Missing in Africa
Todd Moss ( Oct 1, 2012
Africa's thriving democracies and economies, and its alarming transnational security threats, make it more important than ever to the United States. Obama, however, has largely ignored the continent. Regardless of who wins in November, Washington cannot afford to continue on the president's current path.
The Next Panic
Peter Boone and Simon Johnson (Atlantic) Oct 1, 2012
Europe’s crisis will be followed by a more devastating one, likely beginning in Japan.
Farmers can land a blow against poverty
Barbara Stocking (FT) Oct 1, 2012
Realising their potential requires governments to set the right climate for foreign investment.
Politics paints drab outlook for European M&A
John Authers (FT) Oct 1, 2012
Eurozone sluggishness and wider uncertainty are largely to blame for the unwillingness of shareholders to invest in takeovers.
King Ludd is Still Dead
Kenneth Rogoff (Project Syndicate) Oct 1, 2012
Since the dawn of the industrial age, a recurrent fear has been that technological change will spawn mass unemployment. By and large, neoclassical economists' prediction that people would find other jobs, though possibly after a long period of painful adjustment, has been proven correct – but for how much longer?
GOLD – The Simple Facts
Nicholas J. Johnson and Mihir P. Worah (PIMCO) Oct 1, 2012
We see gold as a compelling inflation hedge and store of value. For more than a millennium, gold has broadly managed to maintain its real value, even as various currency regimes have come and gone. The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis. Given current valuations and central bank policies, we believe investors should consider including gold and other precious metals in a diversified investment portfolio.
There is life in this ‘investable’ rally
Peter Oppenheimer (FT) Oct 1, 2012
The relative buoyancy of financial markets has passed almost.
Enforcement of Basel III should be focus
Tom Braithwaite (FT) Oct 1, 2012
In spite of complaints from Tom Hoenig and Andy Haldane and some bankers, the pact is a big step forward.
Europe's Same Old Austerity
WSJ Oct 1, 2012
France and Spain try to tax their way to growth.
Financial innovation: The good and the bad
Thorsten Beck, Tao Chen, Chen Lin & Frank Song (VoxEU) ` 2012
Even before the crisis, many economists warned that financial innovation has a dark side. This column uses new cross-country data on financial innovation and provides evidence that financial innovation can lead to more volatility, more fragility, and more severe losses. But it also finds evidence of improved growth opportunities, better financing, and increased R&D expenditure.
The Federal Reserve and the Currency Wars
Jose Antonio Ocampo (Project Syndicate) Oct 2, 2012
The Federal Reserve’s recent decision to launch a third round of “quantitative easing” has revived accusations by Brazil’s finance minister, Guido Mantega, that the US has unleashed a “currency war.” Both sides are right, highlighting the need to broaden the agenda of international monetary reform.
Japan’s Secret Demographic Weapon
Ian Bremmer and Susan Schwab (Project Syndicate) Oct 2, 2012
As the annual World Bank/IMF meetings get underway in Tokyo, Japanese leaders must confront an unfolding demographic disaster. Encouraging more immigration is unlikely to be adequate to stem the steep decline in population, but policymakers could largely solve the problem by boosting Japanese women's participation in the workforce.
Muslim Anger Could Spur Economic Growth
Meghan L. O'Sullivan (Bloomberg) Oct 2, 2012
As the violent anti-American protests in the Muslim world subside, those in the region and in the U.S. are wondering whether the upheaval will have a permanent effect.
How to Make an Ailing World Economy Even Sicker
Clive Crook (Bloomberg) Oct 2, 2012
Four years after the onset of the recession, the U.S. is recovering weakly, Europe isn’t recovering at all, and prospects in the rest of the world are far from thrilling. It’s an outlook that makes curbing public debt hazardous, yet governments everywhere are deciding that the job can’t wait.
History, gravity, and international finance
Livia Chitu, Barry Eichengreen & Arnaud Mehl (VoxEU) Oct 3, 2012
International investment patterns play an important role in policy debates ranging from global imbalances to banking crises. This column shows that history should not be neglected on this score. It suggests that 10% to 15% of the cross-country variation in US investors’ foreign bond holdings is explained by this 'history effect', which reflects fixed costs of market entry and exit together with endogenous learning.
Is unlimited growth a thing of the past?
Martin Wolf (FT) Oct 2, 2012
Today’s information age is full of sound and fury signifying little. After an upsurge in the 1990s the effect petered out.
The Natural-Resource Curse Strikes Again
Andres Velasco (Project Syndicate) Oct 3, 2012
Chile produces one-third of the world’s lithium – used in batteries that power everything from computers to cars – and has great potential to expand that share. But, while everyone agrees that Chile should realize its potential as a global supplier, the local debate on how to accomplish this has produced more heat than light.
"Signs of Momentum" in WTO Doha Round Talks, Lamy Says
Bridges Weekly Trade News Digest, Volume 16, Number 33 Oct 3, 2012
Nearly a year after last December's ministerial conference, signs are emerging that WTO members could soon be reviving their efforts in moving the Doha Round talks forward, after the negotiations were formally declared at an impasse last year. However, despite recent proposals of deliverables that could help balance a potential trade facilitation agreement, both WTO Director-General Pascal Lamy and members have cautioned that repeats of past problems that slowed earlier efforts at achieving results must be avoided.
WIPO Chief Calls for Rules-based IP System as Assemblies Kick Off
Bridges Weekly Trade News Digest, Volume 16, Number 33 Oct 3, 2012
The World Intellectual Property Organization (WIPO) launched its annual high level meetings – otherwise known as Assemblies – on Monday, against the backdrop of a changing innovation landscape and calls for improved intellectual property (IP) rules to provide an even playing field in the troubled world economy.
South-South Cooperation Comes to WIPO
Bridges Weekly Trade News Digest, Volume 16, Number 33 Oct 3, 2012
The role of South-South cooperation in the field of intellectual property (IP) took centre stage at a World Intellectual Property Organization (WIPO) meeting last Friday, ahead of the UN agency's General Assemblies that began this Monday.
International trade: A fragile armistice
Alan Beattie and Alice Ross (FT) Oct 3, 2012
Imbalances that sparked ‘currency wars’ have been reduced but with reforms still needed, a detente may be short-lived.
Demographics ignite China’s factory riots
David Pilling (FT) Oct 3, 2012
The country can no longer rely on an endless stream of pliant migrant workers happy to accept exhausting, monotonous work.
China’s renminbi story will stay intact
Andreas Utermann (FT) Oct 3, 2012
Investors would do well to gain exposure to the Chinese currency in the coming years.
Natural Resources, Natural Corruption?
Frank Vogl (Globalist) Oct 3, 2012
Despite sitting on billions of dollars of mineral wealth, many countries deal with persistent poverty while their leaders make out like bandits. Why greater transparency will help keep this money where it belongs — with the people.
Argentina's Deadbeat Mom
James K. Glassman (FP) Oct 4, 2012
Cristina Fernández de Kirchner refuses to pay Argentina's massive debts -- and that's why she has to go.
Exchange rates fixed or flexible? Does it matter?
Paul Bergin, Reuven Glick & Jyh-lin Wu (VoxEU) Oct 4, 2012
For many observers, one central flaw of the Eurozone is that countries lose the ability to manipulate their exchange rates to suit their needs. But this article argues that flexible exchange rates are often more likely to make things worse than make things better.
Collective Action Clauses: No Panacea for Sovereign Debt Restructurings
Ben Emons (PIMCO) Oct 4, 2012
Beginning next year, collective action clauses (CACs) will become mandatory for sovereign bonds issued by European countries under U.K. law. CACs, which allow a supermajority of bondholders to agree to changes in bond payment terms, became popular following Argentina’s default in 2001 and even more so after the financial crisis of 2008. On balance, the introduction of CACs in European government bond markets in 2013 is positive for investors. The history of emerging markets and Greece, however, shows that there are no short cuts: Investors must continue to be selective and use bottom-up analysis to assess credit risks.
