In The News

Global Risk of US Credit Crisis – Part II

David Crane September 24, 2007
The globalization of finance has made vast amounts of capital available to many across the world, allowing select leading firms and individuals to become fabulously wealthy. But a lack of effective regulation and opaqueness of many financial instruments also exposed many firms and individuals to enormous risk. Globally connected financial markets and high-speed technology mean that one nation’s...

“Fed, We Have a Problem”

Jeffrey Garten September 12, 2007
Governments with checks and balances are accustomed to internal quarrels over the best ways to solve problems. Such is the case for the US in confronting a sub-prime mortgage crisis that threatens consumer spending, credit availability and jobs around the globe. Firms and investors facing immediate losses from the crisis urge the chairman of the US Federal Reserve System, Ben Bernanke, to lower...

Amid the Mortgage Defaults, America's Day of Reckoning

Joseph E. Stiglitz August 22, 2007
As President George W. Bush’s tax cut for the rich did not help to stimulate a lagging economy during the 2001 recession, the Fed sought to lift by a drastic interest rate cut. Unfortunately, this only made matters worse as more Americans went into large debt. In recent years, lured by "subprime" mortgages and "teaser rates," many Americans overextended themselves, resulting...

Why Dollar Hegemony Is Unhealthy

Thomas I. Palley June 20, 2006
The US dollar holds value for more countries than any other world currency and comprises about two thirds of world’s official foreign-exchange holdings. This dependence allows the US to run large trade deficits in purchasing a cornucopia of goods – from Porsches to t-shirts – by distributing paper IOUs in place of actual dollars. Because of a global faith in the voracious appetite of the US...

Dealing with a Declining Dollar – Part II

David Dapice February 9, 2005
If today's US budget deficit raises concerns, then tomorrow's projections should sound an alarm, writes economist David Dapice. As the United States descends further and further into debt – by several trillion dollars over the next ten years – the value of US currency will decline. Should a worldwide "run on the dollar" result, shockwaves would resonate throughout the global...

Dealing with a Declining Dollar – Part I

Jeffrey E. Garten February 7, 2005
There may be trouble brewing in the global financial system. With US external debt now over US$2.5 trillion, foreign creditors may soon demand higher interest rates in order to keep money flowing into America. In turn, this might lead to a US recession that will eventually spread globally. However, such a disaster could be averted if other countries were to allow their currencies to move...

Protests Greet Yet Another WTO Meeting

Pranab Bardhan September 8, 2003
As the World Trade Organization prepares to meet in Cancun, Mexico, backers and detractors of globalization are clashing again, with each side claiming to represent the interests of the world's poor. Those opposed to globalization in its current form point to an increase in inequality and poverty in countries that have opened up to international capital and corporations, while supporters...