Over the past decade, Chinese trade revenues, savings and purchases of US debt increased. Low interest rates encouraged US consumers to spend and housing prices soared. But such imbalances could not be sustained and financial instruments containing mortgages for homes that have lost their value, have proven toxic for the world. Economists and central bankers are still struggling to find a way out of the subprime mortgage crisis. If Japan’s lost decade offers lessons, then deflation must be averted at all costs if there is to be hope for a recovery.. But for the long-run, one magical phrase emerges from experts and that’s “stricter regulations for the banking industry.” Once governments succeed in restoring consumer and investor confidence, they should focus on designing regulations that encourage responsibility and a long-term outlook. Furthermore, policymakers have to recognize the need for global oversight of the banking industry, either by strengthening existing institutions or by creating new international authorities. The timing of the rescue is uncertain, and the certainty of its efficacy remains in question. To put the matter in historical perspective, there is still no consensus on whether government spending policies of Franklin D. Roosevelt or increased demand for goods created by Second World War pulled the United States out of the Great Depression. One certainty for this crisis: there are no localized solutions for a problem that extends throughout the world.

Davos 2016: Questions About Globalization's End and What Comes Next

Inequality threatens globalization
Paul Laudicina
January 22, 2016

The World Wary as US Federal Reserve Declares End to Debt Crisis

Federal Reserve lifted interest rates for first time since 2007, aiming for normalization; emerging markets may struggle
Chris Miller
January 5, 2016

The Globalization of America’s Colleges

US public and private colleges attracted near 1 million international students for 2014-15
Laura McKenna
November 27, 2015

G20 Leaders Endorse Crackdown on Tax Evasion

G20 members commit to “automatic” exchanges to prevent tax evasion
November 18, 2015

Is It Time for Global Money?

Such a currency may not be feasible, but tools are available to promote financial stability
Larry Hatheway and Alexander Friedman
November 18, 2015

Live Longer, Consume Less: Recipe for Slow Growth

Longer life expectancy, uncertainty, environmental awareness are among five behaviors that reduce consumer spending
Joergen Oerstroem Moeller
October 20, 2015

Angus Deaton’s Nobel Is a Victory for Globalization – And Raises Hard Questions About It

Inequality could undermine once-successful economies; foreign aid reduces government efficiency
Tim Fernholz
October 13, 2015