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31. Inflation Scare: Crazy but Real

Author:
John H. Makin
Publication Date:
07-2009
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The recent steps by the Federal Reserve to preempt deflation have—ironically and unexpectedly— prompted a surge in inflation fears both inside the United States and abroad, especially in China. Specifically, the Fed's measures to go beyond the stimulus inherent in a zero percent federal funds rate by purchasing Treasury and mortgage securities has conjured visions—especially in the eyes of major buyers of Treasury securities, China foremost— of massive money printing to underwrite trillions of dollars of additional government borrowing at low interest rates. As markets have shown, if that were the Fed's intention—which it decidedly is not—the effort would fail because excessive money printing—creating a money supply larger than the quantity of money demanded— would push up interest rates as inflation expectations rose.
Topic:
Economics, International Political Economy, International Trade and Finance, and Monetary Policy
Political Geography:
United States and China

32. Three Lessons from the Financial Crisis

Author:
John H. Makin
Publication Date:
09-2009
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
More than two years have passed since the U.S. housing bubble burst. That event ushered in a financial crisis that was not only intense but also stunning. So stunning in fact, that in August of last year, just a month before the collapse of Lehman Brothers, the global economy was close to a crisis worthy of comparison with the Great Depression, yet neither the markets nor the Federal Reserve had much of an inkling of what was to come. The Standard and Poor's (S) 500 Index had come down to about 1,300 from its October 2007 high of 1,576. Positive growth had just been reported for the U.S. economy during the second quarter of 2008 at an annual rate of 2.8 percent (later revised down to 1.5 percent). Almost one percentage point of that growth came from U.S. consumption, and government spending also contributed. The wave of relief after the Bear Stearns scare in March 2008 had provided a nice boost to the economy and to markets. That boost was further enhanced by the substantial contribution to growth from net exports (2.9 percentage points) thanks to what was, then, continuing strength in the global economy, especially in China, which had reported blistering 10.1 percent year-over-year growth in the second quarter of 2008. These and other positive components more than offset a drag from inventories and residential investment. In short, the real economy had not shown much evidence of damage emanating from the chaos that was churning in the financial sector.
Topic:
Economics, International Political Economy, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:
United States and China

33. Postcrisis Risks

Author:
John H. Makin
Publication Date:
11-2009
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The only thing scarier than the slide of the dollar, which has dropped by 15 percent since March, would be an attempt by the Federal Reserve to stop it. Such an attempt would show that we have learned nothing from the Bank of Japan's disastrous premature exit from a zero-interest policy in August 2000. Closer to home, it would resemble the Fed's premature move to mop up “excess” reserves by doubling reserve requirements in three steps between August 1936 and May 1937, which was followed by the third-worst recession of the twentieth century, from May 1937 to June 1938.
Topic:
Economics, International Political Economy, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:
United States and Japan

34. The Shape of the World to Come

Author:
Laurent Cohen-Tanugi
Publication Date:
08-2008
Content Type:
Book
Institution:
Columbia University Press
Abstract:
Contrary to an optimistic vision of a world "flattened" by the virtues of globalization, the sustainability and positive outcomes of economic and political homogenization are far from guaranteed. For better and for worse, globalization has become the most powerful force shaping the world's geopolitical landscape, whether it has meant integration or fragmentation, peace or war. The future partly depends on how new economic giants such as China, India, and others make use of their power. It also depends on how well Western democracies can preserve their tenuous hold on leadership, cohesion, and the pursuit of the common good. Offering the most comprehensive analysis of world politics to date, Laurent Cohen-Tanugi takes on globalization's cheerleaders and detractors, who, in their narrow focus, have failed to recognize the full extent to which globalization has become a geopolitical phenomenon. Offering an interpretative framework for thought and action, Cohen-Tanugi suggests how we should approach our new "multipolar" world—a world that is anything but the balanced and harmonious system many welcomed as a desirable alternative to the "American Empire."
Topic:
Economics, Globalization, and International Political Economy
Political Geography:
United States and Global Focus

35. How Long Can the Unsustainable U.S. Current Account Deficit Be Sustained?

Author:
Steven B. Kamin, Carol C. Bertaut, and Charles P. Thomas
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper addresses three questions about the prospects for the U.S. current account deficit. Is it sustainable in the long term? If not, how long will it take for measures of external debt and debt service to reach levels that could prompt some pullback by global investors? And if and when such levels are breached, how readily would asset prices respond and the current account start to narrow?
Topic:
Economics, Foreign Exchange, Government, International Political Economy, and Political Economy
Political Geography:
United States

