The Failure of Cross-border Financial Firms: New Thinking in the Aftermath of the Financial Crisis Andrew Cornford

The development of rules for handling insolvencies of financial and non-financial firms with operations in a number of countries (cross-border insolvencies) is a long-standing item on the international regulatory agenda. In this context, the author analyses the measures proposed in various reports to address the problems associated with systemically important financial institutions. financial_firms (Download the full text in PDF format)

Disarray in the Global Economy C.P. Chandrasekhar

The slanging match over currency and monetary policies at the annual Fund-Bank meetings, held over the second weekend of October, points to the disarray in global economic governance. While the US sought to mobilise IMF support for an effort to realign exchange rates and ensure an appreciation of the renminbi in the wake of China’s reserve accumulation, the Chinese accused the US of destabilising emerging economies by allowing ultra-loose monetary policy to flood the emerging world with money. The result was that there was little agreement on what needs to be done to drag the world out of stagnation. Evidence…

Global Imbalances: An unconventional view Vladimir Popov

The paper argues that maintaining today’s global imbalances would help to overcome the major disproportion of our times – income gap between developed and developing countries. This gap was widening for 500 years and only now, in the recent 50 years, there are some signs that this gap is starting to decrease. The chances to close this gap sooner rather than later would be better, if the West would go into debt, allowing developing countries to have trade surpluses that would help them develop faster. global_imbalances (Download the full text in PDF format)

Recycling Global Imbalances Korkut Ertürk

Is the United States at long last getting serious about global imbalances, or are we risking currency wars that can end in unmitigated disaster for all? No one knows, though tension is on the rise with China. This much is certain: any advantage from a lower currency is a zero-sum gain for the world economy as a whole. At best, it is about how to distribute the pie, not about growing it. Until recently, many economists were not sure if global imbalances were something to be worried about at all. If markets always worked efficiently as most economists had accepted…

How Brazil can defend against Financialization Michael Hudson

In this article, it is argued that for developing countries, privatizing the public domain and financializing the economy is akin to military defeat. To defend themselves, the BRIC countries need to isolate themselves from global debt creation. And Brazil (as well as other developing countries), needs to promote the investment of its economic surplus for raising production and living standards, so as to create a positive feedback between higher wage levels and productivity, hence higher global competitiveness. Brazil (Download the full text in PDF format)

The Myth of the “Sub-prime” Crisis Prabhat Patnaik

Capitalism, like the proverbial horse, kicks even when in decline. Even as the current crisis hit it, it gave an ideological kick by attributing the crisis to “sub-prime” lending; and so well-directed was its kick that the whole world ended up calling it the “sub-prime crisis”. The idea, bought even in progressive circles, was that in the euphoria of the boom that had preceded the crisis, financial institutions in the U.S. had given loans even to sections of the population who were not really “credit-worthy”, i.e. who were poor and had few assets of their own. They would normally not…

Fake Lakes vs. Real People Ananya Mukherjee Reed#

If you have been to Toronto, you must have noticed that it lies on the shores of the vast and beautiful Lake Ontario. On this eve of the G20, the Lake looks perhaps especially blue and beautiful, as if with a vengeance, it seems to me. But this is not the lake Canada's leaders want the world to see. As you may know, Premier Harper and his men have built a fake lake - to adorn the 'marketing pavillion' created especially for the summits. The 'puddle pool' - as some have called it - and its accompaniments come at a…

The Great China Currency Debate: For workers or speculators? Andrew M. Fischer

The mainstream view in the West has long held that the renminbi is undervalued, and has been advocating a revaluation of the currency. Their insistence that currency appreciation should happen through nominal revaluation, rather than only through real appreciation, is best understood as reflective of speculative interests and detrimental to the developmental interests of China given that it would forfeit the country’s ability to appreciate through gradually rising wages, contrary to the claims of those leading the debate in the West. Debate (Download the full text in PDF format) (Note: This is also a G24 policy brief)

The Global Economic Crisis: Challenges and opportunities for public administration S.K. Rao

Following a discussion of the factors leading to the recent financial and economic turmoil, this article offers evidence that some countries that have relied more on the role of government and the public sector have managed to contain the crisis in a more successful way. There is, therefore, a need to revisit, redefine and bolster the roles of government and reposition the public sector. Global_Economic_Crisis (Download the full text in PDF format)