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.

Global Crisis: How Far to Go? Part II

Falling export demand could rattle Asian countries, but most are resilient enough to survive
Manu Bhaskaran
October 10, 2008

Scrambling to Clean Up After a Category 4 Financial Storm

There’s only so much the US government can do about debt nobody wants to pay for or hold
Steven Pearlstein
September 24, 2008

Can Asia Rescue the Global Economy?

The risk-averse continent can’t keep pace with US spending, but could instill fiscal discipline in the global markets
Linda Lim
September 29, 2008

Wall Street Dodges a Bullet, How About Next One?

By rescuing AIG and others, the US may be biting off more than it can chew
David Dapice
September 17, 2008

Globalization and the Markets – Part I

Complicated new financial tools outpaced the comprehension of regulators, bankers or customers
David Dapice
January 22, 2008

World Rides to Wall Street's Rescue

US bank executives, forced into the role of paupers, seek cash from global investors
David Enrich
January 17, 2008

Globalization and the Markets – Part II

Despite initial flutter, China won’t let its stock market fall in the much anticipated year of the Olympics
Xu Sitao
January 24, 2008