By Thomas Palley

The last quarter of the 19th century witnessed a period of sustained global deflation. In the 1896 US presidential election, William Jennings Bryan famously attacked the gold standard as the cause of deflation, declaring “You shall not press upon the brow of labour this crown of thorns. You shall not crucify mankind upon a cross of gold.” Read more

From the FT:
Volcker has the measure of the banks – John Gapper
Why we should expect low growth amid debt – Carmen Reinhart and Kenneth Rogoff
An early warning system for asset bubbles – Charles Roxburgh and Susan Lund
How to make the difference between a bleak future and a bright one – Bill Gates in Davos

From elsewhere:
‘Obama sounded like a good old-fashioned mercantilist’- Economist’s View
Global financial regulatory reform falls apart – Felix Salmon
Dialing back the deflation watch – Free Exchange
A proposal for genuine financial reform – Marshall Auerback via the New America Foundation
Off with their heads – Simon Johnson via Project Syndicate
The Fed’s best man – Alan Blinder via the New York Times

By Roger E.A. Farmer

For the past nine months I have been presenting some new ideas at academic conferences where economists have been grappling with the current financial crisis. Boston, Montreal, Amsterdam, London, Cleveland, Sydney, Atlanta … Only the venues change.  The participants and the papers are always the same. Read more

From the FT:
Why trade war is very likely to break out this year – Michael Pettis
Lessons for the American housing market – Robert Pozen
A very small mercy – Editorial comment
Recovery at risk if contradictory forces collide – Ben Funnell
Short View: Axis of worry shifts to Asia – John Authers

From elsewhere:
The US ‘spending freeze’ in context – Free Exchange
IMF revises up its global economic forecast – IMF Direct
The myth of China’s blithe consensus- Michael Pettis
Meryvn King calls for structural overhaul to banking industry – Naked Capitalism

From the FT:
Bernanke’s battle – Editorial comment
How to bypass populism and tackle banking – Arthur Levitt
A better way to reduce financial sector risk – Raghuram Rajan
Where the Walker Review stops short – Hugo Banziger

From elsewhere:
The second Clinton? – The Baseline Scenario
A road not taken – Economic Principals
The economic case against Bernanke – Naked Capitalism
Is the ‘Volcker rule’ more than a marketing slogan? – Realtime economic issues watch
Too interconnected to fail = too big to fail: What is in a leverage ratio? – VoxEU
The Bernanke conundrum – Paul Krugman for the New York Times

As part of the FT’s week-long series on the Brics emerging markets, experts on each of the four economies will contribute to the debate about the role of Brics consumers in the global economy. Today’s entry focuses on India, check back throughout this week for entries from the other countries.

By Suhel Seth

Much has been made of India’s brisk economic march and that in the global comity of economic superpowers, India is inching towards the high table but the fact is that there are two Indias and both shall remain for a long time to come. One which still experiences the ravages of poverty and poor infrastructure while the other that sees luxury brands tempting the now-rich-and-arrived Indian. But brands in India, more than the politician ironically, have understood the power that both these Indias possess in their own unique way.

Much of what happened in 2009 in the world economy escaped India only because while one part had become dysfunctional (no de-coupling here), the other was happily untouched by the global meltdown, which is what continued to propel India’s almost 8 per cent GDP growth.

But the real story of India and the brands within is in effect the story of the quintessential Indian consumer and the DNA which remains largely unaltered. So while on the one hand, 185 Bentleys were sold in 2009 in India, the country also witnessed the launch, and then the delivery of the Nano: a $2500 car from the house of Tatas. From October, 2009 to January 2010, the Tatas have already sold more than 16,500 Nanos: in a country, which also boasts of the world’s largest two-wheeler population. Read more

As part of the FT’s week-long series on the Brics emerging markets, experts on each of the four economies will contribute to the debate about the role of Brics consumers in the global economy. Today’s entry focuses on Brazil, check back throughout this week for entries from the other countries.

By Arminio Fraga

Brazil is thought to be the most western of the Brics—a democracy full of life, an open society, porous to global fads and tastes.

One feature that supports this view is that Brazil’s consumer seems to be totally American, and I mean this neither as an insult nor as compliment, even after the global economic mess we are still digesting. Brazilian households like to buy the newest gadget and prefer to spend on items that will enhance their short-term wellbeing rather than save for a rainy day. This partly explains Brazil’s low saving rate – which has fluctuated around 17 per cent of GDP over the last decade, a number that contrasts sharply with China’s 45-50 per cent.

