Posted November 9, 2009
Financial Crisis | American Economy | Economic Development & Trade | Labor & Employment | Business & Industry
The Global Slump: Deeper Causes and Harder Lessons
Challenge, September/October 2009, v52, #5, pp5-24
"Robert Wade believes many commentators are overly optimistic that the end of the economic crisis is coming soon. Of greater concern to him, however, is that we will forget too soon what few lessons we have learned and fail to learn still more
important lessons about the true causes and solutions of the worldwide financial and economic collapse."
Robert Wade is Professor of Political Economy and Development at the London School of Economics. Order article B1/04-09
Why Capitalism Fails; The Man who Saw the Meltdown Coming Had another Troubling Insight: It Will Happen Again
The Boston Globe, September 19, 2009, online edition
"Since the global financial system started unraveling in dramatic fashion two years ago, distinguished economists have suffered a crisis of their own. Ivy League professors who had trumpeted the dawn of a new era of stability have scrambled to explain how, exactly, the worst financial crisis since the Great Depression had ambushed their entire profession. Amid the hand-wringing and the self-flagellation, a few more cerebral commentators started to speak about the arrival of a “Minsky moment,” and a growing number of insiders began to warn of a coming “Minsky meltdown.” A contrarian amid the conformity of postwar America, an expert in the
then-unfashionable subfields of finance and crisis, Minsky was one economist who
saw what was coming. He predicted, decades ago, almost exactly the kind of
meltdown that recently hammered the global economy."
Stephen Mihm is a History Professor at the University of Georgia. Fulltext B2/04-09
Capitalism: A True Love Story
Forbes, October 19, 2009, v184, #7, pp24-28
"The author suggests that the success of free-market capitalism is based on trust
and mutual advantage. He states that the moral basis of capitalism is the
opposite of greed and that free enterprise involves individuals meeting their
needs by meeting the needs of others. He critiques the U.S. government's
handling of the financial crisis, including its abandonment of free-trade and
its furtherance of a weak-dollar policy."
Steve Forbes is Editor-in-chief at Forbes magazine. Fulltext B3/04-09
Anticipating the Next Crisis
Ghosh, Atish R.; Ostry, Jonathan D.; Tamirisa, Natalia
Finance & Development, September 2009, online edition, 3p
"The global financial turmoil has rekindled the interest of both policymakers and the general public in early warning systems that could anticipate financial crises. But what alarms can such systems realistically sound? How would they work? And would they be effective?"
Jonathan D. Ostry is Deputy Director, Atish R. Ghosh is Chief of the Systemic Issues Division, and Natalia Tamirisa is Assistant to the Director, all in the IMF’s Research Department. Fulltext B4/04-09
Ethics in Economy
Challenge, August/September 2009, v52, #4
"The severe recession and remarkable credit crisis of the past year have called into serious question what economists should be responsible for and to whom. Few in the profession warned about how severe a crisis the economy's dependency on debt could create." This issue of Challenge presents three separate essays by economists on the question of ethics in their profession.
- On the Need for Professional Economic Ethics
Challenge, August/September 2009, v52, #4, pp6-15
"The author argues that economists need to engage the ethics of what they do directly and actively and presents four compelling propositions for why they must do so."
George DeMartino is an Associate Professor of Economics at the Josef Korbel School of International Studies.
- Honesty and Integrity in Academic Economics
Challenge, August/September 2009, v52, #4, pp16-24
"There may not be much outright plagiarism or cheating in economics research, argues the author, but there are ground to conclude that a bias exists in statistical research. Does this amount to dishonesty? This article tackles the issue."
Thomas Mayer is Professor Emeritus of Economics at University of California, Davis.
- Rhetoric Matters
Challenge, August/September 2009, v52, #4, pp25-31
"Deirdre McCloskey pulls no punches in this eloquent essay. Dishonesty is a problem in economics - in particular, the misuse of 'statistical significance' bothers her is the fact that the profession will not discuss the problem seriously."
