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.

China and the US: Two Visions, One Collaboration?

China-US collaboration on infrastructure projects in Asia could reduce extremism, improve relations and help companies
Marc Grossman
November 15, 2016

Trump Spells End of Normality for Europe

The EU, once viewed as an answer to globalization, is perceived as problem
Melanie Amann, Horand Knaup, Martin Knobbe, Peter Müller, Ralf Neukirch, René Pfister, Michael Sauga and Christoph Schult
November 14, 2016

Asia Needs to Spell Out Changes They Want in International Monetary System

Ongoing criticisms without constructive proposals will go ignored
Barry Eichengreen
October 31, 2016

Belgium Walloons Block Key EU Ceta Trade Deal with Canada

Concern about trade deals, lost jobs, lower wages, arbitration rules and corporate power
October 24, 2016

Green Sovereign Bonds: Tactical Moves on an Emerging Market

Early entrants in this market will set the rules
October 20, 2016

Is Globalization Sowing the Seeds of Its Own Undoing?

Nations must put the brakes on globalization – or risk more anger between haves and have-nots
Jay Ogilvy
October 14, 2016

World Bank Admits Some Have Lost Out From Free Trade

Globalization imposes uneven effects, and social supports are needed
Kamal Ahmed
October 12, 2016