This massive discrepancy is also driven by the difference between the social safety nets in the two nations: Brazil’s being extensive in coverage (universal health care, education and social security) and extravagant (early retirement with full pay, for example), whereas China’s is very modest. Read more

From the FT:
Obama demands Wall St payback – Krishna Guha
Politicians must set out their plans for the deficit – Nick Clegg
Europe cannot afford to let Greece default – Simon Tilford

From elsewhere:
Bankers without a clue – Paul Krugman for the New York Times
Should the Fed have a large role in bank regulation? – Economist’s View
Eurozone monetary policy in uncharted waters – VoxEU
The bank tax is just an increase in cost of funds – Felix Salmon
Thoughts on the bank tax – Baseline Scenario
Obama’s “get tough on banks” again tries to play the public for fools – Naked Capitalism
So what are banks for, anyway? – New Deal 2.0

From the FT:
Intolerance of small crises led to this big one – Jacek Rostowski
Britain needs investors for the long term – Peter Mandelson
Financial Crisis Inquiry Commission: Live Coverage – John Gapper’s Business Blog

From elsewhere:
Managing China’s crisis management – Yu Yongding for Project Syndicate
The “other” imbalance and the financial crisis – VoxEU
The Obama financial tax is a start, not the end – Baseline Scenario
‘Sorry’ still seems to be the hardest word on Wall Street – Dana Milbank for the Washington Post

From the FT:
Radical choice has been central bank critic – Michiyo Nakamoto
How to make the bankers share the losses – Neil Record
The soap opera of China’s housing boom – Geoff Dyer

From elsewhere:
The American economy will recover even if the housing market doesn’t – Slate
The need for special resolution regimes for financial institutions – VoxEU
Did demand for credit really fall? – Baseline Scenario

From the FT:
A 10-year plan to close the budget deficit – John Podesta and Michael Ettlinger

Refocus the regulatory debate on essentials – Nicholas Brady

Asia must loosen the grip of its exporters – Lorenzo Bini Smaghi
Inflation angst troubles investors – Sushil Wadhwani

From elsewhere:
No to Bernanke – Baseline Scenarios
Best and highest use – Economic Principals
The end of the revolution is nigh – Free Exchange
‘The once and future Fed policy error?’ – Naked Capitalism

By Michael Pomerleano

As fears of debt disaster swirl around Dubai and Europe, it is useful to take a closer look at local currency bond markets. A recent superb book – This Time is Different: Eight Centuries of Financial Folly, by Carmen M. Reinhart and Kenneth Rogoff - offers a veritable tour de force of local currency markets. Reinhart and Rogoff have done an extraordinary job of putting together statistics covering eight centuries of government debt defaults around the world. The lengthy historical perspective documents never-ending cycles of boom and bust.

Their story is vastly different from the reports propagated by the official community. The official story of local currency bond markets reads roughly as follows. The typical report from a multilateral financial institution (and there have been several) points to the rapid development of local currency bond markets over the past years as a source of strength for financial systems in emerging-market economies. They report that foreign investment is buoyant, with foreign investors channeling increasing volumes of funds into these markets. The authors invariably commend developing countries for borrowing in local currency to reduce foreign currency mismatches end encourage them to adopt better macroeconomic policies, improve debt management strategies, and undertake further financial sector reform. Read more

From the FT:

Dismal outcome at Copenhagen fiasco – Editorial comment Read more

This post for the Financial Times looks at proposed reforms to financial regulation in the EU and in the US. Read more

From the FT:

Planning for death without disruption – Editorial comment Read more

From the FT:

Heraclean labour – Editorial comment Read more

From the FT:

How to hold the rich to their word – Jeffrey Sachs Read more

From the FT:

Why it’s not the end for the City of London – Philip Augar Read more

From the FT:

One easy way to start a trade war – Editorial comment Read more

From the FT:
Tariffs can persuade Beijing to free the renminbi - Robert Aliber
The bonus points in Darling’s plans - Editorial comment
Japan’s fear of spending – Andrew Smithers

From elsewhere:
The importance of capital requirements – The Baseline Scenario
Alan Grayson asks Bernanke for answers in latest retrade of AIG deal – Naked Capitalism
Stiglitz: Too big to live – Economist’s View