Over the past decade, Chinese trade revenues, savings and purchases of US debt increased. Low interest rates encouraged US consumers to spend and housing prices soared. But such imbalances could not be sustained and financial instruments containing mortgages for homes that have lost their value, have proven toxic for the world. Economists and central bankers are still struggling to find a way out of the subprime mortgage crisis. If Japan’s lost decade offers lessons, then deflation must be averted at all costs if there is to be hope for a recovery.. But for the long-run, one magical phrase emerges from experts and that’s “stricter regulations for the banking industry.” Once governments succeed in restoring consumer and investor confidence, they should focus on designing regulations that encourage responsibility and a long-term outlook. Furthermore, policymakers have to recognize the need for global oversight of the banking industry, either by strengthening existing institutions or by creating new international authorities. The timing of the rescue is uncertain, and the certainty of its efficacy remains in question. To put the matter in historical perspective, there is still no consensus on whether government spending policies of Franklin D. Roosevelt or increased demand for goods created by Second World War pulled the United States out of the Great Depression. One certainty for this crisis: there are no localized solutions for a problem that extends throughout the world.

Disrupting US-China Relations Will Incur High Costs

Farok J. Contractor
February 28, 2017

Project Syndicate: The WTO Reborn?

Arvind Subramanian
February 23, 2017

The Weekly Standard: Of Debt and Detriment

Benn Steil and Emma Smith
February 21, 2017

The Diplomat: Australia Keeps TPP Alive

Anthony Fensom
February 13, 2017

US Dollar Reigns Supreme for Developing World, But Not For Long

The developing world fails to enact structural reforms, cannot borrow in their currencies, and depends on the US dollar
Will Hickey
January 17, 2017

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