RSS

September 24, 2009 | The G20 Pittsburgh Summit - Symbolic Policies or Fundamental Reforms?

Johannes Klocke: In principal, the G20 process is right. Yet, the emphases of the G20 agenda remain questionable and problematic. It is becoming more and more likely, that even the deepest crisis since the Great Depression will not suffice to initiate fundamental reforms of the financial system.

September 18, 2009 | How to Be Compensated for Failure?

Anne Deter: Despite the harsh lesson the banks obviously haven’t learnt. As Sarkozy, Obama and Brown all rail against the excesses of the CEO’s and huge bonus payments the trend continues. A return to the basics of the social market economy could provide the perfect solution and hopefully lead to self regulation.

October 16, 2008 | Too Much Political Meddling Will Only Prolong the Financial Crisis

Jens F. Laurson & George A. Pieler: The economic crisis has brought harmony to trans-Atlantic affairs. Europeans might secretly blame the calamity on US “Casino Capitalism,” but they know they are rowing in the same boat and so cooperation is the order of the day. The stock markets treat this as good news now, but it could easily do more harm than good.

September 18, 2008 | Asking Financial Markets for a Viennese Waltz

Andreas Kern: This research note by Christian Fahrholz and myself depicts a new line of argument for the current global financial turmoil and especially the recent American financial crisis.

March 21, 2008 | Multinationals Face Political and Economic Risks

Frederik C. Köncke: In an increasingly complex global environment, businesses are seeking a greater understanding of how they are at risk.

November 18, 2008 | Obama's Agenda: 10 Challenges for the New President

Great challenges await the 44th US president, especially economic ones. The Brookings Institution lists the ten most important:

Restoring Financial Stability: Strengthening the global financial system is a priority alongside the task of defeating the current financial market crisis. Such a strengthening includes increased national regulation and decreased dependence on foreign credit.

October 13, 2008 | G7 Must Work With IMF to Avert Global Recession

It will not suffice if the G7 only saves the financial systems of its own members. ++ The wealthiest nations can afford to shore up their banks, but emerging countries won’t be able to do the same on their own. ++ Steep recessions will follow in emerging regions and will in turn dampen the economies of Western Europe and the US. ++ Therefore, in its own interest the G7 should ensure that

October 9, 2008 | Unjustified Panic May Lead to Great Depression

The current breakdown in financial markets is driven by unjustified panic. ++ Restoring confidence in the financial systems should be the priority for American and European governments. ++ EU countries should offer a time-limited guarantee of the liabilities of the most systemically important institutions. ++ Coordination on how to proceed is necessary if banking systems are to reemerge healthy

October 9, 2008 | US Sneezes, World Catches the Flu

Even those inimical to US policies “have reason not to gloat over America’s comeuppance.” ++  Hugo Chavez has warned of the impending force of “one hundred hurricanes” about to be unleashed on the world’s markets. ++ European nations are having a hard time coming to terms with a solution; Sarkozy has promulgated an EU-wide bailout fund for all 27 members, which faced ardent opposition from

October 2, 2008 | You Lose, I Lose Economics

Asia’s role in the financial crisis shouldn’t be underestimated. ++ Endless liquidity coupled with cheap goods fueled America’s “buy-now pay-later consumption,” inflating the housing bubble in the process. ++ The overextension is as much a story of “Asian prudence” as it is of “US recklessness;” Meanwhile, China and others grew at astounding clips. ++ While there has been a relative shift of

September 30, 2008 | Financial Anger the World Over, but Misguided

Anger stemming from the financial mess is ubiquitous; the biggest backlash comes from outside the Anglo-American world and is directed at their unique type of capitalism. ++ The disparity between individualism and solidarity is the primary cause. ++ Markets are not perfect, nor are Adam Smith’s theories. ++ “Arm’s-length finance,” a distinctly Anglo-American style, has made headway on the

September 26, 2008 | A New Financial Ethos Needed

The financial crisis evinces the exigent need for a “Global Monetary Authority.” ++ No international framework exists for dealing with such crises; the vacuum is perilous. ++ Financial wealth is shifting to the East; the result will be a “clash of philosophies,” in which the American financial system will be contested. ++ The GMA would “set the tone for capital

September 19, 2008 | Multilateralism - Making the Market Work

This is not the end of capitalism, but “the global financial system will never be the same again.” ++ Those responsible for the mess are now entrusted with cleaning it up. ++ Politicians had little choice: socialize the debt or sit and watch as depositors are sucked into the maelstrom. ++ The primary task of politicians should be to establish a system of credible international

September 17, 2008 | The Time for Government Regulation is Now

Three of the top five Wall Street investment banks are no longer independent or no longer exist. ++ The US financial system is “melting away.” ++ Undue faith in unregulated markets led to dubious risk taking in the US as well as in Europe. ++ The worst is yet to come: Government bailouts for private sector financial industries are looking “increasingly likely.” ++ The

July 31, 2008 | How the Banks Can Win Back Confidence

Common efforts to reform the financial system are on the agenda and one step towards this aim is the wide dissemination of the final report of the Institute of International Finance’s committee on market best practices which contains guidelines of conduct necessary to rebuild confidence in the global banking system. ++ It is a breakthrough step as for the first time global financial leaders

