More government is the remedy that the U.S. Congress is reaching for as it moves to evaluate the Bear Stearns Cos. disaster. In this New York Sun article, Amity Shlaes recounts another banking catastrophe, the story of Bank of United States, to show that government involvement can also be a curse—especially when the role of public officials and institutions is unclear.
How the WTO boosts economies and opens societies.
Three developments have altered the US economic and financial climate this year - a distinct tightening of credit terms, a sudden slide in confidence, and emerging signs that the US labor market is softening – and they have been powerful enough to compel an almost unprecedented policy response by both the Federal Reserve and the US Government. Roger Kubarych argues that the monetary policy easing and fiscal stimulus will work, albeit slowly, but the effects on financial markets are less clear.
In his Washington Post column, Sebastian Mallaby writes that investment banks should reform their incentives so they are more like hedge funds.
CFR's Roger Kubarych says a new plan could boost banks' confidence about reserve requirements, but adds that other problems loom.
Until recently, increasing house values and low interest rates have made taking out an adjustable-rate mortgage a no-brainer. Even as the mortgage crisis has unfolded, the traditional model of fixed-rate mortgages is still viewed as uncool. Amity Shlaes argues that Washington should promote fixed-rate mortgages to curtail moral hazard in home borrowing. Both homeowners and the financial markets that serve them would feel better knowing that at least one part of American life is fixed.
The most vivid image amid last week's financial turmoil came from the nation's biggest mortgage lender, Countrywide Financial Corp. Scenes at Countrywide branches conjured those grainy black-and-white images of Depression-era bank runs. Fear has taken over, and sound institutions are suffering along with poorly managed ones. Sebastian Mallaby argues that markets are punishing Countrywide irrationally - and dozens of other basically sound companies are caught up in the maelstrom.
The current subprime mortgage meltdown is part of a time-honored story. Despite the fact that there is more pain to come in this shakeout, Sebastian Mallaby argues that the market for subprime mortgages will eventually revive and thrive, just as it did with subprime’s close cousin, the junk bond.
The current economic and financial situation in the United States amounts to a classic “happy-sad” story—not unlike the seventh Harry Potter book. Despite an overall positive economic scene, the slumping housing market and sky-high gasoline prices have affected public opinion on the economy and the underlying issue of globalization. Roger Kubarych argues that these economic concerns will shape the upcoming presidential campaigns, and globalization may turn out to be the evil “Voldemort” of the tale.
Fierce competition among a handful of cities for dominance of world financial markets reflects the weight economic considerations now carry in determining geopolitical clout.
New York remains a global heavyweight in financial services, but markets in London and East Asia are gaining strength and posing a serious challenge to the Big Apple.
Blackstone’s initial public offering and new legislation in Congress put private equity firms under the regulatory microscope, with potentially vast consequences for global markets.
An increased tax on trading shows China is intent on cooling its stock markets. A sharp drop could have broader economic effects.
Watch leading global business experts discuss the challenges to competitiveness in U.S. capital markets as part of the Council's McKinsey Executive Roundtable Series in International Economics.
Listen to leading global business experts discuss the challenges to competitiveness in U.S. capital markets as part of the Council's McKinsey Executive Roundtable Series in International Economics.
Harvey Goldschmid, Glenn Hubbard, Arthur Levitt, and Frank Zarb address Council members on U.S. Capital Markets Competitiveness as part of the McKinsey Executive Roundtable Series on International Economics.
Robert Kubarych explains why U.S. businesses are making record profits this year, while spending less on capital goods.
The author examines Pakistan's complex role in U.S. foreign policy and advocates for a two-pronged approach that works to quarantine threats while integrating Pakistan into the broader U.S. agenda in Asia.
The authors assess the political, security, and economic challenges facing U.S. policymakers in Afghanistan and evaluate a range of policy options.
Special operations play a critical role in how the United States confronts irregular threats, but to have long-term strategic impact, the author argues, numerous shortfalls must be addressed.
This clear and authoritative book presents a sweeping account of China's global resource quest and the unrivaled expansion of its economy. More
The story of the tragic and often tormented relationship between the United States and Pakistan, and a call to prepare for the worst, aim for the best, and avoid past mistakes. More
An authoritative and accessible look at what countries must do to build durable and prosperous democracies—and what the United States and others can do to help. More