Monetary Mystification
Joseph E. Stiglitz (Project Syndicate) Oct 4, 2012
Central banks on both sides of the Atlantic took extraordinary monetary-policy measures in September, sending stock markets soaring. But politicians – and markets – in both Europe and America are mistaken if they believe that monetary policy can restore economic growth and boost employment.
Energy: Corridor of power
Javier Blas (FT) Oct 4, 2012
The impact of tax systems on economic growth in Europe: An overview
Frank Zipfel and Caroline Heinrichs (DB Research) Oct 5, 2012
Since the financial crisis, the countries of Europe have been faced with the difficult challenge of consolidating their budgets while at the same time promoting economic growth. One approach is a growth-conducive tax system, which keeps distorting effects of taxation on the growth factors – labour, capital and technological progress – as small as possible. Tax reforms carried out in the EU to date are steps in the right direction. Increasing economic policy coordination in Europe offers the chance to implement further structural reforms.
Emerging-Market Investors Looking Beyond the BRICs
Tim Gray (NYT) Oct 6, 2012
The BRIC countries Brazil, Russia, India and China have been losing some investment appeal. Some fund managers suggest a look at a broader range of emerging economies.
A bleak outlook for the world economy
Economist Oct 6, 2012
Politicians in America, the euro zone and China are all dithering dangerously.
Banks and cross-border capital flows: Policy challenges and regulatory responses
Markus K Brunnermeier, José De Gregorio, Philip Lane, Hélène Rey & Hyun Song Shin (VoxEU) Oct 7, 2012
Many argue that the financial sector is in dire need of reform but there is always the danger of solving one problem by creating another. This column outlines the findings of the Committee for International Economic Policy and Reform. It takes stock of the traditional case for financial liberalisation and asks which principles have withstood the test of recent events and which ones now need re-thinking.
Aluminium: Shock and ore
Jack Farchy (FT) Oct 7, 2012
One of the most used metals has missed out on the commodities supercycle, as China’s surging output forces former titans to retrench.
How M&A became a buyer's market
Jonathan Rowley (FT) Oct 7, 2012
In the past 12 months, the auction process has lost its automatic claim as the best way to sell a business.
Parallels between apartheid and Argentina
Tony Leon (FT) Oct 7, 2012
Argentina is increasingly detached from the world because of its eccentric economic course is heading for the cliff edge.
The risks of trading by banks
Arnoud Boot & Lev Ratnovski (VoxEU) Oct 8, 2012
Liikanen, Vickers, and Volcker all question current banking-trading links. This column offers analytic scaffolding for thinking about the separation of banking and trading. Banking generates low risk returns from relationship-based activities; trading generates high-risk returns from short-term concentrated positions. The two are linked since trading allows banks to profit from the ‘spare’ banking capital, but deeper financial markets magnify problems of managing and regulating trading by banks.
Eurozone rage: Turning point or business as usual?
Jacob Funk Kirkegaard (VoxEU) Oct 8, 2012
Political pressures are rising again in Europe. This column argues that reactions in parliaments, central banks and on the street are well within the bounds of predictable reactions to hard times. These developments change nothing of significance in the calculus concerning the eventual success of the Eurozone crisis response.
The Truth About Sovereignty
Dani Rodrik (Project Syndicate) Oct 8, 2012
If the EU's future is now in doubt, it is because sovereignty stands in the way once again. By denying that European integration hinges on restraining national sovereignty, Europe’s leaders are misleading voters, delaying the Europeanization of democratic politics, and raising the costs of the ultimate reckoning.
The Brics have taken an unhappy turn
Gideon Rachman (FT) Oct 8, 2012
The new marks of Bric status are a weakening economy and dysfunctional politics but most will grow faster than the west.
The dollar’s days as reserve currency are numbered
Barry Eichengreen (FT) Oct 8, 2012
The US, Europe and China must share the burden. They can do this by enhancing confidence in their sovereign issues.
Don’t bet on the dollar collapsing
Mansoor Mohi-uddin (FT) Oct 8, 2012
A look at other major economies suggest that only a step up in the pace of Federal Reserve asset purchases will weaken a fundamentally strong dollar
Iran Places New Restrictions on Currency Trading
Thomas Erdbrink (NYT) Oct 8, 2012
The police moved to arrest unlicensed currency dealers and increase patrols in Tehran to prevent unofficial trading from disrupting new official exchange rates for Iran's currency, the rial.
Vigilance Needed to Strengthen Public Finances
IMF Survey Oct 9, 2012
In many advanced economies, efforts to reduce debts and deficits will need to persist for many years for debt ratios to return to pre-crisis levels. The IMF’s Fiscal Monitor recommends large economies like the United States and Japan act in a timely manner to clear policy uncertainties.
The Renminbi Challenge
Barry Eichengreen (Project Syndicate) Oct 9, 2012
China has been gradually implementing its plan for developing the renminbi into an international rival to the dollar. But whether it succeeds turns on how China addresses four challenges, not least whether it can adequately constrain the arbitrary exercise of executive power.
The New Geopolitics of Food
Lester Brown (Globalist) Oct 9, 2012
Global food prices have more than doubled over the last decade. If the trend continues, spreading food unrest will likely lead to political instability in poorer countries. But the problem is not just one of agriculture, it involves energy policy, water resources, transportation, and health and family planning.
Micro, Macro, Meso, and Meta Economics
Andrew Sheng and Xiao Geng (Project Syndicate) Oct 9, 2012
Given the crisis weighing down the world economy and financial markets, it is not surprising that a substantive re-consideration of the principles of modern economics is underway. The profession’s dissident voices, it seems, are finally reaching a wider audience.
All that glitters: A primer on the gold standard
John H. Makin (AEI) Oct 9, 2012
Republicans have called for an investigation of the feasibility of a gold standard, a suggestion that seems particularly intriguing in the face of the high inflation expected under the Fed’s recently announced QE3+ plan. The current combination of flexible exchange rates, ability of private citizens to own gold, and lack of a link between the central bank gold holdings and the money supply would make it difficult for the United States to engineer a return to the gold standard. Returning to a more stable monetary system anchored to gold may become a more attractive option if the world economy sees a sustained period of high inflation.
Think Again: The BRICS
Antoine van Agtmael (FP) Oct 9, 2012
Together, their GDP now nearly equals the United States. But are they really the future of the global economy?
The Currency of Power
Robert Zoellick (FP) Oct 9, 2012
Want to understand America's place in the world? Write economics back into the plan.
Who Won the Great Recession?
Foreign Policy Oct 9, 2012
From food trucks to Tinseltown moguls, climateskeptics to declinist pundits, here's our look at some of the biggestwinners from the economic crisis.
IMF Sees Heightened Risks Sapping Slower Global Recovery
IMF Survey Oct 9, 2012
The IMF’s latest forecast presents a gloomier picture of the global economy than a few months ago, saying prospects have deteriorated further and risks increased. Overall, the IMF’s World Economic Outlook marks down global growth to 3.3 percent this year and a still sluggish 3.6 percent in 2013.
Chavez’s Win Proves ‘Elected Autocrat’ Isn’t an Oxymoron
Clive Crook (Bloomberg) Oct 9, 2012
Hugo Chavez is something of a challenge to the worldview of many rich-country observers. His election victory this week has given him, health permitting, a new six-year term as Venezuela’s president. He’s the leading elected autocrat in Latin America and maybe the world.
Crisis shows why EU must renew its vows
Guy Verhofstadt and Daniel Cohn-Bendit (FT) Oct 9, 2012
The answer to the region’s pressing problems and its critics is a federal structure.
