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Open Think Tank Articles

November 20, 2012 | Ask NATO about Security Despite Austerity This Article contains Flash-Video

Editorial Team: Adrian Kendry is NATO’s Senior Defense Economist and works in the Emerging Security Challenges Division. In our latest Q&A, he takes your questions on the interaction of economic and security challenges. Watch his opening statement.

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October 20, 2011 | Government Bonds Will Be the Next Economic Blow

Andreas Kern: The initial steps taken to deal with the debt crises have created a new kind of toxic asset: government bonds. If the Eurozone and G-20 members do not take adequate action to coordinate their financial regulation, a government bond credit crunch will be the next shock to strike the faltering global financial system.

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September 19, 2011 | Security Despite Austerity: Europe's Defense

Editorial Team: Drastic cuts to defense spending put Europe’s security at risk. As budgets bend to economic pressure, defense ministries urgently need to reform in order to cut waste, improve capability and maintain security. What can European states do to make defense spending more efficient?

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September 13, 2011 | The Impact of the Financial Crisis on European Defense

Christian Mölling: Europe’s defense policy has reached a pivotal moment: states can either initiate comprehensive defense sector reform through the EU, or compromise their security long-term. Europe must link its national military capabilities to improve efficiency and stave off collective security decline.

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August 9, 2011 | Security Despite Austerity: Seeking Your Ideas

Editorial Team: Our latest theme week seeks solutions to Europe’s most pressing security question: in a difficult economic climate, how can European defense ministries get more bang for their buck? We encourage all Atlantic Community members to contribute opinion articles to stimulate this important debate.

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July 27, 2011 | Cutting the US Deficit: Listen to Bill

Stewart Munn: Bill Clinton is right to use the UK economy as a warning of what can happen if deficit spending is cut too severely. If Republicans get their way in the ongoing deficit negotiations, America’s economy could be headed for a long, painful spell. US politicians should take heed.

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July 14, 2011 | Does Europe Have a Death Wish?

Joschka Fischer: Europeans must forge ahead with the political union now; otherwise the euro and EU integration will be undone. Europe would then lose nearly everything it has gained over a half-century from transcending nationalism. In the light of the emerging new world order, this would be a tragedy.

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October 20, 2010 | Defense Cuts: How do We Get More Bang for Our Buck?

Editorial Team: Across Europe, governments are being forced to rationalize spending on their militaries in what is fast becoming an age of austerity. Aside from changing the fundamental make-up of Europe’s armed forces, this will have wider implications for the transatlantic security agenda.

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August 5, 2010 | Whither EU-US Relations?

Lukas Linsi and Mustafa Kutlay: It is quite clear that US-EU relations are far from being satisfactory. More worrying than the cooling down of transatlantic relations in itself, however, is the fact that it is the result of an absence of clear vision and political will on both sides of the Atlantic.

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July 29, 2010 | Europe's Vision Deficit

Guy Sorman: Governments throughout Western Europe are suffering from a dearth of popular support. Leaders from the left, right and center of the political spectrum have all seen drops in approval ratings. They have proven themselves incapable of explaining the economic crisis to their citizens and lack vision.

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July 12, 2010 | Where Europe and America Differ on Global Banking Regulation

Avinash Persaud: It is tempting to base ideas for global financial regulation on bashing big banks. The greater problem is that of diverging American and European views on a safer rulebook.

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April 26, 2010 | EU Should Have Veto Power in Athens

Hans F. Bellstedt: A high EU official should be installed in Athens as a state commissioner with the power to veto spending plans that do not comply with EU and IMF standards. Greece should enjoy a set of austere rules, similar to those having been imposed by the IMF on Argentina or Turkey when they were in financial trouble.

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February 25, 2010 | US-EU Co-operation is Key to Global Governance

Robert Hutchings: The globalised economy and the rise of new economic giants demand a radically reformed international system. But it will nevertheless fall to Europe and America to fashion these new structures for global governance.

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July 16, 2009 | Expats Should Not Overlook Social Injustices in Dubai

Eimear O'Casey: Dubai’s growth came at the expense of the human rights of Asian and African workers, and against the fragile environment. Westerners moving to Dubai have a responsibility to end their ignorance toward this unfair society.

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June 3, 2009 | State-Backed Opel Deal Poses Threat to Free Markets

Jens F. Laurson & George A. Pieler : The recent deal to save Opel in Europe, which was backed by the US, German and Russian leaders and included a 1.5 billion euro investment from Germany, is not the end of the story. The deal blithely gave the state control of a major industry - putting free markets themselves at stake.

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April 3, 2009 | The Transition to Sustainability

Jeffrey D. Sachs: Long term economic growth will only be achieved if accompanied by sustainable investments in green technologies. Yet developed countries ought also to understand that they need to guide and help developing countries towards sustainability.

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February 16, 2009 | The End of Bipartisanship?

Fabian Wendenburg: The stimulus package has been the first real test of Obama’s promised bipartisanship. But after it attracted only three senators and no congressman of the GOP, last week was a vivid reminder that it will be hard to overcome differences of principle and culture.

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February 15, 2009 | The Legacy of the Financial Crisis Awaits Us in 2020

Soyen Park: The financial crisis will bring about critical changes to the global order. New markets will emerge, the ECB may disappear, and leading financial institutions may become obsolete. Whatever the case, prudent, coordinated government policy is imperative.

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January 29, 2009 | A Supranational Approach to Rescuing the Global Economy

Memo 12: Atlantic Community members are in agreement that addressing the global economic crisis is intrinsically linked to engaging with the new world order. All nations and relevant parties beyond the Bretton Woods transatlantic partners must be part of the solution.

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January 21, 2009 | World Economic Forum Focus Week

From the Editorial Team: We are hosting a 5 day run-up to the WEF Conference (conference begins Jan 28) and focusing on two of the major issues: the Global Economy and Climate Change. We are asking you, our readers, to contribute.

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December 9, 2008 | Germany Wins on Globalization, but Not All Germans are Winners

Markus Drake: What do you do when your research yields clear results, but business interests and politicians pick up only a narrow part of the message? Shouting louder is certainly not an option. Professor Daniel S. Hamilton faced this dilemma when presenting his research on Germany and globalization at the event The Global Marketplace 2020: Where Will Germany Be?

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November 12, 2008 | Renaissance of Protectionism

Jens F. Laurson & George A. Pieler: The first dangerous results from governmental overreaction to the financial crisis are beginning to show. Bailout bills have counterproductive effects as political pressure is even brought on institutions that do not need the governmental help. Following protectionist approaches could lead to a harmful and tragic economic outcome.

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October 16, 2008 | Too Much Political Meddling Will Only Prolong the Financial Crisis

Jens F. Laurson & George A. Pieler: The economic crisis has brought harmony to trans-Atlantic affairs. Europeans might secretly blame the calamity on US “Casino Capitalism,” but they know they are rowing in the same boat and so cooperation is the order of the day. The stock markets treat this as good news now, but it could easily do more harm than good.

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September 26, 2008 | HOT ISSUE: <br />How to Respond to the Financial Crisis?

From the Editorial Team: The current financial crisis has sent economists, politicians, and citizens alike scrambling to find solutions. In the US and Europe, expert opinion is divided on how to revamp the economy. How should the United States, the EU, the private sector, and others respond to this international situation?

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Global Must Read Articles

October 4, 2012 | The United States' Wrong Economic Medicine

Policymakers have misdiagnosed the ailment of America’s financial problems. ++ The prescribed medicine can result in unwanted side effects. ++ The American consumer, the patient, has been spending far less, due to the disease, the protracted balance-sheet recession. ++ The problem is that the Fed is treating the disease by deploying monetary accommodation to compensate for the shortfall in

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May 30, 2012 | Whither the European Project?

Germany’s inability to address the Eurozone crisis means that Europe is now facing an existential crisis. ++ As shown by history, Germany’s strict austerity will only lead to depression. ++ Europe’s future depends on Germany’s economic policies and France’s position on political integration and structural reforms. ++ France must approve political union with a common government and parliament for

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March 13, 2012 | The Perils of Austerity

Greece’s troubles have been used to promote a false narrative about deficits and austerity. ++ Greece has officially defaulted on its debt, even if in a negotiated manner. ++ But the story of Greece shows that while deficits are bad, slashing budgets in bad times is even worse. ++ Europe’s periphery is now experiencing depressions caused by austerity. ++ Short of leaving the Euro, nations like

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December 19, 2011 | 2012: An Economic Apocalypse?

