Global Business & Economics Program

  • Is Europe Out Trading America?

    The European Parliament has approved an agreement with South Korea that, if ratified, will create the second-largest free trade area in the world, behind only the North American Free Trade Agreement zone. Coupled with aggressive negotiations with China and India, is Europe poised to overtake the United States as a global trader?

    The Read More

  • Stock Exchange Mergers Consolidating the Global Economy

    The New York Stock Exchange may soon merge with Deutsche Boerse, creating the world's largest financial exchange and setting up a tidal wave of consolidation.

    NPR reports that "NYSE Euronext, the company that owns the New York Stock Exchange and stock and derivatives markets throughout Europe, has confirmed it's in advanced talks with Deutsche Boerse, which owns the Frankfurt Stock Exchange." The Germans would own 60 percent of the combined company, which would be incorporated in the Netherlands and run by Deutsche Boerse's Reto Francioni.

    The news comes hours after the London and Toronto exchanges merged and is likely to spur on further moves. The Singapore Stock Exchange (SGX) has already

    ...

    Read More
  • Soros: Two-Speed Europe Could Disintegrate

    As with the late E.F. Hutton, when George Soros speaks, people listen.  Especially when he predicts the disintegration of the world's largest economy.

    Speaking with BBC from the World Economic Forum in Davos, the billionaire currency trader and philanthropist proclaimed that "The Euro crisis is on the way [to] being solved," thanks to the creation of what amounts to "a common treasury" via the mechanism of a permanent emergency support fund.   While that would seem like good news, indeed, he fears that the "flawed" means with which it's being implemented could be disastrous.

    While the main fear is that the rich countries, notably Germany, will pull out of the common currency, it's at least as likely that the less solvent countries will find the conditions of their rescue untenable.

    ...

    Read More
  • Two Contrasting Faces of Germany Are Put on Display

    As the storm clouds deepen over the euro, I have spent some time in Germany in the last few days speaking to German politicians and officials who played a significant role in bringing in the single currency. Two contrasting faces of Germany are put on display: a generous and slightly unrealistic side - and one that is distinctly less forgiving, likely to win the upper hand and will probably lead, sooner or later, to the unravelling of the present euro bloc.

    On the one hand sit people such as Hans-Dietrich Genscher, long-time Foreign Minister in the 1970s and 1980s and one of the spiritual fathers of European economic and monetary union (EMU). Genscher got the ball rolling in 1987-88 – around the time when finance ministers started to believe in the virtues of international monetary coordination as a result of the relative successes of the Plaza and Louvre accords to shackle runaway movements of the dollar. Genscher launched a series of speeches and papers that

    ...

    Read More
  • Merkel Wins EU Reform Showdown

    Once again, Angela Merkel has held her ground and forced the other EU leaders to accommodate Germany's policy concerns. This time, it's a set of amendments to the Lisbon Treaty to deal with sovereign debt emergencies.

    UPI ("EU bows to Merkel over euro crisis rules")

    Bowing to most of the demands tabled by German Chancellor Angela Merkel, EU leaders green-lighted quicker and harsher fines for repeat budget overspenders, as well as a permanent emergency fund to safeguard the euro. EU officials also agreed to hold the private sector more accountable in case of state defaults.

    "Today we took important decisions to strengthen the eurozone," EU Council President Herman Van Rompuy said after eight hours of tedious negotiations culminated in the

    ...

    Read More
  • The Danger of Divergence: Transatlantic Cooperation on Financial Reform

    This report focuses on defining the major issues in financial regulation that demand transatlantic cooperation, and putting them in their global context.  It analyzes the effects of proposed rules on the US and European economies, including the impact on the real economy and especially the business sector, and outlines concrete recommendations for policymakers.
    Download the PDF

    Read More
  • China's Economic Miracle Has Limits

    The inexorable growth of China’s GDP has now taken it past Japan and it now takes aim at surpassing that of the USA, whose economy is at present more than two and a half times bigger. It took China a little less than a decade to make a similar leap to overtake Japan.

    But then Japan has hardly been growing from 1995 and its GDP has been roller coasting between $4-5 trillion. If the growth of economies were a horserace, this would be akin to passing a fast starter who has slowed down to a trot. Overtaking the USA will be much more difficult.  Still, one widely cited study has it happening by 2035.

    China's growth in past three decades is the miracle story of our times. To replicate it might be a tall order for a country like India which matches it in size and potential, but not yet in political and national will. But GDP alone does not make a nation wealthy. China’s current per capita income keeps it in the company of countries like Algeria and

    ...

    Read More
  • France's Economic Recovery Targets Impressive or Unrealistic? View from Europe

    While neighboring Germany has been praisedfor record levels of economic growth, France has been criticized for setting targets it will have a hard time reaching.

    Even though the French governmentrecently reduced its economic growth targets for 2011 from 2.5% to 2.0%, some think the lower figure is still too optimistic. Critics are also skeptical France can achieve its goal of reducing the country’s budget deficit to 6% next year, a pledge based on the 2.5% growth level. It is unclear the government’s plan to eliminate €10 billion in tax loopholes will fully compensate for slower growth.

    Though Laurence Boone of Barclays

    ...

    Read More
  • Germany Losing Experts Race

    Germany, a pioneer of the industrial revolution and one of the most technologically advanced countries on the planet, is facing a shortage of experts and engineers, a Spiegel report argues.  The problem is an outdated immigration policy.

    Germany, a highly industrialized nation dependent on its technical expertise, extends only a limited welcome to qualified foreigners. But it is an immigration policy which threatens to gamble away the country's future. For years, German politicians have wasted valuable time in an international competition for talent with their half-hearted immigration and integration policies. And now, just as the country seems to have emerged from a major crisis, the alarmists are issuing new warnings. In a knowledge-based society, well-trained people are the most important and scarcest form of capital. While other industrialized nations have been courting skilled foreign workers for years, Germany has discouraged

    ...

    Read More
  • Dodd: G20 Has Taken Over

    Christopher Dodd, chairman of the Senate Banking Committee, declared that recent events demonstrate, "The debate is over.  We're in a global economy."  As such, he repeatedly called for close coordination between American regulators and those of the  other G20 nations.

    The just-passed Dodd-Frank bill followed the principles outlined in the 2008 G20 Summit and the chairman expressed his strong desire that other G20 members, particularly those in the EU, follow suit.   Indeed, he declared that the American bill should serve as a model for theirs.

    The key, as Dodd repeatedly emphasized, was balancing the need for consumer protection and stable institutions "without strangling productivity and

    ...

    Read More