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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.
Greece on Monday “successfully” returned to the international financial markets for the first time after the announcement of the joint eurozone-International Monetary Fund (IMF) assistance pact last week. This provides the first indication of the real world impact of last week’s discussions at the European Union (EU) summit. For Greeks, the outcome seems ominous. The [...]
Some people at the top of the administration begin to understand that it makes both economic and political sense to impose binding constraints on our largest banks. But even the clearest thinking among them still has a problem—breaking up banks seems too much at odds with the way they saved these same banks in 2009. [...]
So, the Greek rescue deal [pdf] is here. One-third IMF money, two-thirds from all eurozone countries, according to their European Central Bank (ECB) capital share, which translates into Germany with just over a quarter and France 20 percent of the eurozone contribution. There are no hard figures in the eurozone statements, but subsequent press announcements [...]
America’s labor market is in the middle of a historical crisis. Long-term and youth unemployment are at unprecedented levels, while so many men have lost their jobs that women now account for the majority of employed Americans. The stubbornly high unemployment rates have devastated the US housing market and consumer spending. Now the long-term damage [...]
Speaking to the American Enterprise Institute, Treasury Secretary Tim Geithner had some good lines yesterday: “The magnitude of the financial shock [in fall 2008] was in some ways greater than that which caused the Great Depression. The damage has been catastrophic, causing more damage to the livelihoods and economic security of Americans and, in particular, [...]
A new study in which I participated has been posted on the website of the Federal Reserve Bank of New York. It documents how the Federal Reserve lowered long-term interest rates about 50 to 60 basis points last year through its purchases of $1.7 trillion of longer-term bonds. The study reinforces an argument I have [...]
The news that Germany prefers the International Monetary Fund (IMF) to a European ad hoc solution for rescuing Greece from financial chaos is welcome for multiple reasons: 1. The IMF is the most appropriate authority to handle such a financial crisis. It would be little more than absurd for the Europeans, who excessively dominate the [...]
For weeks European leaders have talked about eurozone solidarity and their promise of “determined and coordinated action, if needed” while supporting the successful austerity measures taken by Athens. It is becoming increasingly clear, however, that words are what “euro solidarity” amounted to, and that the International Monetary Fund (IMF) will be invited to assist Greece [...]
Judging from their communiqué on March 15 [pdf], the eurozone finance ministers have essentially decided to sit back, cross their fingers, and expect that in the end Greece will bail itself out and that no eurozone financial assistance will ultimately be needed. Perhaps not coincidentally, the ministers got at least half a helping hand from [...]
The report of the court-appointed examiner in Lehman Brothers’ US bankruptcy proceedings, issued on March 11, was a bombshell for the accounting profession by revealing how the failing investment bank hid liabilities in the tens of billions with the use of accounting shenanigans. Despite alerts from whistleblowers, auditors from Ernst & Young appear to have [...]