Goliath wins, but Venezuela is at a turning point
Moisés Naím (FT) Oct 9, 2012
Victory will not change the fact that the country is in a mess. And in this new term, Mr Chávez will not be as popular abroad.
Cyprus must pay price for joining euro
Tony Barber (FT) Oct 9, 2012
Greece is usually seen as the bloc’s most reform-resistant economy and political culture – perhaps because Cyprus slips under most people’s radar.
Mounting Risks, Euro Area Worries Fuel Financial Instability
IMF Survey Oct 10, 2012
Risks to global financial stability have increased and financial markets have been volatile as European policymakers grapple with the ongoing crisis, the IMF said in its latest Global Financial Stability Report.
The Eurozone’s Narrowing Window
Ashoka Mody (Project Syndicate) Oct 10, 2012
Without robust growth, and because perpetual austerity is not politically tenable, Europe’s options are narrowing. So much now hangs on the ECB’s actions – but for how long will these be sufficient to maintain a truce with markets?
World Bank chief sounds alarm over euro
Jim Yong Kim (Emerging Markets) Oct 10, 2012
If the ministers simply did all the things that they promised to do, I think we would be in a much better shape.
'One Billion Hungry' Peak Missing From New FAO Numbers
Bridges Weekly Trade News Digest, Volume 16, Number 34 Oct 10, 2012
A revised estimate of the number of hungry people in the world was released yesterday, classifying 870 million as undernourished between 2010-12. Missing from the UN Food and Agriculture Organization's figures was any reference to the one billion mark that the agency had claimed was reached in 2009 due to high food prices and the economic crisis. The new report cited a change in methodology and improved data as reasons for the shift.
Services Liberalisation Talks Among Group of WTO Members Move Forward
Bridges Weekly Trade News Digest, Volume 16, Number 34 Oct 10, 2012
A subset of WTO members exploring the possibility of a new services liberalisation agreement have made progress in advancing a potential format for such a deal, sources told Bridges this week. While the talks are said to be still in the early stages, many delegates have expressed hope that formal negotiations for the proposed pact might begin as early as next year.
Libya: Armed and dangerous
Borzou Daragahi (FT) Oct 10, 2012
Optimism born of the July elections has been replaced by uncertainty and fear, much of it stoked by the militias that helped overthrow Gaddafi.
Chance for Philippines to break with the past
David Pilling (FT) Oct 10, 2012
The country is about to enter its "demographic sweet spot" – the point at which growth in other Asian economies took off.
South Africa loses out on wall of money
William Wallis (FT) Oct 10, 2012
Investors are looking beyond South Africa for opportunities as it loses its competitive edge and politics becomes uncertain.
Beware the 'central bank put' bubble
Mohamed El-Erian (FT) Oct 10, 2012
Investors must heed unconventional policies but carefully time hand-off from liquidity boost back to fundamentals.
Women Entrepreneurs Drive Growth in Africa
Josh Kron (NYT) Oct 10, 2012
A cresting wave of African businesswomen are harnessing Africa's enterprises and brands as the continent enjoys its greatest economic success in generations.
Can American History Save the Euro?
Thomas Mayer (Globalist) Oct 10, 2012
History suggests that the kind of "fiscal union" Angela Merkel would like to create will never come to pass. But the dustbin of American history may provide a fiscal model that might just work for Europe.
Do falling trade costs benefit all countries equally?
Dennis Novy (VoxEU) Oct 11, 2012
Trade barriers such as transportation costs and tariffs reduce international trade. But when these trade barriers come down, do they increase international trade equally among countries? This column presents evidence from OECD countries that trade costs have a differential impact depending on the trade intensity of the countries involved. When they already trade a lot, country pairs hardly benefit. But bilateral trade grows faster when the initial trade relationship was thin.
An overlooked currency war in Europe
Daniel Gros (VoxEU) Oct 11, 2012
Switzerland has pegged its currency to the euro at a level that helps it sustain a 12% current-account surplus and one of the lowest unemployment rates in Europe. This column argues that the Swiss peg involves currency manipulation that is, as far as Europe is concerned, the same order of magnitude as China’s intervention. It has had a significant impact on the euro exchange rate and a non-negligible effect on the EZ economy.
Global Recovery, Growth Hampered by Uncertainty
IMF Survey Oct 11, 2012
Global economic growth is being weighed down by uncertainty about whether policymakers will deliver on policy commitments, IMF chief Christine Lagarde tells reporters in Tokyo. She says many right decisions have been taken to secure global recovery, but adds that these decisions need to be implemented.
Global Lenders Rebuild Identities After the Crisis
Eswar S. Prasad (NYT) Oct 11, 2012
It has become clear that the World Bank and International Monetary Fund are needed more than ever. But both institutions must now adapt to the rapidly shifting structure of the world economy.
A Protectionist Pickup
WSJ Oct 11, 2012
Brazil is the latest to raise tariffs, blaming U.S. policies.
Ireland: A fallen idol
Jamie Smyth (FT) Oct 11, 2012
Sean Quinn is widely regarded as a villain in the Irish failure but he says he is a scapegoat for deeper failings in Dublin.
We must help shelter Syria’s refugees
Angelina Jolie and António Guterres (FT) Oct 11, 2012
The burden on host communities, their economies and, inevitably, their stability, cannot be overstated.
Natural wealth: Is it a blessing or a curse?
Otaviano Canuto & Matheus Cavallari (VoxEU) Oct 12, 2012
Using data series recently released by the World Bank (2011) on natural capital and other forms of countries’ wealth, this column revisits some of the conclusions reached in the literature on the relationship between natural resource abundance and income levels. The findings support the assertion that there is no clear deterministic evidence of natural resource abundance as a curse or a blessing; therefore, the effect on a country depends on other determinants.
Sub-Saharan Africa Maintains Growth in an Uncertain World
IMF Survey Oct 12, 2012
Sub-Saharan Africa remains relatively insulated from the negative factors pulling down growth in advanced countries, but countries with closer trade links to Europe are experiencing some softening in exports, the IMF says in the main chapter of its Regional Economic Outlook for the region.
Growth in Asia Expected to Moderate Further in 2012
IMF Survey Oct 12, 2012
Growth in Asia during the first half of this year has slowed to its lowest rate since the start of the global financial crisis, and only a modest and gradual pick up is expected next year, the IMF said.
Lagarde Lays Out Roadmap to Shape Post-crisis World
IMF Survey Oct 12, 2012
IMF Managing Director Christine Lagarde, in a Tokyo keynote speech, calls for greater global cooperation to put the world on a strong path to recovery and build on sweeping demographic and technological changes that are driving a shift in global economic power.
Growth in Latin America Moderating but Resilient
IMF Survey Oct 12, 2012
Growth in Latin America and the Caribbean is projected to pick up in 2013, after slowing this year, with risks continuing to dominate the outlook, the IMF said.
Summers: world economy faced with ‘lost decade’
Taimur Ahmad (Emerging Markets) Oct 12, 2012
Japan's experience is “cautionary” about the consequences of allowing “cyclical problems to harden into structural problems,” Summers said
Hard to be Easing
Nouriel Roubini (Project Syndicate) Oct 12, 2012
The US Federal Reserve’s third round of quantitative easing, or QE3, has many observers arguing that the effects on risky assets could be greater than in previous rounds. But, despite the Fed’s commitment to aggressive monetary easing, QE3's effects on the real economy and on US equities could well be smaller and more fleeting.
Emerging-Market Resilience
Michael Spence (Project Syndicate) Oct 12, 2012
As a group, emerging-market economies have been negatively affected by the recent downturn in developed countries. But they will remain an important global growth engine, even as the developed economies experience an extended period of below-trend growth.
Rethinking American Capitalism
Richard Duncan (Globalist) Oct 12, 2012
The U.S. economic system is no longer one in which the accumulation and investment of capital drives the production process. It has instead become one in which the creation and expenditure of credit is the driver.
