From the FT:

Martin Wolf: This time will never be different

Mohamed El-Erian: Return of the old ways of thinking threatens recovery

Wolfgang Münchau: A recognition of the deep roots of the crisis

Robert Shiller: In defence of financial innovation

Elsewhere:

Urban Jermann and Vincenzo Quadrini, VOX EU: Paying more attention to financial shocks

Paul Krugman, New York Times: Crowding in

Carlo Bastasin, Peterson Institute: Is It wise or productive for the United States to press germany to abandon Its export-driven economy?

Markus Jäger, VOX EU: Can China be the world’s growth engine?

China has had a good crisis. That became obvious at the “summer Davos” of the World Economic Forum, in Dalian, less than two weeks ago. Chinese confidence was palpable. But so was anxiety. The giant has survived the shock. But its recovery is driven by a surge in credit and fixed investment. In the longer term, China needs to rebalance its economy, by increasing consumption. It is time for the Chinese to enjoy themselves more. How unpleasant can that be?

Continue reading "Why China must do more to rebalance its economy"

By Yu Yongding

China has rebounded from the global slump with vigour. In the second quarter, its official figures showed year-on-year gross domestic product growth of 7.9 per cent. Those who doubt the quality of China’s macroeconomic statistics can check its physical statistics: in June, electricity production increased 5.2 per cent, reversing the falls of the previous eight months. It is almost certain that China’s GDP will grow more than 8 per cent this year. Continue reading "China’s stimulus shows the problem of success"

From the FT:

Data raise hopes for eurozone recovery France and Germany return to growth

How to release the next boom New growth drivers will emerge, says George Magnus

Elsewhere:

Debtor’s revolt A widespread debt revulsion? Naked Capitalism

When insolvent banks are worth billions We’re nowhere near the point at which you can judge the health of a bank by looking at its share price Felix Salmon

China rising, Rent-seeking version The reason to worry about China  has  little to do with external balances.  It’s about productivity and rent-seeking The Baseline Scenario

By Shankar Acharya

In recent years, the rise of China and India has become a salient feature of the global economic landscape. Conferences and books have proliferated with titles such as “China and India Rising” and “Dancing with Giants”. Although individual contributions have often delineated carefully the differing paths taken by these two populous Asian nations, there has been a general tendency to lump the two countries together in discussions of global economic issues ranging from international trade to climate change. Continue reading "Asia rises, one economic giant at a time"

Creditor countries are worrying about the safety of their money. That is what links two of the big economic stories of last week: Chancellor Angela Merkel’s attack on the monetary policies pursued by central banks, including her own, the European Central Bank; and the pressure on Tim Geithner, US Treasury secretary, to persuade his hosts in Beijing that their claims on his government are safe. But are they? The answer is: only if the creditor countries facilitate adjustment in the global balance of payments. Debtor countries will either export their way out of this crisis or be driven towards some sort of default. Creditors have to choose which. Continue reading "It is in Beijing’s interests to lend Geithner a hand"

The FT’s Arena blog will this week recreate a virtual editorial conference by allowing readers to take part in the debate which helps shape a Financial Times editorial.

Over the course of this week, our editorial writers and specialists will debate an issue which will form the subject of an FT leader. One of our leader writers will open the debate. Readers are then invited to comment at the end of each post and the best comments will be picked up by us and added onto the main blog as posts.

This is your chance to join the debate and our chance to benefit from the opinions of our audience. At the end of the week one of the editorial team will sum up the debate, responding to readers’ contributions. The finished editorial will then be published on the website and in the newspaper on Monday. This week’s theme: should the return of high taxes be a temporary phenomenon or should governments take the opportunity to keep them high for social purposes?

Arena

By Laurence J. Kotlikoff

The US federal government faces a long-term fiscal gap, which exceeds, from all indications, $70 trillion. This gap is the present value difference between all projected future expenditures and all projected future receipts.

Its size reflects the impending retirement of 78m baby boomers and the fact that when retired, they will receive annual benefits from social security, Medicaid (the healthcare scheme for people on low incomes) and Medicare (for the elderly and disabled) that average more than per capita gross domestic product. Continue reading "How to fix US healthcare"