March of the Cities
Finance and Development Sep/Nov 2007
The September 2007 issue of F&D looks at the growth of cities and the trend toward urbanization. Within the next year, for the first time in history, more than 50 percent of the world's population will be living in urban rather than rural areas. What are the economic implications of this urban revolution? Economists generally agree that urbanization, if handled well, holds great promise for higher growth and a better quality of life. But as the lead article tells us, the flip side is also true: if handled poorly, urbanization could not only impede development but also give rise to slums. Other articles in this series look at poverty as an urban phenomenon in the developing world and the development of megacities and what this means for governance, funding, and the provision of services. Another group of articles discusses the challenge of rebalancing growth in China. 'People in Economics' profiles Harvard economist Robert Barro; 'Country Focus' looks at the challenges facing Mexico, and 'Back to Basics' takes a look at real exchange rates.
Latin America’s Corruption Challenge
Susan Ackerman and Bjørn Lomborg (Project Syndicate) Nov 2007
Corruption alone is not the essential problem. Rather, it symbolizes and highlights underlying weaknesses in the operation of the state and its interactions with citizens and businesses.
Total Recall: A Flawed System of Trade
Ryan Finstad (FEER) Nov 2007
How systemic problems led to the recent flood of recalls of China-produced goods.
The "Limits to Growth" Revisited
Joschka Fischer (Project Syndicate) Nov 2007
Since the Club of Rome issued its famous report on the “Limits to Growth” in the 1970's, uninterrupted economic expansion has increasingly made its dire predictions an object of ridicule. And yet the report's basic insight – that we live and work in a finite global ecosystem, with exhaustible resources and capacities – has returned to challenge us again.
Why We Trade
Russell Roberts (Foreign Policy) Nov 2007
We’re used to shrugging off all sorts of rhetorical gobbledygook from our politicians. But when you hear U.S. presidential candidates start to mouth off about free trade, watch your wallet: A discredited 14th-century theory of economics is enjoying a dangerous renaissance in the 2008 campaign.
Economic Growth’s Many Recipes
Dani Rodrik (Project Syndicate) Nov 2007
Strategies for economic development have always been dominated by comprehensive visions about transforming poor societies. But the key lesson of the last half-century is that policymakers must focus on their societies' immediate, binding constraints and seek sequential, cumulative change rather than a single, all-inclusive breakthrough.
Can Anything Slow the Dollar’s Fall?
Roman Frydman and Michael D. Goldberg (Project Syndicate) Nov 2007
“Dollar denial,” that state of willful blindness in which bankers and central bankers claim to be unworried about America’s falling currency, seems to be ending. Now it's time to consider how policymakers can intervene successfully.
Twenty Years After Black Monday
The International Economy Fall 2007
Is the world better or worse prepared to handle financial crises? TIE asked the three key former U.S. officials who managed the 1987 stock market crash—--E. Gerald Corrigan, David Ruder, and Manuel Johnson.
Financial Hypocrisy
Joseph E. Stiglitz (Project Syndicate) Nov 2007
A decade after the 1997 East Asia crisis, the consensus that emerged on the need for fundamental reform of the global financial architecture has led nowhere. So it is not surprising that the world is once again facing a period of global financial instability, with uncertain outcomes for the world’s economies.
The Myth of Decoupling
Melvyn Krauss (Project Syndicate) Nov 2007
Ordinary Europeans should not be fooled by arguments that Europe's economy has become "decoupled" from that of the US. Special interests in Europe would not be peddling such dubious pabulum if they felt confident about the economy’s future.
The Fog of Finance
Jean-Paul Fitoussi and Eloi Laurent (Project Syndicate) Nov 2007
Military leaders talk about the “fog of war” – the condition of fundamental uncertainty that marks combat. The recent credit and liquidity crisis has revealed a similar condition in financial markets, because no one, not even central banks, seems to understand its nature or magnitude.
Aid-for-trade: the details matter
Akiko Suwa-Eisenmann & Thierry Verdier (VoxEU) Nov 1, 2007
‘Aid for trade’ is not the miracle solution for development and globalisation. Economists and policymakers must scrutinise the specific design of each measure, assess its potential impact on the terms-of-trade and consider the specific donor/recipient pair.
Dollar Ben
WSJ Nov 1, 2007
There are major risks to the Fed's reflation.
The Sovereign Wealth Explosion
Stuart E. Eizenstat & Alan Larson (WSJ) Nov 1, 2007
Preventing an isolationist backlash against Russian and Chinese investment might.
