Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

The Sequester and the Closing Window for a Fiscal Bargain

by Robert Kahn Thursday, January 31, 2013

The Committee for a Responsible Federal Budget valiantly continues to make the case for “going big” in the fiscal negotiations. I fear their argument is falling on deaf ears:  the window for a fiscal bargain–grand, bland or otherwise–that deals with our long-term fiscal challenge is closing.  The upcoming sequester battle provides one last opportunity to make such a deal.  Yet both Republicans and Democrats say that they are prepared to allow the sequester to take effect on March 1, at least for a while, and they seem to mean it.  A deal that addresses longer term debt sustainability and at least partly restores the sequester cuts remains possible, though unlikely, as part of the continuing resolution (CR) to fund the government from March 28.  That’s the real deadline.

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New IMF Outlook: No Love for Europe

by Robert Kahn Thursday, January 24, 2013
Data shows that monetary financial institution (MFI) loans to the eurozone private sector is contracting, most notably in peripheral countries. (Data source: European Central Bank


The International Monetary Fund (IMF) has again downgraded its outlook, reducing its forecast for global growth by 0.1 percentage points to 3.5 percent this year and 4.1 percent next year.  For Europe, in particular, there is not much good news: Read more »

Fiscal Cliff Update: a Short-Term Debt Limit Extension Shifts the Battlefield

by Robert Kahn Friday, January 18, 2013

Reports from the House Republican’s Williamsburg retreat suggest growing momentum in favor of a short-term debt limit extension.  This follows calls over the past few days from several prominent Republicans to raise the debt limit, and soon.  This is good news for markets but not an end to fiscal uncertainty, as the battle shifts to the dual cliffs of the sequester and the continuing resolution (CR) funding the government after March 27.  The odds of a government shutdown in the absence of a CR, at least for a few days, are high.

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No Good Choices: Why a Short Term Debt Limit Extension Is on the Table

by Robert Kahn Monday, January 14, 2013

Politico last night highlighted a scenario that has become my ‘base case’: a short-term debt limit extension followed by a government shutdown at the end of March.  This consolidates the three cliffs–debt limit, sequester, and continuing resolution–into one larger showdown that, hopefully, produces an agreement some time in April.

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Drawing the Wrong Lessons From Argentina’s Debt Mess

by Robert Kahn Thursday, January 10, 2013

The Financial Times  has joined the chorus of those calling for a new statutory sovereign debt restructuring mechanism (SDRM), citing Argentina’s legal battle with holdout creditors as evidence of a broken system for restructuring sovereign debt.  The SDRM, as most commonly understood, envisages a formal restructuring process, analogous to national bankruptcy law, to deal with the debt of distressed countries.   It was an impractical and unnecessary idea when first raised by the IMF in 2001, and it remains so today.

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