recent round of multilateral negotiations on climate change concluded last week in Bangkok, Thailand. Fewer than a dozen negotiating days remain before officials reconvene in Copenhagen to make a final push for a deal, but deep divisions persist.
Dollar dilemma
Doug Noland (AT) Oct 14, 2009
Continued weakness in the US dollar is being met by calls for Washington to implement a true strong-dollar policy, such as by increasing interest rates or trimming the country's federal deficit. Yet, such restraint is just not going to happen. Rather, central banks will be pressured to buy a lot more dollars.
A credibility problem for Goldman
John Gapper (FT) Oct 14, 2009
Having taken government money to survive the crash, Goldman Sachs is in such rude health that it will be handing out billions in bonuses. There is much outrage that the US bank wants to carry on as its old self (but bigger) in a world that has changed.
End of the line for the old monetary regime
Jasper McMahon (FT) Oct 14, 2009
It is possible – likely even – that the objectives of price stability and financial stability will pull in opposite directions.
Understanding a systemic banking crisis
Harald Uhlig (VoxEU) Oct 15, 2009
The recent crisis was like a bank run, but it didn’t quite fit. This column describes six features that a model of the recent crisis ought to capture and describes a new theory with which we might analyse the crisis and policy responses.
The fear of depleting international reserves
Joshua Aizenman & Yi Sun (VoxEU) Oct 15, 2009
Emerging markets accumulated massive international reserves over the last decade. This column explores how they used them to respond to the crisis. Economies that accumulated reserves for trade concerns drew them down in response to the shock, while economies driven by financial factors showed a “fear of depleting”.
Global: Bigger than the Big 5
Manoj Pradhan (MS GEF) Oct 15, 2009
Comparing the 2007 financial turmoil and the ensuing recession to large crises internationally and US recessions from the past reveals potential pitfalls and policy dilemmas that have yet to be successfully negotiated.
Whatever happened to imbalances?
Samuel Brittan (FT) Oct 15, 2009
In dollar terms the sums seemed huge. In relative terms they are less frightening. At their 2008 peak, on IMF estimates, global imbalances amounted to 2½ per cent of world gross national product.
Financial regulators must take care over capital
Jacques de Larosière (FT) Oct 15, 2009
We must learn the lessons of misguided accounting and regulatory practices, for we cannot afford mistakes that could endanger the future of our economies.
Derivatives reform: Derivatives reform
Economist Oct 15, 2009
The crucial details of derivatives reform remain elusive.
Dollars Without Borders
Dilip Ratha (Foreign Affairs) Oct 16, 2009
The global flow of remittances represents the link between migration and development. If the world's largest economies are serious about recovery, they should make money transfers as easy and cheap as possible.
Why the US dollar may strengthen in 2010
Christian Broda, Piero Ghezzi & Eduardo Levy-Yeyati (VoxEU) Oct 16, 2009
Many expect the dollar to continue to depreciate over the foreseeable future. This column suggests that it may strengthen in 2010 if the Federal Reserve exits quantitative easing sooner than its counterparts and the US economy enjoys a strong rebound.
Countdown to the next crisis is already under way
Wolfgang Münchau (FT) Oct 18, 2009
We should not see inflation and deflation as opposite scenarios, but as sequential ones. We could be in for extreme price instability, in both directions, as central banks lose control.
Bernanke warns on imbalance risks
FT Oct 18, 2009
Fed chairman Ben Bernanke warned that Asian export policies could lead to a re-emergence of trade and capital flows imbalances, which some believe helped fuel the US housing bubble.
How small nations were cut adrift
Gideon Rachman (FT) Oct 18, 2009
After the Great Recession, the economic and political tide has turned against small nations. It is the smalls that have fared worst – Iceland, Ireland, the three Baltic states. Iceland has not only suffered a catastrophic economic and banking collapse. It is also being bullied by Britain and the Netherlands into paying back billions lost by their citizens when Icelandic banks collapsed.
Why the euro is not the next global currency
Jean Pisani-Ferry and Adam Posen (FT) Oct 18, 2009
As the world debates the potential end of dollar dominance, what is striking is that there is little talk of the euro replacing it.