Dumping Protectionism
Brian Hindley & Fredrik Erixon (WSJ) Nov 1, 2007
Europe does its firms no favors by building trade barriers.
Davos Epiphany
WSJ Nov 1, 2007
The Davos folks have seen the light on what really makes an economy tick.
Strauss-Kahn Takes Over as New IMF Head
IMF Survey Nov 1, 2007
Former French Finance Minister Dominique Strauss-Kahn began his job as the new IMF Managing Director on November 1 determined to put fresh vigor into reform of the 185-member institution that oversees the global economy.
Don't Bank on the Chinese Consumer Saving the World
Joseph Quinlan (Globalist) Nov 2, 2007
What is the reality behind the booming Chinese consumer class?
As oil prices go up in Asia, subsidies go down
IHT Nov 1, 2007
Governments across Asia roll back benefit in face of record highs.
The Global Economic Decoupling Myth
Desmond Lachman (AEI) Nov 1, 2007
The U.S. economy continues to play a substantial role in the global economy.
Letter from China: What if Beijing is right?
Howard W. French (IHT) Nov 2, 2007
What if the doubters have been wrong all along?
Africa's Chance
NYT Nov 2, 2007
Nobody knows whether Africa south of the Sahara might be on the cusp of starting up the ladder of development, but it has its best chance in decades.
The Peru Deal Advances
WP Nov 2, 2007
But for some candidates, apparently, no trade pact will ever be good enough.
Cyclical Dollar Weakness: Still in Its Seventh Inning
Stephen Jen & Luca Bindelli (MSDW) Nov 2, 2007
Don’t go against the powerful trends we’re witnessing in the equity, currency and commodity markets. There are legitimate reasons behind these trends, in our view. Having said this, on a 6-12-month perspective, we believe that the preferred trades will evolve.
Waiting for Coordinated Intervention?
Stephen L. Jen & Charles St-Arnaud (MSDW) Nov 2, 2007
Since the 1970s, it has been a rule rather than an exception that major turning points in the G3 currencies coincided with coordinated interventions. It may take coordinated interventions to halt the current slide in the dollar.
Globalization and the Corrupt States
Branko Milanovic (YaleGlobal) Nov 2, 2007
Legalizing some criminal activities would reduce profits and curb the corruption.
Farm Belt Follies
NYT Nov 3, 2007
With debate on the farm bill to begin next week, the Senate has one last chance to produce a farm program of which the country can be proud.
Global Imbalances: Now More China's Problem than Ours
Brad DeLong Nov 4, 2007
Now that the dollar has dropped 43% from its high against the euro, the process of global rebalancing has finally begun. The U.S. trade and current account deficits have begun to shrink relative to American and world GDP. Asian current account surpluses are about to start to shrink as well--especially if growth slows markedly in America in the aftermath of the end of the housing boom. At the moment Europe is feeling most of the pain, as its currency's value has risen furthest and fastest against the dollar. But Latin America and Asia will start to feel some economic distress as well, as the United States steps out of the role in the global economy it has occupied for a decade: that of the world's importer of last resort.
Robert Rubin likely to fill in at Citigroup
IHT Nov 4, 2007
The move is intended to reassure Wall Street while the board looks for a new chief executive to replace Charles Prince 3rd.
Subprime lessons: fix the information gap
Alberto Giovannini & Luigi Spaventa (VoxEU) Nov 5, 2007
The Basel Committee on Banking Supervision and the Basel II framework were intended to mitigate or prevent crises like the subprime mess. The valuation practices and market transparency the Committee recommends falls short of what is needed.
Last Chance for DDT
Roger Bate (WSJ) Nov 5, 2007
How many more must die of malaria for no good reason?
Record Oil Prices Unlikely to Dent World Growth Much
IMF Survey Nov 5, 2007
With prices nudging record highs, the recent oil spike has received a lot of media attention.
Gisele Dumps Ben
WSJ Nov 6, 2007
It's an ominous sign when runway models spurn the weak dollar.
Textile Two-Step
WSJ Nov 6, 2007
The U.S., Vietnam and 'free' trade.
Curing the Diseases of Poverty
Franklin Cudjoe (WSJ) Nov 6, 2007
Economic development, not patent suspension, will defeat malaria in Africa.
Has the dollar fallen enough?
Giancarlo Corsetti Nov 6, 2007
Classic analysis by Obstfeld and Rogoff says that the dollar still has a long way to fall. Some new theory and recent simulations suggests that US trade response may be bigger than expected and so the dollar may have fallen enough.
China's economy generates billionaires by the dozen
IHT Nov 6, 2007
The United States has more billionaires than any other country: 415 by Forbes's last count. No. 2, and closing fast? China.