Deirdre McCloskey is a Distinguished Professor of Economics, History, English and Communications at the University of Illinois at Chicago. Order articles B5/04-09
America's Response to a Deep Recession
Blendon, Robert; Benson, John
Challenge, August/September 2009, v52, #4, pp32-51
"The current recession has deeply affected the way Americans view their personal financial situation. In their annual analysis of opinion surveys of Americans, Robert Blendon and John Benson find that nine out of ten Americans have a negative view of the economy and that the economy is hurting the middle class as well as the poor."
Robert Blendon is a Professor at the Kennedy School of Government, Harvard University. John Benson is Managing Director at the Harvard Opinion Research Program at the Harvard School of Public Health. Order article B6/04-09
The Future of Reserve Currencies
Cohen, Benjamin J.
Finance & Development, September 2009, online edition, 4p
"The U.S. dollar has reigned supreme as the international reserve currency since World War II. Will that run come to an end as confidence in the greenback is eroded by persistent current account deficits and rising debt? If so, what will replace it?"
Benjamin J. Cohen is Professor of International Political Economy at the University of California, Santa Barbara. Fulltext B7/04-09
The Future of the Dollar
Cooper, Richard N.
Peterson Institute for International Economics, September 2009, online edition, 6p
"The global financial and economic crisis and prospects for large and sustained
budget deficits in the United States have prompted countries with massive dollar
holdings such as China to consider alternatives to the US dollar. These
countries realize that they would suffer losses if inflation eroded the value of
the dollar securities they own. Are there feasible alternatives to the US dollar
as a widely used international currency? Richard Cooper looks at possible
alternatives—major currencies in use, such as the euro, the yen, the pound, or
even the Chinese renminbi, and a synthetic currency such as the special drawing
rights of the International Monetary Fund—and concludes that no other currency
seems likely to overtake the US dollar, and it is likely to remain the dominant
international currency for a long time."
Richard N. Cooper has been the Maurits C. Boas Professor of International
Economics at Harvard University since 1981 and is chairman emeritus of
the Advisory Committee of the Peterson Institute for International Economics. Fulltext B8/04-09
The Dollar and the Deficits: How Washington Can Prevent the Next Crisis
Bergsten, C. Fred
Foreign Affairs, November/December 2009, v88, #6, online edition
"Even as efforts to recover from the current crisis go forward, the United States
should launch new policies to avoid large external deficits, balance the budget,
and adapt to a global currency system less centered on the dollar. Although it
will take a number of years to fully implement these measures, they should be
initiated promptly both to bolster confidence in the recovery and to build the
foundation for a sustainable US economy over the long haul. This is not just an
economic imperative but a foreign policy and national security one as well."
C. Fred Bergsten is the Director of the Peterson Institute for International
Economics since its creation in 1981. Fulltext B9/04-09
The Dollar Dilemma
Foreign Affairs, September/October 2009, v88, #5, pp53-68
"Legions of pundits have argued that the dollar's status as an international currency has been damaged by the great credit crisis of 2007-9 -- and not a few have argued that the injury may prove fatal. The crisis certainly has not made the United States more attractive as a supplier of high-quality financial assets. It would be no surprise if the dysfunctionality of U.S. financial markets diminished the appetite of central banks for U.S. debt securities. A process of financial deglobalization has already begun, and it will mean less foreign financing for the United States' budget and balance-of-payments deficits. Meanwhile, the U.S. government will emit vast quantities of public debt for the foreseeable future. Together, these trends in supply and demand are a recipe for a significantly weaker dollar. And as central banks suffer capital losses on their outstanding dollar reserves, they will start considering alternatives."
Barry Eichengreen is a George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley. Fulltext B10/04-09
The Economic Role of Government: Focus on Stability, Not Spending
Campbell, Karin A.
The Heritage Foundation, Backgrounder #2316, September 17, 2009, 6p
"Is there a role for government in the economy? Yes, says Heritage analyst Karen Campbell—but the government must focus on maintaining economic stability. Fiscal responsibility is an important part of that stability. Government debt can quickly become a burden on the economy and weaken its foundations. Sound macroeconomic policies enhance the credibility of the government and strengthen the political institutions. This credibility is vital for economic stability and Americans’ long-term investment decisions that allow the U.S. economy to flourish."
