ECB: Pushing banks too far?
After the last economic crisis, the European Central Bank put in place strict rules to ensure banks were in a strong financial position. Now, to counter the pandemic's effects, authorities are pushing banks to take more risks in lending to households and businesses. But banks see a rough road ahead, ...
Biden can build on Trump’s successes
Joe Biden’s victory in the U.S. presidential election may mean less change than many expect, especially when it comes to the essential nature of the U.S.’s relationships with other countries. Moreover, President Trump had some important successes that instead of undermining, the president-elect should reinforce.
Examining Latin America’s ‘puzzle’ of low growth
Why do Latin American countries remain mired in sluggish economic growth? Economists have addressed the question with reams of analysis, but the answer is simple: low productivity. That in turn, has been caused by government involvement in the economy that has stifled competition and innovation. The real puzzle is what ...
Higher digital taxes coming soon: A three-part saga
Global policy around digital taxation is headed toward higher and more complicated taxes. The OECD’s latest proposed framework would add a new set of complex regulations to the existing system. Meanwhile, several countries are unilaterally implementing their own digital services tax, which they may refuse to repeal even after the ...
GIS Essay: What a swell party this is
Britain’s political parties have been fading in the 21st century in terms of membership, popular support and relevance to citizens. To many, traditional parties seem more a part of the problem than the solution. Can parties be salvaged? Do we still need them? David Alton, a member of the House ...
Restarting economies: Benefits of the bottom-up approach
Restarting an economy is much more difficult and complicated than shutting one down. So far, countries that have used a bottom-up approach, where businesses are allowed to decide for themselves how to meet health requirements, are faring better than those trying to micromanage the reopening from the top down. The ...
The U.S. mulls more Covid-19 bailouts for states
As parts of the U.S. government wrangle over another round of Covid-19 relief, one of the thorniest issues is whether to offer more aid to states and local governments. What has become clear, however, is that the funds already doled out should have easily covered the shortfalls in tax revenue ...
The Fed and ECB: Average inflation targeting for two
Central banks have long maintained that price stability means 2 percent inflation. Now we hear from the U.S. Federal Reserve and the European Central Bank that it actually means “average” 2 percent inflation. This seemingly small change in the banks’ mission aims to contain and sustain public debt, not inflation.
Fighting poverty after Covid: Through ideology or valid economic strategies?
The Covid-19 pandemic has delayed the eradication of poverty in the developing world, which had been diminishing at a rapid rate earlier. The crisis also has strained the weakened and mismanaged economies in the West. To solve these issues, many are proposing unwise economic policies supported by manipulated data.
Crises put Chile’s free-market consensus in danger
The Covid-19 crisis offered embattled Chilean President Sebastian Pinera a lifeline after months of protests had rocked his administration. Instead, his mismanagement of the response to the pandemic has nearly led to the collapse of his governing coalition. Now, as the country gears up for a referendum on a new ...
Opinion: Europe’s ‘historic’ deal and the future of the EU
Many have hailed the EU’s July decision to partially mutualize its newly issued debt as a “historic step.” Massive as it is, the stimulus package is unlikely to fix Europe’s fragile and crisis-stricken economies, even if the Union’s show of unity has already firmed it politically. However, the change in ...
GIS Dossier: The dilemmas of the ECB’s monetary policy
Experts have long been gravely concerned about the negative side effects that could result from the eurozone’s prolonged ultra-easy credit. However, reversing the monetary policies of the European Central Bank has proven economically and politically risky. The coronavirus crisis has made the challenge even harder.
A Swiss answer to the Covid-19 crisis: Focus on liquidity
Switzerland devised an ingenious way to throw a lifeline to its enterprises during the pandemic-induced crisis. Its “liquidity facility” targets the core segment of the economy, relies on business owners’ sense of responsibility and does not burden the country’s public finances with intolerable debt.
Disastrous economic and social ideas are making a comeback
It is hardly a coincidence that a new monument of Karl Marx, the creator of socialist philosophy, was erected with great pomp in the city of his birth in 2018. Marxist thinking has been undergoing a renaissance for all sorts of wrong reasons, including in academic and political circles. Beware, ...
GIS Dossier: The shifting grounds of EU banking rules and supervision
Bank regulators are forced to close their eyes again to vulnerabilities that made the 2008 banking industry meltdown possible. They need to ensure that banks continue supporting the real economy during the pandemic. For instance, capital requirements are being softened and regulatory relief given so banks can lend as much as possible ...
Berlin could destroy the last vestiges of budget discipline in the EU
Once a staunch defender of financial responsibility in the eurozone, Germany has thrown its support behind the European Commission’s ill-conceived, unwarranted and politicized spending scheme to aid the eurozone’s economy.
Opinion: A tale of two pandemics
The European Union may not survive the coronavirus pandemic, according to critics. Or, quite to the contrary, it will prosper as EU leaders mobilize the union’s political and institutional resources and breathe new life into the European project. Which of the two narratives is more likely to materialize? Michael Leigh ...
The German constitutional court’s courageous ruling was necessary
Germany’s Federal Constitutional Court in Karlsruhe made history on May 5, 2020. The justices found that the European Central Bank could have acted outside its remit by purchasing government debt. Accordingly, the court suspended the Bundesbank’s participation in the ECB’s program.
Sunday Opinion: The art of creating an environment for healthy longevity
Longevity research shows that the building blocks of health are developed early and cultivated throughout the years. Centenarians tend to have a sense of meaning and purpose, and access to resources to overcome challenges. A lucky draw in the genetic pool lottery plays only a secondary role.
The political economy of crony socialism
When governments and critical financial institutions rig the system to facilitate irresponsible public spending, trouble is inevitable. Today’s crony socialism, masquerading as capitalism, is at the root of the crisis unleashed by the anti-coronavirus measures. Unfortunately, panicked citizens perceive the government as a part of the solution, not the problem.
Business strategies are needed for the rough economic stretch ahead
Governments and supranational organizations that weakened the economy’s resilience with overspending, accumulating debt and arbitrary taxation before the pandemic are now doing more damage. They have resorted to scare tactics to expand their control under the pretext of responding to the downturn brought on by lockdowns. The short- and mid-term ...
Policy cures worse than the disease
Governments first failed to respond to the COVID-19 pandemic. When they finally realized the scope of the challenge, most resorted to misguided, self-serving and often disastrous policy responses. Their push for centralization and control of economies, companies and ultimately, individuals, bodes ill for the future.
Opinion: The OECD heads down the wrong path
When it was first founded, the OECD’s mission was to support economic growth. It promoted free trade, low taxes and economic freedom. But over the last three decades, it has strayed from its original goals. It now focuses on expanding the reach of its member governments, especially when it comes ...
Sound business is key, not centralist ambitions
French President Emmanuel Macron’s call for more “solidarity” among eurozone states may have a nice ring in today’s harsh pandemic times. It is, however, a disguised attempt to make the enterprising and frugal European states pick up the tab for the irresponsible ones. Instead of a “transfer union,” France and ...