New Preface to Charles Kindleberger, The World in Depression 1929-1939

Charles Kindleberger’s classic book on the Great Depression was originally published 40 years ago. In the preface to a new edition, two leading economists argue that the lessons are as relevant as ever. The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. We see unemployment, youth unemployment especially, […]

The Dollar: Dominant No More?

The dollar’s key role in international markets is once again in the spotlight. This column introduces a new book by Barry Eichengreen: Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System. As the author puts it, “If you were worried by talk of currency war late last year, you ain’t seen nothin’ yet.”  

Ireland’s Rescue Package: Disaster for Ireland, Bad Omen for the Eurozone

Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the […]

Competitive devalution to the rescue

Every day it seems more likely that we are destined – or should one say doomed? – to replay the disastrous economic history of the 1930s. We have had a stock market crash to rival 1929. We have had a banking crisis comparable to 1931. With the economic meltdown in eastern Europe we have the prospect of a financial crisis in Vienna, exactly as in 1931. We have squabbling among the major economies over the design of rescue loans, just as when the Bank for International Settlements was hamstrung in its efforts to contain the crisis in Austria. We have the prospect of a failed world economic conference in London to dash remaining hopes for a co-operative response, just as in 1933.

Emerald Isle to Golden State

Pity the economy with an exploding budget deficit and no currency of its own.  Ireland is a case in point: its deficit will soon leave 10 per cent of GDP behind.  There is a need for immediate fiscal stimulus, and this is what the economy is getting owing to the collapse of revenues.  But fiscal consolidation will soon be essential to avert financial catastrophe.  And here the absence of a national currency is problematic.  Virtually every example we have of a country that has successfully closed a large deficit has done so while at the same time depreciating its currency.

Can the IMF Save the World?

As the financial crisis has unfolded, the International Monetary Fund has been noticeable mainly for its absence.  This will now change at least temporarily as its Governors assemble for their annual meeting and the kleg lights are turned on.  The question is whether those Governors and the management to whom they entrust the Fund’s operation […]

Asia and Global Stagflation

The world economy is poised on a knife edge. The United States may or may not be technically in a recession, but it is undoubtedly experiencing a sharp growth slowdown. Having been in Ireland last week, where informed opinion doubts that growth will be positive this year, I suspect that not just Ireland but also […]

The Credit Crisis: Final Act or Intermission?

[Based on a talk presented on April 29th to a meeting of UK-based CFOs – explaining the references to Britain and focus on Europe.] We have reached a particularly difficult stage in the development of the credit crisis. There are two quite different views of where we’re at. One is that the worst is now […]