Pass the Peruvian F.T.A.
NYT Nov 7, 2007
Congressional Democrats should vote for the Peruvian deal, which would give American businesses greater access to Peru's markets.
Why plutocracy endangers emerging market economies
Martin Wolf (FT) Nov 6, 2007
Mexico’s Carlos Slim is now the richest man in the world, or so Fortune magazine has told us. His ascension is fascinating. This is not only because he is extraordinarily rich. It is also because the manner in which he has accumulated his wealth tells us much about the capitalism that is spreading across the globe.
Europe’s superstar firms
Thierry Mayer & Gianmarco I.P. Ottaviano (VoxEU) Nov 7, 2007
Much of the public-policy thinking on globalisation – the Lisbon agenda, for example – focuses on winning and losing sectors. A network of teams working in tandem on eight national, firm-level datasets shows that, increasingly, both winners and losers can be found within the same sector. The analysis of firm-level data reveals new facts that are essential for future policy-making on competitiveness and globalisation.
Chinese Investors Lose Out Again
WSJ Nov 7, 2007
China should let investors get on with investing.
Investors agree: Anything but the dollar
IHT Nov 7, 2007
Currency traders gave the U.S. dollar a thorough pounding Wednesday and pushed the value of the euro to $1.47, the highest on record.
Revised Ag Text Delayed As Chair Sees Glimmer of Progress
BRIDGES Weekly Trade News Digest - Vol. 11, Number 38 Nov 7, 2007
The chair of the troubled WTO agriculture talks will postpone issuing a new draft negotiating text initially expected in mid-November until towards the end of the month, trade sources report. The move was prompted by modest signs of movement in the discussions.
WHO Committee on Drug Innovation and Prices Underway in Geneva
BRIDGES Weekly Trade News Digest - Vol. 11, Number 38 Nov 7, 2007
Government officials and civil society representatives are meeting in Geneva this week to discuss ways to spark the development of affordable treatments for medical conditions that disproportionately affect people in poor countries.
Brazil, Peru Discuss New Ideas on Environmental Goods Liberalisation
BRIDGES Weekly Trade News Digest - Vol. 11, Number 38 Nov 7, 2007
Negotiations on expedited liberalisation for environmental goods and services were front and centre at last week's meeting of the WTO Committee on Trade and Environment-special session (CTE-SS).
Markets and Dollar Sink as Slowdown Fear Increases
NYT Nov 8, 2007
Stock markets plummeted and the dollar sank as investors grew skittish over rising oil prices and the prospect of a substantial U.S. economic slowdown.
ECB throws its weight behind efforts to rein in euro
IHT Nov 8, 2007
The bank is concerned that the rapid ascent against the dollar is making planning harder for European businesses.
China threatens to veto WTO accord
IHT Nov 8, 2007
Beijing said it would veto the deal if it failed to shield Chinese industries from foreign competition.
Hedge Funds + Asian Debt = Don't Panic Just Yet
Andy Mukherjee (Bloomberg) Nov 8, 2007
The hiccups in global credit markets notwithstanding, private debt in Asia is the beneficiary of healthy demand.
Dollar Is Battered and Bruised, Not Yet Out
Michael R. Sesit (Bloomberg) Nov 9, 2007
As the dollar tumbles, concern is growing that its weakness may augur the end of the U.S. currency's 62-year reign as the world's specie of choice for trade, financial transactions and central-bank reserves.
Trade Accord Causes a Split of Democrats
NYT Nov 9, 2007
Nearly half the Democrats in the House supported a trade deal with Peru, reopening a party fissure on trade policy.
A Kinder and Gentler IMF
Desmond Lachman (AEI) Nov 8, 2007
Latin America should expect a kinder and a gentler International Monetary Fund under Dominique Strauss-Kahn's leadership.
Adam Smith Growls
WSJ Nov 9, 2007
The 1970s saw the world's last great dollar crisis. Are we watching another such period today?
Mind the GAAP
James S. Turley (WSJ) Nov 9, 2007
The SEC should adopt international financial reporting standards.
Lifelines for the Drowning Dollar
David Malpass (WSJ) Nov 9, 2007
Confidence in low future tax rates would attract investment in dollar-denominated assets.
The Rising Yuan
WSJ Nov 9, 2007
Congress finally gets the Chinese currency revaluation that it's long desired.
Sarkozy, The Ambivalent Globalizer
Jonathan Fenby (YaleGlobal) Nov 9, 2007
France continues an old pattern, pursuing globalization abroad but stopping foreign traders at its border.
