Global Business & Economics Program

  • The Future of Banking: Regulation and Reform in the United States

    On September 14, the Atlantic Council's Global Business and Economics Program held a discussion with former FDIC Chair Sheila Bair on the continuing challenges in the financial industry nearly three years after the start of the global financial crisis. Bair was a key architect of the new US rules governing the banking system—especially those addressing systemically important institutions and protecting taxpayers from future bank bailouts. She shared her views on the proper role and function of the US banking system once the Dodd-Frank financial regulatory reform law is fully implemented.


    Read More
  • Key Resignation Another Blow to Eurozone Stability

    The markets took another hard hit today following the abrupt resignation of Jürgen Stark, Germany’s member of the European Central Bank’s board. The euro hit six month lows against the dollar, bank stocks tumbled five percent, the Dow was down 3 percent, and the FTSE All-World index fell 3.07 percent amid near certainty that Greece would default on its debt and send another shockwave throughout the Eurozone.

    Phillip Inman and Helena Smith, reporting for Guardian, say Stark, "a German hardliner and former member of the Bundesbank board, has lobbied for the ECB to impose stricter austerity measures on Greece and Portugal and to reject using its funds to purchase Italian and

    ...

    Read More
  • G-7 Faces Three-Front Battle Against Contagion

    Tomorrow, finance ministers and central bankers from seven wealthy countries in the developed world will convene in Marseilles, France for their regular meeting to assess the health of the global economy. After a few global gatherings when the economic outlook appeared more promising in 2009 and 2010, the G7 agenda is back to battling contagion — negative spillovers from one financial institution, market or country to another. Recent volatility stemming from European bank funding concerns, protracted fiscal consolidation debates and sharp movements in exchange rates threaten to upend the global recovery. The G7’s ability to cooperate on these three issues will determine the course of contagion — either recurrence or remission. Therefore, during a week when the U.S. President is rightly focused on job creation, managing contagion will be as much a priority for the G7 as promoting growth.
    Read More
  • Running on Empty – Why Europe and the US Continue to Disappoint the Markets

    Over the course of the past few months, we at the Council have been understandably, and I think rightly, heavily focused on the enormous economic implications of Europe’s sovereign debt crisis. As country after country comes under the watchful and discerning eyes of the markets, Europe’s leaders seem increasingly perplexed and incapable of undertaking the serious reforms necessary to save their defining achievement—monetary union across much of Europe.
    Read More
  • Policymaker’s Fear Of The Italian Penalty Shot

    According to one anonymous German official speaking off the record to reporters from Der Spiegel, “a country like Italy can’t be saved.” We will have to trust that he was referring to the country’s size when he made the statement, and not its existential core. If he was, he may well be right, at least under the Euro Area’s current institutional arrangements. Let’s take a quick look at why.
    Read More
  • Europe's War Against Ratings Agencies Escalates

    Lost in the hubbub of Standard & Poor's downgrading the US bond rating is news that the Italian government has the ratings agencies under criminal investigation.

    The Guardian's John Hooper:


    Read More
  • Life in the AA+ League: What a Debt Downgrade Means to You

    How bad is it going to be with a AA+ credit rating?  The answer to that question depends on what you're concerned about. 

    The economy: If you're worried that economic ruin is now upon us, then you can breathe easy (for now).  Traders and economists broadly agree that the impact on borrowing rates for the U.S. government, itself, will be manageable.  The Wall Street Journal's MarketBeat column does a great job running through the key questions and answers.  The main issues -- a spike in U.S. borrowing costs, a global shedding of Treasuries, a stock market plunge -- all play out bearably, though with some initial turmoil. 


    Read More
  • S&P Downgrades USA; Time to Downgrade S&P?

    Standard & Poor's judges that the American political system is a mess and that there should be long-term concern about its public debt. It's hard to argue with that. But would investors really be better off buying Liechtenstein's bonds than America's? On what basis?

    S&P says the downgrade "reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." While that may well be, it's more than we were doing a month ago. Indeed, while most sane analysts agreed that the showdown over the debt ceiling was irresponsible, without it there would have been no

    ...

    Read More
  • Crisis? What Crisis? How to Save a Debt-Drowning Planet

    In late 1979, with the public service unions on strike and with the national debt spiraling out of control, Britain began to resemble a toilet. Prime Minister Jim Callaghan returned from a ‘summit’ in Guadeloupe (they never seem to hold summits in Rotherham or Detroit). The Sun, one of Britain’s Murdoch tabloid newspapers, famed for their restraint and balance as well as the correct use of the telephone, suggested to sun-tanned Jim on his return that there might be just ever such a teeny tad of a problem. "Well”, Jim thundered, “that’s a judgment that you are making. I promise you that if you look at it from outside, and perhaps you're taking rather a parochial view at the moment, I don't think that other people in the world would share the view that there is mounting chaos." Next morning The Sun ran the now infamous headline, “Crisis? What Crisis?” Enter Margaret Thatcher stage right!

    What crisis indeed. Thanks to utter political ineptitude by those we collectively
    ...

    Read More
  • 4 Steps Merkel and Sarkozy Should Take Now

    Wall Street Journal reports that German chancellor Angela Merkel and French president Nicolas Sarkozy are to speak today “with the ‘current situation in the euro zone’ among the issues to be discussed.”  They have much to talk about.
    Read More