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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.
What did the euro leaders decide at 4 a.m. on Thursday morning? Given the lack of details, it might be too early to tell. But the announcement at the Euro Summit1 takes Europe closer than ever to a "comprehensive deal" that addresses all the relevant problem areas: Greece, the faltering European banking sector2, institutional reform [...]
As the G-20 traveling road-show heads to Cannes, the coinage of international summitry risks becoming utterly debased. Restoring relevance to these events requires an agenda that must meet three criteria. The issues must be important, they must be truly international, and there must be some realistic scope for getting agreement on them. At Cannes, only [...]
In my October 24 RealTime column, "The Last Bullet," I argued that the combination of serious reform of the Home Affordable Refinance Program (HARP) and an aggressive Federal Reserve program to hold down the mortgage rate would spark a refinancing boom that could save borrowers as much as $60 billion to $80 billion per year. [...]
For everyone struggling to get their arms around the debt crisis in Europe, Bill Marsh in the New York Times on Sunday (October 23) offers a compelling picture, literally, with graphic illustration for the key issues. The picture is big, 18×21 inches. Either you need a very large computer screen or a hard copy of [...]
US policymakers are running out of options to solve our massive unemployment problem and get the economy growing again. The Administration’s jobs bill faces resistance in Congress. The best option that can be implemented without a vote of Congress is to work through the market that started this mess in the first place—housing. The Administration [...]
The first G-20 summits in 2008 and 2009 were dedicated to overhauling global financial regulation, empowering international financial authorities, and combating the economic downturn. Since then, progress has been uneven and priorities have shifted. The next summit in Cannes is set to be dominated by discussion of the policy chaos in Europe; financial regulatory matters [...]
Belarus is heading to default. This country of 10 million people is running out of international currency reserves. Officially, they were down to $2.2 billion on October 1, which is a month’s worth of imports. But when reserves are so small the question always arises whether they are really usable. Meanwhile inflation surged and it [...]
Paraphrasing Donald Rumsfeld, the former Defense Secretary, you fight a financial crisis with the institutions you have, not the institutions you might want. No doubt Europe went into its current financial and sovereign debt crisis woefully under-institutionalized. In effect, Europe was flying on just one motor—the European Central Bank (ECB), the only institution able to [...]
While the world’s attention is focused on the European financial crisis, a storm is brewing in the Mediterranean that could cause havoc in the region and have wider international consequences. At its center are conflicting claims between the Greek Cypriots and Turkish Cypriots over a potentially large natural gas discovery off the island’s southern coast. [...]
The proposal for a financial transaction tax by the European Union has often been described as a “Tobin Tax.” What is being discussed is a tax rate of 0.1 percent on all financial transactions with the principal objective of raising revenue. Note the emphasis, because these details have created a misleading impression. When James Tobin [...]