The Migrant Money Machine

The developed world could make a big difference to the global economy simply by helping migrants to do what comes naturally: send money home.

BY PETER PASSELL | DECEMBER 4, 2012

Everybody knows that the tens of millions of migrants from developing countries (documented and undocumented) who work in Europe, North America and the Persian Gulf send home a lot of money. What most don't know, though, is that the sums are triple the development aid budgets of the rich donor countries, and growing rapidly. Nor are many people aware that remittances have morphed from an afterthought to a key component in strategies for transforming poor countries into successful "emerging market" economies. Indeed, it's becoming clear that Lant Pritchett, a brand-name economist now at the Center for Global Development, was ahead of his time in arguing that the best thing rich countries could do for the developing world is to let their migrants do the heavy lifting.  

Inflation - Not so great expectations

Dec 3rd 2012, 15:09 by M.C.K. | WASHINGTON 

THOSE who criticise central banks for having acted with insufficient vigour generally argue that they have failed to talk a good game. Paul Krugman and Michael Woodford are among the best-known advocates of this view. The underlying theory is that the expectation of faster consumer price inflation causes prices to rise more rapidly as people attempt to offset the anticipated erosion of their purchasing power by spending more on goods and services. According to this model, central banks theoretically have the power to lower real borrowing costs and real debt burdens (and real wages) even when nominal interest rates have hit 0%, simply by talking convincingly.

The Debt Limit Is the Real Fiscal Cliff

December 3, 2012, 6:00 am

Washington is all abuzz over the impending tax increases and spending cuts referred to as the fiscal cliff, an absurdly inaccurate term that both Democrats and Republicans have unfortunately adopted in order to pursue their own agendas. In truth, it is a nonproblem unless every impending tax increase and spending cut takes effect permanently – something so unlikely as to be effectively impossible.

External Shocks and China’s Monetary Policy

By zheng Liu and Mark M. Spiegel

China prohibits its private sector from freely trading foreign assets and tightly manages currency exchange rates. In the wake of the recent global financial crisis, interest rates on China’s foreign assets fell sharply, while yields on Chinese domestic assets remained relatively high, posing a challenge for China’s monetary policy. Opening the capital account would improve China’s capacity to weather external shocks, such as sudden declines in foreign interest rates. However, allowing the exchange rate to float without removing capital controls is less effective.

Fiscal Cliff Talks Turn Into a Game of Chicken

By ERIC PIANIN, The Fiscal Times

November 30, 2012

 

 

The critical negotiations over a way to avoid the fiscal cliff are fast turning into a game of chicken.

Shedding his optimistic disposition, House Speaker John Boehner, R-Ohio, summoned reporters Thursday afternoon to declare it was time that President Obama and the Democrats revealed how they intended to cut spending and slow the rate of growth of Medicare and other costly entitlements as part of a Grand Bargain of deficit reduction.

“I’ve got to tell you, I’m disappointed in where we are and what has happened in the last couple of weeks,” Boehner said.

Obama’s economic philosophy, in 8 charts

Posted by Zachary A. Goldfarb on November 28, 2012 at 5:27 pm

If you look at President Obama’s biography and policies, you see one unifying theme more than any other: Obama wants to reduce income inequality.

His policies seem designed to achieve other objectives. The 2009 stimulus sought to end the recession. The 2010 Affordable Care Act strove to expand health-care coverage as widely as possible. And in the upcoming tax policy debate, Obama is seeking to shrink the nation’s deficits over time. But in each case, Obama is also trying to reverse three decades of growing income disparity in the United States.

Egypt Crisis Raises Fears Of 'Second Revolution'

Protesters run as they face Egyptian riot Police during clashes on Omar Makram street, off Tahrir Square, on November 28, 2012 in Cairo. Police fired tear gas into Cairo's Tahrir Square, where several hundred protesters spent the night after a mass rally to denounce President Mohamed Morsi's assumption of expanded powers. (GIANLUIGI GUERCIA/AFP/Getty Images) 

CAIRO -- Faced with an unprecedented strike by the courts and massive opposition protests, Egypt's Islamist president is not backing down in the showdown over decrees granting him near-absolute powers.

Activists warn that his actions threaten a "second revolution," but Mohammed Morsi faces a different situation than his ousted predecessor, Hosni Mubarak: He was democratically elected and enjoys the support of the nation's most powerful political movement.

The Fiscal Cliff: Absolutely everything you could possibly need to know, in one FAQ

Posted by Suzy Khimm, Ezra Klein, Dylan Matthews and Brad Plumer on November 27, 2012 at 9:00 am

Washington is engaged in an all-consuming debate about how to resolve the “fiscal cliff” — which we like to call, for reasons that will soon be explained, “the austerity crisis.” But what is that and why does it matter? We at Wonkblog put together a FAQ to sort it out. And we’ll keep updating this FAQ as the debate rages on.

Want to tax capital and income equally? Try the Buffett rule

Posted by Dylan Matthews on November 27, 2012 at 10:09 am

Warren Buffett (Daniel Acker — Bloomberg)

Enthusiasm is building for a “minimum tax” for the wealthy, in which millionaires would have to pay, say, 30 percent of their income in taxes, no ifs or buts. Republicans in Congress have floated taxing the entire income of high-earners at 35 percent, while Warren Buffett has renewed his call for a minimum tax of 30 percent for millionaires.

Let’s hope the austerity crisis is holding back business spending

Posted by Neil Irwin on November 27, 2012 at 10:18 am

Can they reach a deal? Business investment spending may hang in the balance.

There are new signs that businesses are pulling back on their investment spending in advance of the looming austerity crisis. And that’s the good news.

