International Monetary Fund
What To Think About Obama's Regulatory Reforms?
June 17, 2009
There are three views on who exactly is behind financial regulatory reform package that has just been presented. Each view has distinct implications for political dynamics going forward. The first view is that Tim Geithner and Larry Summers have genuinely become radical reformers. They see the error of the ways they pursued during the 1990s--both in terms of financial deregulation for the United States and in their advice to other countries, particularly through the capital market liberalization policies urged upon the IMF. They now seek to put globalized finance back in its box and will pursu
June 03, 2009
This year, Nouriel Roubini, the economist known to the general public as Dr. Doom, Prophet of the Financial Apocalypse, spent the early hours of Mardi Gras on the floor of the Frankfurt Stock Exchange. It was only 11 a.m., but the party was rollicking. Traders careened around the floor, hooting and honking, dressed as dragons and devils and convicts. Rock music roared overhead, and no one seemed to care that, by the bye, the market had tanked.
Is China Taking Tim Geithner To The Cleaners?
June 01, 2009
On his China visit, Secretary Geithner is immediately on the defensive. The language he is using on the Chinese policy of exchange rate undervaluation-through-intervention is the mildest available. And the commitment he is making, in terms of bringing down the U.S. deficit--which we all favor--is an extraordinary thing to put numbers on in a foreign capital. Such commitments are of course unenforceable, but still the wording indicates--and is understood by China--great U.S. weakness. Not surprisingly, China seems likely to push for more. Their main idea is that some part of their U.S.
Commenter roidubouloi, our resident bank hawk, raises a great point: It is very difficult to reconcile the IMF figures with the results of the stress tests -- impossible actually. The stated capital of the banking system is on the order of $1 trillion. If there are losses on the order of $1.5 trillion, then the system is insolvent. But if none of the major players is insolvent, merely stretched, where did the losses go? That gets even harder to answer when you consider that the 19 banks being stress-tested account for about two-thirds of the assets in the banking system.
Why The Stress Test Leaks Have Been So Confusing
May 06, 2009
The public relations campaign packaging the bank stress tests is kicking into high gear and our professional information managers are really hitting their stride. They face, of course, a classic spin problem: you need to get the information out there, but you don't want to be too definitive on the first day or soon after--if you're easy on the banks, that looks bad; if you're tough on the banks, that might be dangerous. The best way to handle this is by jamming your own signal--which they are starting to do in brilliant fashion. To the WSJ you leak that BoA needs to raise a great deal of capit
Why We Have To Fix The Banks
March 23, 2009
The IMF's Managing Director lays it out to Reuters: The world is in a dire economic crisis, but no recovery is possible until the financial sector is cleaned up, the head of the International Monetary Fund said on Monday. ... Although bailing out banks was politically unpopular, businesses and households could not survive without a working banking system, he said. The IMF's experience of 122 banking crises around the world had taught it that economic recovery was impossible until banks were cleaned up, whether this was done quickly or slowly. "You can put in as much stimulus as you want.
The Geithner Disaster
March 20, 2009
Being Treasury secretary is usually not a job that calls for great political skills. But with a banking crisis crippling the economy and threatening to turn a recession into a depression, Tim Geithner has been plunged into the center of politics--as both the person responsible for what the administration should do, and as the main exponent of that policy. But he has faltered in crafting an effective policy and failed miserably in putting it forward.
Whistling Past The Graveyard
March 16, 2009
Simon Johnson is a professor at MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He is co-founder of the global economy website, BaselineScenario.com. Expectations were low for this weekend's G20 meeting of finance ministers and central bank governors. Despite that, we should be disappointed with the outcome. There was no substantial progress on any policies that will help pull us out of a severe recession. The U.S.
Debt Man Walking
December 03, 2008
For those Americans who are not daily readers of the Financial Times, the past few months have been a crash course in the abstract and obscure instruments and arrangements that have derailed the nation's economy. From mortgage-backed securities to credit default swaps, the financial health of the country has undergone a gory public dissection.
November 21, 2008
Less than two months ago, key members of Argentine president Cristina Fernández de Kirchner’s cabinet boasted that the global financial crisis would not affect Argentina. At the Waldorf Astoria in New York on September 25, the president herself reacted bitterly to an American executive who asked about her plans to cope with the looming downturn: “It is you [the US and Europe] who need a Plan B.” They spoke too soon.