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.

Going... Going... Greece on the Brink

Greece faces a choice – reform or populism, corruption and a mass sell-off of assets
Maria Margaronis
September 22, 2011

The Eurozone Fights for Survival – Part II

European nations that abandon the union would be pariahs in the financial markets
Joergen Oerstroem Moeller
August 18, 2011

The World Consequences of US Decline

Volatility and uncertainty threaten the globe
Immanuel Wallerstein
August 16, 2011

Global Economy: Is Anybody in Control?

National leaders worldwide resist tackling job creation, growing imbalances and other economic crises
David Dapice
August 9, 2011

A Global Laughingstock, US Politicking Threatens Economy

Unnecessary squabbling over debt raises questions on US leadership and exposes deeper problems
Philip Bowring
August 2, 2011

Employment Versus Debt

US Congress could be targeting the wrong priority
Nayan Chanda
July 26, 2011

The Eurozone Heads for Breakup

Saver nations had little policy control over the spendthrifts
Nouriel Roubini
June 16, 2011