By Jeffrey Sachs

One of the vexing problems of the US banking crisis is the difficulty of valuing the toxic assets on the banks’ balance sheets.  The government is proposing to remove these assets in return for taxpayer equity in the banks, but at what terms of exchange? It seems that if the government pays too much it bails out the banks, while if it pays too little it de-capitalises them.  There is way, however, to be both fair and efficient, by settling the taxpayers’ ownership at a later date, after the toxic assets have been monetised. Read more

By Jagdish Bhagwati

President Barack Obama faces protectionist pressures. These are not just from the labour lobbies that have led Joe Biden, US vice-president, to chide “pure free traders” and to ask for “fair trade”; and which, astonishingly, have also led the US president to use his first meeting with President Felipe Calderón of Mexico – overwhelmed by the brutal fight against drug cartels caused by the US failure to legalise drugs – to urge on him tougher labour standards, a protectionist demand that is clearly aimed at raising Mexican costs of production. The pressures come also from the lobbies pushing for a Detroit bail-out that is inconsistent with the World Trade Organisation. Read more