In the World of Banks, Bigger Can Be Better
Charles Calomiris (WSJ) Oct 19, 2009
We can solve the too-big-to-fail problem without losing the benefits of a global financial system.
How to manage the gigantic financial cuckoo in our nest
Martin Wolf (FT) Oct 20, 2009
This recovery has been no accident. When central bank money is almost free, prices of risky assets are recovering, competitors have disappeared or are weakened, making money is a relatively simple matter for the strong survivors.
A crisis in search of a narrative
Daniel Yergin (FT) Oct 20, 2009
Will the Great Recession be followed by the New Caution, changing saving and spending habits, and lowering future growth? Will prudence loom larger in financial markets?
Doha Talks Need 'Serious Acceleration' to Meet 2010 Deadline: Lamy
Bridges Weekly Trade News Digest, Volume 13, Number 36 Oct 21, 2009
WTO Director-General Pascal Lamy warned delegates at the WTO's General Council meeting on Tuesday that they will need to dramatically pick up the pace of their negotiations if they want to wrap up a global trade deal by the end of next year. The meeting also shed some light on the organisation's upcoming ministerial conference, which is set to kick off at the end of next month.
Eastern Europe's Economy
Nouriel Roubini (Forbes) Oct 22, 2009
Crouching dollar, rising debt
Economist Oct 22, 2009
Stories on America's weakened currency and fiscal woes.
Big exporters don’t pass through exchange rate movements
Nicolas Berman, Philippe Martin & Thierry Mayer (VoxEU) Oct 22, 2009
The prices of tradable goods are remarkably insensitive to exchange rate movements. This column provides a firm-level explanation. In response to a depreciation, high-performance firms raise their mark-ups rather than their export volumes, and their choices dominate the aggregate export variables.
Why curbing finance is hard to do
Martin Wolf (FT) Oct 22, 2009
There is a way of making finance safe. But it would be radical: deposits would be 100 per cent reserve backed; and the liabilities of other investment vehicles would be adjusted for the market value of their assets at all times. Banking would disappear.
The Chinese Disconnect
Paul Krugman (NYT) Oct 22, 2009
Something should be done about China's weak-currency policy, which poses a growing threat to the rest of the world economy.
Everyman's Financial Meltdown
Ron Chernow (NYT) Oct 22, 2009
The stock market crash of 1929, which started 80 years ago this week, possessed clear-cut villains, a riveting story line and plenty of abuses for reformers to correct.
Tales from the trade talks
Economist Oct 22, 2009
Tortuous negotiation, finger-pointing and other shenanigans.
American banks are on the mend
Economist Oct 22, 2009
America's big banks are getting healthier. The small fry are not.
Nero's ghost in Istanbul
Hossein Askari (AT) Oct 23, 2009
The hot subject at the recent Istanbul meeting of the International Monetary Fund was how to reshuffle its voting power - as if, having failed to see financial disaster coming, the fund could be placed to recommend what to do to prevent future crises. The meeting had a feeling reminiscent of Rome burning as Nero made music.
The rise of trade and social protection
Michael Huberman & Christopher M. Meissner (VoxEU) Oct 23, 2009
Globalisation is often accused of unleashing a race to the bottom in labour regulation and social protection. The evidence suggests otherwise. This column explains how, historically, trade itself was a path to better labour regulation and social entitlements.
Preventing the Next Financial Crisis
Allan H. Meltzer (WSJ) Oct 23, 2009
Don't be fooled by the bond market. Banks are holding prices down because they can buy Treasurys with free money from the Fed.
The Cost of Trade 'Enforcement'
WSJ Oct 23, 2009
China emulates America's bad habits.
Global: Debtflation
Spyros Andreopoulos (MS GEF) Oct 23, 2009
We have flagged inflation as a major long-term risk going forward. Yet there is another source of inflation risk – the possibility that central banks might want to engineer ‘controlled’ inflation to reduce the public debt burden.
Do not ignore the need for financial reform
George Soros (FT) Oct 25, 2009
It is not the right time to enact permanent reforms. The financial system is far from equilibrium. The short-term needs are the opposite of what is needed in the long term.