36. Policy Liberalization and FDI Growth, 1982 to 2006

Author:
Matthew Adler and Gary Clyde Hufbauer
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Over the last three decades the global economy has expanded in a remarkable fashion. While nominal world GDP has increased four times, world bilateral trade flows have grown more than six-fold, and the stock of foreign direct investment (FDI) has grown by roughly 20 times since 1980. The sources of global trade and investment growth are well known—general economic expansion, policy liberalization, and better communications and technology—but the impact of each source is unclear. In this paper we attempt to uncover the contribution of policy liberalization to the rising ratios of US inward and outward FDI stocks to GDP over the last three decades.
Topic:
Economics, Globalization, International Political Economy, International Trade and Finance, Markets, and Political Economy
Political Geography:
United States

37. Saakashvili Pulled the Trigger: Turkey between Russia and Georgia

Author:
Hasan Ali Karasar
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
Turkey has been involved, historically and demographically, with many of the regions of “frozen conflict” in post-Soviet space. At this point, one might consider the position of Turkey as being at the epicenter of Euro-Atlantic and Russian extremes concerning the frozen conflicts. Georgia, since 1991, has been considered a valuable “strategic partner” by Turkey for several reasons. Turkish Prime Minister Tayyip Erdogan's Caucasus Pact idea is a good opportunity to create an inclusive (Russia, Turkey, Georgia, Armenia, and Azerbaijan) new foreign policy approach at this stage. This approach should be merged with the representation of all the frozen or unfrozen conflict areas, peoples, ethnic groups and regions included under the roof of such an alliance.
Topic:
NATO and International Political Economy
Political Geography:
Russia, United States, Europe, Turkey, Middle East, Asia, Armenia, Azerbaijan, and Georgia

38. Special Report No. 205: Why We Should Still Study the Cuban Missile Crisis

Author:
Michael Dobbs
Publication Date:
06-2008
Content Type:
Working Paper
Institution:
United States Institute of Peace
Abstract:
Some scholars have questioned the utility of studying the Cuban missile crisis as a model for executive decision making during times of crisis, arguing that it offers little guidance for policymakers today. Many accounts of the missile crisis are incomplete, inaccurate, and too narrowly focused on the “rational actors” at the center of the drama while overlooking the “irrational actors.” Nonetheless, the Cuban missile crisis remains the best-documented study of presidential decision making at a time of supreme national danger. It offers policymakers and students of history unique insights into the interplay between the debates in the Oval Office and fast-moving events in the rest of the world. For decades, the Cuban missile crisis has been studied and analyzed as a case study in presidential power and crisis management. It is better understood as an example of the limits of presidential power and the haphazard returns of crisis management. The missile crisis illustrates the sometimes pivotal role of personality in politics. Had someone else been president in October 1962, the outcome could have been very different.
Topic:
Cold War, International Political Economy, and Nuclear Weapons
Political Geography:
United States and Cuba

39. PolicyWatch #1394: Increasing Pressure on Iranian Opposition in Iraq

Author:
Raymond Tanter
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Throughout summer 2008, Iraqi politicians tied to Tehran have put increasing political pressure on the U.S. government to allow Baghdad to control Camp Ashraf, the base housing Iran's main opposition -- the Mujahedin e Khalq (MEK). Options regarding Iraqi-based MEK members are limited, but include the following: sending them to the United States; allowing them to stay in Iraq under Iraqi control; dispersing them to surrounding countries, including Iran; or maintaining the status quo with the continued protection of the U.S. military. Since each option is problematic, finding a solution is neither easy nor simple.
Topic:
International Political Economy
Political Geography:
United States, Iraq, Iran, and Middle East

40. Russia vs Georgia: The Fallout - Europe Report N°195

Publication Date:
08-2008
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
The Russia-Georgia conflict has transformed the contemporary geopolitical world, with large consequences for peace and security in Europe and beyond. Moscow's initial moves into South Ossetia as large-scale violence broke out there on 7-8 August were in part a response to a disastrous miscalculation by a Georgian leadership that was impatient with gradual confidence building and a Russian-dominated negotiations process. But Russia's disproportionate counter-attack, with movement of large forces into Abkhazia and deep into Georgia, accompanied by the widespread destruction of economic infrastructure, damage to the economy and disruption of communications and movement between different regions of the country, constitutes a dramatic shift in Russian-Western relations. It has undermined regional stability and security; threatened energy corridors that are vital for Europe; made claims with respect to ethnic Russians and other minorities that could be used to destabilise other parts of the former Soviet Union, with Ukraine a potential target; and shown disregard for international law.
Topic:
NATO, International Political Economy, and War
Political Geography:
Russia, United States, Europe, Ukraine, Asia, Soviet Union, Moscow, Georgia, South Ossetia, and Abkhazia