Posted on Monday, November 16th, 2009
By the Center for Geoeconomic Studies
The United States is rapidly approaching its legal debt limit of just over $12 trillion. As of September 2009, U.S. debt stood at $11.9 trillion. As these charts indicate, Congress has raised the limit four times in the past three years, as the need for financing has risen. Some hope that the limit will encourage fiscal responsibility. Others fear that this exercise raises the risk of a technical default, as nearly occurred in 1995, which would disrupt markets and potentially impose severe costs on a struggling economy.
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Posted in Fiscal Policy, U.S. | 0 Comments »
Posted on Monday, November 9th, 2009
By the Center for Geoeconomic Studies
Over the last decade, Asia has developed into a major manufacturing base for the developed world. This relationship has provided mutual benefits: the West has received cheap goods while the East has developed its production capacity more quickly. China, to a significant extent, has been the assembler nation, importing raw materials and intermediate products from the rest of Asia and exporting finished products to the West. This relationship is illustrated in the chart above, which plots China’s imports from Asia and its exports to the U.S. and Europe since January 2000. Recently, however, this relationship has weakened slightly — China is providing more demand for Asian exports than the West is providing for Chinese exports. An important question is whether the strong Asian recovery can continue without a robust recovery in Western demand for Chinese goods.
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Posted in China, Trade | 0 Comments »
Posted on Monday, November 2nd, 2009
By the Center for Geoeconomic Studies
The greatest challenge of European monetary union is devising a single monetary policy for a large grouping of countries facing divergent economic conditions. As these charts show, this challenge has been thrust to the fore since 2008, as eurozone employment conditions have diverged dramatically across member countries. Whereas the effectiveness of independent monetary policy as a tool for managing employment in smaller open economies is much debated among economists, the political challenge facing the European Central Bank in having to justify its policy decisions under current conditions is clear.
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Posted in 2008/9 Downturn, Central Banks, Europe | 0 Comments »