The economic outlook for 2012 is clear: everyone is in trouble. ++ The Eurozone is certain to recede further, which will also put pressure on the economic downturn in the US; the UK is majorly exposed. ++ China’s model is stalling, and its refusal to let the Yuan appreciate could trigger one of several trade wars. ++ Weak governments and popular unrest have made it difficult for countries

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October 7, 2011 | Occupy Wall Street: Take It Seriously

Occupy Wall Street protestors have legitimate grievances about how government has handled the economic crisis, but have been trivialized by the mainstream media. ++ Finding some protestors with contradictory or mistaken claims does not make the group’s frustration invalid. ++ The movement should be taken seriously because the set of people who can be angered by bank bailouts and the state

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August 12, 2011 | US and Europe Must Support BRIC Recovery

The world economy now depends less on the leadership of the US and Europe, and more on the domestic consumption of large developing markets. ++ Western policymakers should be wary of new monetary stimulus, as a weaker dollar could raise inflation rates in the BRIC countries, slowing the growth of their domestic demand. ++ To support high consumption in emerging markets, Western leaders should

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July 25, 2011 | US Must Solve Domestic Issues First

In a world of diverse threats and diffuse power, the US must turn to a policy of “restoration” to “rebalance the resources devoted to domestic challenges, as opposed to international ones, in favor of the former.” ++ While an active foreign policy should continue to invigorate alliances, the US must be more discriminating in its military interventions abroad. ++ America

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July 19, 2011 | Europe Has Obama's Attention

As the eurozone crisis groans on, a German-led Europe regains the stage as America’s most important foreign partner. ++ But this is more a matter of necessity than choice. “Openings to China and India have produced little. Relations with Russia, if improved, remain quixotic. And Obama now plays defense on the Middle East in this season of Arab revolt.” ++ Hoping to avoid a

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November 29, 2010 | Europe is Edging Towards the Unthinkable

“It is easy to criticise eurozone governments, but how about some constructive advice?” ++ The EU chose not to establish a contingency plan for the Euro during the past decade of prosperity. ++ Now, the longer you wait the more radical the solution needs to be. ++ National debt should be separated from financial debt and a common European treasury bond should be created but there is no political

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November 26, 2010 | Only Germany Can Save the Eurozone

The current threat to the eurozone is the greatest challenge to German statecraft since the country was peacefully united 20 years ago, but at the moment they are not rising to the challenge. ++ Following Greece and Ireland, the next countries which could require bailouts are Portugal, and Spain. ++ If this occurs, there would be only two ways forward. ++ The first would be for the eurozone to

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August 5, 2010 | Moralisation of Capitalism: The New Enlightenment?

The financial crisis has marked the start of a new chapter in history: the post-western world. ++ The global balance of power is shifting, and the traditional responses of denial from America and soul-searching from Europe will not alter this reality. ++ The western comparative advantage is not found in its demographics, economics, or military, but rather in its ideals: democracy, the rule of

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August 3, 2010 | Embracing the Myth of Structural Unemployment

The American governing elite has begun to define high levels of economic distress as the new normal for workers. ++ Politicians are in the process of repudiating their responsibility to create jobs by labeling high unemployment as “structural” and permanent. ++ The Federal Reserve is complicit in defining success down, which will quickly become a self-fulfilling prophecy. ++ “A

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July 26, 2010 | Beef Up the Budget of the I.M.F.

The International Monetary Fund needs to increase its available resources and adjust its policies to new economic realities. ++ Flexible and precautionary credit lines that guarantee some measure of protection against the aftershocks of a global financial crisis are a step in the right direction. ++ The Fund’s credibility would be enhanced in the developing world if it would abandon its

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June 22, 2010 | Slow Recovery: Bashing the Chinese

Bashing the Chinese has become a fad in the Western media lately, in particular since the recovery has been slow. ++ Proponents of the “China solo show” theory in the West claim that “China has been the biggest winner in the global financial crisis.” ++ However, their real aim “is in fact to press China to undertake more and more improper international

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May 31, 2010 | Europe Needs to Get Its Act Together

The financial crisis demonstrated that European leadership is virtually nonexistant; only the actions of individual states like Germany, France, and the UK prevented a complete catastrophe. ++ It is “absolutely essential to foresake the neoliberalism that brought
on the present crisis.” ++ Europe’s weakness will keep it from becoming one of the leading forces in the new world order. ++ Europe

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February 19, 2010 | Soccer Star Pushes Countries to Meet MDG Targets

French soccer star and UN Goodwill Amb. Zinedine Zidane is trying to raise support and awareness of the MDGs. ++ The financial crisis has set back the efforts of Asian countries to meet MDG targets. ++ The Asian Development Bank recommends that these countries increase their social spending to stay on track. ++ “Without better protection, people fall back into poverty with economic

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February 12, 2010 | Eastern Europe Needs the Euro

The global financial crisis has had severe repercussions in the new Eastern European EU-member states, as well as in the three former Soviet Republics of Belorussia, Ukraine, and Moldavia. The following lessons can be drawn from the manner in which the crisis impacted these Eastern European countries:

If a currency peg is to be used in this region, then it should be in the dominant currency in

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February 1, 2010 | 3 Step Survival Kit for the Eurozone

The EU will bail out one of its fellow members for the first time in its 11 year-long honeymoon with the euro. ++ After Greece and Portugal, Spain is likely to ask for support as well. ++ What should be done in order to prevent the eurozone from faltering?++ First, a transparent crisis-management system to impose string-attached bail-out plans; second, a strong political leadership from the

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December 16, 2009 | Hold On To The Expats

In the present financial crisis many expats are dropped by their home company in favor of local hire. ++ Although this presents a significant cost reduction to the head office initially, the mid- to long term effects of dispensing with key personnel are often not recognized. ++ This is part of a larger trend in which managers are allowing “short-term considerations to overwhelm desirable

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November 12, 2009 | Financial Crisis Hits Developing Countries Harder than Expected

The financial crisis has hit poor, developing countries to a greater extent than anticipated. An additional 50 million people have slid into poverty there. Developing countries are set to lose 750 billion dollars in income by the end of 2009, as a result of the international financial upheaval. For developing countries, the financial crisis has brought about a crisis in confidence in the wisdom

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October 13, 2009 | The Renminbi Needs to Float

The key cause of the current financial crisis is a lack of balance in the world economy. ++ Whilst China has built up immense financial reserves, the US has seen its account deficit grow and grow on the back of infinitely increasing interest payments on its foreign debt. ++ The US needs to become more competitive thereby increasing public and private saving, whereas China should boost its

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October 9, 2009 | Financial Crisis Requires Continued Action

Although there is lots of talk of green shoots, the recession is not over and the crisis demands that we finish what we started. ++ Stimulus packages are helping to stabilise our economies, but we are still in danger. ++ “Premature removal of the crutches we gave our sick economies could destroy the green shots, destroy investor’s confidence and throw us back into a more severe crisis.” ++ We

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September 16, 2009 | Can China Deal With Transition?

It seems the moment when China becomes the world’s largest economy is getting closer every day. ++ However, before China will finally become number one, the country has to find a way to manage its two biggest challenges: the democratic and economic transitions. ++ “Without a democratic mandate, the Communist party relies on rapid growth to keep the system stable, thus, somehow the country needs

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September 2, 2009 | Is the Dragon Fizzling Out?

China’s stock market continues to fall as the Shanghai Composite fell 5% on August 31st. ++ “The jitters in Asia and the rest of the world are rooted in fears that China will not be able to help pull the global economy from recession.” ++ However, Goldman Sachs still predicts large growth for the dragon this year. ++ “China’s economic policymakers have been performing

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August 27, 2009 | Walk the Walk G20!

