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In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.
The draft G-20 communiqué, as published on the Financial Times‘s website, is not encouraging. To be sure, there are humorous moments, such as: Each of us commits to candid, even-handed, and independent IMF surveillance of our economies and financial sectors, of the impact of our policies on others, and of risks facing the global economy. [...]
I hope it works. The financial stability plan presented on March 23 by Treasury Secretary Timothy Geithner could be a part of the solution because it would remove some of the bad assets from the banks’ balance sheets and put some capital into the banks. The Treasury is clearly trying clever tactics to avoid going [...]
Here is Ben Bernanke’s problem: 1. The financial sector is busy setting up arrangements in which employees are guaranteed high levels of compensation if they stay on through the difficult days ahead. These retention-type payments allow firms to survive in their existing form, pursue business-as-usual, and gamble for resurrection, i.e., make further risky investments. 2. [...]
Are multinational corporations in the United States relocating their manufacturing sites overseas, abandoning workers and communities at home? And are their investments abroad “hollowing out” America’s productive capacity? At a time of global economic and financial turmoil, these questions are as controversial as ever. The 2008 election rekindled the debate over the practices of multinational [...]
I’m continually amazed by how easy it is for government officials to hoodwink most of the news media. All it takes is for a couple of leading finance ministers to get on roughly the same page, and we’re reading/hearing about “substantial progress” or “major steps forward.” If someone provides an articulate background briefing to a [...]
Does the United States’ need to borrow undercut the needs of others? That was the argument of a front page article in the New York Times on March 9, reporting that the global flight to dollar-denominated US government securities had contributed to a sharp reduction in the external financing for developing countries. The article strongly [...]
Forecasters at international organizations often find themselves in a delicate position. On the one hand, they have unparalleled access to hard data and intelligence about what is happening in every corner of the world economy. On the other hand, their main shareholders—the United States and larger European countries—do not want to hear predictions that are [...]
It is common knowledge that the cost of Medicare and Medicaid will grow to become an unsustainably large part of the US federal budget in coming decades. Perhaps less well known is that more than 80 percent of the projected increases derive from “excess cost growth,” unrelated to expansion in coverage or the effects of [...]
Emerging-market crises are marked by an increase in tunneling—i.e., borderline- legal/illegal smuggling of value out of businesses. As time horizons become shorter, employees have less incentive to protect shareholder value and are more inclined to help out friends or prepare a soft exit for themselves. Boris Fyodorov, the late Russian Minister of Finance who struggled [...]