A Villain to Our Rescue
Robert J. Samuelson (WP) Nov 9, 2007
Those who bash globalization bite the hand that feeds them.
Currencies: The Undervalued Dollar to Keep Weakening
Stephen Jen (MSDW) Nov 9, 2007
We believe that the market will likely push the USD lower, until the G7 are provoked into threatening or conducting interventions. As the G7 are not yet in a position to intervene, the USD will likely keep weakening, even against the JPY.
Currencies: Global Official Reserves Just Breached US$6.0 Trillion
Stephen Jen & Charles St-Arnaud (MSDW) Nov 9, 2007
In this note, we present an update on the world’s official reserves. Total global official reserves breached US$6.0 trillion as of end-August, compared to US$5.0 trillion at end-2006.
US and Europe aim to resolve trade disputes
FT Nov 9, 2007
Diplomats from the US and European Union are laying the groundwork for an unprecedented round of bilateral bargaining in which all of the main transatlantic trade disputes would be put on the table and negotiated in one go.
The Golden Haves
Kenneth Rogoff (Project Syndicate) Nov 10, 2007
If the top nine income earners in the US donated their earnings, it would be the equivalent of about three months income for the world's poorest billion people. But, rather than punitively taxing wealth, globalization strengthens the case for shifting to a flat tax on income (or better yet consumption) with a moderately high exemption.
Robert Rubin is wrong about the dollar
Paul Krugman (NYT) Nov 10, 2007
He says, “You could have had surpluses that affected the savings rate and would have helped the trade balance. I think you would have had more confidence in the policy framework and you would have had a better dollar,” he says regretfully. He pauses to reflect. “But we are where we are.” This is what John Williamson of the Institute for International Economics calls “the doctrine of immaculate transfer.”
Governments and public support for trade: 2nd welfare theorem in action
Anna Maria Mayda & Kevin H. O’Rourke (NYT) Nov 12, 2007
The creed: Trade creates winners and losers, but the winners win more than the losers lose, so governments should boost public support for trade by creating ex ante mechanisms that share the pains and gains. Here is some evidence that it actually works.
Pot trade slows
Independent Record Nov 12, 2007
For years, backpacks crammed with cash have slipped north into Canada, followed closely by hockey bags packed with premium marijuana skating south into Montana.
Dollar Policy: Don't Ask, Don't Tell
NYT Nov 12, 2007
The stated desire for a strong dollar is on a collision course with the stated belief in market-determined exchange rates.
The Dollar In Danger
Sebastian Mallaby (WP) Nov 12, 2007
For a quarter-century after World War II, money was based on a loose version of the gold standard. The U.S. dollar was pegged to gold; other currencies were pegged to the dollar; stable prices underpinned the prosperity and soaring trade of the 1950s and '60s. Then in 1971 Richard Nixon balked at the high interest rates necessary to maintain the dollar's link to gold. For the rest of the decade, inflation ripped. The cure, starting in 1979, involved two recessions in the United States and the Third World debt crisis.
Latvia fends off devaluation rumors as it tries to cool economy
IHT Nov 12, 2007
The pessimistic view, one endorsed in broad brush by the European Central Bank, holds that Latvia is unable to make the tough choices needed to avoid depegging from the euro.
European economy less at risk than that of U.S., IMF says
IHT Nov 12, 2007
Strong fundamentals mean that the European economy is in a good position to weather financial turbulence but the banking sector needs to beef up its approach to risk management, the International Monetary Fund said Monday.
Understanding the Falling Dollar
Brad Setser (WP) Nov 12, 2007
The factors leading to the precipitous recent fall in the valuation of the U.S. dollar.
Facts and fallacies about US FDI in China
Lee Branstetter & Fritz Foley (VoxEU) Nov 13, 2007
Here are some hard facts countering the myth that Western MNEs have hollowed out their domestic economies in their quest to build up China as the world’s factory.
Weak U.S. Dollar May Be `Checkmate' for the Fed
Caroline Baum (Bloomberg) Nov 13, 2007
When the Federal Reserve talks about the risks to the economy, be it slower growth or higher inflation, it's usually an either/or proposition.
Investor Safe Haven Becomes a Concern
NYT Nov 14, 2007
In another sign of turmoil in the credit markets, large financial firms are being forced to protect money market funds from losses brought on by investments that no longer seem safe.
Hillary Calls 'Time Out'
WSJ Nov 14, 2007
Mrs. Clinton tries to have it both ways--no, make that all ways--on trade.