Government, Geography, and Growth
Jeffrey D. Sachs (Foreign Affairs) Oct 12, 2012
According to Daron Acemoglu and James Robinson's Why Nations Fail, economic development hinges on a country's political institutions. But their monocausal analysis ignores other important factors (such as geography) that can also affect growth.
China's Anti-Keynesian Insurgent
Zhang Weiying (WSJ) Oct 12, 2012
Warnings that stimulus spending would lead to malinvestment were once ignored.
The Dumbest Trade War Is a Green One
Patrick Jenkins (WSJ) Oct 12, 2012
At least there's something real at stake in the Huawei imbroglio.
Chasing Deadbeat Argentina
WSJ Oct 12, 2012
A U.S. investor tries to get its money back from Buenos Aires.
A Third Weapon to Save the Euro
James Kanter (NYT) Oct 12, 2012
The president of the European Council has proposed creating a separate budget for the euro zone, perhaps equipped with a central treasury and borrowing powers.
World Bank project dilemma
Curtis S Chin (AT) Oct 13, 2012
Southeast Asian nations have great plans for new infrastructure that will require cash from the likes of the World Bank, and so risk conflict over international standards designed to protect the environment and local people affected by such grand projects.
A deadly mix for aid effectiveness
Anders Olofsgård (VoxEU) Oct 13, 2012
The recent focus on impact evaluation within development economics has led to increased pressure on aid agencies to provide evidence from randomised controlled trials. This column argues this reinforces a political bias towards immediately verifiable and media-packaged results at the expense of more long-term and complex processes such as institutional development.
Basel liquidity rules and their impact on the interbank money market
Clemens Bonner & Sylvester Eijffinger (VoxEU) Oct 13, 2012
Will the new Basel rules make monetary policy less effective? This column looks at how banks responded to the introduction of the Dutch quantitative liquidity requirement. It concludes that a liquidity rule does influence lending rates and volumes in the interbank money market. These effects, however, are at least partially intended and the overall effect of a binding liquidity rule is still positive.
Should Europe reconsider its supervisory governance? Two is better than one
Donato Masciandaro & Marc Quintyn (VoxEU) Oct 14, 2012
Supervisory failures were key to the 2008 financial crisis. This column argues that supervisory governance has improved but that more is needed. The reforms should include a separation of macro- and micro-supervision since this allows for checks and balances that complement and strengthen governance.
The rise and fall of (Chinese) African apparel exports
Lorenzo Rotunno, Pierre-Louis Vézina & Zheng Wang (VoxEU) Oct 14, 2012
The surge in African apparel exports that followed the launch of new US trade preferences in 2000 gave hope that African industrialisation was around the corner. Ten years down the road, the success was all but forgotten. This column shows this is because US trade policies inadvertently turned Africa into a temporary trade corridor for China.
The ‘new normal’ of Chinese growth
Yiping Huang (East Asia Forum) Oct 14, 2012
Growth of Chinese GDP decelerated to 7.8 per cent in the first half of 2012 from 9.6 per cent a year ago.
Asia Knows How to Get Along With a Bigger China
Pankaj Mishra (Bloomberg) Oct 14, 2012
Preparing for a recent trip to Indonesia last week, I came across an article by Meidyatama Suryodiningrat, the editor of the feisty Indonesian daily Jakarta Post, protesting that the Obama administration’s “pivot” to Asia seemed too much like an attempt to start a cold war against China, with the help of its neighbors.
The world is stuck in a vicious cycle
Lawrence Summers (FT) Oct 14, 2012
Doctors prescribing antibiotics warn their patients they must complete the full course. So too with economic policy.
Heed siren voices to end fixation with austerity
Wolfgang Münchau (FT) Oct 14, 2012
The IMF study says simply that austerity may not achieve its goal of reducing debt within a reasonable amount of time.
Big oil must rediscover exploration mojo
Guy Chazan (FT) Oct 14, 2012
The majors have had a poor record of finding enough new reserves to replace the oil and gas they produce and some admit they have dropped the ball
China: Beyond the conveyor belt
Kathrin Hille and Rahul Jacob (FT) Oct 14, 2012
As the number of young workers peaks and aspirations rise, the low-cost manufacturing model is under pressure.
Highlights from IMF 2012
Phil Thornton (Emerging Markets) Oct 14, 2012
The IMF/World Bank annual meetings in Tokyo ended with little agreement on what to do to solve the eurozone crisis – but with a lot of intriguing insights into where the world economy is going
China Contends Market Sets Value of Its Currency
AP/NYT Oct 14, 2012
China's central bank chief, Zhou Xiaochuan, said Sunday that the nation's currency has reached its equilibrium rate, signaling that major movement in its value is unlikely soon.
The Retreat of Globalization
Kevin Warsh and Scott Davis (WSJ) Oct 14, 2012
Banks are retrenching, trade is slowing. What if the world is becoming more fragmented as policy makers focus on short-term urgencies?
Not making the grade: Report card on global financial reform
Laura Kodres (VoxEU) Oct 15, 2012
While financial reform is underway around the world, this column argues that much more needs to be done.
Africa’s Big Boom
Jean-Michel Severino & Emilie Debled (Project Syndicate) Oct 15, 2012
Africa is undergoing unprecedented economic growth, which is likely to persist, given that it is based on structural geographic and demographic factors. But Africa’s national governments still face significant challenges, particularly when it comes to supporting small and medium-size businesses.
A New Year’s Banking Union
Michel Barnier (Project Syndicate) Oct 15, 2012
In June, European heads of state and government committed themselves to the creation of a single European supervisor for banks in the eurozone. Now they have to resolve several remaining questions in order to establish Europe-wide bank supervision by January 2013.
Greece Needs a Revolution, But
Thanos Skouras (Globalist) Oct 15, 2012
Could rising social unrest spark a revolution Greece? The only revolution Greece needs is reducing the public sector's size, minimizing bureaucracy and promoting private enterprise.
Is China Due for a Slowdown?
Israel Malkin and Mark M. Spiegel (FRBSF Letter) Oct 15, 2012
Many analysts have predicted that a Chinese economic slowdown is inevitable because the country is approaching the per capita income at which growth in other countries began to decelerate. However, China may escape such a slowdown because of its uneven development. An analysis based on episodes of rapid expansion in four other Asian countries suggests that growth in China’s more developed provinces may slow to 5.5% by the close of the decade. But growth in the country’s less-developed provinces is expected to run at a robust 7.5% pace.
A grand bargain to unify the eurozone
Dennis Snower (FT) Oct 15, 2012
Because such proposals come from Berlin, seen as truculent, they receive little attention. Time to take them seriously.
Only big debt restructuring can save euro
Willem Buiter (FT) Oct 15, 2012
A warning about austerity fatigue on the periphery and bailout fatigue at the core as the convincing crisis response of summer fades.
Methodical financiers replace ‘masters of the universe’
Patrick Jenkins (FT) Oct 16, 2012
Citi’s new boss epitomises the new breed of straightforward commercial bankers that is replacing predecessors from investment banking realm.
China needs a robust credit infrastructure
Henny Sender (FT) Oct 16, 2012
Innovative lending is needed to make the country’s financial system more market friendly and to serve the economy more efficiently.
The fund warns and encourages
Martin Wolf (FT) Oct 16, 2012
The alarm has been sounded and the route to safety has been suggested. It is time for those with the power to act.
Allure of emerging markets fails to dim
Stefan Wagstyl (FT) Oct 16, 2012
Multinationals have expanded to offset weak home markets, triggering foreign direct investment that counterbalances wild swings elsewhere.
Markets: Rage against the machine
Michael Mackenzie, Arash Massoudi and Stephen Foley (FT) Oct 16, 2012
While technology has made trading cheaper, investors fear the system is too complex to manage.