Until now, leaders from the G20 countries have not shied away from grand declarations as to how the world of finance must change. ++ Most statements involve deep cuts in executive bonuses and the granting of state credits for corporations. ++ President Nicolas Sarkozy has been especially frank in condemning bankers that were supposedly responsible for the crisis. ++ “He has now obligated himself

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July 31, 2009 | Why the EU Fails in a Multipolar World

The financial crisis evoked the necessity of a rebalancing of the global power equilibrium and of Europe’s status in it. ++ “Nowadays, there is both too much and too little Europe”. ++ While European countries are overrepresented in the world’s premier forums, Europe lacks influence, because of its heterogeneity. ++ “The absurdity of Italy’s presence in the

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July 21, 2009 | Wall Street Learned Nothing

Experts said last year’s economic breakdown was “the end of the world as we know it… there are new values that we will need to adopt and adapt.” ++ But as memories of the financial turmoil begin to fade, bankers are right back where they started. ++ Goldman just set aside $11.4 billion for bonuses, about what Wall Street firms were paying two years ago, and its trading desk regularly risks

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July 15, 2009 | Economic Decline Threatens Medvedev's 'Liberality'

A decline in the Russian economy caused by the global financial crisis could set off an authoritarian agenda change in the Kremlin. ++ Worker protests and societal riots against company closings are just the beginning. ++ The situation in mono-industrial cities leftover from the Soviet era is particularly alarming. ++ Considering the growing power of today’s Russian state, the nationalization

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May 11, 2009 | World Moving Towards An Owned-By-China Era

China’s £2 trillion of foreign currency reserves could help fix the financial crisis. ++ China is already the sixth largest outward investor. ++ “The era of Made in China is drawing to a close, the era of Owned by China is starting and we had better be ready for a rapid transition.” ++ Some countries are concerned Chinese investments could be used to seek political ends, but the “west needs

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April 8, 2009 | The Economic Crisis Focuses on the G2, Not the G20

President Obama’s “deferential diplomacy” cannot surmount fundamental transatlantic differences, as exemplified by the failure of a wider fiscal stimulus. ++ Demographic patterns dictate policy responses to the economic crisis. ++ The aging European countries, faced with a sooner “fiscal meltdown,” guard against debt increase due to the stimulus packages. ++ However, it is the “G2 of China

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April 1, 2009 | Poor People Will Pay Heavier Toll

Developing countries —even if not located at the at the center of the crisis— will feel the impact of the financial crisis’ “second wave.” ++ As remittances decline and demand for exports falls, poor households will find it increasingly difficult to save the money necessary to provide for education and good food quality. ++ In the face of human suffering we should

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March 31, 2009 | G20 Meeting to Determine the Global Economy's Path

The upcoming G20 meeting will determine the future path of the global economic system. ++ The camps are divided into two: Obama, Brown and the IMF (who speak of depressed demand and push for stimulus plans) vs. Sarkozy and Merkel (who speak of the success of the “welfare state” to offer protection against the crisis). ++ It is crucial that the G20 rejects any suggestions for

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March 27, 2009 | Politicians Open Your Eyes!

The economic crisis has hit the world as a surprise but was it truly unexpected? Krugman, Economic Nobel Prize Winner in 2008, had issued warnings since 2000 on the fragility of ultraliberalism. ++ Yet, when it comes to hearing pessimistic predictions or even facts, citizens and politicians often opt for closing their eyes rather then intervening.++ History is rich in examples of neglect. ++

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March 27, 2009 | The Left's Missed Opportunity

The economic crisis has highlighted the failure of the US imposed model of deregulation, at least for the financial sector. ++ What a perfect occasion for the Left, whose mantra is state regulation, to re-enter the political scene. ++ Unfortunately this has not been the case. ++ Several European left wing parties such as the SPD, PSOE and PD, have been caught off guard recently by making a

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March 23, 2009 | Have Faith in the Market

Nobel Prize Winner Gary Becker argues that the current economic crisis is born out of big government, the Fed’s low interest rates policy, and the “bubble mentality” meaning the reckless borrowing based on “expectations that prices would continue to rise at rates we now recognize, […] were unsustainable.” ++ Yet, despite the apparent failure of the global financial

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March 13, 2009 | Social Cohesion Depends on Functioning Economies

The December 2008 events in Greece were spurred by the shooting of a teenager by the police, yet have deeper roots in the dismal social, economic and political conditions in which the Greek youth finds itself. ++ As the financial crisis challenges what people take for granted, increased crime rates and illegal migration make the ground fertile for social unrest. ++ If the current situation

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March 12, 2009 | The Misinterpretation of the Financial Crisis

Noble Prize winner Amartya Sen argues that the current global crisis does not signal the end of capitalism, but rather calls for rethinking the nature of capitalism. ++ Sen refers to Adam Smith to argue that the pioneer of the “free hand” did not define capitalism solely on profit motive and self interest. ++ Rather, he spoke also of “trust and confidence to work

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March 9, 2009 | Obama's Mortgage Plan is the Solution

Since the economic downturn began as a mortgage crisis, the focus should be on mortgages in order to find a solution to the financial crisis. ++ Mr. Obama and his administration seem to be aware of this; the Homeowner Affordability and Stability Plan announced last month is an effective strategy to tackle the mortgage problem. ++ Critics claim that this plan fails to punish those responsible by

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March 3, 2009 | Economic Crisis More Dangerous Than Terrorism

In his State
of The Union Address
in January 2002, George W. Bush warned us of the infamous “Axis of
Evil.” Iran, North Korea and Iraq were accused of harboring
terrorists, building weapons of mass destruction and threatening world peace.
Seven years later, President Obama is confronted with another similarly grave
“Axis.” This time, however, it is not linked to terrorism or weapons
of

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March 3, 2009 | This Time Around, Think of Ethics

The financial crisis was not a total shock; some economists - Stiglitz - warned of the dangers which inhabited the global economy. ++ Currently, the use of public funds to revive the economy will only succeed if done in an ethical way which allows for “responsible state intervention.” ++ The financial crisis calls for ethical regulation and changing attitudes in industrialized

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February 26, 2009 | Lure France Back into NATO

When France left NATO’s permanent command structure 43 years ago, it was confident in its decision. ++ Contemporary realties —the financial crisis and the need for transatlantic cooperation in light of a slowly emerging multipolarity— combine to call for a stronger French presence. ++ France’s return to NATO would better serve French domestic interests, advance the

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February 26, 2009 | A Fine Line Between Hope and Fear

The White House’s comparisons between the US’ current financial situation and the Great Depression have created a necessary climate of fear in the country. ++ This crisis is both alarming and systemic and America must face up to its bad habits if it is to make it through to the other side. ++ However, if Obama is to honor his campaign promises, this anxiety-discourse must also be

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February 25, 2009 | Where is the Money to Help Eastern Europe?

Eastern Europe is acutely hit by the economic crisis and WB President Zoellick estimates that the region would need $120bn to recapitalize its banks. ++ Western Europe, as the main investor and credit provider in the region, is however not immune from the critical state of its neighbor. ++ Western European banks have thus started cutting money supplies to the East fearing that the incapacity of

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February 25, 2009 | Obama Will Save the World at the G-20

Obama is the only man who can bring about effective change and make the financial crisis a passed nightmare: “he is untainted, popular and leader of the country that, for good and ill, remains central.” ++ On the occasion of the G-20 he must recognize the US’ responsibility in triggering the chaos but explain that it is time to move away from the “blame game” and set priorities for the

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February 23, 2009 | The "Euroization" of Eastern Europe

The financial crisis is bad, but eurozone members still have some hope given the bail out guarantees. ++ It’s in Central and Eastern Europe that the catastrophe scenario seems too real to escape; the provision of mortgages in foreign currencies and the reluctance to adopt policy to prepare countries for their future transition to the euro combined to create a financial disaster. ++ The

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February 20, 2009 | Politics, Not Deregulation, Caused the Crisis

Quotas for federal housing loans to poor Americans led to a huge increase in subprime loans. ++ Regulators could have stepped in, but thought that housing prices would increase steadily. ++ The crisis shows that we cannot help poor people by lending them more money than they can pay back. ++ The deregulation that has taken place has been exaggerated, and giving regulators more power would not

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February 18, 2009 | Disempowered Unions Explain Economic Crisis

“Misshapen economic codependency of the US and China” lies at the heart of the economic crisis. ++ E. Asian exports are being left to gather dust in US warehouses whilst the US is paralyzed by debt accumulated to compensate for the consumers it lost through offshore labor. ++ The “dysfunctional duo” have more in common than they think, as the impotence of unions in both

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February 13, 2009 | New Bail-Out: Go See Obama!

The curious case of Henrietta Hughes shows American attitudes towards social assistance. ++ Before, she was unemployed and homeless, living in a small car with her adult son. ++ Now, she lives in a spare home of a Republican representative and has a job. ++ Her life changed in front of Obama, and the TV-cameras. ++ This shows “Yes, we can”-attitude, but also miserable American social support,

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February 12, 2009 | Mr. Obama, Safety Should Preceed Speed

Obama seems to be certain that “disaster” and “catastrophe” will materialize should the stimulus legislation fail to be adopted promptly. ++ How can he be so sure? Overconfidence is not an unfamiliar trait in Washington: Kennedy and Johnson were plagued by it. ++ This time, a little more prudence would not hurt; $789 billion are at stake and ineffective spending would be unpardonable. ++ After

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February 12, 2009 | Do Not Upset the Internal Market

The motor force behind the development of the EU has been economic interdependence and the creation of a common internal market. ++ If member states respond to the crisis by putting their national interest first, measures like state aid — especially banking and automotive industries — will upset the workings of the internal market and put European prosperity at risk. ++ The review process of

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February 10, 2009 | Fixing the Economy and the Planet In One Go

If the international community acts carefully, the economy and the climate can be healed in tandem. ++ Incentives to cut greenhouse emissions could “kick-start private investment and refuel the economy.” ++ To coordinate developing and developed nations, caps for specific sectors should be set. ++ CO2 capture and storage (CCS) should be promoted as a means for developing countries

