"Europe's leaders were right about the pressure. Monetary union without banking union will not work, and a workable banking union requires at least some elements of fiscal and political union. But they were wrong about the irresistible part. There is no inevitability about what comes next."
Authors: Benn Steil and Dinah Walker Wall Street Journal
Benn Steil's Wall Street Journal op-ed, co-authored with Dinah Walker, shows that the Fed has effectively been targeting "risk on, risk off"—prodding investors into and out of risky financial assets—for over a decade now. He derives a rule that predicts the Fed's behavior since 2000 even better than the "Taylor Rule" did from 1987 to 1999.
As Europe continues to weather economic stagnation and a succession of debt crises, the European Central Bank has responded with an aggressive set of monetary policies that have redefined the bank's original mandate.
The April 2012 Global Financial Stability Report from the International Monetary Fund states that although the global financial regulatory framework is being strengthened, no asset is truly risk-free. It highlights longevity risk as a pressing economic issue and analyzes its fiscal implications.
ProPublica tells the inside story of why the Federal Reserve agreed to allow banks to raise dividends in 2011, despite warnings that banks were not healthy enough and that the economy could implode again.