Published in Spiegel, this interview with German Finance Minister Schäuble provides insight into the relationship between Minister Schäuble and his American counterpart, Secretary Geithner, as well as the German position on the latest financial developments like the recent move towards quantitative easing.
With U.S. unemployment and high debt threatening Americans at home and U.S. power abroad, this Backgrounder looks at congressional candidates' difficulty in articulating policies that balance job creation and debt reduction.
This second installment of the Capital Flows Quarterly series investigates two factors that could substantially alter the long-run value of the U.S. dollar: the dollar's reserve status and the sustainability of U.S. international debt.
In the face of a weak job market in the near term and an unsustainable budget deficit over the longer term, Peter Orszag argues that we should extend the Bush-era tax cuts for two years and then end them altogether.
Benn Steil's article in the Spring/Summer edition of the CATO Journal argues that restraining excessive debt accumulation will require significant changes in the U.S. corporate taxation regime and the principles underlying the conduct of U.S. monetary policy.
Authors: Benn Steil and Paul Swartz Financial News
Benn Steil's June column in Dow Jones' Financial News, co-authored with Paul Swartz, shows how mass Russian and Chinese selling of Fannie and Freddie debt in 2008 severely exacerbated the financial crisis. Contrary to the arguments of Fed Chairman Ben Bernanke and others, they show that there are very real dangers inherent in America's outsized reliance on foreign government financing.
The dollar's status as the world's reserve currency has become a facet of U.S. power, allowing the United States to borrow effortlessly and sustain an assertive foreign policy. But the capital inflows associated with the dollar's reserve-currency status have created a vulnerability, too, opening the door to a foreign sell-off of U.S. securities that could drive up U.S. interest rates. In this Center for Geoeconomic Studies Capital Flows Quarterly, Francis E. Warnock argues that a sell-off came close to happening in 2009. How the United States uses this reprieve will affect the nation's ability to borrow for years to come, with broad implications for the sustainability of an active U.S. foreign policy.
Newly developed long historical time series on public debt, along with modern data on external debts, allow a deeper analysis of the cycles underlying serial debt and banking crises. The evidence confirms a strong link between banking crises and sovereign default across the economic history of great many countries, advanced and emerging alike
Some of Obama's budget proposals are sound policy, but congressional gridlock and faster economic reforms in China and Europe could jeopardize U.S. competitiveness, says Economist.com editor Ryan Avent.
Gerald F. Seib views the federal budget deficit as a potential national security threat, emphasizing that budget deficits make America vulnerable to foreign pressures, allow Chinese power to grow as a result, put long-term national-security budgets at risk, and underme the American model before the rest of the world.
The authors argue that the United States has responded inadequately to the rise of Chinese power and recommend placing less strategic emphasis on the goal of integrating China into the international system and more on balancing China's rise.
Campbell evaluates the implications of the Boko Haram insurgency and recommends that the United States support Nigerian efforts to address the drivers of Boko Haram, such as poverty and corruption, and to foster stronger ties with Nigerian civil society.
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