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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.
After getting bailed out by taxpayers’ billions, banking is clearly viewed by the public and by regulators as needing to become more boring. In other words, to look less like the high return-on-equity sector of yesteryear and more utility-like, perhaps outlawing the most volatile, highly leveraged, and profitable in the short-term types of modern finance.1 [...]
Is modern finance more like electricity or junk food? This is, of course, the big question of the day. If most of finance as currently organized is a form of electricity, then we obviously cannot run our globalized economy without it. We may worry about adverse consequences and potential network disruptions from operating this technology, [...]
The usual concern about the US-China balance of economic and political power is couched in terms of our relative international payments positions. We’ve run a large current account deficit in recent years (imports above exports); they still have—by some measures—the largest current account surplus (exports above imports) ever seen in a major country. They accumulate [...]
Who could be against innovation? That is the argument used by industries that wish to avoid regulation, that excessive government oversight will diminish incentives to innovate, or erode property rights to innovations, and we all will be worse off for it. And in the broad, this is a valid concern. We are all better off [...]