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February 9, 2009 | Leaders, Fight the Economic Tempest Together

Whether or not the current economic situation is a depression depends on one’s definition of the term. ++ What is certain is that global trade and growth have been in freefall for the last couple of months. ++ The expected reaction from world leaders was coordination but this never materialized; instead “policymakers have wasted almost five months during which most of the debate has been

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February 6, 2009 | Obama's Stimulus Plan: the Right Medicine This Article contains Flash-Video

The response to an economic crisis which is very reminiscent of the Great Depression needs to reflect the urgency of the situation. ++ The stimulus plan now standing before Congress will bring the change hoped for because it is “more than a prescription for short-term spending — it’s a strategy for America’s long-term growth and opportunity in areas such as renewable energy, health care

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February 6, 2009 | The World Stands Up Against Capitalism

People are sick and tired of having to pay for their governments’ mistakes; the time has come for elites to take responsibility. ++ It is customary in crisis times for “extraordinary politics” to enable politicians to adopt unpopular measures and people lose out. ++ Yet, as was the case in Argentina in 2002, the real target of the collective rage is no person but a whole system: capitalism. ++

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February 5, 2009 | Global Energy Infrastructure Needs Higher Investment

The financial crisis has put the brakes on a sustainable energy market for now. Investment in the last half of 2008 was only half of what it was in 2007. “Green investment” during financial crisis will be considered an ever greater luxury. At the same time it is increasingly important for the largest energy carries to make the switch and begin reducing carbon emissions. If one waits until the

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February 5, 2009 | Obama Must Stop Protectionism or See It Spread

Protectionist measures, like the proposed Buy American provisions in the US stimulus package, will not be taken lightly by other countries. ++ Even if measures followed WTO rules, China and India can retaliate. ++ Americans will “learn history, which they do not study enough at school, by seeing it repeated in their own lifetime.” ++ US accusations of Chinese currency manipulation are popular

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February 3, 2009 | From Globalisation to "Deglobalisation"

To date, the world has known globalization. ++ But the financial crisis has spurred talks on the new trend of deglobalization: shifting focus from the international level to the domestic one. ++ This does not seem to concern the Davos participants: globalization was reaffirmed and it was argued that the benefits of free market economics will always trump calls for protectionism. ++ While in

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February 2, 2009 | Financial Crisis Is Good News For Africa

The global economic crisis is in fact good news for aid-dependent Africa. ++ It is an opportunity for the continent to move towards the market-driven interventions which have enabled the rise of Brazil, India and China. ++ “Foreign aid has been the biggest single inhibitor of Africa’s growth,” fostering corruption, dependency and bureaucracy. ++ Focusing on the Chinese market

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February 2, 2009 | Tax Payers Pay for Stockholders' Mistakes

The Obama administration’s plan for rescuing the banking system is not the appropriate response to saving the financial system. ++ The problem goes beyond fairness considerations, “where taxpayers bear the cost if things go wrong, but stockholders and executives get the benefits if things go right.” ++ Times have changed, Greenspan is no longer the Maestro and bankers are no longer

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February 2, 2009 | No Time For Tough Talk with China

Sino-US relations have not got off to a good start. ++ US Treasury Sec. Tim Geithner has branded China a “currency manipulator,” a careless move. ++ China is the US’ largest creditor and it is entirely plausible that it will act in its own interests and move its cash elsewhere if pushed. ++ The White House generally looks keen on taking a hard line with China, but now is no

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January 30, 2009 | Davos: Towards Unity or Towards Division?

Davos’ opening speeches have highlighted the opposing attitudes of the two orators. ++ They share only one thing in common, the target audience of their words: the absent USA ++ Putin heavily criticized the US for being the source of the crisis whilst China’s Wen Jiabao only indirectly alluded to it, instead stressing the importance of collaborating with the Obama administration to find a way

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January 29, 2009 | World Leaders Powerless in Davos

Klaus Schwab, President and Founder of the WEF, has stated that the 39th forum will be one of convalescence of the world economy. ++ Well, nothing is less sure. ++ Recently the crisis has hit both Asia and Brazil, both expected to be exempt. ++ The biggest problem is that confidence seems to have disappeared among the G20. ++ Behind the numerous statements advocating a global response and

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January 29, 2009 | PM Harper's Hobson Choice

Last seen clutching on to power by the skin of his teeth in the Fall, Canadian PM Harper has come back with a massive $2.5m bail-out plan. ++ “Can there be any greater act of capitulation for a former head of the anti-government National Citizens’ Coalition than actually increasing the size of government?” ++ This new budget is entirely void of ideology and marks a complete U-turn

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January 28, 2009 | Davos: a Message of Hope

The annual appointment in the Swiss mountains to discuss the future of the world economy arrives just in time to get to the heart of the financial crisis. ++ Unfortunately newly elected President Obama will not be present ++ At his inauguration speech, however, Obama reiterated his strong commitment to a market economy. ++ The same spirit ought to accompany the experts and politicians who

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January 28, 2009 | Beware of the "Fiscal Straitjacket"

The debate over the ways to revive the US economy has an explicit focus on the immediate and short-term: save the economy now. ++ But in the absence of a medium-term strategy, the stimulus plan will simply add to an already large deficit and the government will most likely find itself locked in a “fiscal straitjacket that could paralyze public sector action in critical areas for a decade

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January 28, 2009 | Mediterranean: Beware of the New Social Brigades

The Red Brigades, a communist inspired terrorist group which emerged in Italy in the 70s, have been substituted by new social brigades (NSB), a different name but no less nocuous. ++ Deprived of a strong political culture, NSB take advantage of social malaise to recruit followers. ++ The economic crisis provides conducive conditions for this new group to flourish; the most exposed countries are

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January 27, 2009 | What's With the Republicans?

Republicans are very slow to understand that their policies have worked against America. ++ Their illusions are reflected in their doubts over the President’s stimulus plan: they argue that it legitimates excessive spending at a time when the continuous shedding of labour requires conservative spending. ++ G.O.P policies which redistributed wealth to those on the top of the income ladder

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January 27, 2009 | UK Must Shed Neo-Liberal Fears

Nothing can stop increased unemployment, and the young will be hit hardest. ++ The labor market is a social institution which touches on all parts of society. ++ Some companies try to avoid laying off workers, wanting to re-train them instead, but the UK government is not supporting this. ++ We need state-subsidies for people who educate themselves instead of becoming unemployed, we need

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January 27, 2009 | Southern Europe Out of the Eurozone

The economic and political divisions between a “hard core” Northern Europe and a crumbling South are re-emerging in the midst of the economic crisis. ++ Euroskeptics argue that this will eventually lead to a departure of the “South” from the Eurozone, whilst europhiles predict that it will produce an even “wider euro area assuming the debts of the weaker nations.” ++ The

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January 27, 2009 | Finally, the End of Immigration

The financial crisis may produce an “automated” solution to migration: as jobs lessen immigration currents are reduced. ++ In the US, the numbers of those “caught trying to sneak in […] from Mexico is at its lowest level since the mid-1970s.” ++ While many are sighing with relief, it should be remembered that it is thriving nations which attract immigration flows. ++

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January 23, 2009 | Nationalize the Banks, For Good

It is a case of too little, too late for British PM Brown’s second banking-bail out. ++ The current halfway measures are a recipe for failure and “risk turning recession into slump.” ++ The solution is clear: nationalize the banks. ++ Calls for nationalization are coming from economist and CEOs alike, yet the Labour legacy leaves ministers allergic to the prospect of

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January 23, 2009 | The US Bubble Will Not Be Helped More Debt

Obama spoke of sacrifice, but the only ones sacrificing are the Chinese, Japanese and Saudis who fund America’s debt. ++ These countries are the sole creditor nations able to buy bonds to finance the spending expected by Americans. ++ Once they have invested, these creditors will be trapped, as any attempt to rid themselves of the bonds will collapse their value. ++ America is bloated: 5% of

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January 23, 2009 | Consistency Is Needed To Stabilize the Economy

Soon-to-be US Treasury Secretary Geithner has declared to the Senate that speed and force are necessary to deal with the financial crisis. ++ Meanwhile, Bank of America has faltered. ++ Plans to set up a “bad bank” are advancing in Washington, an institution that would buy up failing assets and free other banks from the burdens, with Geithner’s approval. ++ This will be costly and may in any

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January 22, 2009 | The Verdict on the Global Financial Crisis

The solution to the financial crisis — probably the product of excess supply and demand due to “huge asset price bubbles” — may lie with a simple economic equation: “at world level, supply must equal demand.” ++ President Obama should move towards this adjustment, propose the creation of a consumer based economy in China, divert global surplus capital into developing

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January 21, 2009 | President of Change or President of Continuity?