Shipments of core capital goods, a measure that excludes defense spending and aircraft — a common measure of business investment — fell 0.4 percent in October, the Commerce Department said Tuesday. There is an obvious and likely explanation: Firms were becoming all the more wary of what might happen with the “fiscal cliff,” the wave of tax hikes and spending cuts scheduled to take effect on Jan. 1 absent a new agreement. If you are a corporate executive weighing the purchase of a piece of industrial equipment or a truck for your delivery fleet, you may well decide “I’ll just wait to see how all this shakes out.”

Does advertising help or harm the economy?

Posted by Brad Plumer on November 27, 2012 at 11:21 am

It’s impossible to escape advertising. Truck ads on billboards, beer ads on television, pop-up ads for credit cards on the Internet. It’s everywhere. Last year, U.S. companies spent about $144 billion on commercials and other forms of marketing—about 1 percent of the GDP. So what effect do all these ads have on the economy?

The dangerous fiscal deadline isn’t Dec. 31 – it’s February 2013

Posted by Suzy Khimm on November 27, 2012 at 2:43 pm

(Source: Mark Lennihan / AP)

The debt ceiling has largely taken a backseat to the looming fiscal changes that are scheduled to take effect on Dec. 31. But unless it’s dealt with in the lame duck Congress, we’re going to hit another debt limit come February 2013, according a new analysis by the Bipartisan Policy Center.

What’s holding back the economy, in 10 charts

Posted by Zachary A. Goldfarb on November 27, 2012 at 3:09 pm

Lately, there has been quite a bit of excitement that the big overhang of debt left over from the financial crisis may be starting to ease. Treasury Secretary Timothy F. Geithner has noted that there’s been a “significant reduction” of debt, and a number of indicators point to American households getting their finances in better shape.

How U.S. can once again define the future

By Patrick Doherty, Special to CNN

November 27, 2012 -- Updated 1859 GMT (0259 HKT)

 

Editor's note: Patrick Doherty is the deputy director of the National Security Studies Program at the New America Foundation and author of the forthcoming report, "Grand Strategy of the United States of America."

(CNN) -- Washington is all about the fiscal cliff these days. In Doha, Qatar, world leaders are negotiating over climate change. Federal debt and carbon emissions are indeed two big problems on the nation's front burner. But they are just the beginning.

Greece, markets satisfied by EU-IMF Greek debt deal

By Jan Strupczewski and Luke Baker

BRUSSELS | Tue Nov 27, 2012 4:58pm EST

 

(Reuters) - The Greek government and financial markets were cheered on Tuesday by an agreement between euro zone finance ministers and the International Monetary Fund to reduce Greece's debt, paving the way for the release of urgently needed aid loans.
The deal, clinched at the third attempt after weeks of wrangling, removes the biggest risk of a sovereign default in the euro zone for now, ensuring the near-bankrupt country will stay afloat at least until after a 2013 German general election.

Is China Up to the Challenge?

Long menu of problems: New Party Secretary General Xi Jinping (top); angry protesters demand cancellation of polluting petrochemical plant in Zhejiang

WASHINGTON: China has ended the suspense by announcing the new leadership headed by Xi Jinping to the nation and the world. While the Communist Party and Central Military Commission elites are now identified, we must wait until March for a clearer idea of the policy orientations of China’s new elite, when the National People’s Congress will appoint ministers of State Council and other government officials. But it is not premature to identify their main challenges and speculate about how the leaders  may respond.

There exists a surprisingly strong consensus inside and outside of China on the principal problems and what reforms are needed. They essentially constitute significantly relaxing state and party control and allowing private sector and civil society greater leeway, while redirecting resources to spurring innovation and reducing social inequities. Specifically, urgent tasks include: 

 – reorienting the economic growth model away from investments into physical infrastructure and subsidized exports to one driven by domestic consumption and innovation, emphasizing the knowledge economy and service industries;

Businessman paid for Vietnam bank governor's son to attend British university to 'curry favour', court hears

SFO takes tough line on bribery by foreign companies  Photo: REUTERS

A business tycoon “desperate” to secure a £90million printing contract paid for the son of a Vietnamese bank governor to attend a British university to "curry favour", a court has heard. 

Bill Lowther, 73, is accused of paying £18,000 in tuition fees and thousands of pounds more for student accommodation for the son of a Vietnamese bank governor to attend Durham University.

Euro Ministers Take Third Swing at Clearing Greek Payment

Antonis Samaras, Greece's prime minister, center, arrives to speak at a news conference following the European Union (EU) leaders summit meeting at the European Council headquarters in Brussels, Belgium, on Friday, Nov. 23, 2012. Photograph: Jock Fistick 

Euro-area finance ministers try for the third time this month to clear an aid payment to Greece and forge a blueprint to keep the country a solvent member of the currency bloc.

Finance chiefs from the 17-member single currency return to Brussels today, less than a week after an all-night meeting failed to yield agreement and days after a European Union summit broke up without a proposed seven-year budget. At stake at the euro meeting is the continuation of a three-year mission to return Greece to financial health.

How Big Banks Can Spread Bigger Financial Ills

By The Staff of FUTURITY.ORG, Futurity.org

November 25, 2012

 

Looking at large national and international banks in terms of ecosystem stability and contagion models reveals that their influence and potential power for destruction far exceeds their actual size.

Vietnam’s November Inflation Accelerates to 6-Month High

(Bloomberg) – Vietnam’s inflation quickened to a six-month high as health care and education costs climbed.
Consumer prices gained 7.08 percent in November from a year earlier, after rising 7 percent in October, the General Statistics Office in Hanoi said today. That was the biggest increase since May and the third straight acceleration. Prices rose 0.47 percent from the previous month.