In The News

World Economy: What Went Wrong

March 23, 2009
The IMF concludes that a lack of regulation – not global imbalances – led to crisis, and “the distinction has important consequences for whether macroeconomic policy or more regulation of financial markets will provide the solutions to the mess,” reports the Economist. Economists examine the root causes, comparing problems to previous crises to develop solutions and prevent repeats. “The IMF...

No One Model for New Global Economy

Yoichi Funabashi March 23, 2009
As the global crisis deepens and countries seek different ways out, devising new global economic institutions would do little to restore confidence. Instead, the institutions in place – the International Monetary Fund, the Bretton Woods system on exchange rates and the World Bank – should take immediate steps to incorporate a rising Asia into their systems of global governance. Otherwise the...

How Washington Can Prevent “Zombie Banks”

James Baker March 10, 2009
The word “zombie” describes a corpse-like being, under a spell that allows it to move about, but not undertake any deliberate or meaningful action on its own. Such is the term used by former James Baker, former US treasury secretary, to describe banks that accept huge government bailouts, but don’t go about the business of lending. When Japan suffered economic collapse in 1990, the US sternly...

Fixing Global Finance: An Interview with Martin Wolf

March 5, 2009
Martin Wolf, Chief Economics Commentator and Associate Editor for the Financial Times, talks about his new book “Fixing Global Finance,” and the current financial crisis. In this interview with Nayan Chanda, editor of YaleGlobal, Wolf explains why global imbalances caused the financial crises, outlines the steps for ending this destructive cycle, and offers suggestions on how to help ensure...

A Faltering Solidarity? EU Resists Eastern Bailout Pleas

March 4, 2009
The word “bailout” is not the exclusive property of American officials – it has been buzzing on the lips of leaders around the world as the crisis develops. The European Union has found itself in an especially tight spot since its member countries have experienced very different levels of economic hardship. While it is working towards a common recovery plan, the pressure is revealing old fissures...

Another Fine Mess

February 3, 2009
As European banks receive another round of government assurances, the purpose of funding is to insure toxic assets and stimulate lending. Despite protests from some quarters of society, these bailout packages, by shifting default risk from the banks to the governments that back them, have kept fear of bank runs at bay, according to an article in the Economist. Still, not enough credit is flowing...

Democrats Push Obama for Smaller Tax Cut in Stimulus Package

Peter Nicholas January 10, 2009
President Barack Obama faces pressure from his own party to adjust a government economic stimulus plan of $775 billion, reducing tax cuts and spending more on road, bridge and infrastructure construction. The US politicians anticipate that some combination of spending and tax cuts could increase US confidence and improve the overall economy. But tax cuts and spending will also add to the US debt...