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September 26, 2008 | HOT ISSUE: <br />How to Respond to the Financial Crisis?

From the Editorial Team: The current financial crisis has sent economists, politicians, and citizens alike scrambling to find solutions. In the US and Europe, expert opinion is divided on how to revamp the economy. How should the United States, the EU, the private sector, and others respond to this international situation?

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Global Must Read Articles

May 6, 2009 | Crisis Management Means Securing Long-term Growth

The economic recession demands crisis management that
incorporates not only spontaneous aid measures, but also lays the foundations
for long-term growth. Poor crisis management could have fatal effects on the
long-term prospects of growth. Cases in point are Japan
and Sweden,
who experienced many economic hardships in the 1990s. Japan’s faulty
crisis management strategy led to a limping

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May 6, 2009 | Eastern Europe Needs EU Help to Overcome Crisis

While
Western Europe is slowly beginning to view the
future once again with optimism, the crisis still has a tight grip on the East.
Multiple Eastern European countries are sinking deeper into recession, the
export market with the West is broken, and banks are on the brink due to
excessive indebtedness and falling exchange rates. The effects thereof are felt
in Western Europe as well. It is

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April 30, 2009 | Financial Crisis Requires Deeper Changes

The IMF estimates the fiscal costs of rescue efforts to be high and difficult to obtain. ++ Still, the solid logic remains: the fiscal costs of deep recessions are greater than those of rescuing finance. ++ Choices of how to fix the system entail risks and little hope for amelioration. ++ Managed bankruptcy — with unpleasant risks — makes sense due to the dire effect on incentives of the

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November 20, 2008 | An Auto Bailout Would Damage Free Trade

A bailout for the Big Three automotive companies could damage US engagement in the global economy. ++ Foreign investment and job insourcing would take a major hit, costing jobs and devaluing the dollar. ++ By expanding protectionist policies around the globe, the bailout would hinder US multinational businesses, including the Big Three auto-makers. ++ To keep up international competition, the US

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October 24, 2008 | Nationalism Trumps Global Economic Cooperation

Financial turmoil has provoked leading nations to recognize the need for economic cooperation, yet fierce nationalism has reared its head amid the calls for global unity. ++ “Economics and finance may be global, but politics is still local.” ++ Western nations seek to retain power in the world system and emerging nations do not wish to yield their sovereignty. ++ Ideally the next US president

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October 6, 2008 | Potential EU Monetary Crisis - Recapitalize Now

Despite the success of some initial bank bailouts granted by the EU, such as Fortis, Europe is still short of an overall financial strategy. ++ Three things are needed: first, money to recapitalize the banking sector; second, a semi-permanent EU crisis committee to make financial decisions; and third, clear rules indicating when to recapitalize. ++ Sarkozy was right to support a EUR 300 billion

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October 6, 2008 | Bailout is "Dirty Socialism"

The nationalization of Fannie Mae and Freddy Mac was “clean socialism.” ++ The Wall St. bailout, on the other hand, has exposed deep divisions in the US. ++ Both sides of Congress had serious doubts when passing the bill. ++ This is dirty socialism. ++ Liquidity could be created by only granting credit to good banks, but the US banks are all “mired in the sub-prime morass.” ++ While

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October 3, 2008 | Bailouts Work, But the Current Paulson Plan Won't

The Laevan and Valencia study of 42 recent bailouts shows they can work, yet the current Paulson plan may not. ++ “Paulson and Bernanke should use bailout money to recapitalize the banks, not buy bad assets.” ++ Furthermore, the US bailout is likely to cost $2 trillion, not a mere $700 billion. ++ Successful bailouts usually include debt relief for consumers and businesses, which the current plan

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October 1, 2008 | Paulson 0, Democracy 1

“It is a glorious day for democracy.” ++ With all members of the House up for re-election in November, the rejection of the Paulson plan is a clear indication of the American public will - Wall Street must be accountable, not the tax payers. ++ Americans distrust the Bush administration, question its trickle-down economic theory, and fear more allocations of public funds to political favorites,

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September 29, 2008 | Economics We Don't Understand

We are witnessing the very “bankruptcy of modern economics.” ++ While we have long understood demand-oriented macroeconomics, the current financial crisis does not conform to any previous economic model or known solution. ++ The previous $152 billion stimulus package didn’t help, since the problem lay with financial markets, not consumer markets. ++ The Paulson plan is the most effective solution

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September 25, 2008 | No Blank Check for Paulson

The Bush administration’s financial bailout package is not well received by Congress – and rightly so. ++ There should be no “blank check,” given Henry Paulson’s maladroit leadership. ++ Obama has outlined four cardinal conditions that are imperative to any effective bailout; “these are the right principles.” ++ Moreover, the government should give

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September 23, 2008 | US Bailouts: Socialism is Not the Answer

Washington is bankrupt, fiscally and morally. ++ Socialism is in full swing, proving the free-market Republicans hypocrites. ++ Paulson wants Congress to grant the Fed $700 billion to buy private assets. ++ Such a move will only create more financial turmoil for the US and Europe in the future. ++ Moreover, the entire G8 is a financially “spent force.” ++ Yet, ironically the political landscape

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