Has the IMF Missed the Point on Public Debt Overhangs?
Anders Åslund (PIIE) Oct 16, 2012
The October World Economic Outlook of the International Monetary Fund (IMF), issued semi-annually, contains an ambitious chapter 3, "The Good, the Bad, and the Ugly: 100 Years of Dealing with Public Debt Overhangs." It is an empirical study of developed countries that have had public debt of more than 100 percent of GDP in the last century, clearly inspired by Carmen Reinhart and Kenneth Rogoff's book This Time Is Different.
Banking union in Europe and other reforms
Viral Acharya (VoxEU) Oct 16, 2012
With most of the debate around banking union in the Eurozone focusing primarily on the financial institutions it will regulate, this column argues that the issue of sovereign debt of the members of the Eurozone needs also to be taken into account.
The political economy of (eventual) banking union
Geoffrey R D Underhill (VoxEU) Oct 16, 2012
As the debate regarding banking union in the Eurozone rolls on, this column tackles the subject from a different angle – outlining the political economy ramifications of such an undertaking.
Banking union: Where we’re going wrong
Dirk Schoenmaker (VoxEU) Oct 16, 2012
A piecemeal approach towards banking union is emerging, with banking supervision first and resolution and deposit insurance at some undefined later stage. This column argues that such an approach may lead to an unstable banking union and that any attempt at banking union must include an integrated deposit insurance and resolution authority in order to be successful.
Banking union as a crisis-management tool
Charles Wyplosz (VoxEU) Oct 16, 2012
Countries have various mechanisms that provide lending when a bank fails. But when bank problems far exceed available resources, central banks must be lenders of last resort, even when their role is clouded to mitigate moral hazard. This column explains the ECB is ill-equipped to act as such a lender; it doesn’t have enough control due to coordination problems across countries. The column argues this must change. The ECB must be the lender of last resort and this involves a Eurozone banking union.
Why the rush? Short-term crisis resolution and long-term bank stability
Thorsten Beck (VoxEU) Oct 16, 2012
The Eurozone crisis has shown that the traditional approach of EU supervisory cooperation is not enough. This column argues the gaps in cross-border bank regulations have to be addressed on three levels: A short-term crisis resolution mechanism for the Eurozone, a functioning banking union, and stronger cooperation agreements across the EU and beyond. Critically, such reforms have to start from the resolution component.
Downside risk and the value anomaly
Victoria Galsband (VoxEU) Oct 16, 2012
The value anomaly – higher average returns on value as opposed to growth stocks – is a robust phenomenon on equity markets around the world. This column argues that the exposure to downside market risk can explain why value stocks outperform their growth counterparts. The key is to distinguish between 'bad' and 'good' downside market shocks.
Offshoring and middle-income workers in the US
Lindsay Oldenski (VoxEU) Oct 16, 2012
The state of the US middle class has been a key issue this election season as middle-income workers have experienced relative wage losses in the last decade. Skill-biased technology change has previously been identified as a major cause of this polarisation of wages in the US. But this column shows that there is also an empirical link between offshoring by US firms and the polarisation of the US labour market.
Why the rush? Short-term crisis resolution and long-term bank stability
Thorsten Beck (VoxEU) Oct 16, 2012
The Eurozone crisis has shown that the traditional approach of EU supervisory cooperation is not enough. This column argues the gaps in cross-border bank regulations have to be addressed on three levels: A short-term crisis resolution mechanism for the Eurozone, a functioning banking union, and stronger cooperation agreements across the EU and beyond. Critically, such reforms have to start from the resolution component.
Bye-bye, globalization
David M. Smick (WP) Oct 16, 2012
What will replace a dying model?
Mugabe looks east at questionable cost
Gavin du Venage (AT) Oct 17, 2012
Zimbabwe's increasingly acrimonious relationship with the West has encouraged President Robert Mugabe to look towards China for economic sustenance. It is not always clear who benefits from this policy, and at what cost.
Money-Market Resistance
Mark Roe (Project Syndicate) Oct 17, 2012
The US Securities and Exchange Commission recently rejected proposed rules that were aimed at making money-market funds safer in a financial crisis – a decision that caused consternation among many outside regulators and observers. It is not hard to see why.
Fears of Global Economic Slowdown Dominate IMF Annual Meeting
Bridges Weekly Trade News Digest, Volume 16, Number 35 Oct 17, 2012
The protracted global financial crisis dominated the agenda at last week’s International Monetary Fund (IMF) Annual Meeting in Tokyo, Japan, as new data showed that economic growth is likely to be even lower than anticipated this year and next. As officials debated how best to boost growth while addressing macroeconomic imbalances, the controversial topic of rich countries using further quantitative easing to boost their job markets – a practice slammed by many emerging economies as putting their own exchange rates and trade at risk – featured prominently during the high-level discussions.
Global economy: When China sneezes...
Patti Waldmeir, Andrea Felsted and Vanessa Friedman (FT) Oct 17, 2012
From falling iron ore prices to sluggish sales of earth movers and luxury goods, the ripples of China’s slowdown are being felt around the world.
It’s time to levy the risk takers
Manmohan Singh (FT) Oct 17, 2012
A levy on derivative liabilities is a transparent approach that will ensure taxpayers are not made accountable for systemic failure
Coping with financial crises: Latin American answers to European questions
Eduardo Cavallo & Eduardo Fernandez-Arias (VoxEU) Oct 17, 2012
The Eurozone body politic seems to be slowly learning the lessons for crisis management. This column argues that Latin America’s decades of financial crisis can provide key insights for Europe.
Angola Creates Fund to Spread Oil Wealth
Lydia Polgreen (NYT) Oct 17, 2012
Using start-up capital of $5 billion, Angola will try to diversify its economy and invest in Africa's booming hotel industry and infrastructure projects.
Uncertainty weighing on the global recovery
M Ayhan Kose & Marco E Terrones (VoxEU) Oct 18, 2012
Bouts of elevated uncertainty have been one of the defining features of the sluggish recovery from the global financial crisis. This column explores the role of uncertainty in driving macroeconomic outcomes using data from a large group of advanced countries over the past 40 years. It concludes that uncertainty appears to hinder growth.
Why Estonia Is Beating the Eurozone
Frank Shostak (Mises Daily) Oct 18, 2012
Against the background of a severe economic crisis in the eurozone, one is surprised to find a member of the euro area that is actually showing good economic performance. This member is Estonia. In terms of so-called real gross domestic product (GDP) the average yearly rate of growth in Estonia stood at 8.4 percent in 2011 against overall eurozone performance of 1.5 percent. So far in 2012 the average yearly growth stood at 2.8 percent in Estonia versus -0.2 percent in the eurozone.
A Europe for the World
Javier Solana (Project Syndicate) Oct 18, 2012
As the EU aspires to become an international power, its choice is simple. Either Europeans act in unity to confront the tremendous challenges presented by the tumultuous changes now underway in the world order, or they will be doomed to act as spectators in a world in which they have little or no say.
Europe’s Flawed Banking Union
Howard Davies (Project Syndicate) Oct 18, 2012
Europe is trying to achieve a stronger federal model that responds to the weaknesses revealed by the eurozone crisis, but it is doing so without addressing the need to bring its citizens along. That is also true of proposals for a banking union, with the EU adopting devices that are designed to avoid having to consult them.
