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511. Prime Brokers and Derivatives Dealers

Publication Date:
04-2010
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Runs by prime-brokerage clients and derivatives counterparties were a central cause of the World Financial Crisis. Worried about potential losses, many hedge funds withdrew their assets from brokerage accounts at Bear Stearns and Lehman Brothers in the weeks before these banks failed. Although Morgan Stanley did not fail, it also suffered from the withdrawal of prime brokerage assets. These runs, together with runs by short-term creditors, precipitated Bear Stearns' and Lehman's demise. Even if these firms would have failed anyway, the runs made their failures much more sudden and chaotic, and made coherent policy responses much harder.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
United States

512. Bigger Is Better

Author:
Richard Rosecrance
Publication Date:
05-2010
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Throughout history, states have generally sought to get larger, usually through the use of force. In the 1970s and 1980s, however, countervailing trends briefly held sway. Smaller countries, such as Japan, West Germany, and the "Asian tigers," attained international prominence as they grew faster than giants such as the United States and the Soviet Union. These smaller countries -- what I have called "trading states" -- did not have expansionist territorial ambitions and did not try to project military power abroad. While the United States was tangled up in Vietnam and the Soviet Union in Afghanistan, trading states concentrated on gaining economic access to foreign territories, rather than political control. And they were quite successful. But eventually the trading-state model ran into unexpected problems. Japanese growth stalled during the 1990s as U.S. growth and productivity surged. Many trading states were rocked by the Asian financial crisis of 1997-98, during which international investors took their money and went home. Because Indonesia, Malaysia, Thailand, and other relatively small countries did not have enough foreign capital to withstand the shock, they had to go into receivership. As Alan Greenspan, then the U.S. Federal Reserve chair, put it in 1999, "East Asia had no spare tires." Governments there devalued their currencies and adopted high interest rates to survive, and they did not regain their former glory afterward. Russia, meanwhile, fell afoul of its creditors. And when Moscow could not pay back its loans, Russian government bonds went down the drain. Russia's problem was that although its territory was vast, its economy was small. China, India, and even Japan, on the other hand, had plenty of access to cash and so their economies remained steady. The U.S. market scarcely rippled.
Topic:
Economics
Political Geography:
United States, China, India, Asia, Vietnam, and Germany

513. Faulty Basel

Author:
Marc Levinson
Publication Date:
05-2010
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
No abstract is available.
Topic:
Economics and Financial Crisis
Political Geography:
United States and Europe

514. Expeditionary Economics

Author:
Carl J. Schramm
Publication Date:
05-2010
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
No abstract is available.
Topic:
Economics
Political Geography:
Afghanistan, United States, and Iraq

515. A New Strategy to Leverage Business for International Development

Author:
Robert Mosbacher, Jr.
Publication Date:
05-2010
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
To tackle global poverty, it is essential to craft a new and dynamic approach to economic development that refl ects the realities of a 21st century global economy and incorporates the participation of a wide variety of new players, particularly from the private sector. While investment, trade and innovation all represent basic components of building healthy economies, this paper focuses primarily on strategies to increase both in-country and international private capital investment in order to create jobs. To that end, it concentrates on two areas: strengthening and reforming the existing structures, coordinating mechanisms and policies that support U. S. economic development efforts; and improving public-private partnership models to promote broader fi nancing to local businesses, greater human capital support and technical assistance and improved physical and ICT infrastructure.
Topic:
Foreign Policy, Development, Economics, Emerging Markets, Poverty, and Third World
Political Geography:
United States

516. The Case for Auditing the Fed Is Obvious

Author:
Arnold Kling
Publication Date:
04-2010
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Recently, the Federal Reserve has significantly altered the procedures and goals that it had followed for decades. It has more than doubled its balance sheet, paid interest to banks on reserves held as deposits with the Fed, made decisions about which institutions to prop up and which should be allowed to fail, invested in assets that expose taxpayers to large losses, and raised questions about how it will avoid inflation despite an unprecedented increase in the monetary base.
Topic:
Economics, Government, Political Economy, Politics, and Financial Crisis
Political Geography:
United States

517. The United States and Mexico: More Than Neighbors

Author:
Andrew Selee, Katie Putnam, and Christopher Wilson
Publication Date:
05-2010
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
No country in the world affects daily life in the United States more than Mexico. The two countries are deeply intertwined, and what happens on one side of the border necessarily has consequences on the other side. Almost one in ten Americans is of Mexican descent, and a third of all immigrants in the United States today are from Mexico, while well over a half-million Americans live in Mexico. Mexico remains the second destination for U.S. exports after Canada, and millions of American jobs depend on this trade. From south to north the linkages are even greater: over three quarters of Mexico's exports go to the United States and one in ten Mexicans lives in the United States.
Topic:
Economics, Emerging Markets, Politics, Regional Cooperation, Bilateral Relations, Immigration, and Law Enforcement
Political Geography:
United States, Canada, Central America, and Mexico

518. The Transatlantic Economy 2010 Annual Survey of Jobs, Trade and Investment between the United States and Europe

Author:
Daniel S. Hamilton and Joseph P. Quinlan
Publication Date:
01-2010
Content Type:
Book
Institution:
Center for Transatlantic Relations
Abstract:
Despite the recession, the United States and Europe remain each other's most important foreign commercial markets. No other commercial artery in the world is as integrated and fused as the transatlantic economy. We estimate that the transatlantic economy continues to generate close to $4.28 trillion in total commercial sales a year and employs up to 14 million workers in mutually “onshored” jobs on both sides of the Atlantic.
Topic:
Economics, International Trade and Finance, Markets, and Bilateral Relations
Political Geography:
United States and Europe

519. Economic Growth and Institutional Innovation: Outlines of a Reform Agenda

Author:
William A. Galston
Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
When experts and pundits are asked what the president and Congress should do to promote economic growth, they typically respond with a list of policies, often mixed with stylistic and political suggestions. Few focus on institutional change, which is too easy to conflate with yawn-inducing “governmental reorganization.”
Topic:
Economics and Financial Crisis
Political Geography:
United States

520. Spurring Innovation Through Education: Four Ideas

Author:
Grover J. (Russ) Whitehurst
Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
A nation's education system is a pillar of its economic strength and international competitiveness. The National Bureau of Economic Research analyzed data from 146 countries, collected between 1950 and 2010, and found that each year of additional average schooling attained by a population translates into at least a two percent increase in economic output. A 2007 World Bank policy research working paper reported similar results. Based on these findings, if the United States increased the average years of schooling completed by its adult population from the current 12 years to 13 years—that is, added one year of postsecondary education—our gross domestic product would rise by more than $280 billion.
Topic:
Economics and Education
Political Geography:
United States