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| Friday, November 20, 2009 |
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ANALYSIS
March 2, 2009
Sagging Index no longer reflects what’s going on in the market, some say, Replacements? Google it, to start.
March 2, 2009
Downward price spiral will actually boost the cost of capital for most companies. CFOS, take note.
March 2, 2009
The latest bailout at AIG could be a preview of how the president will deal with Wall Street.
March 2, 2009
No corporate defaults. Big debt offerings. Percolating CP issuance. Things may be looking up in the capital markets.
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February 4, 2009 2:18 PM ET
With fears growing that the economic stimulus package being debated in Washington, D.C., won’t be enough to stave off a severe global recession, calls are growing for the International Monetary Fund to help boost imports by developing countries. Since imports in many of those countries are constrained by growing current account deficits, those calling for IMF action recommend that the fund issue what are called special drawing rights. SDRs are international reserve assets whose value is tied to a basket of widely traded foreign currencies. Created in 1969, SDRs let member governments supplement their foreign reserves. “This one seems like a no-brainer,” Dani Rodrik, a professor of political economy at Harvard University’s John F. Kennedy School of Government, wrote on his blog yesterday. “The U.S. fiscal stimulus will be a lot less effective if it is not accompanied by similar fiscal action elsewhere,” Mr. Rodrik noted, adding that “developing nations are severely limited in what they can do in this respect because they have little room for domestic borrowing.” Since the IMF has the capacity to issue SDRs at will, Mr. Rodrik expressed puzzlement as to why it hasn’t already done so, especially in light of the growing consensus that the global economy is in serious trouble. He isn’t alone. At the World Economic Forum held recently at Davos, Switzerland, Montek Singh Ahluwalia, the deputy chairman of India’s planning commission and a former head of the IMF’s watchdog known as the Independent Evaluation Office, called for the IMF to issue $250 billion in SDRs or in increased member quotas, which determine their access to IMF funds. That call echoed one early last month by a group of economists associated with the Political Economy Research Institute at the University of Massachusetts. In a paper in which they noted that the world economy faced a “worsening crisis” requiring “global economic coordination,” the group called for the IMF to be revamped in a way that used SDRs to create what it called “a truly global reserve currency.” In the past, the IMF has resisted demands to issue more SDRs for fear of their potential to produce inflation. But as Mr. Rodrik put it in his blog post, “In the current environment, this is a plus rather than a minus.”
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