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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 shift in employment in the United States toward the service sector has long been associated with rising income levels. Generally speaking, the larger a country’s services sector as a share of the economy and employment, the richer the country. What, then, is the outlook now that the global economic crisis has struck at the [...]
Buried in the late wire news on Friday, June 26—and therefore barely registering in the newspapers over the weekend—the Treasury announced the rules for pricing its option to buy shares in banks that participated in the Troubled Asset Relief Program (TARP). The Treasury Department said the banks will make the first offer for the warrants. [...]
Paul Volcker is always a rewarding read. He is a balanced straight-thinker. With the Internet, the cost of reading Volcker is only the time it takes to read plus the necessary additional effort to think about what he has said. A recent example is Volcker on the economy, the international monetary system, and financial reform [...]
German Chancellor Angela Merkel will meet with President Obama today, June 26, in Washington to deepen US-German cooperation on economic, security, and climate-change issues. An unfortunate quote of mine to a German paper from some months back has been trotted out in the press to exemplify informed American skepticism on the German governing coalition’s economic [...]
In recent weeks we have seen again that bond markets do respond negatively to projections of big government deficits. How difficult will it be for the world’s leading economies to confront plunging confidence in the bond markets by balancing their government budgets? A comparison of the challenges faced by different members of the Organization for [...]
What is the essence of the problem with our financial system—what brought us into deep crisis, what scared us most in September/October of last year, and what was the toughest problem in the early days of the Obama administration? The issue was definitely not that banks and nonbanks could fail in general. We’re good at [...]
The United Nations Security Council voted today on a new round of sanctions on North Korea. These sanctions are politically significant, particularly in signaling the changing attitude of Beijing toward developments on the peninsula. However, it is highly unlikely that the sanctions, in themselves, will have immediate effect on North Korea’s nuclear program or the [...]
One of the more interesting counter-arguments against the idea that big banks should be broken up comes from people who play close attention to the behavior of small banks. They point out that small banks are a powerful political lobby, a point nicely illustrated by the NYT’s explanation of how changes to bankruptcy law were [...]
On his China visit, Secretary Geithner is immediately on the defensive. The language he is using on the Chinese policy of exchange rate undervaluation-through-intervention is the mildest available. And the commitment he is making, in terms of bringing down the US deficit, which we all favor, is an extraordinary thing to put numbers on in [...]