The Great Debate UK

from The Great Debate:

Time to rethink inflation targeting

John Kemp Great Debate-- John Kemp is a Reuters columnist. The views expressed are his own --

It is time to add another victim to the ever-growing list of institutions (Bear Stearns, Lehman Brothers) and theories (value at risk, fair value accounting and originate to distribute) which have been tested by the financial crisis and found wanting. The central bank practice of inflation targeting -- the jewel in the crown of modern monetary economics -- has palpably failed.

Over the last two decades, inflation targeting has emerged as the most popular strategy for monetary policy among the world's major central banks, and become something of a state-of-the-art choice among theorists and central bankers.

Even the Fed, long skeptical, considered announcing a formal target for inflation last year. Senior officials considered whether it would be a useful way to counter the threat of deflation by providing an "anchor" for expectations about future prices. In the end the central bank ducked the decision and decided to press ahead with long-term inflation forecasts instead, as a form of "soft" targets.

But the experience of major central banks over the last five years -- both those pursuing formal targets and those like the Fed which have been employing "shadow" ones -- suggests inflation targeting has failed and will need to be overhauled once the immediate crisis has passed.

from The Great Debate:

No safe haven for artful tax dodgers

Alex Smith-GreatDebate-- Alexander Smith is a Reuters columnist. The opinions expressed are his own --

Big countries have got the world's tax havens running scared. They must now press home their advantage to stop such countries providing oases for tax dodgers and money launderers.

Switzerland, Austria, Luxembourg, Liechtenstein and Andorra have all responded to a global crackdown on tax evasion by offering to relax strict bank secrecy laws. This is an important victory for campaigners to put tax havens on the straight and narrow. Until their recent climbdown, Liechtenstein and Andorra were two-thirds of a trio of hardliners that refused to commit to Organization for Economic Co-operation and Development (OECD) standards on transparency and the exchange of information, earning them a place alongside Monaco on the OECD's blacklist of uncooperative tax havens.

from The Great Debate:

Wen’s U.S. posturing doesn’t matter – yet

James Saft Great Debate -- James Saft is a Reuters columnist. The opinions expressed are his own --

What is more remarkable, that the premier of America's largest creditor publicly raised concerns about U.S. creditworthiness or that the market took the news so easily in its stride?

"We have lent a massive amount of capital to the United States, and of course we are concerned about the security of our assets," Chinese premier Wen Jiabao said on Friday at a news conference to close the annual session of parliament.

from The Great Debate:

“Truman doctrine” could boost IMF firepower

Paul Taylor Great Debate-- Paul Taylor is a Reuters columnist. The opinions expressed are his own --

The day before he returned to the U.S. Treasury for six weeks to help the understaffed Obama administration, Edwin Truman published a proposal to give the International Monetary Fund more firepower to fight the financial crisis.

Truman's idea -- a one-off $250 billion allocation of Special Drawing Rights (SDRs) to IMF member states -- looks like the quickest way to put a safety net under developing countries and avert financial contagion. The Group of 20 world leaders should embrace it at the meeting in London on April 2.

from The Great Debate:

Divorce marked to market

MARKETS-GLOBAL /-- Margaret Doyle is a Reuters columnist. The opinions expressed are her own --

The Myerson divorce case in Britain makes compelling reading, as all rich bust-ups do. Regardless of whether the judges make Ingrid Myerson hand back 3.2 million pounds of her 11.1 million pound payout to compensate for the decline in her ex-husband's shares, she is a lucky woman.

Thanks to her divorce last year from fund manager Bryan who, as one half of Active Value Advisers, was the scourge of corporate UK, she is independently wealthy. Had the marriage survived, she would probably be -- like him -- worthless.

from The Great Debate:

Too failed to live not too big to fail

James Saft Great Debate -- James Saft is a Reuters columnist. The opinions expressed are his own --

The U.S. policy of keeping zombie financial institutions alive is so clearly failing that it is now attracting attack from inside policymakers' circle of covered wagons.

The most interesting intervention in the banking debate in the past few weeks was an extraordinary attack by Kansas City Federal Reserve President Thomas Hoenig on what he termed a policy of "piecemeal" nationalization which leaves discredited management in place, repels new capital from the banking system and allows bad assets to fester rather than be cleared.

from The Great Debate:

An equal opportunity recession?

Jim CarrJames H. Carr is chief operating officer for the National Community Reinvestment Coalition, a Washington-based association that promote access to basic banking services for America’s working families. He is a member of the Insight Center for Community Economic Development’s “Experts of Color Clearinghouse”. The views expressed are his own.

The U.S. economy is unraveling at a pace not seen in decades. The more than 650,000 jobs lost last month has contributed to a growing concern that the unemployment rate could rise to 10 percent or higher before the economy rebounds. At the center of the economy’s instability is a foreclosure crisis that has claimed 3.5 million homes in the last year alone, and threatens the loss of an additional 8 to 10 million homes to foreclosure over the next five years.

from The Great Debate:

Hitting the reset button: the silver lining

Jeffrey Bussgan– Jeff Bussgang is a General Partner at Flybridge Capital Partners, an early-stage venture capital firm in Boston. This post originally appeared in the Vox Populi section of www.peHUB.com. The views expressed are his own. –

When I was a kid, I was obsessed with the newly invented personal computer. In 1982, I used my paper route and Bar Mitzvah money to purchase an Apple II+ PC (my parents did subsidize the purchase somewhat, I confess). I was mesmerized by the magic of the personal computer and all its possibilities: games, programming, communications and more.

from The Great Debate:

The Dow at 36,000 and the end of history

dow36000

Bernd Debusmann - Great Debate -- Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. --

It's no longer in print but you can get it over the Internet and $1.99 (plus shipping and handling) buys you a well-preserved copy of Dow 36,000, a book that has become an emblem for really, really wrong forecasts.

from The Great Debate:

Economic stimulus Beijing-style: I treat, you pay

wei_gu_debate-- Wei Gu is a Reuters columnist. The opinions expressed are her own. --

Beijing may criticize American consumers for spending money they do not have, but the truth is Chinese leaders do the same, they just make sure it doesn't end up on their account.

In its $585 billion economic stimulus package, the central government is contributing just a quarter of the funds needed, leaving the rest of the tab to banks, local governments and the private sector.

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