The No Farmer Left Behind Act
WSJ Nov 14, 2007
Modern farm bills are really about buying votes.
Geopolitics At $100 A Barrel
Robert J. Samuelson (WP) Nov 14, 2007
Oil at $100 a barrel suggests a new geopolitical era when energy increasingly serves as a political weapon.
NAMA Positions "Diverging Rather Than Converging," Dimming Hopes for Doha Deal
BRIDGES Weekly Trade News Digest - Vol. 11, Number 39 Nov 14, 2007
Is an agreement possible in the Doha Round negotiations on industrial goods? Or do governments' 'red lines' simply not overlap enough to allow them to strike a deal? The answer remains far from clear, officials suggest, after a week of talks served once again to highlight WTO Members' differences instead of pointing the way to convergence.
Participants Satisfied With Progress in WHO Talks on Bolstering Medical Innovation
BRIDGES Weekly Trade News Digest - Vol. 11, Number 39 Nov 14, 2007
Members of the World Health Organisation (WHO) on 10 November ended a week of talks without coming up with a draft plan to promote medical innovation, instead noting that they had made meaningful progress and that the negotiations would resume next year.
Regulating the international financial system: towards a more balanced, market-based model
Richard Portes (VoxEU) Nov 15, 2007
The global financial system shows signs of stress – turmoil, not a systemic financial crisis. Risk is being repriced and the unwinding will take some time. Now is the time to think carefully about longer-term reforms needed to improve the stability of the international financial system.
Interest Rates and Dollar Fundamentals
Alan Reynolds (WSJ) Nov 15, 2007
There are two sides to every exchange rate.
Brussels Looks East
Razeen Sally (WSJ) Nov 15, 2007
The EU jumps on the FTA bandwagon, but to what end?
Decree on medical devices in China sets off trade alarms
IHT Nov 15, 2007
The decree calls for new safety inspections for foreign-made medical devices - but not for those made in China.
It's a Semiglobalized World
Pankaj Ghemawat (Globalist) Nov 16, 2007
Is the world economy as integrated as most people perceive it to be?
GCC: Transforming Oil into Financial Wealth
Stephen Jen (MSDW) Nov 16, 2007
We think GCC members should be accumulating wealth through their SWFs: aggressively converting wealth ‘underground’ (in the form of oil) to wealth ‘above ground’ (in the forms of financial or physical assets) would have important non-financial benefits to these economies.
Scant Evidence of Import-Price Pass-through -- So Far
Richard Berner (MSDW) Nov 16, 2007
Is a weaker dollar inflationary? The answer, obviously, is yes. It’s clear that a weaker dollar will, other things equal, boost import prices and possibly inflation expectations, and thus inflation. But other things aren’t equal: I think that the economy is weakening, pricing power is fading, and thus, in today’s circumstances, the dollar’s influence on inflation likely will be small. That logic also applies to the influence of rising commodity prices on inflation. Thus, notwithstanding the Fed’s legitimate concerns about inflation risks, officials will have some latitude to respond to the incipient and palpable weakening in economic activity.
Stephen Jen (MSDW) Nov 16, 2007
The US’ ‘twin deficits’ are shrinking fast, and in the next two to three years are likely to slim down. Adjusting for the ‘J-Curve’ effect and high oil prices, the improvement in the underlying trade balance in the US since end-2005 is remarkable. We think the scene is being set for a significant dollar rally in 2008.
Dollar Still Overvalued, Strauss-Kahn Says
IMF Survey Nov 16, 2007
Managing Director Dominique Strauss-Kahn reiterated November 15,"The view of the IMF is that the dollar is still overvalued" and is so far moving in the right direction despite its recent significant depreciation against the euro.
Realigning the yuan: Resistance from G-20
IHT Nov 17, 2007
The U.S. and the EU face an uphill struggle for support on raising the value of China's currency at a meeting in South Africa.
Two Cheers for Bob Zoellick
WSJ Nov 17, 2007
Good news, and bad, at the World Bank.
Capital Flight and Other Policy Risks
Ethan Penner (WSJ) Nov 17, 2007
The Fed needs to demonstrate to foreign investors that we will not let their assets decline further.
Critics Assail Weak Dollar at OPEC Event
NYT Nov 18, 2007
A rare meeting of the heads of state of the OPEC countries ended here today on a political note, with two leaders — President Hugo Chávez of Venezuela and President Mahmoud Ahmadinejad of Iran — blaming the weakness of the United States dollar for high oil prices.
