Last month, students from four continents joined forces to call for reform of the economics curriculum.
In an open letter, the students said they wanted their courses to delve into a wider range of economics theories and methodologies than the standard neo-classical model that dominates undergraduate teaching, and to learn more about the implications of policy-making.
Speaking to those students was a heartening experience – all of them struck me as extremely thoughtful and articulate. Their desire for reform seemed driven by a curiosity about the world and what economics could do to improve it.
I suspect they’ll be encouraged by comments made in a speech today by the similarly thoughtful and articulate Benoît Cœuré, who sits on the European Central Bank’s executive board. Read more
Eurozone price rises sound alarms at ECB – FT
Libya turmoil crushes risk appetite – FT Read more
Q: What do jitters over European debt, stubbornly high unemployment and earthquakes have in common?
A: They have all been cited as reasons for central banks to delay interest rate hikes.
It’s not just economic crises that cause central banks to postpone tightening monetary policy. Since the beginning of the year, a number of political and natural disasters have pressured banks to keep rates low. Here is Money Supply’s list of the top three non-financial events that kept rates low. Are we missing any? Comments welcomed below. Read more
Alistair Darling’s task in the pre-Budget report was to improve the credibility of Britain’s deficit reduction plans for the public, the markets and for those running monetary policy. I am convinced this report will fail on all counts.
With a couple of hours digging through the numbers, the report strikes me as deeply political and its presentation extremely unhelpful. This is not the way to gain credibility. Why? Read more
The Office for National Statistics has today published a paper defending its early estimates of Gross Domestic Product against criticisms that the figures are not worth the paper they are written on. But its case rests entirely on trust, writes Chris Giles of the Financial Times, and does not address the external concerns about its data. Read more
In the great Japanese debate on how to balance the contradictory demands of reining in the deficit and continuing stimulative spending, chalk up another political point for Shizuka Kamei, Japan’s minister for financial services. Read more
German exporters remain confident despite the rising euro, writes Ralph Atkins of the Financial Times Read more
Daniel Pimlott of the Financial Times reviews the day’s economic news Read more
I have a good deal of sympathy for Sheila Bair’s idea that secured creditors should take a hit when a financial institution fails. But there are two problems with her proposal. First, it would kill the triparty repo market, where lenders assume secured really means secured. Second, it is not clear to me why we should want a standardised 20 per cent haircut. Better to estimate the haircut in normal bankruptcy and apply that to any special resolution process.
Moreover, it looks to me like the most promising way of getting some effective discipline from bank creditors is to focus on the more junior categories of debt – sub-debt and potentially reverse convertibles (I like the idea of requiring banks to hold debt that converts into equity when certain thresholds are breached).
German resistance to IMF expansion plans is growing, writes Ralph Atkins in a blog Read more
Ralph Atkins of the Financial Times discusses Jean-Claude Trichet’s thoughts on the euro and European regulation Read more
Krishna Guha of the Financial Times on Fed Governor Kevin Warsh arguing forcefully for a symmetry of response from the FOMC for credibility reasons Read more
Krishna Guha of the Financial Times predicts the FOMC will stick to its current $1,450bn MBS and agency debt buying programme but stretch out the timeline past year end Read more
I’ve just been speaking to China’s ambassador to the US – Zhou Wenzhong – and he doesn’t seem very enthusiastic about a renewed push on global imbalances.
He also says that China’s premier has made it clear “this is no time to talk about exit strategy” and that Beijing’s efforts to support growth “will continue” – but with an additional focus on making sure that bank lending does not all end up in real estate and equities.