New Asian frontier markets: Bangladesh, Cambodia, Lao PDR, Myanmar
Syetarn Hansakul (DB Research) Oct 18, 2012
We expect the Asian frontier markets (AFMs) to be on a solid and accelerating growth path over the next five years, with real GDP growth potentially rising to 7-8% annually. All of the countries are expected to be members of the WTO by 2017. Trade at the regional and international levels is expected to deepen and drive growth in these countries. There are some risks to this constructive outlook such as natural catastrophes, political instability or even risks that could arise from rising interdependence with the global economy. Beyond these immediate risks, there are important challenges to tackle such as poverty reduction and protection of the environment and the national heritage. Improvement on these fronts will help the AFMs maintain their attraction for FDI flows. Finally, economic reform will need a more commercially-driven banking sector and financial markets, as well as a robust regulatory regime.
Hunger Makes a Mockery of Today's World Economy
William Pesek (Bloomberg) Oct 18, 2012
The world has become a global village. When you look back at what happened during the food-price crisis in 2007 and 2008, it was a wake-up call. It resulted in food riots in 40 cities across the world. It brought down governments. When people are hungry and angry in rural areas, it results in political instability.
'Natural hedging' of exchange-rate risk
Dario Fauceglia, Anirudh Shingal & Martin Wermelinger (VoxEU) Oct 19, 2012
Recent literature on the role of imported inputs in exchange-rate adjustments of exports implicitly assumes full exchange-rate pass-through into imported input prices, which is a rather strong assumption. This column uses intermediate input prices to investigate the effect of exchange-rate fluctuations in Switzerland. It suggests an appreciation of the currency leads to higher profit margins through the import channel and imported inputs act as a natural means for hedging exchange-rate risks.
Brexit: Europe loses patience with London
Philip Stephens (FT) Oct 18, 2012
There have been many crises in London’s volatile relationship with the EU. However, this one feels very different.
Be prudent with eurozone banking rules
David Green (FT) Oct 18, 2012
The challenges of a switch from national to supranational supervision are formidable and could take years to resolve.
China comfortable with weaker growth
Jamil Anderlini (FT) Oct 18, 2012
Something has definitely changed in Beijing, where officials are no longer concerned about hitting the magic 8% annual economic growth target.
Is Germany the Main Beneficiary of the Euro?
Alfred Steinherr (Globalist) Oct 18, 2012
If the German economy benefited more than other countries' from the euro, as it is commonly assumed, shouldn't Germany pony up the finances to help hold the eurozone together? But if those benefits never materialized, does it make any sense for Germany to pay dearly to save the euro?
A Eurozone Without Germany?
Alfred Steinherr (Globalist) Oct 19, 2012
What will happen to the eurozone if it can't resolve the rising acrimony between its southern and northern members? Many analysts speculate that weaker countries like Greece might end up being pushed out of the euro. A better option may be for Europe's strongest economy to return to the deutschmark.
As the Rest of the World Slows, Africa Accelerates
Chrystia Freeland (Reuters/NYT) Oct 18, 2012
The growing consensus among some of the world's smartest money is that the next big emerging market may be Africa.
The Only Game in Town
Raghuram Rajan (Project Syndicate) Oct 19, 2012
Thus far, central banks have been willing to step where politicians fear to tread, finding new and increasingly unconventional ways to try to influence the direction of troubled economies. But they must be able to admit when they are out of bullets.
Breaking Mexico out of middle income trap
Alejandro Ibarra-Yunez and Richard Bennett (WT) Oct 19, 2012
On December 1, Enrique Pena Nieto will assume office as Mexico's new president -- returning the long-ruling Institutional Revolutionary
Happiness Is Equality
Robert Skidelsky (Project Syndicate) Oct 19, 2012
Average incomes have been going up steadily, but typical incomes have been stagnating or even falling, implying that most of the gains of growth have been captured by a minority – sometimes a very small minority. Nowadays, it seems, it is not more growth that we want, but more equality.
Europe Moves East
Dominique Moisi (Project Syndicate) Oct 19, 2012
Ten years ago, then-US Defense Secretary Donald Rumsfeld famously distinguished between “Old” and “New” Europe on the basis of their attitudes toward the United States and the war in Iraq. The distinction remains valid, though not in the way that Rumsfeld meant.
Mongolia in Globalization’s Chokehold
Mark Juergensmeyer (YaleGlobal) Oct 19, 2012
Mongolia exemplifies how rapid globalization reduces checks and balances, increases exploitation
Time to ship during financial crises
Nicolas Berman, José de Sousa, Philippe Martin & Thierry Mayer (VoxEU) Oct 20, 2012
With the Global Crisis came the Great Trade Collapse, a fall in world trade much larger than the fall in GDP. This column argues that one reason behind this is that time to ship magnifies the effect of financial crises on trade. The reason is that exporters react to the increased probability of default even more so the longer the time to ship.
Indonesia put to test
Richard Javad Heydarian (AT) Oct 20, 2012
The Indonesian economy, while in many respects an example of dynamism, remains too dependent on commodity exports, and development is hampered by corruption and inefficiency in the public sector.
Banking union will not end Europe’s crisis
Wolfgang Münchau (FT) Oct 21, 2012
The banking union is a tool so powerful that it could unite the EU’s core. But it will also separate it from the rest.
China’s currency rises in the US backyard
Arvind Subramanian and Martin Kessler (FT) Oct 21, 2012
The gravitational forces of economics, trade and currency are drawing east Asian countries closer to China.
Oil price risk, expropriation and bilateral investment treaties
Johannes Stroebel & Arthur van Benthem (VoxEU) Oct 21, 2012
The sharp increase in the oil price between 2003 and 2008 brought back the practice of expropriating assets of independent oil companies. This column suggests that bilateral investment treaties may mitigate expropriations and allow resource-rich countries to shift a larger proportion of the risk associated with variations in natural resource prices to oil companies.
TARGET losses in case of a euro breakup
Hans-Werner Sinn (VoxEU) Oct 22, 2012
As with the Eurozone crisis, the TARGET debate shows little sign of disappearing quietly. This column argues that the ECB has tolerated, if not created, huge TARGET imbalances that impose a particular risk on the northern countries should the euro break up. It calls for a fairer and more sustainable system – and suggests the US model may offer some guidance.
This time is different, again? The US five years after the onset of subprime
Carmen M Reinhart & Kenneth Rogoff (VoxEU) Oct 22, 2012
The strength of the US recovery has become a political issue in the presidential election. The US is doing better than other advanced economies, but famous economists associated with the Romney campaign claim this is not good enough. The US, they argue, is different. Here, the masters of the 'this time is different' research genre – Carmen Reinhart and Ken Rogoff – argue that US historical performance is not different when it is properly measured, so the economy’s performance is better than expected.
A Golden Opportunity
Patrick Barron (Mises Daily) Oct 22, 2012
The euro debt crisis in Europe has presented Germany with a unique opportunity to lead the world away from monetary destruction and its consequences of economic chaos, social unrest, and unfathomable human suffering. The cause of the euro debt crisis is the misconstruction of the euro that allows all members of the European Monetary Union (EMU), currently 17 sovereign nations, to print euros and force them on all other members. Dr. Philipp Bagus of King Juan Carlos University in Madrid has diagnosed this situation as a tragedy of the commons in his aptly named book The Tragedy of the Euro. Germany is on the verge of seeing its capital base plundered from the inevitable dynamics of this tragedy of the commons. It should leave the EMU, reinstate the deutsche mark (DM), and anchor it to gold.
Confront China's Currency Manipulation Now
Peter Navarro (World Affairs) Oct 22, 2012
Political leaders may want to engage Beijing, but given its blatantly unfair trade practices, human rights abuses, and military aggression, a confrontation is long overdue. Read More
Blaming China’s Currency Manipulation is Tempting—but Wrong
Stephen S. Roach (World Affairs) Oct 22, 2012
Beijing’s currency is not the villain it’s often made out to be, and America should start seeing its relationship with China as an opportunity rather than a threat.
