In The News

Paulson’s Moment of Truth

September 18, 2008
With major firms imperiled, the US government has had to up-end its economic policies by intervening and extending rescues to private investment banks, government-sponsored lenders and a major insurance firm. The bail-outs have added to US debt while deflating value of the US dollar. By refusing to bail out investment bank Lehman Brothers, US Treasury Secretary Henry Paulson signaled that...

Islamic Bond Decree Cripples Sukuk, Imperils Projects

Haris Anwar September 5, 2008
Strict interpretation of Islamic law discourages interest payments associated with debt. Banks in fast-growing areas of the Middle East, like Dubai, created a special group of bonds – or sukuk market – described as Shariah-compliant, which allow payment through the exchange of assets rather than money. Bonds, as instruments of debt, raise capital and spur development of property, and unlike...

Banking on Neo-Confician Capitalism

Ho Kwon Ping September 5, 2008
Low interest rates and easy loan terms encouraged people and businesses around the globe to live beyond their means. Those loans were based on assets that have since plummeted in value, explains Ho Kwon Ping, chairman of the board of trustees for Singapore Management University. Investment banking and speculation create instant winners and losers, increasing income inequality. He explains that “...

A Global Approach Is Needed to Beat Inflation

Adam Posen August 26, 2008
Inflation invites discontent, because wages purchase less as the prices of goods and services rise. Central bankers, including those in the US and China, should cooperate in combating inflation, urge Adam Posen and Arvind Subramanian of the Peterson Institute for International Economics in an essay for the Financial Times. By resisting tighter monetary policies and expecting other nations to...

The India-China Paradigm Is Passé

Kanika Datta August 25, 2008
The days of business nationalism are long over, including for those based in China and India, suggests Kanika Datta, writing for the Business Standard. Chinese and India businesses seek mergers and acquisitions with foreign firms to expand and deliver products and services quickly, cost-effectively and efficiently to both domestic and new markets. At times, firms venture into new territory to...

Emerging Markets Must Shift Their Focus Inwards

Raghuram Rajan August 22, 2008
Emerging markets can prepare for a slowdown in the US by allowing their currencies to appreciate in value and developing new products for their own consumers, advises Raghuram Rajan, finance professor with the University of Chicago and former chief economist of the International Monetary Fund. The transition – as developing nations shift from making products for Americans and Europeans to...

The Oil Price: Nothing to Smile About

August 12, 2008
The rising price of oil throughout summer 2008 resulted in higher prices for most other products, especially food. With a dip in the price of oil, some analysts expect central banks to hold off from lifting interest rates, maintaining less expensive credit and money for business. But that cheap credit can lead to risky speculation and bubbles, some economists argue. Current interest “rates now...