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An IMF Bridge to Somewhere for Greece?
The IMF has resurrected an old technique – commonly used in the 1980s during the Latin American debt crisis – that will allow Greece to avoid a payment default next month on debt owed to European creditors. But the Fund’s elegant compromise still leaves Greece under the shadow of an enormous debt overhang.
New Life for the SDR?
The rise of anti-globalization political movements and the threat of trade protectionism have led some people to wonder whether a stronger multilateral core for the world economy would reduce the risk of damaging fragmentation. If so, enhancing the role of the IMF's incipient global currency may be the best option.
America’s Confidence Economy
While financial markets seem convinced that the recent surge in business and consumer confidence in the US economy will soon be reflected in hard data, such as GDP growth, economists and policymakers remain unsure. Whether their doubts are vindicated will matter for both the US and the world economy.
Boosting South Africa’s Diversity Dividend
South Africa will need much more than improved economic governance if it is to reduce inequality and achieve strong growth. In particular, the private sector must deepen its efforts to improve economic inclusion, and capitalize on the well-known benefits of greater diversity in the workforce and the boardroom.
An Unstable Economic Order?
The retreat of the advanced economies from regional and global institutions has received a lot of attention lately. But while the destabilization of multilateral economic and financial structures could be particularly devastating for developing countries, the entire global economy will be adversely affected if the trend continues.
The International Barriers to Trump’s Economic Plan
With Republicans holding majorities in both houses of Congress, US President-elect Donald Trump should have a relatively clear road ahead to implement his domestic economic agenda. But if Trump is to deliver the high growth he has promised, he will have to overcome external barriers as well.
Toxic Politics Versus Better Economics
The relationship between politics and economics is changing. Advanced-country politicians are locked in bizarre, often exceptionally hostile conflicts, instead of acting on a growing economic consensus about how to escape a prolonged period of low and unequal growth.
Managing the Economic Consequences of Nationalism
The aftermath of the UK's unexpected vote to leave the EU is being monitored closely. People all over the world want to know how Brexit will unfold, not just to manage its specific effects, but also to gain insight into what is likely to happen if other upcoming votes tip in favor of nationalist agendas.
An Opportunity for Egypt and the IMF
Egypt’s leaders and the International Monetary Fund have struck a tentative deal for a $12 billion, three-year loan. If approved by the IMF Board next month, the new program will be an important opportunity to improve relations between the two sides – an outcome that would benefit both Egypt’s citizens and the Fund’s credibility.
Unburdening the Facebook Generation
The outcome of the UK’s Brexit referendum is but another reminder of a yawning generational divide that cuts across political affiliation, income levels, and race. Once again, young people have gotten the short end of the political stick – mainly because they couldn't be bothered to care about their own wellbeing.
Latin America’s Rising Right
From changes in government in Argentina and Brazil to mid-course policy corrections in Chile, Latin American politics appears to be undergoing a rightward shift. But unless today’s political winners deliver notably higher and significantly more inclusive growth, their electorates are likely to move on.
Saudi Arabia’s Bold Vision for Economic Diversification
The attention attracted by Saudi Arabia's new Vision 2030 economic agenda is not surprising. If the Kingdom can establish the institutions and incentives needed to transform its economy, other countries that face similar challenges, in the region and beyond, may be inspired to follow suit.
Time for Debt Reduction in Greece
With Greece's cash balances severely stressed, another round of contentious discussions with its creditors has begun. The only way to escape this vicious cycle, and enable Greece finally to leave its troubles behind, is to stop kicking the can down the road and agree to a credible debt-reduction program.
The Brexit Muddle
In the UK, the question of whether to remain in the EU is dominating the media, boardroom discussions, and dinner conversations. While slogans and soundbites tend to capture most of the attention, deeper issues in play leave the outcome of the June 23 referendum subject to a high degree of uncertainty.
Is the Perfect Storm Over for Markets?
So far this year, financial markets around the world have been navigating a perfect storm – that is, a violent disruption fueled by an unusual amalgamation of smaller disturbances. The spike in volatility of financial markets is the direct result of three distinct factors.
The End of the New Normal?
Just when the notion that Western economies are settling into a “new normal” of low growth gained mainstream acceptance, doubts about its continued relevance have begun to emerge. Instead, the world may be headed toward an economic and financial crossroads, with the direction taken depending on key policy decisions.
The Chinese Economy’s Great Wall
The renminbi's recent decline, which has thrown Chinese stock markets into turmoil and drove the government to suspend trading twice last week, highlights a major challenge facing the country: how to balance its domestic and international economic obligations. The authorities' answer will have a major impact on the global economy.
Argentina’s Economic Big Bang
Last week, newly elected Argentine President Mauricio Macri's government initiated a bold plan to revitalize a bruised and beleaguered economy. The plan's outcome matters not just for Argentina, but also for nearby countries, where leaders are watching closely for clues about how to deal with their economies' own woes.
The Great Policy Divergence
Over the next few weeks, the US Federal Reserve is expected to raise interest rates, while the European Central Bank doubles down on monetary stimulus. Although both central banks are pursuing legitimate domestic agendas, there are few mechanisms to manage the international repercussions of this policy disparity.
Governments’ Self-Disruption Challenge
One of the most difficult challenges facing Western governments today is to enable and channel the transformative – and self-empowering – forces of technological innovation. They will not succeed unless they become more open to creative destruction, allowing not only tools and procedures, but also mindsets, to be upgraded.
Shelter from the Storm in Europe
To secure a prosperous future, Europe must confront three distinct challenges: the Greek crisis, Russia’s incursion in Ukraine, and the rise of populist political parties. While Europe could address each of these challenges individually with relatively little risk, all three must be addressed simultaneously.
