Benn Steil


A graphical take on geoeconomic issues, with links to the news and expert commentary.

The Government Bank

by Wednesday, April 29, 2009

The Fed recently reaffirmed its determination to expand its balance sheet. The crisis has already driven it to take on risky assets such as agency bonds and commercial paper. It has also lent to weak financial institutions, and is expected to participate in the Treasury’s public-private partnership to buy toxic assets. The expansion has averted a crippling credit contraction. But the Fed could lose money by taking on risk. Read more »

Debt Supply

by Monday, April 20, 2009

The U.S. is projected to run an unprecedented fiscal deficit this year due to its efforts to boost the economy and rescue the financial sector. In the past few years, the deficit has been financed by foreign public flows, particularly from China. But many fear that foreign demand for Treasuries could fall in the near future. Will the U.S. be able to continue to meet its financing needs? Read more »

Trade Troubles

by Tuesday, April 14, 2009

The WTO has forecast that world trade will decline by 9% this year, the largest fall since World War II and the first decline since 1982. The severity of the contraction in world trade not only exceeds the post-WWII recession average, but is also deeper than in any post-war recession. In response, G20 leaders extended their agreement not to impose protectionist trade barriers to the end of 2010 and promised $250 billion in trade finance. Read more »

Side-By-Side with the Depression

by Monday, April 6, 2009

The current downturn is now sharper than most post-war recessions. Comparisons with the depression are rising, but there are important differences too. The policy response has been quicker this time. The federal budget deficit has expanded much more quickly than during the Depression, reflecting government bailouts and stimulus. In the current downturn, it took only about 12 months for the U.S. budget deficit to decline by more than 5%, while during the Depression it took nearly three years to do so. The hope is that bold government action can prevent a rerun of the 1930s. Read more »