A number of economists and financial experts have begun suggesting that discussions of regulatory reform—at the G-20 summit meeting in mid-November and elsewhere—should be curtailed or postponed because the implied tightening of regulation could complicate the management and recovery from the financial and economic crisis. I think this view is overwrought. Let me elaborate. Characterizing [...]

Read full post

Congress will leave town this week without passing another stimulus package or deciding what to do about the failing auto industry. The only thing Congress could agree on was a second temporary extension of unemployment insurance. This extension and the extension passed earlier this year are mere band-aids on a program with serious problems. Given the prospect of a long and deep recession, it will only be a matter of time before Congress will need to take further action.

Read full post

Treasury Secretary Henry Paulson announced earlier this week that the Troubled Asset Relief Program (TARP) has succeeded in stabilizing the U.S. banking system. This unfortunately no longer appears to be the case.

Read full post

As the financial crisis deepens, the world’s central banks and financial authorities have gained broad support for their efforts to reintroduce liquidity to the credit markets, get banks to lend again and bring down spreads and bond yields. But these sensible and indeed required steps to avoid a repeat of the 1930s may come with [...]

Read full post

Initial reactions to the G-20 summit are fairly positive. The communiqué and associated press conferences conveyed: (a) There was no open acrimony; (b) The body language was broadly supportive of countercyclical fiscal stimulus policies; And (c) there may now be a serious international regulatory agenda. None of this is really new and it could all [...]

Read full post

The November meeting of G-20 leaders in Washington reflects the important role of emerging economies in the global financial system and the need for the G-7 to adjust to this reality. But trade and finance are not the only areas in which the G-7′s dominance of global activity has faded. After two decades of rapid resource demand growth in the developing world, the G-7 today accounts for only a third of global energy demand and CO₂ emissions. And just as the Bretton Woods institutions built by the financial powers of the post-War period need updating, the current approach to global energy and environmental governance needs to be rethought.

Read full post

The upcoming G-20 summit meeting in Washington provides an opportunity for India to help shape the new global economic architecture in line with its strategic and economic interests. India should propose short-term, crisis response actions to help limit the economic downturn; advance a clear, medium-term agenda; and push for a political commitment by all countries to keep markets open and prevent trade barriers from going higher.

Read full post

Ten days before the opening of the G-20 heads-of-government meeting in Washington, the International Monetary Fund (IMF) issued a revised forecast for global growth, released last Thursday, that has been widely interpreted as merely confirming that the world economy is slowing down. (And fast—it is remarkable to knock nearly a percentage point off the global growth projection, just a month after the last forecast went final.) But the forecast can also be read as a reflection of the Fund’s exhortation to fiscal expansion and, among some observers, as an indication of where some participants in the G-20 process may be headed.

Read full post

Getting agreement on general language in support of all countries undertaking counter-cyclical macroeconomic stimulus measures at the upcoming G20 Summit will be easy, especially now that China and the United States have signaled plans for their own major fiscal packages. Getting a commitment to specific common policy actions will be difficult, as past summits have demonstrated.

Read full post

The impending Group of 20 summit in Washington, DC, November 14–15, organized to discuss solutions to the economic crisis and reforms to the international financial architecture, is potentially the most important international economic meeting in a very long time. However, it has been hastily convened, insufficiently prepared, and President-elect Barack Obama will not participate. To make this meeting and those that will follow successful, officials of the Bush administration and other governments should heed six key principles for successful international negotiations. The Obama team should also reflect on them as it prepares to take office.

Read full post