Benn Steil


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

The IMF Is Shocked, Shocked, at Greece’s Fiscal Failure. Should It Be?

by Benn Steil and Dinah Walker Wednesday, September 26, 2012

The IMF last week told the Greek government to get with the program—specifically, the economic adjustment program that Greece agreed to as a condition for receiving loans from the Fund.  Greece is indeed way off target, but that’s apparently par for the course with such programs.  In 2003, the IMF’s own independent evaluation office looked at the difference between actual and projected changes in fiscal balances in countries receiving funds from its Extended Fund Facilities (EFF) and so-called Stand-By Arrangements (SBA).  As shown in the graphic above, nearly ¾ of market-based countries (that is, countries not in transition from central planning) receiving funds from the EFF or SBA underperformed their targets in the second year of their program.  By this standard, Greece looks like a normal ward of the IMF. However, Der Spiegel reported on Monday that the Troika of official Greek lenders (the European Commission, ECB, and IMF) was now pegging Greece’s budget deficit at €20 billion.  If accurate, that would put Greece on track to miss its IMF fiscal deficit target by €13 billion, or a whopping 6 percent of GDP – making it an extreme target-underperformer even by the standards of the many past underperformers. Read more »

Is Bernanke Right on QE3 and the Mortgage Market?

by Benn Steil and Dinah Walker Thursday, September 20, 2012

Fed Chairman Ben Bernanke defended QE3 at his September 13 press conference by arguing that it would lower mortgage rates and increase home prices.  Over 80% of U.S. household debt is mortgage debt, so the extent to which he is right could be of considerable consequence to the future path of economic recovery.  Read more »

How Ryan Gets His Budget Savings

by Benn Steil and Dinah Walker Thursday, September 6, 2012

In his Path to Prosperity, Republican vice presidential candidate Paul Ryan called for $40 trillion in spending over the next 10 years, $7 trillion less than President Obama called for in his 2013 budget.  What accounts for the gap? $1 trillion is from Medicaid and other health programs. Another $1.4 trillion comes from anticipated (wished for?) interest-cost savings ($4.3 trillion compared with $5.7 trillion).  So where does Ryan make his really big cuts? “Other” mandatory spending.  $631 billion was spent on these programs in 2011, though Ryan proposes paring this to only $349 billion by 2018.  Over ten years, Ryan slashes a whopping $3.5 trillion vis-à-vis Obama, targets unspecified, from this large and broad category, which includes political minefields like unemployment compensation, retirement benefits, earned income and child tax credits, food assistance, and veteran benefits.  This sounds a lot like a New Year’s pledge to cut 1,000 calories a day from the category of “meals.” Read more »