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381. The Music Stops

Author:
John H. Makin
Publication Date:
09-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
During a 10:00 a.m. conference call on August 17, 2007, Federal Reserve vice chairman Donald Kohn and New York Federal Reserve president Timothy Geithner were urging Citicorp chief executive Chuck Prince and his fellow big bank CEOs to use the Fed's discount window, which is set up to alleviate liquidity pressures on individual banks or on the banking system as a whole. Prince, the head of the world's largest bank (Or is it the second largest? No one really knows since bank balance sheets are so full of securities that cannot be priced.) may have been wishing that he had not chosen to offer a chillingly clear characterization of the global financial system a little more than five weeks earlier in a Financial Times interview on July 9, three weeks before the global credit markets began to seize up.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States

382. The Band Plays On

Author:
John H. Makin
Publication Date:
08-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
In a July 9 interview in Tokyo with the Financial Times about the surging, liquidity-driven financial sector, Citigroup chief executive Chuck Prince characterized the situation in global financial markets more insightfully than some investors might have wished: “When the music stops, in terms of liquidity, things will get complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing.” Prince elaborated further, saying that (as the article paraphrased it) “the way big Wall Street banks and hedge funds had picked up troubled subprime mortgage lenders was an example of how 'liquidity rushes in' to fill the gap as others spot a buying opportunity.”
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States and Tokyo

383. Why Interest Rates Are Rising

Author:
John H. Makin
Publication Date:
07-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The bond “conundrum” that Alan Greenspan spoke of toward the end of his tenure at the Federal Reserve is disappearing. Chairman Greenspan was drawing attention to unusually low longterm interest rates worldwide on bonds.1 More recently, however, in less than a month interest rates on U.S. ten-year notes have risen by 60 basis points with no change in expected inflation. The shift is all the more unusual because of its abruptness and relative magnitude: in statistical terms, it is a rise of three standard deviations in “real” (inflation-adjusted) rates in a market that has been quiet over the past five years. Moreover, the few “surprise” moves since the tech-stock bubble burst in 2000 have mostly been in a downward direction.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States

384. The Remarkable American Consumer

Author:
John H. Makin
Publication Date:
06-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The American consumer is a very persistent spending machine. It is American consumption growth running at higher than 4 percent annualized— well above its long-term average—that has kept the economy comfortably out of recession for the past six months as the housing slowdown has subtracted more than a percentage point from growth. Even with a substantial additional drag on the U.S. economy from other areas—inventory liquidation, weakening net exports, and rapidly rising gasoline prices—the American consumer's spending surge has still been enough to keep GDP growth in positive territory.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States and America

385. Weaker Capital Spending Cuts Growth Forecast

Author:
John H. Makin
Publication Date:
05-2007
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
On Friday, April 13, the Wall Street Journal's lead story on the unlucky U.S. economy was “Economy Enemy No. 1: Soft Capital Spending.” The nation's leading business newspaper was acknowledging a six-month slowdown in capital spending that has, along with the drag from the housing sector, been lowering U.S. growth.
Topic:
Economics, International Trade and Finance, and Markets
Political Geography:
United States

386. Off-Shoring: New Challenges and Opportunities in an Expanding Global Economy

Publication Date:
02-2007
Content Type:
Working Paper
Institution:
The National Academy of Public Administration
Abstract:
The impact of shifting U.S. business operations to foreign countries on the nation's workforce and economy is not a new or unstudied issue. For decades, it has been central to the debate about the benefits and costs of economic growth and trade expansion. However, this debate has not produced consensus on the magnitude and significance of off-shoring, which occurs when companies contract out activities abroad, either to their own affiliates or to other firms.
Topic:
Economics, International Trade and Finance, and Labor Issues
Political Geography:
United States

387. APEC and the search for relevance: 2007 and beyond

Author:
John Ravenhill, Lorraine Elliott, Helen E.S. Nesadurai, and Nick Bisley
Publication Date:
11-2006
Content Type:
Working Paper
Institution:
Australian National University Department of International Relations
Abstract:
In September 2007, Australia will host the annual Economic Leaders' Meeting of the Asia–Pacific Economic Cooperation (APEC) forum. This will be the culmination of over 100 days of ministerial, official and business group meetings, working groups and dialogues that will be held in various Australian cities from January to August. Fifteen federal government departments will be involved along with a range of other interested actors, predominantly in the private sector. The Australian government will spend considerable sums of money on the leaders' meeting itself, not least to ensure the security of those attending. This will include, if all goes according to plan, the heads of government of 21 countries—member economies in APEC-speak—including the United States, Russia, Japan and China. Security may well be the least of the government's worries. Few would argue that APEC is 'going strong' as a regional economic forum and recent reviews have suggested that at best it faces an uncertain future and that at worst it could be in a state of terminal decline. The forum is argued to have lost its relevance and to have generally been unsuccessful in attaining any of its more ambitious goals such as regional trade liberalisation.
Topic:
Security, Development, Economics, and International Trade and Finance
Political Geography:
Russia, United States, Japan, China, Australia, and Australia/Pacific

388. Intellectual Property Rights as a Key Obstacle to Russia's WTO Accession

Author:
Matthew Ocheltree and Sherman Katz
Publication Date:
10-2006
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Russia has been in the process of seeking membership in the World Trade Organization (WTO) since June 1993. Currently, the United States is the only major economic power that has yet to finalize a bilateral market access agreement with the Russian Federation. Most observers of the situation concur that the enforcement of intellectual property rights laws remains, along with agriculture, one of the two major hurdles to Russian accession to the World Trade Organization.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
Russia, United States, Europe, and Asia

389. Foreign Investment and National Security: Getting the Balance Right

Author:
David M. Marchick and Alan P. Larson
Publication Date:
07-2006
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Despite the significant benefits that foreign investment brings to the U.S. economy, a recent poll by the Pew Research Center for the People and the Press found that 53 percent of Americans believe foreign ownership of U.S. companies is “bad for America,” a sentiment that reached a boiling point with the proposed acquisition of the U.S. port operations of P Steam Navigation Company by Dubai Ports World (DPW). The DPW case brought to the public's attention the little-known executive committee charged with reviewing the security risks of foreign investment—the Committee on Foreign Investment in the United States (CFIUS)—and ignited a flurry of congressional activity to change its mandate and operations under the Exon-Florio Amendment to the Defense Production Act of 1950.
Topic:
Security, International Political Economy, and International Trade and Finance
Political Geography:
United States, America, and Dubai

390. Foreign Investment in the US (I): Disappearing in a black hole?

Author:
Daniel Gros
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
Centre for European Policy Studies
Abstract:
The US international investment position today should in principle be equal to the sum of past current account balances (mostly deficits). However, this is by far not the case even taking into account the balancing item 'errors and omissions'. Between 1982 and 2004, the US has accumulated a grand total of around $4.5 trillion (thousand billion). (The sum of current account deficits has been about $1 trillion smaller than the amount of net sales of US assets to the rest of the world because of the anomaly in reinvested earning.) Despite this accumulation of deficits the US net international debtor position (IIP) has deteriorated 'only' by $2.7 billion (and is now estimated – at the end of 2004, end 2005 figures are not yet available for the US IIP – at 'only' around $2.5 trillion). This implies a total of 'unearned' gains to the US of around $1.8 trillion during 22 years. The quite detailed data available for a somewhat shorter period (1989-2004) show that only a very small part of this sum, around 10-20%, can be explained by exchange rate and stock market changes.</p
Topic:
International Relations and International Trade and Finance
Political Geography:
United States