A polite discourse on bankers and bubbles
Wolfgang Münchau (FT) Oct 25, 2009
I suspect we are in another bubble in the global equity, bonds and commodity markets. Central banks should be prepared to prick them before they cause calamity.
The Fund should help Brazil to tackle inflows
Arvind Subramanian and John Williamson (FT) Oct 25, 2009
Helping Brazil to moderate inflows of foreign capital rather than issuing a negative response would signal that the IMF is taking a less doctrinaire approach.
Debtors to the Front
WSJ Oct 26, 2009
A plan to cede U.S. influence at the IMF.
Inflation fears threaten US creditworthiness
AT Oct 26, 2009
Anything that poses a threat to the large budget deficits being run up by the United States is liable to worsen the economic slump. Inflation at present appears to be benign, yet in itself the fear of rising prices does pose a threat for the creditworthiness of the US as an international net borrower. The fear will increase with global recovery.
Rice tariffs snarl ASEAN single market
AT Oct 26, 2009
The failure of Thailand, the world's largest exporter of rice, and the Philippines, heavily dependent on imports of the food stuff, to agree on rice tariffs has dealt a blow to efforts by the 10-member Association of Southeast Asian Nations to forge a free-trade area along the lines of the European Union.
We must overturn the status quo in derivatives
Kenneth Griffin (FT) Oct 26, 2009
The derivatives market failed us last year. It is shameful that the citizens of America's Main Street were forced to 'bail out' Wall Street.
A theory of how international reserves and easy money caused the crisis
Guillermo Calvo (VoxEU) Oct 27, 2009
How did turmoil in the US subprime mortgage market ignite a global crisis? This column explains how emerging markets’ voracious appetite for international reserves coupled with record-low US policy interest rates and lax financial regulation to produce the large-scale creation of quasi-money subject to self-fulfilling-expectations runs. The theory suggests significant changes in Fed and regulatory policy are needed.
Oil prices and bank profitability
Heiko Hesse & Tigran Poghosyan (VoxEU) Oct 27, 2009
Bank balance sheets in oil-exporting economies have been hard hit recently. This column provides the first empirical evidence linking oil prices to bank performance in such economies. It suggests that easily observed oil prices could inform macro-prudential regulation in these countries and mitigate pro-cyclical bank lending.
Efficient Market Theory and the Crisis
Jeremy J. Siegel (WSJ) Oct 27, 2009
Neither the rating agencies' mistakes nor the overleveraging by financial firms was the fault of an academic hypothesis.
How mistaken ideas helped to bring the economy down
Martin Wolf (FT) Oct 27, 2009
The era when central banks could target inflation and assume that what was happening in asset and credit markets was no concern of theirs is over. Not only can asset prices be valued; they have to be.
When banks are too big to succeed and too big to fail
Paul Betts (FT) Oct 27, 2009
Brussels' demand that banking groups that were granted massive state aid during the crisis shed large chunks of their assets on competition grounds could fuel an unwanted merger and acquisition revival in the financial sector
Financial Stability for Central Banks (Part I)
Stephen S. Roach (Globalist) Oct 27, 2009
How can central banks be made more accountable?
Financial Stability for Central Banks (Part II)
Stephen S. Roach (Globalist) Oct 28, 2009
Should the G-20 create a global systemic risk manager?
Financial crises are different!
Stephen Cecchetti, Marion Kohler & Christian Upper (VoxEU) Oct 28, 2009
Is the current turmoil unique? This column examines three decades of financial crises and says that it stands out. But the variation in past experiences suggests that the major economies may regain their pre-crisis levels of output by the second half of 2010.
Is King Euro Naked?
Carlo Bastain (PIIE) Oct 28, 2009
Europeans may find several historical and theoretical reasons why a political government for the euro area would be desirable. But after the global crisis there are technical reasons why it is more than desirable. That conclusion is a necessity in light of three increasingly important aspects of current monetary developments in Europe: (1) the lack of an exchange rate policy; (2) the absence of a European fiscal authority guaranteeing the stability of sovereign bonds; and (3) the collusive relationship developing between the European Central Bank (ECB), the banks, and the national governments hiding the costs to the taxpayers.