July 30, 2008 | The Global Economy Needs to Slow Down

The deepening financial crisis may seem a rationale for expansionary global macroeconomic policy. ++ Individual countries may see some short-term growth benefit to US-style macroeconomic stimulus, albeit these vantages will be minimal compared to the inflantation which they initiate. ++ There is a need to introduce more banking discipline and to call on policymakers to refrain from excessively

July 14, 2008 | The Fed Won't Solve Fannie and Freddie's Problems

Despite warnings of their imminent collapse, with the help of US government, Fannie Mae and Freddie Mac should be able to survive and stock market panic can be avoided. ++ Since the two companies have $5.3 trillion in liabilities, the Fed will need to step in if they become insolvent or consequences could be dire. ++ Their survival, however, is not necessarily good news: governmental intervention

July 14, 2008 | Europe Should Lead Global Financial Reform

Outperforming the dollar and the yen, the euro is a resounding success. ++ Still, Eurozone policymakers should allow for more economic freedom and encourage competition. ++ Europe should stop supporting national enterprises and give the ECB more support. ++ In terms of external economic policy, Europe should offer the world its experience and help reform the G8 and IMF as well as deal with

July 2, 2008 | Monetary Policy Must Tighten to Avoid Future Crises

According to a report by the Bank of International Settlements, the ongoing financial crisis has revealed the folly of lax monetary policy during periods of rapid credit growth and asset prices. ++ Central banks and financial institutions should approach the system holistically, not targeting certain individuals, but rather exercising “macroprudential” policies, which focus on

April 24, 2008 | Will the Chinese Change International Institutions?

The appointment of a Chinese Professor, Lin Yifu, to the post of chief economist at the World Bank reflects the changes in the global balance of powers. ++ In the past, the World Bank, like the IMF, was traditionally dominated by American, Europeans, and their neoliberal agenda. ++ However as American financial pillars are now underpinned by Chinese money, it has become impossible to ignore

April 14, 2008 | Africa's Fragile Triumph Over Global Financial Turmoil

The rise of American philanthropy and foreign investment, as well as the need for raw materials are protecting Africa’s frontier economies from international economic volatility. ++ Yet a slowdown in the US and EU could lead to the decrease of the significant cash
infusion from immigrants. ++ And investors are undependable since they fear political turmoil in formerly stable Nigeria, Kenya and

April 10, 2008 | Financial and Leadership Deficits

The current financial crisis demands strong governmental actions, particularly in the US. ++ The US’s financial problems can be explained through the debt crisis, credit crunch, and housing bubble which lead to a consumer binge. ++ The government should help homeowners stay in their homes and engage in effective rescues when necessary. ++ This downturn is only made worse by the current US

March 28, 2008 | US Financial Crisis: An Advantage for Russia

Russia could benefit from the US financial crisis if Americans transfer their excess liquidity to currencies such as the ruble which are likely to appreciate. ++ Russia is enticing to foreign investors: the ruble is undervalued, Russian equities are cheap, and commodities are scarce. ++ Yet Russia will also face risks as a sudden increase in capital inflow could lead to reduced reform and

March 18, 2008 | "Fighting Recession With Panic"

As a reserve currency, the US dollar’s value was only sustainable while the economy was growing. ++ As many economists expect a recession, the Fed is moving aggressively to pump more liquidity into the US banking system. ++ This and increasing trade protectionism are adversely sustaining consumption, hindering capital formation and entrepreneurship, and halting the creation of wealth necessary to

March 18, 2008 | Increasing Intervention to Deal With the Market Crisis

Europe and Japan’s deafening silence in the face of the US’ market crisis is exacerbating the credit turmoil. ++ US policymakers should alter contracts for mortgage holders and/or use the government’s balance sheet to support the housing market. ++ The Federal Reserve must act in unfamiliar ways, because its traditional instruments are “too blunt.” ++ Coordination with international central banks

March 11, 2008 | Global Capital Markets: The USA Stands its Ground

The world financial
markets’ present bout of turbulences should not hide the long-term and often brighter
trends:

Despite
occasional crises, global financial assets have expanded continuously over the
last decades. In 2006 alone, global assets increased by 17% to 167 trillion
USD.
The
growing importance of emerging countries’ financial markets and their
increasing integration in

December 21, 2007 | The US Sub-Prime Crisis: Mortgage Bonds and the Sociology of Repossession

The inner-workings of the sub-prime crisis in the United States are explored by the BBC. Scrutinized are its origins and its effects, but particularly the role of the mortgage bond market in the outcome and current challenges.

The city of Cleveland is used as a representative example of the complications, given financial institutions capitalized on its predominant character as working-class,

May 31, 2007 | Bruegel Says Worldwide Exchange Rates Adjustment Would Fight Current Account Deficits

The March 2007 Bruegel Policy Brief reveals that imbalances in global current account positions are not sustainable and need adjustment. A 15% depreciation of the dollar and an appreciation of Asian currencies is needed in order to:

• reduce the US current account deficit,
• faciliate China’s focus on domestic demand and reduce its accumulation of foreign exchange reserves, and
  *