In The News

With US on the Brink of Default, Eyes are on Rating Agencies

David Dapice July 26, 2011
Governments have long operated by borrowing, not just for long-term projects but also daily operations. The US, with a self-imposed debt ceiling, borrows more than 40 cents for every dollar it spends. With the government about to exceed spending limits, global investors are on edge, waiting to see if the US Congress lifts the current debt ceiling, allowing continued operations, or goes into...

How Foreign Money Can Find Its Way Into Political Campaigns

Dan Froomkin July 20, 2011
The US government and campaign-funding reform groups struggle to prevent foreign money influencing US elections. Foreign governments and corporations openly spend millions on lobbying efforts, more than $200 million in 2008, reports Dan Froomkin for the Huffington Post. Lobbyists can easily hike their own wages and redirect foreign funds as donations. “[S]ome of that money may well be wending its...

China Urges US to Protect Creditors by Raising Debt

Bettina Wassener, Matthew Saltmarsh July 15, 2011
China, a major lender to the US, urges the president and US Congress to reach agreement on lifting the nation’s debt limit, so that bills can be paid. “China holds more than $1 trillion in United States Treasury securities, making it highly sensitive to any developments that could lower the value of those holdings,” reports the New York Times. Statutory limits have been in place since 1917, an...

Europe Seeks to Free Itself From Rating Agencies' Grip

David Böcking July 8, 2011
Risk and creditworthiness of state debt are largely assessed by three major agencies based in the US. Nations rated low – due to low revenues, excessive borrowing or threat of default – pay high interest rates to borrow. As Greece and Portugal struggle to repay massive debt, facing steep downgrade by the agencies, European politicians renew calls for an independent credit-rating agency based in...

Playing Make-Believe With Greece

Floyd Norris July 4, 2011
Operating under the assumption that their economy is “too big to fail,” Greeks anticipate an infusion of new loans and are in no hurry to embrace austerity. Despite their role in failing to regulate the excessive lending, central bankers resist accountability for the crisis in Greece. Floyd Norris of the New York Times compares central and commercial bankers: Both loaned funds without adequately...

Growing Economies, Rising Problems – Part II

Uri Dadush, William Shaw June 23, 2011
The global economy is expected to triple in size by the year 2050, and much of the growth will come from emerging economies, which were viewed not long ago as impoverished and backward. This YaleGlobal series examines the consequences of the changing global economic order. While developing nations accrue more economic power, thanks to their large populations, they’ll remain relatively poor, note...

How the Euro Became Europe's Greatest Threat

June 22, 2011
Ordinary Europeans are losing patience, wondering if more bailouts can possibly stem the crisis once and for all. A handful of finance ministers scramble to contain the damage, preventing the Greek crisis from spreading and forcing cuts in valued social programs in nations where citizens did not overspend. The euro’s founders did not envision such a crisis or the political fury over a huge...