Broken BRICs
Ruchir Sharma (FA) Oct 22, 2012
The most talked-about global economic trend in recent years has been "the rise of the rest," with Brazil, Russia, India, and China leading the charge. But international economic convergence is a myth. Few countries can sustain unusually fast growth for a decade, and even fewer, for more than that. Now that the boom years are over, the BRICs are crumbling; the international order will change less than expected.
AIG: An improbable profit
Henny Sender (FT) Oct 22, 2012
Despite concerns the US would never recoup the $182bn spent rescuing AIG, taxpayers have begun to make money from the bailout.
Stop this campaign against ECB policy
Paul de Grauwe (FT) Oct 22, 2012
The Bundesbank should cease in its attempts to undermine the eurozone by reliving the glories of its past.
India leaves foreign investors unamused
Victor Mallet (FT) Oct 22, 2012
A corporate drama has been unfolding in India starring retailer Walmart, whose efforts to invest there are under suspicion.
EM leaders must tackle taboos for growth
Manoj Pradhan (FT) Oct 22, 2012
As the demographics turn, greater investment in labour-saving technology is needed to produce more with a smaller labour force.
Why China Won't Repeat Japan's Past
Koh Gui Qing (NYT/Reuters) Oct 22, 2012
Abundant room for greater consumption and wealth, a slow-rising currency and steps to cool property markets will leave China in a good position to avoid Japan's fate.
China needs to find a voice
Peter Mattis (AT) Oct 23, 2012
Growing debate in China recognizes that the gap between the country's power as the world's second-largest economy and Beijing's ability to shape discussions and values needs to be closed. The challenge for Beijing is to project its right to voice on the international stage what kind of world China wants.
Gauging the multiplier: Lessons from history
Barry Eichengreen & Kevin H O’Rourke (VoxEU) Oct 23, 2012
The size of the fiscal policy multiplier – and thus the impact of austerity on GDP – has been a contentious issue since the crisis started. The IMF recently revived the debate by suggesting that the multiplier is much higher than previously thought in the current policy environment. This column discusses independent empirical research that confirms the IMF’s view – the authors’ estimate of the multiplier is in the range of 1.6.
Europe’s Path to Disunity
Hans-Werner Sinn (Project Syndicate) Oct 23, 2012
The assertion that the eurozone could be transformed into a United States of Europe is no longer convincing. The path toward it is far more likely to lead to a deep rift within Europe, because turning the eurozone into a transfer and debt union would require more central power than currently exists in the US.
A New Low for China Bashing
Stephen S. Roach (Project Syndicate) Oct 23, 2012
As America’s election season nears the finish line, the debate always seems to come unhinged. Nowhere is that more evident than in the fixation on China – singled out by both President Barack Obama and his Republican challenger, Mitt Romney, as a major source of pressure bearing down on American workers and their families.
Ukraine’s chance to return to Europe
Vitali Klitschko (FT) Oct 23, 2012
The government in Kiev cannot continue to embrace oligarch capitalism and misrule far beyond Sunday’s election.
Collateral reuse risks contagion
John Plender (FT) Oct 23, 2012
While the IMF argues a rebound in collateral reuse would stimulate markets, John Plender warns of risks in that strategy.
The Lost Generations
Jeffrey D. Sachs (Project Syndicate) Oct 24, 2012
When a country's young people are well educated, they can find gainful employment, dignity, and the ability to adjust to the labor market, while businesses invest more, knowing that their workers will be productive. Yet many societies do not meet the challenge of ensuring a decent education for each generation of children.
The Economist’s Buttonwood Gathering
Mohamed A. El-Erian (PIMCO/Economist) Oct 24, 2012
My objective today is ambitious and, some would say, unrealistic. By drawing on research and many discussions at PIMCO, I hope to set out a simple approach to analyze a fluid and complex world.
Asia needs stronger regional institutions
David Pilling (FT) Oct 24, 2012
As China grows more powerful, the Pax Americana will become less tenable. But Beijing faces a dilemma as to what can replace it.
World weighed down by debt won’t grow
Satyajit Das (FT) Oct 24, 2012
Lawmakers seem unable to handle the truth: expansionary fiscal and monetary policies won’t restore economies after a debt-driven boom.
Regulation: Collateral damage
Ralph Atkins, Philip Stafford and Brooke Masters (FT) Oct 24, 2012
New rules to make banks safer may create more demand for high-quality assets than the market can provide.
Can Europe prevent Asia's rise?
Barry Desker (AT) Oct 25, 2012
The West, increasingly preoccupied with Asia's rise, is mounting a rearguard action to delay the redistribution of power in multilateral organizations such as the International Monetary Fund. It's a losing battle since as influence grows these institutions will be molded in an Asian image, just as European and American power shaped the past century's international rules.
Euro Avoids Collapse, but Its Future Remains Uncertain
Floyd Norris (NYT) Oct 25, 2012
The real issue facing the euro is whether the peripheral countries can become successful economies while staying in the currency zone.
Japanese banks: Back in the saddle
Michiyo Nakamoto (FT) Oct 25, 2012
Tokyo’s mega-banks are expanding internationally but a lack of foreign board members could hinder their ambitions.
A three-tier EU puts single market at risk
Charles Grant (FT) Oct 25, 2012
Most of the union’s economically liberal countries – including Britain, Sweden and Poland – are outside the eurozone.
West should pay attention to India’s woes
Mohamed El-Erian and Michael Spence (FT) Oct 25, 2012
There is time to change policy and return to the path of higher growth and financial stability.
A Finnish parallel currency is imaginable
Gillian Tett (FT) Oct 25, 2012
As the eurozone crisis rumbles on, some Finnish business and government officials are quietly mulling the logistics of leaving the currency union.
“Misunderstanding Financial Crises”, a Q&A with Gary Gorton
Cardiff Garcia (FT) Oct 25, 2012
Read enough books and economics papers about the recent US financial crisis, and at some point you might notice something odd.
Brazil: Fair economic prospects
Markus Jaeger (DB Research) Oct 26, 2012
Brazil’s economic growth has roughly doubled over the past ten years, increasing from 2.0-2.5% a year to almost 4%. In cyclical terms Brazil has been affected by the global economic backdrop. But Brazil’s economic fundamentals remain very sound and the cyclical recovery will be accompanied by structural reforms. On balance, this will underpin higher savings and investment, making it very unlikely that the economy will grow less than 3.5% over the medium term.
Development after the Arab Spring
Emmanuel Frot, Anders Olofsgård & Maria Perrotta (VoxEU) Oct 26, 2012
What does the Arab Spring mean for development in the region? This column looks at development aid during the political transition in East Europe in the 1990s. It argues that aid donors need to be aware of the potential pitfalls.
The Real Losers of Globalization
Branko Milanovic (Globalist) Oct 26, 2012
Everybody knows who the big winners from two decades of globalization are. (Certainly the Occupy movement wouldn't be surprised.) The big question concerns who are losers. The surprising answer: and it helps explain why election results, including the upcoming U.S. presidential election, are so fickle.
Korea Outpaces Japan in the "New Normal"
Yukiko Fukagawa (SERI Quarterly) Oct 26, 2012
Korea's major exporters have done remarkably well even during the depths of the financial crisis, and especially compared to Japanese firms. This success is attributable to both continuing government export promotion, changes in production techniques, and structural issues at Japanese rivals. Korean firms, however, still face the important challenge of becoming real innovators.
Sovereign Environmental Risk
Achim Steiner and Susan Burns (Project Syndicate) Oct 27, 2012
Many financial observers have begun to question the models upon which credit-rating agencies, investment firms, and others rely to price the risks tied to such securities. At the same time, it is increasingly obvious that any reform of risk models must factor in environmental implications and natural-resource scarcity.
The renminbi bloc is here: Asia down, the rest of the world to go?
Martin Kessler & Arvind Subramanian (VoxEU) Oct 27, 2012
As China becomes ever more important in the global economy, will its currency take on an international role? This column argues that in some sense, this is already happening – an increasing number of emerging-market currencies seem to track (co-move with) the renminbi – and the trend is set to continue.
