Authors: Benn Steil and Dinah Walker Wall Street Journal
Benn Steil and Dinah Walker analyze the market reaction to the publication of the European Central Bank's long-awaited bank stress test results. The ECB's coddling of stress-tested banks — through the use of inflated inflation estimates and generous treatment of tax offsets against future profits which may never arise — precipitated a sell-off of bank stocks in a period when broad European indexes were up significantly. Unlike with the successful 2009 U.S. stress tests, there is no credible backstop of public funds available for Eurozone bank recapitalization, which would account for the ECB's reluctance to draw attention to the sector's undercapitalization.
The recent oil price crash came as a surprise to many observers due to several critical misconceptions about oil markets, writes Michael Levi. As for prices going forward, “only the reckless would bet with any confidence on one particular outcome.”
Authors: Michael A. Levi and Andrew P. Morriss Wall Street Journal
The Wall Street Journal asks Michael Levi and Andrew P. Morriss whether the U.S. should act unilaterally to reduce greenhouse gas emissions. Levi answers “yes,” arguing that cutting greenhouse gas emissions now would enhance public health and the international credibility of the United States, and that reasonable action now would reduce long-term costs.
The recent U.S.-China climate deal has inspired both celebration and skepticism. Michael Levi responds to each, noting that while the terms of the agreement are in themselves insufficient to reign in global warming, the deal is a “genuine success” as diplomatic progress toward reducing climate risk.
Countries are increasingly turning to sanctions and other economic tools to advance their geopolitical interests. Jennifer Harris explains how attitudes toward these economic techniques of statecraft have evolved over the years.
As oil prices continue to drop, Michael Levi argues that the benefit to American consumers will outweigh any damage to the U.S. economy. However, how you view this plunge in oil prices "depends a lot on where you live and what work you do."
Peter R. Orszag writes that the common U.S. conception of state capitalism in China is dated and wrong, which creates dangerous complacency among policymakers about the risks of a Chinese economic slowdown.
Peter R. Orszag argues that the rise of tattoos reflects a broader trend of anti-establishmentarianism, and he predicts that tattoos will become even more popular as long as most Americans' sense of opportunity and upward mobility remains limited.
The new BRICS Bank and Contingent Reserve Arrangement initiatives are, despite stated Russian ambitions, wholly unconvincing responses to the shortcomings of the Bretton Woods institutions and the dollar-based global financial architecture.
World leaders gathered at a United Nations summit to kick off 15 months of negotiations aimed at finalizing a climate pact next December in Paris. Michael Levi argues that domestic policies rather than international climate talks will determine the fate of global efforts to tackle climate change.
A. Michael Spence argues that the eurozone has an opportunity to jumpstart economic recovery by relaxing fiscal constraints on the condition that member states use the reprieve to initiate public sector investment and structural reforms.