Worldwide, the state has recently reassumed a greater role in the economy, including firm sustainers of the neoliberal philosophy. ++ The adoption of Keynesian measures has been seen as an unavoidable step to counteract the undesirable consequences of excessive deregulation of financial markets. ++ These measures are, however, provisional and will disappear as soon as the crisis is tamed. ++

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January 19, 2009 | Shopping Does Not Equate To Patriotism

The poor should not be beggared to bail out speculators. ++ Housing, health care and education are so expensive they are creating misery comparable to the ills of imperialism, feudalism and bureaucratic capitalism that once afflicted China. ++ Officials calling on “everyone to spend a year’s income” and call it “patriotic consumption” are echoes of Marie Antoinette. ++ Consumption is not

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January 16, 2009 | 2009: End of the Putin System?

Rapid triumph after the South Ossetian August war and oil barrel prices reaching the stars seem to be no more than distant memories for the Kremlin. ++ The financial crisis has hit Russia hard: aside from making oil prices fall under $40 in December, it has put the entire Putin system on the edge of collapse. ++ Despite no longer being President, PM Putin is still the big man of the country;

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January 15, 2009 | Euro-skeptic Czech Republic?

Unity in responding to the economic crisis and unity when negotiating a new PCA with Russia is the mantra of the Czech Republic, current holder of the EU Presidency. ++ It is time for skeptics who fear new members’ commitment towards the EU to put their worries away. ++ Neither the recency of membership nor the communist past are preventing them from pursuing European interests. ++ Standing

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January 15, 2009 | Congress to Stop Bank Bailout Plan?

The US Congress is critical of the way money from the Trouble Asset Relief Program has been used, and adds that the remaining amount should be made conditional on more loans being granted. ++ However, analysts argue that as the financial crisis was caused by a liquidity crisis due to mortgage losses, loan provision will remain depressed for some time. ++ While Congress’ goal of directly

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January 13, 2009 | Outcome of Return to Keynesianism Is Uncertain

The Fed’s decision to pour tons of new dollars into the US economy has not staved off recession. ++ The government is in fact the main beneficiary of the huge increase in the monetary base: deposits which the public are too uneasy to borrow have been put into the Treasury to be spent by the government. ++ This is Keynesian economics, characterized this time by unparalleled government

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January 12, 2009 | 2009 Will Test EMU and Franco-German Relations

2009 will be a challenging year for EMU and Franco-German relations regarding which economic policies to adopt. ++ The two countries traditionally differ on their stance vis à vis the role of the ECB, namely its degree of independence. ++ The French have often accused their neighbor of gleaning “unfair economic advantage from the EU.” ++ Criticism has risen under Sarkozy and culminated

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January 9, 2009 | Obama: Big On Words, Small On Action?

When President Obama speaks of the current state of the US economy, his rhetoric reveals the gravity of the situation. ++ Yet, his actions fall short of his words, with US analysts arguing that his stimulus plan will do little to address the fast forming “output gap” and the expected upsurge in unemployment rates that will follow from lost production. ++ Whatever the reasons for his

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January 9, 2009 | Food Crisis Disappears, but Only From Newspapers

A key topic a few months ago, the food crisis has now disappeared from the headlines. ++ Unfortunately this does not mean that the situation has improved; on the contrary, the financial crisis is likely to bring a series of negative repercussions. ++ It will hinder governments of developing countries from increasing needed investment in agriculture, which is likely to intensify the emergency.

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January 7, 2009 | Obama Suggests Tax Cuts To Stimulate Economy

President Obama has introduced a new stimulus plan to revive the US economy. ++ While the plan aims to reduce tax payments by $300 and provide relief to both families and business, US officials warn against the unnecessary spending that usually accompanies tax cuts. ++ While the complete plan has yet to be worked out, the Obama administration has characterized it as ‘ideologically

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January 6, 2009 | Will China Miss George W. Bush?

While the world welcomes the end of the Bush presidency and places its hopes on the man who promised change, China stands aloof from the celebrations. ++ President Bush turned a blind eye to China’s human rights abuses and failed to provide criticism of Chinese military expansion, leaving it undisturbed to pursue its goal of becoming a world power. ++ Currently, global recession and a new

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December 19, 2008 | "Empires of the Future"

Barack Obama, financial crisis, resurgent Russia, G20, Western decline, climate change - in the season of global predictions, current discourse is driven by these and other such catchwords. ++ Yet, predictions from December 2007 were of little value: none predicted the financial collapse, none an Obama victory, nor any vastly fluctuating oil prices or governments’ failure to keep pace with global

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December 19, 2008 | A New Consensus for Global Financial Regulation

“We need a financial system that operates with less leverage, has stronger oversight, and is more transparent.” ++ Already existing regulators have been under pressure from top-earning bankers to not use their powers. ++ The US refused IMF assessment until July 2008. ++ Rules have to be enforceable and enforced. ++ Also the regulators need monitoring. ++ 19 new international judicial institutions

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December 17, 2008 | "A Green Growth Engine"

To achieve low carbon emissions and green growth, an “eco- efficient, information technology-based approach” is needed. ++ The US believes that a 7% increase in broadband services will “reduce carbon dioxide emissions by 1.45m tons.” ++ The US and Korea should cooperate to develop a national knowledge infrastructure, which can secure future growth engines that do not

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December 16, 2008 | China Looks Vulnerable In Face of Financial Crisis

Protests and strikes have taken place among laid-off workers across China as the financial crisis begins to hit. ++ Global demand for Chinese goods is likely to plummet in 2009, creating heightened tension between the US and China. ++ Protectionist measures in the US, which are likely to be emulated in the EU, will hit the Chinese export market very hard. ++ The Chinese economy is

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December 16, 2008 | Financial Crisis Will Create New Somalias

Populous Muslim countries will be among those hardest hit by the current economic crisis. ++ The Mumbai terrorists were to politics what the Somali pirates are to economics. ++ Iran will either break down or break out into military action. ++ Pakistan finds itself broke in a situation where allegiance to the government has been bought. ++ Indonesia and Saudi-Arabia pay “Muslim risk premium”. ++

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December 12, 2008 | Put GM, Chrysler and Ford Into Bankruptcy

Bankruptcy is the right path for Detroit car companies. ++ Under “Chapter 11” proceedings they will be able to continue and restructure production. ++ This will not undermine trust in American cars -the company executives of GM and Chrysler have already done that. ++ Pension funds will suffer, but it is better to help them directly. ++ “US workers, working for Japanese carmakers, have shown their

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December 10, 2008 | "Don't Create a Fiscal Crisis!"

The European Central Bank has cooperated with major central banks to expand its liquidity provision, making it easier to access central-bank money. ++ Fundamental measures to protect economies have been carried out by euro-zone governments, which have “provided support for the banking system by offering funds for recapitalization and guarantees for inter-bank loans.” ++ Effective

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December 5, 2008 | US Financial Crisis as Kick-starter for Green Technology

Falling auto prices, bank crashes, mass layoffs: the economic crisis has taken full hold of the United States. Current prognoses predict that the crisis will persist for at least another year. In addition, climate change poses one of the biggest challenges that president-elect Obama must address. The influential Center for American Progress, led by John Podesta, wants the new US administration to

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December 5, 2008 | A Behavioral Trap Threatens Fed in Detroit

Pouring Fed money into the car-makers of Detroit is tempting. ++ If they slip, “a myriad” of other companies depending on them will fall. ++ But if the Fed bails out car companies, credit card companies will come begging, after which come “makers of dog polisher and electric banana straightener.” ++ A bail-out will commit the Fed to spending more if $25bn turns out not to be enough. ++ “Before

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December 4, 2008 | China: "Western Institutions Cannot Be Trusted"

China Investment Corporation, a fund that manages foreign exchange reserves for China, says it does not dare invest in western financial institutions. ++ When “government policies change every week, how can you expect that to make me confident?,” said Lou Jiwei, head of the fund. ++ US officials are trying to convince China not to let its currency, the renminbi, devalue, as this would give China

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December 3, 2008 | Sino-US Dialogue Essential to Solve Financial Crisis

Tomorrow the fifth Sino-US Strategic Economic Dialogue will start and will focus on how the two economies will face the ongoing financial crisis ++ Other topics on the agenda include energy, environment, trade and investment. ++ Such a dialogue is essential as both countries are critical to counter the economic slowdown. ++ The US needs China to “tackle the current financial crisis as the

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December 3, 2008 | Long-term Solvency of US Government Endangered

A downward spiral of stagnation and deflation - “stag-deflation” - is threatening the US and the world. ++ Central banks are no longer lenders of last resort, having to give direct loans, or even becoming the sole lenders on the market. ++ Governments are thus absorbing private sector losses, endangering their long-term solvency. ++ “2009 will be a painful year.” ++ “’Crazy’ policy