Eurozone breakup would trigger the mother of all financial crises
Barry Eichengreen (VoxEU) Nov 19, 2007
Adopting the euro is effectively irreversible. Leaving would require lengthy preparations, which, given the anticipated devaluation, would trigger the mother of all financial crises. National households and firms would shift deposits to other euro-area banks producing a system-wide bank run. Investors, trying to escape, would create a bond-market crisis. Here is what the train wreck would look like.
Chinese Dam Projects Criticized for Their Human Costs
NYT Nov 19, 2007
A year after the completion of the Three Gorges Dam, water pollution, landslides and mass resettlement have led to questions about hydropower as a solution to China's energy conundrum.
Argentina and the Paris Club
Mary Anastasia O'Grady (WSJ) Nov 19, 2007
Stop the IMF before it 'helps' again.
Green protectionism
Economist Nov 15, 2007
A dangerous flaw in a bill to control carbon emissions.
Thinking about the dollar
Paul Krugman (NYT) Nov 19, 2007
I have to do some teaching on the subject of the falling dollar and whether it’s recessionary. So herewith some ruminations.
Feldstein’s view on the dollar
Richard Baldwin (VoxEU) Nov 20, 2007
In a May 2007 essay, Martin Feldstein argued that a drop in US mortgage refinancing would raise US personal saving and this would necessitate a fall in the dollar. That’s looking pretty good at the moment. Here his basic logic is explained.
Somalia Worst Humanitarian Crisis in Africa, U.N. Says
NYT Nov 20, 2007
Somalia has higher malnutrition rates, more current bloodshed and many fewer aid workers than Darfur, United Nations officials said.
Why You Should Oppose 'Economic Development'
Michael Cecire (TCS Daily) Nov 20, 2007
It's no substitute for growth.
Protectionist Rhetoric Will Accelerate the Dollar's Slide
David Leo Veksler (Mises Daily) Nov 20, 2007
Pat Buchanan's recent attempt to diagnose the sinking dollar demonstrates that ignorance of basic economics is not limited to the Left. Buchanan points out the plummeting value of the dollar relative to other currencies and major commodities such as gold (up 24% this year) and oil (up over 50% in 12 months). He then declares that "the prime suspect in the death of the dollar is the massive trade deficits America has run up" to "maintain her standard of living and to sustain the American Imperium." This diagnosis offers a tantalizing glimpse of the truth, yet shatters it with protectionist bromides.
High Oil Prices Challenge Policymakers
IMF Survey Nov 20, 2007
A confluence of geopolitical tensions, temporary supply shortfalls, and a weakening dollar has pushed oil prices to record highs, in the context of limited spare capacity. The spike could boost inflation, complicate monetary management, and add to strains on low-income oil-importing countries.
Are immigrants good for cities?
Giovanni Peri (VoxEU) Nov 20, 2007
Research on US data shows that high immigration cities experienced higher wage and housing price growth. Immigration had a positive productivity effect on natives overall, but important distributional effects. Highly educated natives enjoyed the largest benefits while the less educated did not gain (but did not lose much either).
Say It, Hank. Say U.S. Has Strong-Dollar Policy
Caroline Baum (Bloomberg) Nov 20, 2007
The U.S. has a strong-dollar policy. The U.S. dollar is weak. Ergo U.S. dollar policy isn't working or is a fiction.
Falling Behind and Falling Apart: The Bottom Billion
Paul Collier (Globalist) Nov 20, 2007
Will recent trends in development economics ever benefit the bottom billion?
Why is oil bad for a nation’s long-run growth?
Art Durnev & Sergei Guriev (VoxEU) Nov 21, 2007
The consensus story: Resource abundance boosts GDP in the short-run but hinders or reverses the development of growth-enhancing institutions and thus long-run growth. New evidence suggests that this works by worsening corporate transparency, capital allocation and growth.
Draft Texts Facing Delay, As WTO Contemplates End-2008 for Doha Accord
BRIDGES Weekly Trade News Digest - Vol. 11, Number 40 Nov 21, 2007
For weeks, diplomats at the WTO had expected the chairs of the struggling Doha Round trade talks on agriculture and industrial goods to soon come up with new draft agreement texts that were to be the basis for a last-ditch attempt at a deal.
ACP Regions Splinter, As EU Turns Up Pressure for EPAs
BRIDGES Weekly Trade News Digest - Vol. 11, Number 40 Nov 21, 2007
A bloc of Eastern and Southern African countries appears to be splintering in economic partnership agreement (EPA) talks with the EU, with some members of the group set to sign a separate deal with Brussels.
Trade and the Bottom Billion
Paul Collier (Globalist) Nov 21, 2007
Will recent trends in development economics ever benefit the bottom billion?
