Peterson Institute: RealTime Economic Issues Watch

Obama Should Give a Qualified Endorsement to Asian Regionalism

C. Randall Henning — Fri, 06 Nov 2009 22:11:22 +0000

President Obama’s trip to East Asia over the next two weeks comes at an important time in Asian regionalism. East Asian governments have been moving on several fronts toward regional cooperation and, while some skepticism might be justified, the rest of the world would be wrong to dismiss these developments as [...]

A Merit-Based Selection Process for the World Bank and IMF? Don’t Count on It!

Jacob Funk Kirkegaard — Wed, 04 Nov 2009 22:15:16 +0000

Meeting in London last April, the G-20 leaders declared “that the heads and senior leadership of the international financial institutions [i.e., the World Bank and the International Monetary Fund] should be appointed through an open, transparent, and merit-based selection process [pdf].” When you look at the selection processes for [...]

New Fiscal Stimulus Is Not Warranted Now

Simon Johnson — Fri, 30 Oct 2009 20:54:09 +0000

Yesterday morning I testified to a Joint Economic Committee of Congress hearing (update: that link may be fragile; here’s the JEC general page). The session discussed the latest GDP numbers, the impact of the fiscal stimulus earlier this year, and whether we need further fiscal expansion of any kind. I argued that [...]

Latvia, Lithuania, and the IMF

Anders Aslund — Thu, 29 Oct 2009 14:00:17 +0000

The International Monetary Fund (IMF) has had a good year in Eastern Europe. It has been called to help numerous countries and it has acted fast and generously. It has learned several lessons from the East Asia financial crisis of 1997–98, which was very similar. The East European crisis is primarily [...]

Is King Euro Naked?

Carlo Bastasin — Wed, 28 Oct 2009 14:49:02 +0000

Europeans may find several historical and theoretical reasons why a political government for the euro area would be desirable. But after the global crisis there are technical reasons why it is more than desirable. That conclusion is a necessity in light of three increasingly important aspects of current monetary developments in [...]

Europe’s Banks Still Need Restructuring

Nicolas Véron — Mon, 26 Oct 2009 14:00:39 +0000

Most discussions about financial stability tend to focus on steps to ensure that last year’s meltdown does not happen again, including tighter regulation of capital and compensation policies, prevention of moral hazard through new resolution mechanisms, overhaul of supervisory structures, and reform of governance and disclosures. But Europe’s policymakers should [...]

Low Interest Rates May Be Here To Stay

Joseph E. Gagnon — Fri, 23 Oct 2009 13:58:27 +0000

One of the most striking features of today’s economy is that interest rates, on everything from bank loans to Treasury bonds, are at 50-year lows. Federal Reserve actions to stabilize the financial system and stimulate economic growth contributed importantly to these low rates. There is much talk lately of the need [...]

The Consensus on Big Banks Begins To Move

Simon Johnson — Thu, 22 Oct 2009 19:54:47 +0000

Just when our biggest banks thought they were out of the woods and into the money, the official consensus in their favor begins to crack. The Obama administration’s publicly stated view—from the highest level in the White House—remains that the banks cannot or should not be broken up. Their argument is that [...]

Boring Banking: Will It Become Bangalore’s Bonus?

Jacob Funk Kirkegaard — Wed, 14 Oct 2009 13:34:01 +0000

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 [...]

Diana Farrell and the White House Theory of Bank Size

Simon Johnson — Tue, 13 Oct 2009 18:17:56 +0000

On Friday morning (October 9), Diana Farrell—a senior White House official—made a significant statement on NPR’s Morning Edition with regard to whether our largest banks are too big and should be broken up. “Ms. Diana Farrell (Deputy Assistant for Economy Policy): We understand Simon Johnson’s views on this, and I guess the [...]