• The Debt Ceiling: A Guide for the Bewildered

      It is very difficult to explain American politics to those who are not Americans and/or have not lived here long enough.  Add to that the confusion over basic economic principles, and it becomes almost impossible to explain the debt-ceiling debate to rational people. As noted by James Galbraith, this is not a fiscal crisis, […]

  • The Greek Crisis: Uttering the Other “D Word”

      Default is not the dirty word that nobody wants to say.  Almost everybody now accepts that Greece will default.  Several people will prefer to use the euphemism of “re-profiling debts,” but we all know what it means.  The interesting thing is that at least some authors, like Martin Wolf in a recent Financial Times […]

  • Currency Wars and Global Rebalancing

      Guido Mantega, the Brazilian Finance Minister, said recently that Brazil is in the middle of a currency war.  His preoccupation with exchange rate appreciation is not directed to global imbalances, in general, or China, in particular.  A more depreciated currency provides protection for domestic production and makes domestic goods and services cheaper for foreigners. […]

  • The Greek Present

      The Brazilian expression “Greek Present” (Presente de Grego) means unwelcome gift, an obvious reference to the infamous Trojan Horse.  The current crisis in Greece might show that the euro was just one of those presents.  If the European Union (EU) does not provide sufficient resources to preclude not just a default, but also and […]

  • How to Fire a Central Banker: Lessons from Argentina

      In the United States, the mismanagement of the financial crisis, in particular the ill designed Troubled Asset Relief Program (TARP), has led to a wave of populist protests, and to a narrow confirmation vote for Bernanke.  In Argentina, where the recession was considerably milder than in the United States and had no financial cause, […]