China challenge for African prosperity
AT Oct 28, 2009
China's increasing dependence on Africa for oil and minerals is being matched by concern that only a few Africans benefit from the big deals involved. Extra vigilance and a new attitude to training and development could change that, as China's own success in reducing poverty demonstrates.
A Balanced Global Diet
NYT/IHT Oct 28, 2009
Global imbalances — roughly defined, the different emphasis the world’s leading economies place on savings, spending and debt — is a phrase much used and little acted upon.
Insight: Lessons learned in Singapore
Gillian Tett (FT) Oct 28, 2009
If you talk to financiers in Singapore these days, the topic of property prices keeps cropping up but, unlike in America, it is not the threat of further real estate market falls.
Lamy Calls for Text-Based Talks, Delegates Express Frustration
Bridges Weekly Trade News Digest, Volume 13, Number 37 Oct 28, 2009
Delegates need to move to text-based negotiations if they want to spur progress toward a global trade deal, WTO Director-General Pascal Lamy stressed to a meeting of WTO officials on Friday. The mood among delegates was grim, with many complaining of back-sliding and a lack of transparency in the negotiating process, but Lamy remained optimistic.
Agreement with Banks Limits Crisis in Emerging Europe
IMF Survey Oct 28, 2009
In an interview, Erik Berglöf and Anne-Marie Gulde discuss the impact of the European Bank Coordination Initiative, a series of meetings that have helped emerging Europe avert systemic crisis.
Asia Recovering Rapidly, but Faces Challenges, says IMF
IMF Survey Oct 28, 2009
After being hit hard by the global economic crisis, Asia is now rebounding fast, according to the IMF. The region is outpacing other parts of the world, with the "green shoots" of recovery appearing earlier and taking firmer root than elsewhere.
How to avoid a repeat of the Great Crash
Peter Clarke (FT) Oct 28, 2009
The chain of events leading from a collapse in stock prices on Wall Street to a Great Depression has leapt from history with an entirely fresh verisimilitude.
The future or the museum? Europe's moment of choice
Philip Stephens (FT) Oct 29, 2009
The debate about who should be chosen as the first president of the European Council has become a proxy for this more fundamental choice. Economic power is now shifting eastwards on a scale and at a speed beyond our previous experience.
Goodbye to the pre-crisis trend line
Samuel Brittan (FT) Oct 29, 2009
The latest IMF World Economic Outlook points out that much of the loss of output in a severe recession is permanent.
Why the renminbi has to rise to address imbalances
Martin Feldstein (FT) Oct 29, 2009
Making Chinese exports more attractive helps lift gross domestic product and jobs in China but prevents a reduction in global imbalances.
Yuan gaining currency beyond China's borders
Russell Hsiao (AT) Oct 29, 2009
Beijing's apparent disinterest in developing a policy on the convertibility of the yuan has given way since the global financial crisis to a clear determination to increase international use of the Chinese currency, particularly by its Asian neighbors. The launch in January of the China-ASEAN free trade area will help to accelerate this regionalization of the currency.
The Big Mac's Currency Lesson
WSJ Oct 29, 2009
McDonald's departure from Iceland is a suggestive economic indicator.
Why Derivatives Market Reform Means So Much
Robert A. Johnson (Globalist) Oct 29, 2009
How should derivatives be reformed in the wake of the financial crisis?
The effects of higher capital
Economist Oct 29, 2009
Why are banks so averse to raising equity.
India and capital flows
Economist Oct 29, 2009
India is caught in two minds about financial globalisation.
Capital floods into India
Economist Oct 29, 2009
What India can learn from Brazil about controlling capital flows.
The price of uncertainty
Economist Oct 29, 2009
The impossible task of eliminating uncertainty.
Global: Reversing Excessive Excess Reserves
Manoj Pradhan (MS GEF) Oct 29, 2009
Excess reserves on central bank balance sheets are at elevated levels. Lending out of excess reserves could then push up money supply, raising inflation risks. Ironically, commercial banks are most likely to find suitable borrowers just as central banks start to tighten on the back of a sustainable recovery, lowering the impact of rate hikes.