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November 26, 2008 | Eastern Europe Needs Financial Protection Too

As EU banks have been stabilized, east European subsidiaries have been discarded because some don’t want to use taxpayer money abroad. ++ As a result, investors are fleeing the “wrong side of a financial Iron Curtain.” ++ The EU ignores eastern Europe’s significance to their own prosperity. ++ If the crises remains in eastern Europe, production across Europe will slow,

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November 26, 2008 | Dalai Lama Losing Britain in the Financial Crisis

After asking China to give more to the IMF, Britain has drastically changed its position on Tibet, no longer recognizing it as autonomous. ++ This change of heart risks tearing up historical agreements that frame the international order and “could provide the basis for resolving China’s dispute with Tibet.” ++ Britain’s concession could be China’s biggest triumph

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November 25, 2008 | Central Banks Should Buy Low, Sell High

Central banks should go on an internationally coordinated shopping spree. ++ They should target not only municipal bonds, but buy up bank shares on the open market, the price of which are down to as low as a tenth of what they were two years ago. ++ This would reduce the risk of private investment in the sector and open up a road for recovery. ++ In order to be fair, the central banks’ shopping

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November 18, 2008 | Europe's Economy Needs Cooperative Efforts

To answer the G20’s calls for budgetary stimulus, Europe needs a three-part recovery program. ++ EU member states must pledge to equally share the burden of recovery. ++ Because many countries will exceed EU deficit limits, budgetary boosts need to be accompanied by an agreement to strengthen the EU’s fiscal framework. ++ Member states should make a commitment to avoid borrowing at

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November 18, 2008 | Hard Road Ahead for Obama

Obama is going to have a very hard time fulfilling his campaign promises. ++ The heavy financial burden of the market bailout will slow his progress, especially since his tax policy proposals don’t seem to even cover his planned health-care reforms. ++ Obama’s preference for negotiation and economic sanctions might not get results with Iran and N. Korea and Israel’s upcoming

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November 13, 2008 | IMF Stands for Global Economy Insurance

Uninsured drivers need to save big for car crashes; nations have done that to prepare for financial crashes. ++ However, every-country-for-itself policies are wasteful and inflate credit bubbles. ++ The IMF was everyone’s insurance after Bretton Woods but it has not kept up with the crash costs. ++ Government payments should be tripled to make the IMF bigger and to help unavoidable crashes

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November 13, 2008 | China Can Rescue the World

China can revive the world economy by strengthening its consumption. ++ Its industrial development has been shaped by US consumer demand and “US consumption has in turn been fueled by Chinese lending that kept interest rates low.” ++ This circle is broken - the US economy is in a recession and the Chinese are failing to fill the gap. ++ China has the resources to undertake stimulus

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November 12, 2008 | Minimum Target for the G20: Do No Harm

The G20-meeting may harm the economy if conflicts surface and the US is blamed for the crisis. ++ The IMF lacks legitimacy due to an under-representation of Asian powers and over-representation of Europeans. ++ Obama must agree to the results of the summit, even with a lame-duck Bush as host, or markets risk destabilization. ++ Leadership is needed from Europeans who called for the meeting. ++

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November 11, 2008 | Congressman Calls for Fire Hose on Own Party

A “fire hose, not [a] feather duster” is needed for Republican Party reform, even if it means taking risks. ++ The Fed’s task should be limited to stopping inflation; the financial system also needs overhaul. ++ The GOP, meanwhile, should target changing the tax code while taking control of the health-care debate. ++ Republicans have lost their ideals of spending discipline and need to return to

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November 11, 2008 | Sarkozy Against "Polite Conversation"

French President Sarkozy is rushing on with demands for the upcoming G20-meeting, at the expense of diplomacy. ++ His harsh call for multilateral action, blaming Wall Street for the crisis, is explained by a feeling of support from public opinion in Europe. ++ However, the crisis was not fabricated only in the US; Europe’s structures have their own faults. ++ Sensible targets for the summit would

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November 10, 2008 | Beware Deflation

Deflation is the financial threat that might catch us unaware. ++ Relief from high food and oil prices is pleasant, but extreme price drops could signal economic havoc. ++ For now, falling prices will suppress inflation (5% in the US and 9% in Asia in 2008), and service industry prices are less volatile than raw goods, providing economic stability. ++ Ultimately, deflation threatens loan

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November 10, 2008 | "Europe in Wonderland"

Actions undertaken by governments and central banks won’t be able to adress the financial crisis as other huge risks are threatening the financial system. ++ The world has benefited from over-consuming America, but the “US engine of growth” can’t be replaced by Asia, pushing the EU into a depression. ++ There is a need for macroeconomic and fiscal coordination at the EU

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November 7, 2008 | Blank Czech: The Next EU Presidency

The Czech government is ready for the EU presidency.++ “In the past two decades, the central and east European (CEE) economies have done their homework, introducing reforms, with bank bail-outs and privatizations.” ++ The Czech presidency must address three problems: eurozone recapitalization, central European members vulnerable to a euro-wide recession, and new members needing financial support.

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November 4, 2008 | Old System of Finance is Kaputt

Germans now lament eschewing the “glorious era” of state ownership of banks. ++ They are missing a cardinal fact, though: The European Central Bank’s independence “enabled it to serve as a corrective to governmental policies and powers,” whereas the US Federal Reserve implemented “interest rate and money supply strategies configured to meet the needs of the US

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November 3, 2008 | How to Solve the Financial Crisis

With the financial crisis still in full progress, political leaders are ready to cooperate. ++ As politicians negotiate next week, they have to realize that the economy is still too unstable to carry out extensive reforms. ++ Discussions are needed to evaluate the roots of the crisis, followed by talks about “substantive reforms.” ++ An “international high level group of non governmental

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October 31, 2008 | Safety First, Pocketbook Second

America might think Wall St. and Main St. are now more important than Haifa St.; They are wrong. ++ From WWII to 9/11, history has shown that economic crises and America’s resulting inward attention are the seeds of global conflict. ++ Threats, such as the situations in Pakistan and Iran, could escalate at any time. ++ Al Qaeda and Iranian terror networks are not threats but enemies who are

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October 30, 2008 | International Middle-Man Fund

International Monetary Fund resources are limited and might not handle all those requests from new, strategically located democracies like Pakistan, Ukraine and Hungary if things get too severe; however, the US, Japan and Europe should still borrow from the IMF when needed in order to ensure global stability without borrowing from Gulf Arab states, Russia or China, which would attach political

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October 29, 2008 | But Words Can Never Hurt My Financial System

European financial schadenfreude and finger-pointing directed at the US might be premature crowing. ++ Not all roots to the crisis stem from New York, rather mainly from London and Frankfurt. ++ Blaming the US and calling for a new global financial order is “an excuse to restore European statism as official policy.” ++ History, especially Japan’s, has exhibited the superior

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October 24, 2008 | Nationalism Trumps Global Economic Cooperation

Financial turmoil has provoked leading nations to recognize the need for economic cooperation, yet fierce nationalism has reared its head amid the calls for global unity. ++ “Economics and finance may be global, but politics is still local.” ++ Western nations seek to retain power in the world system and emerging nations do not wish to yield their sovereignty. ++ Ideally the next US president

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October 24, 2008 | What We Can Learn From Asia

Financial bailout plans enacted by governments help to revitalize market confidence but do not address the fundamentals of the financial crisis. ++ Governments have failed to closely check banks’ balance sheets  – they should learn a lesson from Asia. ++ First, the situation of financial institutions has to be assessed before asset management companies can aquire “non-performing

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October 22, 2008 | Cries for Change Are Empty Political Platitudes

Crying to re-found democratic capitalism and create a new global economic order, world leaders are simply trying to divert attention away from their own helplessness and cover the confusion they have been thrown into by a crisis they failed to predict and prevent. ++ These are empty political platitudes – there will be no revolution. ++ The creation of a global financial market watchdog is

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October 22, 2008 | "Super-Sarko's Plans for the World"

National governments of the EU have dealt with the financial crisis, ignoring the power of EU institutions. ++ State aid laws have been neglected aiming to “prevent EU governments from subsidising national companies.” ++ President Sarkozy is calling for tighter “supervision of the international banking systems” and for a “crackdown on international tax havens”

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October 22, 2008 | Crisis Will Reassert Russia as a Global Player

The financial crash will have serious geopolitical consequences. ++ Russia will reassert itself as a global player. ++ As its stock market does not play as crucial a role as in Western markets, and as Russia has a lot of money due to the boom in oil and natural gas markets, it will be the greatest winner in the aftermath of the crisis. ++ The US will also, in the long run, gain as the crisis will

