Grasping 'Radical' Economic Change

market declines in the United States, and cascading losses in other major markets around the world, many analysts said the financial crisis of 2008 had devolved into a full-fledged panic. David M. Rubenstein, the cofounder and managing director of the Carlyle Group, a leading private equity firm, discusses what must be done to mitigate the fear he says has "overtaken everything.".

By CFR, USA.

Macro Economic Policy Resource.

Zimbabwe's Economic Implosion

When inflation gets really bad, it becomes “hyper-inflation.” Yet even that word seems insufficient to describe what’s happening in Zimbabwe. In May 2006, when inflation rates surpassed 1,000 percent, people quipped that the country’s smallest bill, a $500 note, was more cost effective as toilet paper, given that toilet paper was selling for $417—not per roll, but per square (NYT).

By CFR,USA.

Macro Economic Policy Resource.

Considering China’s Currency

The valuation of China’s currency has animated economists for over a decade. After years of pressure from Washington, China floated its currency in 2005, abandoning a strict peg to the U.S. dollar and opting, rather, for an exchange rate pegged to a basket of international currencies. This move created a modicum of wiggle room for the yuan, but U.S.

By CFR, USA.

Macro Economic Policy Resource.

Defeating Japanese Deflation

After years of crippling deflation, the Japanese economy may finally have some spring in its step. The Bank of Japan, timidly but significantly, is raising interest rates. The bank has nudged (Marketwatch) the country’s benchmark rate twice since last summer, bringing it to 0.5 percent after having held it at zero for six straight years. By Lee Hudson Teslik.

By CFR, USA.

Macro Economic Policy Resource.

Latin America’s Dueling Development Banks

1 June 2007. Venezuelan President Hugo Chavez proposed a regional development bank in the same March 2007 speech announcing his country’s withdrawal from the World Bank and the International Monetary Fund. Clearly, he hoped the so-called Bank of the South would supersede the two Western-dominated lenders. By Stephanie Hanson.

By  CFR, USA.

Macro Economic policy Resource.

Federal Revenue and Spending" Want to know how the Federal government is raising and spending your money? This excellent web resource from the Heritage Foundation details the rise of federal spending, trends in taxation and borrowing. Brian M. Riedl, Rea Hederman and Ethan Baker provide the data in "Federal Revenue and Spending: A Book of Charts".

By Heritage Foundation, US.

Macro Economic Policy Resource.

Asset Bubbles " Hans-Joachim Voth examines five bubbles that eventually popped, and discuses the feasibility of central bank policy. In all cases, he finds that monetary policy was too loose during the period when the bubble was developing, and that a determined switch from an accommodating to a tight stance caused "the music to stop". Despite the severe real effects of asset bubbles in all five examples, it is argued that the case for targeting them explicitly is weak. "A Tale of Five Bubbles - Asset Price Inflation and Central Bank Policy in Historical Perspective" is published by the Centre for Economic Policy Research.

By Centre for Economic Policy Research , Sweden, UK, Germany, Japan, US.

Macro Economic Policy Resource.

Argentina's Crisis " Kurt Schuler sets out a programme of reforms which are designed to restore confidence in Argentina's economy. These include dollarization, reforming the financial system, and tax reductions. "Fixing Argentina" is published by the Cato Institute.

By Cato Institute , US.

Macro Economic Policy Resource.

Privatizing Banking Regulation " Bert Ely argues for the privatization of prudential banking regulation. The present system whereby some banks are, in effect, deemed to big to fail has a strong moral hazard element - whereby banks are encouraged to take more risks because of this implicit guarantee. He proposes a system of cross-guarantee deposit insurance. Under this system an individual bank would negotiate a prudential regulatory contract with a syndicate of of guarantors - largely other banks. The syndicate would guarantee against loss of bank deposits. In return the syndicate would receive a negotiated risk-sensitive insurance premium.

By Bert Ely , US

Macro Economic Policy Resource.