A sense of place
Patrick Lane (Economist) Oct 27, 2012
Geography matters as much as ever, despite the digital revolution.
When markets drive the economy, cash flow is king
David Rosenburg (FT) Oct 29, 2012
With policy rates near zero, cash flow is king. Within the equity sector, this means a focus on dividend growth, dividend yield and dividend coverage
The first step in Europe’s banking union is achievable, but it won’t be easy
Nicolas Véron (VoxEU) Oct 29, 2012
Eurozone leaders are firmly committed to a banking union, at least on paper. But do Member States agree on the current proposals? And what do these proposals leave out? This column argues that a dangerous combination of disagreements between Member States over contentious issues and pitfalls in the design of new institutions may well ensnare the Eurozone along its faltering path towards recovery.
EM-10 debt metrics have improved very tangibly over past decade or so
Markus Jaeger (DB Research) Oct 29, 2012
In the two decades bookmarked by the Mexican debt moratorium of August 1982 and the IMF bailout of Brazil in 2002, emerging economies suffered repeated financial crises. Due to much improved external and public debt positions, sovereign debt and balance-of-payments crises are a thing of the past as far as the EM-10 are concerned.
Outright Monetary Transactions sterilised?
Michael McMahon, Udara Peiris & Herakles Polemarchakis (VoxEU) Oct 30, 2012
‘Sterilisation’ - where purchases of assets by a central bank are offset by withdrawals - may help the ECB to control inflation. This column discusses how the ECB’s current approach may be fraught with danger, however. In a world where sovereign default risk is perceived to be likely, the ECB’s only real hope is that its approach makes a Eurozone default impossible.
The Silent Revolution Inside the IMF
Stephan Richter (Globalist) Oct 30, 2012
Gow the IMF is remaking its decision making body to reflect the growing clout of emerging markets, as well as rethinking old tenets of the Washington Consensus that helped create the financial crisis.
A Europe of Solidarity, Not Only Discipline
George Soros (Project Syndicate) Oct 30, 2012
The decision at the EU summit in June to form a banking union, and the ECB’s commitment to unlimited intervention in the sovereign-bond market, could be a turning point for Europe were these steps reinforced with additional measures. Unfortunately, the EU’s unfolding tragedy characteristically feeds on such glimmers of hope.
An Optimistic Case for the Euro
Martin Feldstein (Project Syndicate) Oct 30, 2012
The prospects for the euro and the eurozone remain uncertain. But recent events at the European Central Bank, in Germany, and in global financial markets make it worthwhile to consider a favorable scenario for the common currency’s future.
Brazil’s Growth Conundrum
Andres Velasco (Project Syndicate) Oct 30, 2012
In 2010, Brazil’s economy grew at an impressive 7.5% clip, as highly expansionary fiscal and monetary policies, implemented in response to the global financial crisis, lifted it out of harm’s way. While similar policies are again doing the trick today, Brazil needs to move beyond its stop-and-go cycles and ensure steady growth.
Which Nations Failed?
Arvind Subramanian (American Interest) Oct 30, 2012
Democracy, development, and the uncooperative realities of Chinese and Indian history.
Draghi’s resolve is ECB’s sharpest tool
Ralph Atkins (FT) Oct 30, 2012
A drop in private sector activity raises the question of whether the ECB might have to prevent parts of the eurozone falling into a deflationary slump.
Forget Europe: Is the Real Debt Crisis in Japan?
The Diplomat Oct 30, 2012
While the world worries about Greece and Spain, Japan also has its share of debt problems. Are financial markets missing the real problem?
Renminbi Rising
Zhang Monan (Project Syndicate) Oct 31, 2012
potentially dangerous development for China – in part owing to the risk of an abrupt and painful reversal. Indeed, after strengthening sharply, the renminbi could turn out to be a prime target for short sellers.
Fiscal Closing Time?
Jean Pisani-Ferry (Project Syndicate) Oct 31, 2012
Economists may not be able to pinpoint the precise economic impact of fiscal retrenchment. But, by improving their methods and collecting new data, they can tell us with much greater accuracy than ever before when and how consolidation should be carried out.
Provincial Europe
Joschka Fischer (Project Syndicate) Oct 31, 2012
A new European mindset, and a foreign policy equal to it, is urgently needed if Europe is to meet the challenges posed by Asia and the wider Middle East. Unless Europe develops the capacity to defend its own interests, it will become vulnerable to a growing range of economic and security threats.
WTO: Fewer New Trade Restrictions Among G-20 Members, Though Warning Signs Remain
Bridges Weekly Trade News Digest, Volume 16, Number 37 Oct 31, 2012
The use of new trade restrictions among the Group of 20 leading economies has slowed down over the past five months, the WTO announced earlier today. However, the continued build-up of protectionist measures put in place since the onset of the economic crisis remains a source of concern, given their potential to worsen global problems. The mixed news comes amid warnings this week from French and German national leaders – as well as the heads of the world’s international finance institutions – that the global economic recovery is still far from being assured.
Laos, Tajikistan Approach WTO Entry
Bridges Weekly Trade News Digest, Volume 16, Number 37 Oct 31, 2012
The WTO is expected to see Laos and Tajikistan officially join its ranks over the coming months, after both countries completed major steps in their efforts to join the 157-member trade body this past Friday.
EU-Mercosur Trade Talks Continue, Despite Reshuffling of Southern Cone Bloc's Membership
Bridges Weekly Trade News Digest, Volume 16, Number 37 Oct 31, 2012
Talks for a trade deal between the EU and Mercosur moved forward last week, according to Brazilian officials, five months after political controversy in Paraguay led to a reshuffle of the Southern Cone customs union’s membership and sparked uncertainty over whether the move would slow the nearly two-decade long negotiations. An end-date for the region-to-region talks, however, remains unclear.
European Parliament Votes in Favour of Possible Trade Talks with Japan
Bridges Weekly Trade News Digest, Volume 16, Number 37 Oct 31, 2012
Japan and the European Union moved another step closer toward possibly launching negotiations for a bilateral trade pact last week, after the European Parliament voted in favour of a non-binding resolution regarding the talks.
Official: Pakistan on Track to Normalise Trade with India by Year's End
Bridges Weekly Trade News Digest, Volume 16, Number 37 Oct 31, 2012
Pakistan is on track for granting its neighbour – and often political rival – India most favoured nation (MFN) status by year's end, Pakistan's commerce secretary confirmed last week. The two sides also recently outlined a timeline for reducing their sensitive lists for each others' imports under the South Asia Free Trade Area (SAFTA) Agreement, as part of their ongoing efforts to boost bilateral trade ties.
Time to decide whether Greece is in or out of the euro
Mohamed A. El-Erian (FT) Oct 31, 2012
The focus is back on the debt crisis in Greece where a three party governing coalition is struggling to come up with a new economic reform programme that can secure parliamentary approval. Meanwhile governments, such as Germany’s, that extend support to Athens, are considering how best to approach their own legislatures with Greece’s request for even more aid.
Sri Lanka: A tight grip on the controls
James Crabtree (FT) Oct 31, 2012
The country has become an exemplar of postwar development but critics say the government is trampling on civil rights.
The future of Africa’s youth hinges on creating employment
Jeffrey Herbst and Greg Mills (FT) Oct 31, 2012
If the continent is to produce self-sustaining growth and jobs, it will have to remove its anti-business animus.
Money market funds come under attack
Burton Malkiel (FT) Oct 31, 2012
Common ground between investors, who want to maximise returns, and regulators, who would like to eliminate systemic risk, must be found.
Blue Planet
Uri Friedman (FP) Oct 31, 2012
What if the world could vote in the U.S. election?