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October 21, 2008 | America's World Role Is Diminishing

The US has to face a reduction in its super-power role and an “era of financially induced isolationism.” ++ Spending on foreign policy challenges has increased, and the times in which a strong dollar used to provide stability to the US economy seem to be over. ++ The US can’t pull back from the world stage leaving a “dangerous power vacuum.” ++ In the past the US

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October 20, 2008 | Banking Crisis Will Erode US Geopolitical Hegemony

It is clear that it was the free-market fundamentalism and reckless stewardship of the US government that led to the current financial crisis. ++ The US will pay a high price for its sins. ++ The bailout, which is likely to end up costing more than the Iraq war, will not only erode US financial hegemony, but undermine its geopolitical domination as well. ++ Financial troubles will prompt American

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October 20, 2008 | Lack of Politicial Trust Is the Reason for Market Crisis

The financial crisis is the consequence of a democratic deficit. ++ “Market capitalism only works when it can feed off democratic social capital” and the lack of political trust, which is a form of social capital, hinders people from participating in the market ++ The “secret of the invisible hand” is not economic but social capital. ++ There is a need for not only

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October 17, 2008 | Financial Crisis Vindicates the EU

The Brown-Darling rescue package for British banks not only provided a template to follow for the rest of the EU, but was also adopted by the US. ++ The British PM did not rest on his laurels and is leading international action even further by calling for reform of global financial institutions like the IMF. ++ This crisis has had one positive outcome: Europeans finally have their act together.

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October 15, 2008 | China: Rescuer of the Financial Crisis

The monetary meltdown is partly the result of collapsing consumer and business spending. ++ The assumption that banking sytems could be left alone has proven to be false. ++ There needs to be state-financed banking systems. ++ While spending in the West slows, the only way to stop recession is for the Chinese to increase their spending. ++ They hold $2 trillion in reserves that could save the US

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October 15, 2008 | Assuaging EU Taxpayers

Europe has a plan to bail out the banking system, but it might be hard to convince European taxpayers to pick up the bill. ++ In reality gross debt will increase, not taxpayer debt, and by saving banks we save million of jobs - yet strong opposition from national parliaments is still likely. ++ To convince taxpayers, leaders in Europe must do three things: punish banks and bankers by increasing

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October 15, 2008 | Merkel in the Hot Seat

Merkel’s uncertainty regarding the financial crisis is becoming increasingly evident. ++ Recently, three “Merkel myths” have been dispelled: the CSU loss in Bayern ended the idea of Merkel’s electoral invincibility; her rejection of an EU financial rescue plan proves she is not a European; and political vacillation has cast doubt on her leadership abilities. ++ As the

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October 14, 2008 | G20 the New G7

G20 nations represent 85 percent of the world’s economy. ++ The forum is essential for addressing the financial meltdown. ++ Developed nations urgently need liquidity; the vast reserves of foreign capital held by emerging economies are the remedy. ++ Bush’s first appearance at the G20 highlights this very fact. ++ “It’s of all nations’ common interest to take coordinated measures to tackle the

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October 14, 2008 | UK: Stay Away From Joining the Euro

Though the UK economy has become more “European,” one area of contrast endures: the euro. ++ UK capitalism has been discredited and the credit crunch will be a test that may prove independent currency is bad for financial stability, reviving the case for joining the euro. ++ However, disparities in production, investment, wages and yields between EU countries could unravel the entire currency. ++

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October 13, 2008 | God Save the Queen - She is Saving Us

Gordon Brown and Alistair Darling “have shown us the way through this financial crisis.” ++ The British Prime Minister and his officials lead the world in assessing the financial crisis and quickly enacting an apt solution. ++ The problem: lack of capital in the banking system; Brown’s solution: equity injections, a type of temporary nationalization, with the first commitment of funds coming to

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October 13, 2008 | G7 Must Work With IMF to Avert Global Recession

It will not suffice if the G7 only saves the financial systems of its own members. ++ The wealthiest nations can afford to shore up their banks, but emerging countries won’t be able to do the same on their own. ++ Steep recessions will follow in emerging regions and will in turn dampen the economies of Western Europe and the US. ++ Therefore, in its own interest the G7 should ensure that

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October 10, 2008 | Gordon Brown: Global Fix for Finance

World’s financial systems are increasingly interdependent, and solutions to economic slowdown that used to be relevant are now “outworn dogmas.” ++ Cross-continental flows of capital make regional systems of supervision inadequate. ++ A global system of supervision needs to be introduced immediately. ++ The Financial Stability Forum and the International Monetary Fund need to

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October 9, 2008 | Unjustified Panic May Lead to Great Depression

The current breakdown in financial markets is driven by unjustified panic. ++ Restoring confidence in the financial systems should be the priority for American and European governments. ++ EU countries should offer a time-limited guarantee of the liabilities of the most systemically important institutions. ++ Coordination on how to proceed is necessary if banking systems are to reemerge healthy

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October 8, 2008 | Financial Crisis Sheds New Light on Russia

The financial crisis stole the spotlight from the Russia-Georgian conflict, but it also sheds new light on the topic. ++ Reasonable attitudes are conquering politics because we are suddenly “all in the same boat.” ++ Russian weaknesses are now clearly evident. ++ If the world economy is growing slower, Russia’s oil leverage is suddenly less weighty and its military modernization will

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October 8, 2008 | Global Crisis, Global Solution

With the financial crisis teetering on the verge of global contagion, a coordinated, worldwide effort is needed to avert a further calamity. ++ “There is inherent tension as finance becomes global but its regulation remains national.” ++ Solutions include a global stimulus program with different countries using different tools: recapitalizing banks for psychological purposes and expanding

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October 7, 2008 | Creating an Asian Bond

It is time for the “globar” - or “global dollar,” a collective Asian bond that could revitalize the world economy by catering to US currency-stabilization needs and simultaneously recycling massive Asian surpluses back into tangible assets in Asia itself. ++ Asia’s surpluses are primarily in US dollars, a risky investment in the current turmoil. ++ Asian countries are no longer mere borrowers,

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October 6, 2008 | Potential EU Monetary Crisis - Recapitalize Now

Despite the success of some initial bank bailouts granted by the EU, such as Fortis, Europe is still short of an overall financial strategy. ++ Three things are needed: first, money to recapitalize the banking sector; second, a semi-permanent EU crisis committee to make financial decisions; and third, clear rules indicating when to recapitalize. ++ Sarkozy was right to support a EUR 300 billion

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October 6, 2008 | Bailout is "Dirty Socialism"

The nationalization of Fannie Mae and Freddy Mac was “clean socialism.” ++ The Wall St. bailout, on the other hand, has exposed deep divisions in the US. ++ Both sides of Congress had serious doubts when passing the bill. ++ This is dirty socialism. ++ Liquidity could be created by only granting credit to good banks, but the US banks are all “mired in the sub-prime morass.” ++ While

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October 3, 2008 | "GOP - R.I.P"

For Republicans, the financial crash of Sept. 29, as the stock market fell over 700 points, will be remembered as the day which began their “exile” from political power. ++ Republicans in the House voted against their own party’s bailout plan by a margin of 2 to 1, emphasizing their divided and seemingly leaderless state. ++ While the presidential race is still uncertain, it is obvious that

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October 3, 2008 | Bailouts Work, But the Current Paulson Plan Won't

The Laevan and Valencia study of 42 recent bailouts shows they can work, yet the current Paulson plan may not. ++ “Paulson and Bernanke should use bailout money to recapitalize the banks, not buy bad assets.” ++ Furthermore, the US bailout is likely to cost $2 trillion, not a mere $700 billion. ++ Successful bailouts usually include debt relief for consumers and businesses, which the current plan

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October 2, 2008 | You Lose, I Lose Economics

Asia’s role in the financial crisis shouldn’t be underestimated. ++ Endless liquidity coupled with cheap goods fueled America’s “buy-now pay-later consumption,” inflating the housing bubble in the process. ++ The overextension is as much a story of “Asian prudence” as it is of “US recklessness;” Meanwhile, China and others grew at astounding clips. ++ While there has been a relative shift of

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October 1, 2008 | The US Needs a Global Line of Credit

The US is following a pattern similar to Japan’s financial crisis in the 1990s, but ignoring the principles and method with which to handle it. ++ Unlimited liquidity in the market is needed and the world should help share the burden. ++ The US must ask the global community to provide $5 trillion for troubled financial institutions. ++ This should come from those who have collected dollar

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October 1, 2008 | Paulson 0, Democracy 1

“It is a glorious day for democracy.” ++ With all members of the House up for re-election in November, the rejection of the Paulson plan is a clear indication of the American public will - Wall Street must be accountable, not the tax payers. ++ Americans distrust the Bush administration, question its trickle-down economic theory, and fear more allocations of public funds to political favorites,

