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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.
Yesterday morning I testified to a Joint Economic Committee of Congress hearing (update: that link may be fragile; here’s the JEC general page). The session discussed the latest GDP numbers, the impact of the fiscal stimulus earlier this year, and whether we need further fiscal expansion of any kind. I argued that a global recovery [...]
The International Monetary Fund (IMF) has had a good year in Eastern Europe. It has been called to help numerous countries and it has acted fast and generously. It has learned several lessons from the East Asia financial crisis of 1997–98, which was very similar. The East European crisis is primarily a current-account crisis, not [...]
Europeans may find several historical and theoretical reasons why a political government for the euro area would be desirable. But after the global crisis there are technical reasons why it is more than desirable. That conclusion is a necessity in light of three increasingly important aspects of current monetary developments in Europe: (1) the lack [...]
Most discussions about financial stability tend to focus on steps to ensure that last year’s meltdown does not happen again, including tighter regulation of capital and compensation policies, prevention of moral hazard through new resolution mechanisms, overhaul of supervisory structures, and reform of governance and disclosures. But Europe’s policymakers should remind themselves that the current [...]
One of the most striking features of today’s economy is that interest rates, on everything from bank loans to Treasury bonds, are at 50-year lows. Federal Reserve actions to stabilize the financial system and stimulate economic growth contributed importantly to these low rates. There is much talk lately of the need for an exit strategy [...]
Just when our biggest banks thought they were out of the woods and into the money, the official consensus in their favor begins to crack. The Obama administration’s publicly stated view—from the highest level in the White House—remains that the banks cannot or should not be broken up. Their argument is that the big banks [...]
After getting bailed out by taxpayers’ billions, banking is clearly viewed by the public and by regulators as needing to become more boring. In other words, to look less like the high return-on-equity sector of yesteryear and more utility-like, perhaps outlawing the most volatile, highly leveraged, and profitable in the short-term types of modern finance.1 [...]
On Friday morning (October 9), Diana Farrell—a senior White House official—made a significant statement on NPR’s Morning Edition with regard to whether our largest banks are too big and should be broken up. “Ms. Diana Farrell (Deputy Assistant for Economy Policy): We understand Simon Johnson’s views on this, and I guess the response is the [...]
The agreement to coordinate global economic strategies was one of the most impressive achievements by the G-20 in Pittsburgh and at the IMF meeting in Istanbul. But without credible agreements on currency policies, that project could turn out to be very vulnerable, or even a Trojan horse allowing politically stronger countries (China and the United [...]
Buried in the avalanche of meaningless press releases from Istanbul is a highly significant item. Dominique Strauss-Kahn, managing director of the IMF, “has proposed the appointment of Naoyuki Shinohara to the position of deputy managing director. Mr. Shinohara, a former vice minister of finance for international affairs of Japan, will succeed Takatoshi Kato.” This is [...]