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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.
With all the current attention to the reappointment vote on Fed Chairman Bernanke, we would direct people to our recent paper, "Do Markets Care Who Chairs the Central Bank?", forthcoming in next month’s issue of the Journal of Money, Credit, and Banking. In it, we make the first ever assessment of the effects of central [...]
At the broadest level, Thursday’s announcement from the White House was encouraging—for the first time the president endorsed potential new constraints on the scale and scope of our largest banks and said he was ready for “a fight.” After a long, tough argument Paul Volcker appeared to have finally persuaded President Obama that the unconditional [...]
At this stage in the electoral cycle, Democrats should be running hard against big banks and their consequences. Some roots of our current economic difficulties lie in the Clinton 1990s, but the real origins can be traced to the financial deregulation at the heart of the Reagan Revolution—and all the underlying problems became much worse [...]
Few political arrangements have been as tested by the economic and financial crisis as the European Union. The European Union is a relatively recent endeavor, with its origins in 1950. It has developed over a period of peace and near-uninterrupted growth. But many have predicted that faced with a big enough shock, European nation-states would [...]
On January 14 President Obama announced that he would ask Congress to impose a “financial crisis responsibility fee” on the 50 largest financial institutions. The fee (hereafter referred to as the tax) would be applicable to all financial institutions with more than $50 billion in consolidated assets. If it becomes law, approximately 35 US banks [...]
Backed by the Chinese government, Chinese companies have been acquiring equity stakes in natural resource companies, extending loans to mining and petroleum investors, and writing long-term procurement contracts for oil and minerals. These activities have aroused concern that China might be locking up natural resource supplies, gaining preferential access to available output, and extending control [...]
The big banks are pretesting their main messages for bonus season, which starts in earnest next week. Their payouts relative to profits will be “record lows,” their people won’t make as much as in 2007 (except for Goldman), and they will pay a higher proportion of the bonus in stock than usual. Behind the scenes, [...]
The eurozone faces a grave risk of divergent economic growth patterns in the next 10 years, according to a recent analysis by Martin Wolf1 in the Financial Times. Although the whole of the euro area’s current account is in broad balance with the rest of the world, the differences in the external position of single [...]
Before the global economic and financial crisis began in August 2007, the enormous current account deficits and surpluses of some major countries and groups of countries (the United States, China, and oil producers, for example) were widely identified as posing the greatest risk to international economic and financial stability. As the crisis winds down, attention [...]
In his speech at the American Economic Association on Sunday, Ben Bernanke, chairman of the Fed, said that monetary policy played at most a small role in the US housing bubble and that financial regulatory policy is the appropriate tool for preventing harmful asset price bubbles in the future. I agree with these conclusions, but [...]