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October 1, 2008 | The End of US Arrogance

By talking about terrorism instead of the financial crises in front of the UN, Bush has staged himself as “yesterday’s man.” ++ Even Germany - one of America’s closest allies - is distancing itself from the US and blames the state for opposing tighter international market controls. ++ German politicians do not see the US as the “superpower of the global financial system” anymore. ++ The view

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September 30, 2008 | Financial Anger the World Over, but Misguided

Anger stemming from the financial mess is ubiquitous; the biggest backlash comes from outside the Anglo-American world and is directed at their unique type of capitalism. ++ The disparity between individualism and solidarity is the primary cause. ++ Markets are not perfect, nor are Adam Smith’s theories. ++ “Arm’s-length finance,” a distinctly Anglo-American style, has made headway on the

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September 30, 2008 | Rescue the Rescue Plan

The rejection of the rescue package, led by Republicans, proved the incompetence of US leadership. ++ Most members of the G.O.P. still believe socialism poses the biggest threat and disregard that today’s economy experiences huge cycles of bubble and burst due to global capital flow. ++ Greater authority is needed. ++ The Congressional plan is not perfect, but it would have stabilized the

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September 29, 2008 | Presidential Debates: What Are They Worth?

Presidential debates cannot change the fundamentals of an election. ++ Reagan’s poor opening debate against Mondale didn’t keep him from a 49-state landslide, and Kennedy’s strong debate against Nixon didn’t insure his victory - a surge in the Catholic vote did. ++ While McCain performed well on Friday, the fundamentals haven’t changed: unpopular president, more Democratic voter registration, and

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September 29, 2008 | Economics We Don't Understand

We are witnessing the very “bankruptcy of modern economics.” ++ While we have long understood demand-oriented macroeconomics, the current financial crisis does not conform to any previous economic model or known solution. ++ The previous $152 billion stimulus package didn’t help, since the problem lay with financial markets, not consumer markets. ++ The Paulson plan is the most effective solution

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September 26, 2008 | A New Financial Ethos Needed

The financial crisis evinces the exigent need for a “Global Monetary Authority.” ++ No international framework exists for dealing with such crises; the vacuum is perilous. ++ Financial wealth is shifting to the East; the result will be a “clash of philosophies,” in which the American financial system will be contested. ++ The GMA would “set the tone for capital

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September 26, 2008 | India Dodges Financial Crisis

The impact of the current financial crisis on India will be minimal. ++ Indian institutions, such as ICICI Bank, have relatively little exposure to Wall Street, and due to a good regulatory system, should escape fairly unscathed. ++ However, Tata AIG will admittedly have trouble ahead. ++ Finance Minister Chidambaram has already guaranteed that “firms will have the necessary funds to absorb

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September 26, 2008 | US: Still the Global "Beacon of Free Enterprise"

It’s a critical question: Is the financial crisis on Wall Street going to damage the US’s image of good finance and business expertise? ++ Actually, the answer is no. ++ The image of the US from a global perspective is still strong, and the US is for many “a beacon of free enterprise.” ++ There is no other financial leader who could replace the US - Europe is divided, while Russia and China have

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September 25, 2008 | No Blank Check for Paulson

The Bush administration’s financial bailout package is not well received by Congress – and rightly so. ++ There should be no “blank check,” given Henry Paulson’s maladroit leadership. ++ Obama has outlined four cardinal conditions that are imperative to any effective bailout; “these are the right principles.” ++ Moreover, the government should give

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September 25, 2008 | Private Sector Boosts Asset Values, Not Government

In the late 80’s and early 90’s the government-owned Resolution Trust Corporation (RTC) was charged with overseeing $400 billion in assets, most from failed banks and loan institutions. ++ The lessons learned then are applicable now. ++ Assets require active management to increase value, which the government cannot provide. ++ Holding large amounts of assets will depress prices due to a looming

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September 24, 2008 | Financial Fix Must be Clear and Efficient

Urgent action to save the financial system is good, but current draft legislation is risky. ++ Congress should not rush into a decision but needs to concentrate on three things: quickly restoring financial stability with low cost, punishing those responsible, and addressing the cause of the crisis — the price collapse in the real-estate market. ++ The Treasury plan has major problems,

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September 24, 2008 | UK: Take Action, Cut Interest Rates

Unemployment in Britain will rise by 2 million by the end of the year. ++ Just last month 81,000 more British citizens were without jobs, causing the unemployment rate to rise from 5.3% to 5.5%. ++ Job activity is on a sharp decline. ++ Employers are not hiring, and unemployment among the youth is very high. ++ Unfortunately, the UK economy tends to follow the path of the US economy, simply six

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September 23, 2008 | US Bailouts: Socialism is Not the Answer

Washington is bankrupt, fiscally and morally. ++ Socialism is in full swing, proving the free-market Republicans hypocrites. ++ Paulson wants Congress to grant the Fed $700 billion to buy private assets. ++ Such a move will only create more financial turmoil for the US and Europe in the future. ++ Moreover, the entire G8 is a financially “spent force.” ++ Yet, ironically the political landscape

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September 23, 2008 | No Money Left for Change

The US has done the right thing when it launched a rescue plan. ++ Those who argue how vast the initiative is are wrong because they underestimate the extensiveness of the US economy. ++ However, the true impact of the expansion of public spending lies in politics, because there is simply not much money left over for areas such as health care or alternative energy. ++ So even if Obama is elected

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September 22, 2008 | Hard Landing for Eurozone

The demise of the shadow banking system began last week. ++ This is the financial crisis of the century. ++ Shadow banks are not protected from bank runs, as commercial banks are. ++ A run on hedge funds is highly probable. ++ If these institutions are to be government-insured, they will need regulation in order to avoid any moral dilemma implications. ++ A “severe” US recession is

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September 19, 2008 | Multilateralism - Making the Market Work

This is not the end of capitalism, but “the global financial system will never be the same again.” ++ Those responsible for the mess are now entrusted with cleaning it up. ++ Politicians had little choice: socialize the debt or sit and watch as depositors are sucked into the maelstrom. ++ The primary task of politicians should be to establish a system of credible international

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September 18, 2008 | Politics of Fear are Bad News for Obama

Due to the financial crisis, the attack on the US embassy in Yemen, and the latest tropical storms, the tone of the US presidential campaign has become nervous and angst-ridden. ++ Even if people who consider the economy to be the most important reason to vote for Obama, there is a “deeper politics of fear that runs against Obama.” ++ While Obama offers a dream of how the world could be, McCain

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July 25, 2008 | The G8 Leaders Must "Get Their Act Together"

There are four main problems that deepen the world crisis: incoherence of American leadership, lack of global financing, lack of contact between scientific experts and politicians, and finally the fact that the G8 ignores the UN and the World Bank — institutions offering the best hope to tackle global problems. ++ The Group of Eight summits have turned into photo opportunities and illustrate the

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June 2, 2008 | US Deficit and Sinking Dollar: The Agenda of a New G5

The US dollar was for a long time the leading global currency against which all other foreign currencies were measured. The downside of this is that as a result, the USA has accumulated a huge trade deficit. In 2006, foreign goods and services purchased by Americans were worth 600 billion USD more than the goods and services they sold abroad. Every day, the US needs to draw on seven billion

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May 15, 2008 | Financial System Failed the Test of the Marketplace

Former Fed chairman, Paul Volcker, blames this year’s financial crisis on the lenders’ and investors’ attempting to revise the age-old fundaments of finance. ++ Despite the euphoric effect of bubbles, parties involved in the financial system must remember that the further a rubber band is stretched, the harder it will snap back into its former position. ++ Credit rating

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May 13, 2008 | Finance: US and Japan Only Similar in Symptoms

The current problems of the US financial sector are often compared to those of Japan in the 1990s. ++ While there are many similarities, there are significant structural differences that suggest that a different remedy is required in the case of the US economy. ++ US banks, under greater pressure from the market, were quicker to acknowledge their losses and raise private-sector capital. ++ A

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April 11, 2008 | IMF Needs a New Governance Structure

The IMF might have prevented the US crisis if it had detected mortgage market vulnerability sooner. ++ Since IMF governance is organized according to the “money for influence” model - most influential members have most leverage - US policies and regulations were not scrutinized or criticized. ++ IMF can only effectively supervise and secure financial stability if power is distributed evenly to

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Comments

October 25, 2011 | A great delineation of Europe's strategic...

August 3, 2010 | Guy- I thought your article made a very good...

October 14, 2009 | Good diagnosis of current affairs in Baltics,...

September 15, 2009 | The idea of introducing a global tax on all...

October 17, 2008 | I agree that the financial crisis has...

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