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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 response to many inquiries prompted by my previous posting about the debt ceiling in Denmark, I thought it sensible to add a few more details about the origins of the Danish debt ceiling and how and why it has been changed over the years. The Danish debt ceiling was first instituted by law in [...]
Sallie James of the Cato Institute has published a new policy brief, "Time to X Out the Ex-Im Bank."1 As her title suggests, James sharply questions the Ex-Im Bank’s effectiveness at promoting US exports or creating jobs. We take a differing view. Our own policy brief, "Revitalizing the Ex-Im Bank," identified several Congressionally-imposed and self-imposed [...]
The US debate about raising the debt ceiling has produced many references to the existence of similar “debt ceilings” in other countries—for example, Denmark, which has a fixed nominal debt limit legislatively outside the annual budget process1. From a legal and legislative process point of view, the US and Danish debt ceilings are similar. Both [...]
The European visionary Jean Monnet once quipped that “people only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them.” This sentiment was clearly at the special euro area summit in Brussels on July 21, as European leaders again showed their far reaching pragmatism in reforming the [...]
Nobody loves a tax evader. Almost twenty years ago, I wrote that the United States must take effective steps—in an age of globalization—to ensure that Americans pay their personal income taxes to Uncle Sam.1 In particular, Americans should not be able to avoid personal taxes by hiding their foreign dividends and interest from the eyes [...]
Sometimes it takes a narrow lens to distinguish the true features of big objects. The future of financial globalization, whatever one’s perspective on its dangers or merits, is one of the biggest questions of our times. By contrast, accounting is often perceived as a boring technique. But the policy debate on accounting and especially on [...]
On both sides of the Atlantic, policymakers face sovereign credit events. If those events materialize, will the result be a disaster? Yes and no. Yes if the credit event occurs in the context of a failure by policymakers to address convincingly the underlying short-term and medium-term economic, financial, and political issues. No if the credit [...]
With Italian and Spanish 10-year bond rates still at record highs, despite the new Italian austerity budget approved over the weekend, it is evident that the markets are telling EU policy makers to fix the debacle over "private sector involvement" (PSI) in the second Greek bailout. At the heart of the current fiasco is the [...]
Eight European Union (EU) banks failed and 16 "sort of failed" the EU latest stress tests. As a result, the eight must promptly raise an aggregate of about €2.5 billion in core tier 1 capital. For the 16 others, with core tier 1 capital between 5 percent and 6 percent and sizeable exposures to sovereigns [...]
The euro area debt crisis has reached the acute stage: The contagion from Greece has begun to infect the markets for the sovereign debt of the large countries in the zone, Spain and Italy. Euro group finance ministers are considering a range of old and new options, including a previously rejected but worthy proposal to [...]