Squeezed by the dollar and oil, global stocks take a beating
Carter Dougherty (IHT) Nov 21, 2007
Global stock markets staged a broad retreat Wednesday, with a sell-off in Asia stretching through Europe and into the United States, as investors pondered whether the U.S. economy would slow more than expected and as oil prices flirted with $100 a barrel.
What Ordinary People Can Do for the Bottom Billion
Paul Collier (Globalist) Nov 22, 2007
What power do ordinary people in the West have to alleviate the plight of the world's poorest billion?
Danes to vote - again - on the euro
IHT Nov 22, 2007
The prime minister of Denmark said Thursday that the country would hold a second referendum on whether to join the euro, which Danes rejected seven years ago.
Financial Globalization and Monetary Policy
Mark M. Spiegel (FRBSF) Nov 23, 2007
My remarks concern monetary policymakers' opportunities and challenges in the face of the growing volume of international capital movements. The topic is currently of particular interest for two reasons: First, this year marks the tenth anniversary of the devastating Asian financial crisis, in which issues associated with disruptive capital flows were paramount. Second, world financial markets are currently experiencing substantial turbulence; although it is due primarily to the "subprime" mortgage crisis taking place in the United States, international financial linkages have also played a prominent propagating role.
Currencies: Portfolio Allocation for Sovereign Wealth Funds
Stephen L. Jen & Luca Bindelli (MSDW) Nov 23, 2007
In this note, we document the risk-return profiles of various asset classes in the last two decades, and make some observations concerning the investment portfolios that SWFs may adopt.
EU to press China over yuan
IHT Nov 23, 2007
Next week in Beijing, European leaders will tell China that it must revalue its currency and address its trade gap with the West.
Airbus's currency exchange troubles could multiply
IHT Nov 23, 2007
Slashing spending could delay a successor plane to the A320 by several years.
Subprime Series, part 1: Financial Crises Are Not Going Away
Stephen Cecchetti (VoxEU) Nov 26, 2007
Here is the first in a series of 4 essays exploring the lessons from the subprime turmoil. It sets the stage for the series, arguing that financial crises are intrinsic to the modern economy, but both individuals and governments should make adjustments to reduce the frequency of financial crises and their impact on the broader economy.
Sovereign Wealth World
James Surowiecki (New Yorker) Nov 26, 2007
Between corrupt mortgage brokers, feckless lenders, and risk-happy hedge funds, there’s plenty to keep investors and policymakers up at night. But recently a new item has appeared on the list of things to worry about: so-called sovereign wealth funds, which are investment funds controlled by foreign governments. While these funds are not new—they first rose to prominence in the seventies, as a way for Arab states to reinvest their oil money—of late they’ve become major players in global markets, thanks to the precipitous rise in oil prices and the booming Chinese economy. China’s new sovereign fund alone has two hundred billion dollars to invest, while sovereign wealth funds all together control more than two and a half trillion dollars—and could control as much as twelve trillion by 2015. These funds now have the buying power to shape market prices and acquire assets throughout the developed world. Were China’s fund so inclined, it could buy Ford, G.M., Volkswagen, and Honda, and still have a little money left over for ice cream.
China rejects Sarkozy calls on renminbi
FT Nov 26, 2007
China has waved aside a call from Nicolas Sarkozy for accelerated appreciation of the renminbi against the euro, telling the visiting French president it would continue its exchange rate reforms at its own 'gradual' pace
Could the euro rule supreme? It's not worth it
Simon Tilford (FT) Nov 26, 2007
The risk of conflict within the eurozone is clear. A stronger euro would be anathema to those already worried about its strength.
Offshoring service sector jobs: the role of distance
Keith Head, Thierry Mayer & John Ries Nov 27, 2007
How much should service-sector workers in rich nations fear offshoring competition from much lower paid workers in India? New research suggests that distance still provides signification pro¬tection, almost as much in services as it does in goods. Once again the death of distance has been greatly exaggerated.
Follow the Fundamentals
David Brooks (NYT) Nov 27, 2007
The U.S. still has much more to gain than to lose from openness, trade and globalization.
Oil Producers See the World and Buy It Up
NYT Nov 27, 2007
Flush with petrodollars, oil-producing countries have embarked on a global shopping spree.
