This post provides links to a number of interesting articles I have read over the past few days (while touring through Europe) that you may also enjoy.

Lawrence Strauss (SmartMoney): An interview with Burton Malkiel, July 7, 2009.

Robert Samuelson (The Washington Post): Economists out to lunch, July 6, 2009.
One intriguing subplot of the economic crisis is the failure of most economists to predict it. Here we have the most spectacular economic and financial crisis in decades – possibly since the Great Depression – and the one group that spends most of its waking hours analyzing the economy basically missed it.

Willem Buiter (Financial Times): Quantitative easing, credit easing and enhanced credit support aren’t working, July 3, 2009.
In a nutshell: quantitative easing (QE), credit easing (CE), and enhanced credit support (ECS) are useful when the problem facing the economy is funding illiquidity or market illiquidity. It is useless when the binding constraint is the threat of insolvency. Today, liquidity is ample, even excessive. Capital is scarce. Capital is scarce first and foremost in the banking sector. A panoply of central bank and government financial interventions and support measures have ensured, at least for the time being, the survival of most of the remaining crossborder banks. It has not done enough to get them lending again on any scale to the household and non-financial enterprise sector.

IMF (World Economic Outlook): Contractionary forces receding but weak recovery ahead, July 8, 2009.
The global economy is beginning to pull out of a recession unprecedented in the post-World War II era, but stabilization is uneven and the recovery is expected to be sluggish. Macroeconomic policies need to stay supportive, while preparing the ground for an orderly unwinding of extraordinary levels of public intervention. At the same time, given weak internal demand prospects in a number of current account deficit countries, including the United States, policies need to sustain stronger demand in key surplus countries.

William Rhodes (Financial Times): Rich nations must act on free trade, July 9, 2009.
The time has come for the G8 to move from rhetoric to action to guard our global trading and investment system. In the US we also need to send the right signals to our friends abroad by ratifying the bilateral trade agreements that have already been negotiated and by actively pursuing a free trade agenda. How to think about a jobless recovery, July 6, 2009.
It’s not unusual for employment statistics to lag other economic indicators, particularly output, as an economy emerges from recession, but usually the lag is fairly short. In recent recessions, however, this pattern has broken down. In the last downturn, in 2001, job growth finally returned some two years after the economy bottomed. This is the jobless recovery; an upturn that looks like an upturn, but sure doesn’t feel like one.

Philip Aldrick (Telegraph): US lurching towards “debt explosion” with long-term interest rates on course to double, July 5, 2009.
The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank.

Jeff Immelt (Financial Times): Innovation can give America back its greatness, July 9, 2009.
Competitiveness will be renewed by rebuilding manufacturing, exports and technology, not through protectionism.

Paul Krugman (The New York Times): Help is on the way, July 5, 2009.
So fundamental health reform – reform that would eliminate the insecurity about health coverage that looms so large for many Americans – is now within reach. The “centrist” senators, most of them Democrats, who have been holding up reform can no longer claim either that universal coverage is unaffordable or that it won’t work. This is a historic opportunity – arguably the best opportunity since 1947, when the A.M.A. killed Harry Truman’s health-care dreams. We’re right on the cusp. All it takes is a few more senators, and HELP will be on the way.

Kenneth Rogoff (Guardian): Europe’s got it right on Keynes, July 5, 2009.
Unlike America’s hyper-aggressive fiscal response, Europe’s more tempered approach could pay off in the long run.

Martin Wolf (Financial Times): What India must do if it is to be an affluent country, July 8, 2009.
What would need to change if India were to become an advanced economy in one generation? The answer is: a great deal. But one thing is clear: after the performance of the past three decades, the goal is not laughable.

Nicola Cetorelli & Linda Goldberg (Federal Reserve Bank of New York Staff Reports): Globalized banks – lending to emerging markets in the crisis, June 2009.
As banking has become more globalized, so too have the consequences of shocks originating in home and host markets. Global banks can provide liquidity and risk-sharing opportunities to the host market in the event of adverse host-country shocks, but they can also have profound effects across international markets. Indeed, global banks played a significant role in the transmission of the current crisis to emerging-market economies.

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