The Quiet Financial Revolution Begins
Steadily and indisputably, the financial services industry – with which we all interact, whether as borrowers, savers, investors, or regulators – has embarked on a multiyear transformation. This process, slow at first, has been driven by the combined impact of two sets of factors.
Western Politics’ Locust Years
Many mainstream political parties in the West are so busy playing defense that they are forgoing the strategic thinking needed to re-energize growth models, anchor financial stability, and ensure that technological innovation enables broad-based prosperity. As a result, Western economies may be undermining their future potential.
Creative Self-Disruption
Companies like Uber, Apple, and Airbnb have succeeded by exploiting a fundamental trend affecting nearly all industries: individual empowerment through the Internet, app technology, digitalization, and social media. If traditional firms hope to remain competitive, they must follow suit.
The Messy Politics of Economic Divergence
The world is increasingly characterized by divergence – in economic performance, monetary policy, and thus in financial markets. Though there is a broad consensus on what must be done to rebalance the global economy, political leaders remain unwilling to fulfill their economic-governance responsibilities.
What Are We Betting On?
The world has collectively placed a huge bet on three fundamental outcomes: a shift toward more inclusive global growth, the avoidance of policy mistakes, and the prevention of market accidents. But all three developments are highly uncertain ? and bets on them are exceedingly risky.
A Year of Divergence
In the coming year, the global economy will be characterized by widening discrepancies in economic growth and policies. As these divergences become increasingly difficult to reconcile, policymakers will either have to overcome the obstacles that have so far impeded effective action or allow their economies to become destabilized.
The Inequality Trifecta
Perhaps the most striking disconnect at the annual IMF/World Bank meetings was the disparity between participants’ interest in discussions of inequality and the ongoing lack of a formal action plan for governments to address it. This represents a profound failure of policy imagination – one that must urgently be addressed.
The Fragmentation of Bretton Woods
In recent years, political support for economic multilateralism has eroded, undermining the effectiveness of the Bretton Woods institutions and disrupting the international monetary system. This is not only hampering the global economys ability to meet its potential; it is also contributing to geopolitical insecurity.
The Three-Track Middle East
Rather than achieving internal convergence, the Middle East is now following at least three distinct paths, and already-large differences will persist and grow for a number of years to come. The main question is what will become of countries like Egypt, which can end up following the path of Syria or of the UAE.
Mexicos Breakout Moment?
Mexico has a good chance to realize its impressive structural-reform agenda. Doing so would give the rest of the world an important example of how such programs can be designed, implemented, and, most important, sustained until a critical mass of revitalized sectors and thus faster growth and greater prosperity is achieved.
Markets Federal Reserve Love Story
For many years market participants have been richly rewarded for falling in love quickly and decisively with policy measures adopted by the US Federal Reserve. More recently, however, some have become less comfortable, warning that the codependence is encouraging excessive risk-taking and, in some cases, bubbly valuations.
The Democratic Disruption of Finance
There seems to be no limit to the exciting possibilities that come from combining technical innovations, the Internet, and social media. What is less appreciated is the extent to which the same phenomenon is starting to play out in finance, via a democratization process that could transform the institutional landscape.
Cementing Europe?s Recovery
Europe?s renewed sense of hope and confidence, however encouraging, is not yet sufficient to produce appreciable gains for current and future generations. A few things need to happen over the next several weeks and months if Europe is to minimize the risk of another prolonged period of under-performance and financial risk.
Wallets Wide Shut
With profitability at or near record levels, cash holdings by the corporate sector in Europe and the US have reached an all-time high - and are earning very little at todays near-zero interest rates. But, for at least six reasons, firms are not investing in capacity and creating the jobs that these economies need.
A Happier Ending for IMF Reform?
Despite an elegant solution that involved no new commitments of resources, the US Congress last month refused to take up a long-delayed funding proposal for the IMF. But there is also a silver lining here, because disappointment can be turned into renewed opportunity.
DC Plan Design for the Bumpy Road Ahead
by Mohamed El Erian of PIMCO,
In late October, PIMCOs CEO and Co-CIO Mohamed A. El-Erian presented the keynote speech at Pensions & Investments West Coast Defined Contribution Conference. He also spoke with P&I about top-of-mind concerns for retirement plan providers and sponsors. The Q&A below is based on that conversation.
The Uncertain Future of Central Bank Supremacy
Advanced countries’ central banks were among the first to warn that their ability to compensate for other policymakers’ inaction is neither endless nor risk-free. The trouble is that few outsiders seem to be listening, much less preparing to confront the limits of monetary policy’s effectiveness.
America's Labor Market by the Numbers
Net monthly job creation in the US was up in August, while unemployment was down. But, to get a real sense of the American labor markets health, we need to look at other indicators, and what these numbers have to tell us about both the present and the future is far from reassuring.
What's Happening to Bonds and Why?
by Mohamed El-Erian of PIMCO,
To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from exceptional support from central banks, to an asset class experiencing large outflows, negative returns and reduced standing as an anchor of a well-diversified asset allocation.
Lehman's Morbid Legacy
As the fifth anniversary of Lehman Brothers collapse approaches, we need analyses of the previously unthinkable outcomes that have become reality with profound implications for current and future generations and that our systems of governance have yet to address properly. Four such outcomes come to mind.
Europe's Fake Normal
This summers sense of economic normality in Europe is neither natural nor necessarily tenable in the long term, because it reflects temporary and potentially reversible factors. If Europe does not return to addressing its economic challenges in a more comprehensive manner, the current calm may quickly give way to renewed turmoil.
Ireland and the Austerity Debate
People on both sides of the austerity debate are trying to position Ireland as the poster child for their case. Though neither side can claim victory, this tug-of-war illustrates the complex range of arguments in play and highlights why conclusive economic policy making is proving so elusive.
Results 51–100
of 122 found.