Why banking is an accident waiting to happen
Martin Wolf (FT) Nov 27, 2007
What is wrong with the sector? It is too profitable, over-protected and takes risks, which is why a crisis emerges every few years. But the public sector subsidises this risk-taking
Exchange Rate Regime Bipolarity Continues, Slowly
IMF Survey Nov 27, 2007
Advanced and emerging market countries are continuing to shift to either a hard peg or a free floating exchange rate regime, although at a slower pace, Governor of the Bank of Israel, Stanley Fischer, said at an IMF research conference lecture.
Sovereign funds upbeat on growth of financials
FT Nov 28, 2007
Investment funds from the Middle East and Asia have invested an estimated $37bn in shares of western financial companies this year in a sign the funds are taking a more optimistic view than other investors of the growth prospects for banks, exchanges and asset managers.
Global Cleansing
WSJ Nov 28, 2007
A backlash against bribery, from Germany to South Korea.
Papering Over Protectionism
WSJ Nov 28, 2007
A U.S. trade body rejects tariffs against China, but will Congress?
Subprime Series, part 2: Deposit insurance and the lender of last resort
Stephen Cecchetti (VoxEU) Nov 28, 2007
The second essay in this 4-part series discusses the lesson from the Bank of England’s recent experience, arguing that a lender of last resort is no substitute for a well-designed deposit insurance mechanism.
Wen Jiabao says China will loosen reins on the yuan
IHT Nov 28, 2007
The remarks by the Chinese prime minister came after a summit meeting in which European Union financial leaders pressed Beijing to move on matters of trade and currency.
Prudential outsourcing deal has a cold logic
FT Nov 28, 2007
Prudential's announcement that it will outsource much of its UK back office to Capita earned a rare pat on the back from the unions.
Several ACP Countries Sign EPAs with Brussels, As Group Continues to Splinter
BRIDGES Weekly Trade News Digest - Vol. 11, Number 41 Nov 28, 2007
With an end-year deadline looming, some countries in eastern and southern Africa have broken away from regional negotiating blocs to sign separate economic partnership agreements (EPAs) with the EU. The prospect of losing preferential access to the EU market helped push these countriesto agree to open their own economies to a wide range of European imports.
Taiwan Drops Opposition to Chinese Appellate Body Judge, Unblocking WTO Dispute System
BRIDGES Weekly Trade News Digest - Vol. 11, Number 41 Nov 28, 2007
Taiwan on 27 November dropped its opposition to the appointment of a Chinese lawyer to the WTO appellate body, paving the way for her and three other judges to be appointed to the global trade arbiter's highest court. The move unblocked the operation of the WTO dispute settlement system, after the row over attorney Zhang Yuejiao had briefly threatened to escalate into a "crisis."
Foreign state funds should be offered shelter
George Kleinfeld (FT) Nov 28, 2007
The players with the most chips in global capital markets today tend to have one common characteristic – foreign-government ownership.
Citi of Arabia
WSJ Nov 29, 2007
Abu Dhabi takes Manhattan--and Washington, too?
Brussels vs. Beijing
WSJ Nov 29, 2007
Trade deficits aren't the cause of Europe's problems.
The panic about the dollar
Economist Nov 29, 2007
A full-blown dollar collapse would be disastrous. Thankfully, it need not happen.
Losing faith in the greenback
Economist Nov 29, 2007
How long will the dollar remain the world's premier currency?
China agrees to end a dozen subsidies that trouble trade relations
IHT Nov 29, 2007
The WTO settlement came only two weeks before a high-level meeting between U.S. cabinet members and China aimed at reducing tensions with Beijing.
Global response needed to the shifting world order
Philip Stephens (FT) Nov 29, 2007
Globalisation was something rich countries did to the rest of the world – for the good of all, of course. Now, amid US anxiety about intellectual property and product standards, it is beginning to feel as if globalisation belongs to Asia.
Achieving low-carbon growth for the world
Nicholas Stern (VoxEU) Nov 30, 2007
Targets and trading must be at the heart of a global agreement to reduce greenhouse gas emissions, according to Sir Nicholas Stern delivering the Royal Economic Society’s 2007 annual public lecture today, ahead of next week’s world summit on climate change in Bali.
Subprime Series, part 3: Why central banks should be financial supervisors
Stephen Cecchetti (VoxEU) Nov 30, 2007
The third essay in this 4-part series argues that central banks should have a direct role in financial supervision.
American Brain Drain
WSJ Nov 30, 2007
Why we need foreign-born Ph.D.s.
Currencies: USD Peggers to Blink, Now the Fed Has Turned Dovish?
Stephen Jen (MSDW) Nov 30, 2007
As the Fed continues to ease, possibly quite aggressively in the coming year, and if the rest of the world does not slow too much, the dollar pegs will come under intense pressure.