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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.
Presumably the rulers of Dubai and Abu Dhabi are currently locked in negotiations regarding the exact terms that will be attached to a “bailout” for Dubai World. We’ll never know the details but if—as seems likely—the final deal involves creditors taking some sort of hit (perhaps getting 75 cents in the dollar at the end [...]
Just when momentum was starting to build for increased capital requirements as the core element of an approach that will rein in reckless risk taking, Morgan Stanley effectively demolishes the idea. In “Banking—Large & Midcap Banks: Bid for Growth Caps Capital Ask,” (no public link available) Betsy Graseck, Ken Zorbo, Justin Kwon, and John Dunn [...]
Before heading to Asia in November, President Obama announced that a White House “jobs forum” will be held in December on jobs and economic growth.1 The president called for “openness to any demonstrably good idea to supplement the steps already taken to put American back to work,” while simultaneously warning against any “ill-considered decisions—even with [...]
Hard on the heels of his tour of China—a visit that produced mixed results and even more mixed reviews—President Obama welcomes Prime Minister Manmohan Singh to the White House in the first state visit of his presidency. For both Mr. Obama and Dr. Singh, the trip will be important symbolically, politically, and economically—even if it [...]
“American taxpayer dollars should not be used to finance those Chinese jobs.“ Who could disagree with Senator Schumer’s statement, which accompanied his recent call for cancellation of $450 million in federal stimulus funds for a new $1.5 billion wind park in Texas—on the grounds that it would utilize 240 wind turbines made in China? As [...]
“Banking on the State” [pdf] by Andrew Haldane and Piergiorgio Alessandri is making waves in official circles. Haldane, executive director for financial stability at the Bank of England, is widely regarded as both a technical expert and as someone who can communicate his points effectively to policymakers. He is obviously closely in line—although not in [...]
The city of London has been Europe’s dominant financial center since the 18th century, and its prominence has been especially marked in the decade before the current financial crisis. The city has succeeded by combining the intermediation of global financial imbalances, channeling Asian and Middle Eastern savings toward investment products in the West, and increasing [...]
Pundits and policymakers around the world are wringing their hands over the possibility of further declines in the foreign exchange value of the dollar. Predicting exchange rates is notoriously difficult; there is almost as much chance of the dollar rising next year as of it declining. But if the dollar were to fall further, should [...]
With short-term, risk-free interest rates essentially at zero in the major developed economies, conventional monetary policy is in a liquidity trap. As a number of commentators have observed, printing zero-interest-rate money to buy zero-interest-rate assets has no real economic effect because the assets are near-perfect substitutes for money. But does that mean that central banks [...]
Whether to use public money to rescue financial firms because they are too big, too complex, or too interconnected to be allowed to fail is not a new issue. However, in the financial and economic crisis of the last year and a half, the number and nature of such rescues in sophisticated financial markets and [...]