International Monetary Fund
How Legitimate Is the G20?
September 29, 2009
Strong advocates of our new G20 process are convinced that it will bring legitimacy to international economic policy discussions, rule-making, and crisis interventions. Certainly, it’s better than the G7/G8 pretending to run things--after all, who elected them? But who elected the G20? The answer is: No one. And, in case you were wondering, there is no application form to join the G20 (although you can crash the party if you have the right friends, e.g., Spain). The G20 has appointed themselves as the world’s “economic governing council” (to quote Gordon Brown). Is this a good idea? Not reall
Today at TNR (September 26, 2009)
September 26, 2009
How Ahmadinejad's UN Antics Went From Being His Greatest Asset to a Major Liability, by Abbas Milani What on Earth Does Olympia Snowe Want? by Jonathan Cohn The 'Fame' Remake: Unnecessary, but With Occasional Bursts of Tenderness, by Christopher Orr How Far Should We Go in Extracting Information From Najibullah Zazi? by Michael Crowley Why the GOP’s Latest Foot-Stomping About Medicare Is Meaningless, by Jonathan Cohn How Does the New Iranian Nuclear Facility Change Obama’s Calculations?
How to Fix the IMF
September 25, 2009
The headline news from the G20 summit in Pittsburgh is that progress has been made on "IMF reform," meaning increased voting power for emerging markets relative to rich countries--remember that West Europeans are greatly overrepresented at the IMF for historical reasons. But further change in a sensible direction is being blocked by the U.K.
G20: "In The Medium Run We're All Retired"
September 22, 2009
It looks like the G20 on Friday will emphasize its new “framework” for curing macroeconomic imbalances, rather than any substantive measures to regulate banks, derivatives, or any other primary cause of the 2008-2009 financial crisis. This is appealing to the G20 leaders because their call to “rebalance” global growth will involve no immediate action and no changes in policy--other than in the “medium run” (watch for this phrase in the communiqué). When exactly is the medium run? That’s an easy one: It’s always just around the corner. Not today, of course; that would be short run. And not in 2
U.S. Strategy for the G20: You Cannot Be Serious.
September 21, 2009
According to the WSJ this morning (top of p.A1), the U.S. is pushing hard for the G20 to adopt and implement a “Framework for Sustainable and Balanced Growth,” which would amount to the U.S.
The Paradox of the Paradox of Thrift
September 16, 2009
Keynes' paradox of thrift holds that if everyone tries to save at the same time during a recession, then the economy continues to contract due to a fall in demand. This sends incomes lower and gives people less money to sock away, so that total savings actually fall instead of rising. The implication for our times is that a new era of frugality might not be what the economy needs. But in a new IMF paper, Yasser Abdih and Evan Tanner argue that Keynes' paradox might not apply after a financial crisis. In normal times, companies can finance investment through their own savings.
What You Need to Know About the State of Our Financial System
September 14, 2009
Financial markets have stabilized--people believe that the U.S. and West European governments will not allow big financial institutions to fail. We have effectively nationalized any banking system losses, but we’ll let bank executives enjoy the full benefits of the upside. How much shareholders participate remains to be seen; there will be no effective reining in of insider compensation (my version; Joe Nocera’s view). Small and medium-sized banks, however, will continue to fail as problems in commercial real estate continue to mount.
Today at TNR (September 9, 2009)
September 09, 2009
Middle of Nowhere: The Senate’s Irrational Obsession With ‘The Center’, by Jonathan Chait I Understand Why Seniors Are Worried About Health Care Reform. But Here’s Why They’re Wrong, by Jonathan Cohn How I Finagled My Way Into the Compound of Afghanistan’s Most Notorious Warlord, by Jason Motlagh And Now It Is Time For Obama to Scare the Bejeezus out of the Middle Class… by William Galston They Don’t Make Right-Wing Gasbags Like They Used to, by Michelle Cottle What Should We Expect From the Upcoming G-20 and IMF Meetings? by Simon Johnson How to Save Las Vegas. Step One: Stop Having Fun.
Low Expectations for the G20 and IMF
September 08, 2009
As we wade through a long line of international economic meetings--G20 ministers of finance last week, G20 heads of government in Pittsburgh coming up, IMF-World Bank governors meeting in Istanbul early October (and all the associated “deputies” meetings, where the real work goes on)--it seems fair to ask: Where is regulatory reform of our financial system heading? Long documents have been produced and official websites have become more organized. Statements of principle have been made. And the melodrama of rival reform proposals has reared its head: continental Europeans for controlling pay
The Case Against The G8
July 08, 2009
The G7 was originally conceived as a form of steering committee for the world economy (antecedents). Existing formal governance mechanisms, around the IMF and the UN, seemed too cumbersome (and too inclusive) during the 1970s, with the breakdown of fixed exchange rates, assorted oil shocks, and the broader shift of economic initiative towards Western Europe and Japan. And the G7 had some significant moments, particularly with regard to moving exchange rates in the 1980s. More broadly, behind the scenes, it served as a communication mechanism between the world's largest economies ("coordinatio