Karen A. Campbell, Ph.D., is Policy Analyst in Macroeconomics in the Center for Data Analysis at The Heritage Foundation. Fulltext B11/04-09
Global Economic Prospects as of September 2009: Onward to Global Recovery
Peterson Institute for International Economics, Paper presented at the sixteenth semiannual meeting on Global Economic Prospects, September 17, 2009, online edition, 25p
"The great global recession of 2008 and early 2009 is over, and worldwide economic recovery is now under way. Most forecasters expect that the pace of this recovery will be tepid, especially in the United States and other industrial countries, with unemployment continuing to rise into next year and with little reduction in margins of slack before 2011 at the earliest. Some fear a “double dip” where economies fall back into recession at a relatively early stage of recovery."
Michael Mussa is a Senior Fellow at the Peterson Institute for International Economics. Fulltext B12/04-09
What’s In and Out in Global Money
Frankel, Jeffrey A.
Finance & Development, September 2009, online edition, 5p
"In the sometimes faddish world of international monetary economics, concepts are hot, then they are not. A leading international economist nominates five concepts that recently were virtually conventional wisdom but now are “out,” and five that have gained new stature."
Jeffrey Frankel is Harpel Professor at Harvard University. Fulltext B13/04-09
Pittsburgh: A Fresh Start or Cosmetic Tinkering?: The Chances for a Complete Overhaul of the International Financial Markets
Stiftung Wissenschaft & Politik (SWP), September 2009, online edition, 7p
"A good year after the collapse of Lehman Brothers, the heads of state and government of the G20 meet in Pittsburgh at the end of September 2009. Amidst signs of global economic recovery – astonishingly fast in the eyes of many observers – the focus is shifting away from acute crisis management and onto long-term reform of the international financial markets. For all the resolute rhetoric, there is no decisive progress to report here. Not even this financial crisis, it would appear, is enough to bring about comprehensive reordering of international finance. Crucial questions, such as countering global imbalances, are low down the agenda for the Pittsburgh summit."
Heribert is a researcher at the Global issue division of SWP. Fulltext B14/04-09
Promises, Promises: Will the G-20 Haunt or Help Obama Later On?
Weisman, Steven R.
YaleGlobal, September 30, 2009, online edition
"The results of the recent G-20 Summit in Pittsburgh could be a critical turning
point in global integration given that the grouping has now replaced the G-8. It
could also be a thorn in US President Obama’s side. The pledges made during the summit could place Obama at odds either with his
allies abroad or his allies at home. Balancing the two will prove difficult."
Steven R. Weisman is Editorial Director and Public Policy Fellow at the Peterson Institute for International Economics. Fulltext B15/04-09
Global Macroeconomic Imbalances: G-20 Leaders Must Back up Their Rhetoric with Deeds
Financial Times, Economists' Forum, October 13, 2009, online edition
"The financial crisis has taught us a painful lesson that global macroeconomic imbalances can wreak enormous damage on the world economy. At the G-20 Pittsburgh Summit, leaders committed to a framework that would prevent further damage. Eswar Prasad proposes a Special Drawing Rights scheme that allows G-20 countries to make enforceable policy commitments."
Eswar Prasad holds the New Century Chair in International Economics. He is the Tolani Senior Professor of Trade Policy at Cornell University and a Research Associate at the National Bureau of Economic Research. Fulltext B16/04-09
Future of Globalization: Is the Recession Triggering Deglobalization
CQ Researcher Global, September 2009, v3, #9, pp233-256
"Global trade has plummeted in recent months by rates not seen since the Great Depression. This year alone, the World Trade Organization predicts trade will tumble 10 percent, the biggest contraction since World War II. While countries so far have avoided the kind of disastrous trade wars that marked the 1930s, protectionist measures and nationalist sentiments are rising across the globe, reflected in the original “Buy American” provision of the U.S. government's economic stimulus package. Clearly, globalization, so recently hailed in books like Thomas Friedman's best-selling The World Is Flat, has stalled. Some economic historians even believe the world is entering an era of “deglobalization,” with nations turning inward economically and culturally, which could lead to a dangerous increase in international tensions. Other analysts say the economic, technological and social ties that bind nations to each other have grown so strong that globalization is an irreversible phenomenon that will help the global economy recover."
