In its Global Connections Report, British multinational bank HSBC forecasts a 95 percent increase in U.S. trade by 2026. Over the next five years, HSBC expects U.S. trade growth to trail the global average, and then to match or exceed it in subsequent years. Much of the growth will be in exports to emerging markets of commodities and goods such as autos, biopharmaceuticals, and telecommunications and medical equipment.
An analyst told Bloomberg: “We will soon see that imports will grow faster than exports in emerging markets. This will signify a shift where traditionally export-driven countries will drive developed and emerging market growth as their own trade demands become more powerful.”
This CFR Independent Task Force report encourages the Obama administration and Congress to adopt a “pro-America” trade policy that brings to more Americans the benefits of global engagement.
International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.
Corporate Regulation and Taxation
FDIC Vice Chairman Pessimistic on 'Living Wills'
Thomas Hoenig, the vice chairman of the Federal Deposit Insurance Corp. (FDIC), said the requirement that banks write “living wills” is not a panacea and would not end “too big to fail” (WSJ). As part of its rules on resolution authority, the Dodd-Frank Act requires the nine largest financial institutions operating in the United States to submit their living wills this Sunday, while smaller institutions' submissions are due at the end of 2013. The Federal Reserve and FDIC can require banks to divest operations if the regulators do not believe their orderly unwinding plan is “credible."
In the wake of the financial crisis, CFR brought together fifteen academics to form the Squam Lake Group, to offer guidance on the reform of financial regulation. In October 2009, the group argued that “living wills would help authorities anticipate and address the difficulties that might arise in a resolution.”
In December of 2010, CFR’s Maurice R. Greenberg Center for Geoeconomic Studies held its World Economic Update, a panel discussion in which experts analyzed the effects of the Basel III accords and new U.S. federal regulations. Meeting videos and a transcript are available.
Corporate regulation and taxation. Read more from top economists and business experts on solutions for addressing corporate tax reform.
The Cost of Postponing Infrastructure Investment
Harold Sirkin, a senior partner of management consulting firm BCG, believes the U.S. economy suffers from underinvestment in infrastructure (Bloomberg). One 2010 study found that problems with transportation infrastructure cost the economy $130 billion annually. A recent study by the American Society of Civil Engineers predicts an underdeveloped electrical grid could cost business and households almost $200 billion annually by 2020. Sirkin argues: “Expanding and modernizing America’s infrastructure is an investment, not consumption. It not only creates economic value—it improves U.S. competitiveness.”
The first Renewing America Progress Report and Infographic Scorecard, released last week, assesses the current state of U.S. transportation infrastructure policy.
Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.
Microsoft Buys a Business Social Network
Microsoft announced its plans to acquire Yammer, a social network for businesses, for $1.2 billion in cash (TechCrunch). Microsoft plans to place Yammer within its Microsoft Office division, which may hint at plans to use the social network to improve collaboration in its productivity software. Like last year’s $8.5 billion acquisition of Skype, a large internet telephony firm, Microsoft faces a challenge in monetizing a service that was originally free. Yammer’s CEO said that the strategic fit with Microsoft drove the decision to pursue an acquisition and not the challenging post-Facebook market for initial public offerings (AP).
Google’s Massive Effort to Spot Cats
Google’s X laboratory built one of the largest computer neural networks to recognize images of cats (NYT). While the topic may seem trivial, the approach was cutting edge. Google used automated machine learning; rather than explicitly teaching the program what a cat is, the program observed millions of photos and derived general characteristics that distinguished cat faces from human ones. Learning by recognizing general patterns and abstracting away unimportant details is an innate human ability that traditional computer programs poorly emulate, and many computer researchers are turning to neurobiology for insight.
Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.
The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.