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.

Greek Crisis and the Future of the European Union – Part II

Mistrust threatens cooperation among nations and EU survival
Jean-Pierre Lehmann
May 7, 2010

Debt and Unemployment: Is Global Capitalism Responsible? – Part II

Lingering high joblessness in US threatens global prosperity
David Dapice
April 26, 2010

Debt and Unemployment: Is Global Capitalism Responsible? – Part I

Politicians propose reforms but it’s the global market that disposes
Jeffrey E. Garten
April 23, 2010

Beijing Is Key to Creating More U.S. Jobs

China's currency, a global problem in need of a global solution
C. Fred Bergsten
April 22, 2010

The G-20 and the Future of Capitalism – Part III

For all its inequity, instability and immorality, a chastened capitalism is here to stay
Pranab Bardhan
April 3, 2009

The G-20 and the Future of Capitalism – Part II

The London G-20 summit spotlights the great disunion of the European Union at a critical juncture
Jean-Pierre Lehmann
April 1, 2009

The G-20 and the Future of Capitalism – Part I

Vacuous talk of international cooperation while countries chart their narrow course does not bode well
Jeffrey E. Garten
March 30, 2009