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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.
As the eurozone dominos line up and Chancellor Angela Merkel of Germany seeks to “maintain the primacy of politics over markets,” leaders and policymakers in the region are confronting an increasingly urgent question: how to deal with the speculative forces creating turmoil in European financial markets. As the contagion shifts from Ireland to Portugal and [...]
The ironies and contradictions surrounding the demand by some European governments that Ireland raise the corporate tax rate as part of a program to address its present financial predicament are breathtaking. They threaten the political underpinnings of the euro area, but also highlight a constructive role for the IMF. Let us count the ironies. First, [...]
With Irish banks evermore dependent on the European Central Bank (ECB) for liquidity,1 the question is not about whether Ireland can “go at it alone,” but of what kind of—and on what conditions—foreign financial aid it will receive. No country can ultimately pick and choose the kind of foreign financial support it receives, although small [...]
Last week’s renewed anxiety over bond market collapse in Europe’s periphery should come as no surprise. Greece’s EU/IMF program heaps more public debt onto a nation that is already insolvent, and Ireland is now on the same track. Despite massive fiscal cuts and several years of deep recession Greece and Ireland will accumulate 150 percent [...]
While the noisy arguments about macroeconomic imbalances and exchange rates dominated the publicity at the recent G-20 Summit, the participants in Seoul also marked an important milestone for financial regulation. They symbolically closed a cycle of intense global discussions that started two years earlier with the first G-20 Summit in Washington. The most prominent item [...]
The outlook for the global economy is surprisingly strong despite the failure of the G-20 at Seoul to do much to support it. World growth should average 4.5 percent this year and in 2011. This rosy aggregate, however, masks very sharp differences around the world. The emerging and developing countries are expanding at better than [...]
After a period of relative stability over the summer and early fall, the jitters have again arrived in the European financial landscape. Markets for peripheral sovereign debt in the eurozone are now back to the levels seen in early May, before “Europe’s Grand Bargain” in which Greece was awarded a lifeline from both the European [...]
Early Friday I went through the G-20 communiqué for the Wall Street Journal; a marked up copy is available online. It is hard to imagine how the summit could have gone any worse for the US Treasury and the president. The spin machine is now working overtime—and you’ll see big efforts to get more positive [...]
The G-20 summit concluded in Seoul without fireworks inside or outside the conference rooms. The Korean authorities must be relieved. But let’s take stock of the process and grade the summiteers and their governments on their accomplishments. Let’s remember as well that summits are largely about agenda setting and agenda completion; they are less about [...]
The bizarre development at the G-20 summit in Seoul this week was the swing from a relatively generalized coalition critiquing the undervalued renminbi in the run-up to the G-20 session in Toronto in June—which prompted China to make its rate “flexible” again—to the specter of Germany and Brazil united with the Chinese in critiquing the [...]