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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.
In the days following publication by the European Union of the long-awaited stress tests of its banking sector, the market reaction—judged by the evolution of the euro, bank stocks, and peripheral spreads—has looked positive. This makes sense. The hundreds of pages of analysis of the impact of the stress tests have focused on individual banks, [...]
On Monday, July 26, a memorable exercise in market power and the power of persuasion of those who favor financial market transparency took place. It came in the form of the last 7 remaining EU banks out of the total of 91 participating in the stress test reluctantly releasing their individual exposures to European sovereign [...]
The European banking stress test results announced on July 23 combined encouraging features with disappointing ones, which explains the paradoxical mix of reactions: Markets rose, even as many analysts denounced what they saw as a sham. Their publication is unlikely to single-handedly bring the interbank market back to soundness. But it may prove an important [...]
On Friday, July 23, the Committee of European Banking Supervisors (CEBS), along with national EU bank regulators and—crucially—most of the affected individual banks, finally released new data to the public regarding the stress testing of the European banking system. What have we learned? Appearances matter—especially for bank stress tests. So first it is clear that [...]
In his testimony [pdf] to the Congress this week, Fed Chairman Ben Bernanke left the door open to further monetary stimulus but made it clear that such action is not imminent. This reluctance to act may seem puzzling given the widespread view that the economic recovery is too weak. In response to a senator’s question, [...]
This week Ireland became the latest “eurozone peripheral economy” to see its sovereign credit rating downgraded by the credit rating agencies. This follows similar earlier downgrades of Portugal, Spain, and of course Greece. But this downgrading trend is actually good news for the European economy as a whole and truly excellent news for Germany. When [...]
In the wake of the Gulf oil spill, Senate Democrats are gearing up to bring an energy bill to the floor next week in the hopes of improving the safety of offshore oil production and beginning to wean the country off fossil fuels. The biggest outstanding question surrounding the draft legislation is whether it will [...]
Have we not heard it all before? The bank stress tests are not sufficiently transparent, the conditions are too soft, and nobody knows who will put up the financing for necessary recapitalization of weak banks. But after the US bank stress tests were published on May 7, 2009, the Wall Street Journal announced: “Worst-Case Capital [...]
I am not able these days to make as much time as I would like to read whole books, but during a recent vacation I was able to finish Lords of Finance by Liaquat Ahamed. I recommend it to anyone interested in the interwar period of the 1920s and 1930s, both before and after, and [...]
The bank lobbyists, it turns out, missed one. They and their congressional allies were able to gut the Volcker Rule, the Lincoln Amendment, and almost everything else that could have had a meaningful effect on the industry. But, as I point out in a Bloomberg column on July 9, they couldn’t get at (or didn’t [...]