In The News

The Markets Prey on Debt-Laden Nations

Joergen Oerstroem Moeller January 17, 2011
The world has gross savings of more than $61 trillion, reports the International Monetary Fund. Those holdings are highly imbalanced: China’s surplus is more than $4 trillion while the US owes $14 trillion. Investors relentlessly detect and predict trends in pursuit of higher profits. Japan, the US and many European nations carry high debt loads. The financial markets are impatient with low...

The Rising Burden of Government Debt

Eswar Prasad, Mengjie Ding December 29, 2010
Nations hiked debt in recent years to escape economic crisis – with advanced economies doing most of the borrowing. Global debt is expected to more than double from $23 trillion in 2007 to $48 trillion in 2015. Emerging markets not only borrow less, but they also contribute more to economic growth, report Eswar Prasad and Mengjie Ding for the Brookings Institution. The pair examines debt not only...

Global Bond Rout Deepens on US Fiscal Worries

Ambrose Evans-Pritchard December 10, 2010
The price of borrowing is climbing for the US as investors like China and Russia unload holdings of US treasury bills. The US has massive debt, representing about 10 percent of its GDP, and struggles for fiscal responsibility in a range of government programs, including health-care and retirement for senior citizens. Meanwhile the US president and Congress contemplate renewing across-the-board...

If You Thought the Bank Bailout Was Bad, Wait Until the Mortgage Defaults Hit Home

Morgan Kelly November 16, 2010
Ireland’s decision in September to borrow from the European Central Bank to repay €55 billion in bonds of bankrupt Irish banks calmed markets for the time being. The outcome satisfied large European banks that held the bonds, but left the Irish government with an open-ended commitment to cover losses amounting to more than 20 percent of GDP. Writing for the Irish Times, economist Morgan Kelly...

How Speculators Are Crippling the Copper Industry

Jens Glüsing, Alexander Jung, Thomas Schulz November 4, 2010
Volatility in copper prices – and commodity prices more generally – is a product of financial speculation. Expansion of internet market trading, ravenous Chinese demand, and large financial firms looking to diversify portfolios contribute to demand. Copper is an essential component for cables, plumbing and electronic devices, and the limited nature of natural resources like copper piques the...

Chinese Bank Chief Urges Push Overseas

Jamil Anderlini October 28, 2010
Crisis provides opportunity, the old Chinese saying goes, and the Bank of China's chairman sees economic opportunities as banks of other nations struggle to recover. His comments could signal an end to a government ban on offshore mergers and acquisitions by Chinese financial groups, notes Jamil Anderlini for the Financial Times. The informal ban has been in place since 2007 as recognition...

G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

Simon Kennedy, Eunkyung Seo October 26, 2010
Relatively low currency values make a nation's exports more attractive for global customers. Before global recession struck, the US and other nations protested artificially low values of China's currency. Heeding the warnings, China insisted on a gradual rise in value. To counter global recession and boost domestic spending, the US and others pumped currency into markets, essentially...