Reed Karaim is a freelance author writing for
The Washington Post, U.S. News & World Report, Smithsonian, American Scholar, USA Weekend and other publications. Order article B17/04-09
Ron Kirk Talks Trade
National Journal, October 16, 2009, v41, #42, 2p
"U.S. Trade Representative Ron Kirk was a strong supporter of the North American
Free Trade Agreement when he was mayor of Dallas from 1995 to 2002. After losing
a race for the U.S. Senate in 2002, Kirk became a partner in Houston-based law
firm Vinson & Elkins before being confirmed to his current post in March 2009. He sat down with National Journal's Bruce Stokes after seven months on the job to discuss the trade challenges facing President Obama and his administration."
Bruce Stokes is the international economics columnist for the National Journal. Fulltext B18/04-09
A Harsh Climate for Trade: How Climate Change Proposals Threaten Global Commerce
Cato Institute, Trade Policy Analysis no. 41, September 9, 2009, online edition, 20p
"The upcoming Copenhagen conference on climate change has led to calls for the
United States to adopt a climate change abatement program in advance. In an
effort to minimize adverse effects on certain domestic industries from higher
energy costs, however, proponents of a cap-and-trade program for greenhouse gas
emissions have loaded up their proposal with giveaways, loopholes, and barriers
to imports from nations with less stringent emission caps. These trade measures
are likely to be ineffective at best and harmful to U.S. interests at worst."
Sallie James is a trade policy analyst at the Cato Institute's Center for Trade Policy Studies. Fulltext B19/04-09
Fiscal Stimulus, Job Creation, and the Economy: What Are the Lessons of the New Deal?
Hannsgen, Greg; Papadimitriou, Dimitri B.
Levy Economics Institute of Bard College, October 2009, 5p
"As the nation watches the impact of the recent stimulus bill on job creation and economic growth, a group of academics continues to dispute the notion that the fiscal and job creation programs of the New Deal helped end the Depression. The work of these revisionist scholars has led to a public discourse that has obvious implications for the controversy surrounding fiscal stimulus bills."
Greg Hannsgen is a research scholar at the Levy Institute. President Dimitri B. Papadimitriou is executive vice president and Jerome
Levy Professor of Economics at Bard College. Fulltext B20/04-09
Is the U.S. Unemployment Rate Already as High as It Was in the 1980s?
Schmitt, John; Baker, Dean
Challenge, September/October 2009, v52, #5, pp117-125
"Even today, some observers insist the economy cannot be so bad if the unemployment rate is still below levels reached in 1982. But, in fact, the labor force is on average much older now, and that should mean more people are working. If we adjust the labor force for age, how are we faring? These two economists make the calculation."
John Schmitt serves as a senior economist with the Center for Economic and Policy Research in Washington, DC. Dean Baker is a macroeconomist and co-founder of The Center for Economic and Policy Research (CEPR). Order article B21/04-09
The Broad Reach of the Minimum Wage
Challenge, September/October 2009, v52, #5, pp100-116
"No single policy decision in the past thirty years stands out as more symbolic of the time than the resistance to raising the federal minimum wage. This economist argues strongly, however, that far more than those at the bottom of the rung were affected. The level of the minimum wage affects wages well up that income ladder."
Oren Levin-Waldman is a Professor in the Graduate School for Public Affairs and Administration at the Metropolitan College of New York, State University of New York Press, Albany. Order article B22/04-09
MetroMonitor: Tracking Economic Recession and Recovery in America’s 100 Largest Metropolitan Areas
The Brookings Institution, MetroMonitor, September 2009, online edition
"Beneath the constant drumbeat of headline numbers emanating from Washington on U.S. jobs, national unemployment, GDP, and home prices lies a complex, diverse set of 366 metropolitan economies. While no metro area has been immune from the current economic downturn, the pain is unevenly distributed. Some have felt only modest effects, and a few show early signs of recovery, while others are undergoing a wrenching restructuring that may fundamentally alter their economic trajectory."
The MetroMonitor, an interactive barometer of the health of America’s
metropolitan economies, looks “beneath the hood” of national economic statistics
to portray the diverse metropolitan landscape of recession and recovery across
the country. Fulltext B23/04-09