Political Economy

The US pension bailout fund PBGC is already stretched and may require more taxpayer money. Now it would be taking over pensions that will be even more underfunded, with asset values way below the present value of the liabilities. And more…

I guess we will never know whether or not Mariano Rajoy uttered the two magic words so effectively immortalized in song by Aretha Franklin that Saturday afternoon in late May as he cruised down the Chicago River in what Spanish media called…

I would submit then that the problem is the debt. This is true right across the developed economies. Until the debt is reduced, global growth will be slow and that makes economies susceptible to recession. As much as the President wants to…

It is clear that Greece will be unable to hit their deficit targets. According to Die Zeit, Greece is already lagging on tax revenues and privatization proceeds. This is why the German government is already debating relaxing Greece’s…

The events surrounding Spain have caused me to throw in the towel on European policy makers. It is clear to me that the events on the ground are moving too quickly for them to adjust their policy stances enough to prevent more catastrophic…

Nigel Farage isn't impressed by the Spanish bailout. Take a look

By Michael Pettis About ten years ago I published an article in Foreign Policy that I just recently re-read.  In the article I extended one of the arguments I made in my book, The Volatility Machine, that the globalization process is…

The following is the text of a much anticipated speech Fed Vice Chair Janet Yellen gave at the Boston Economic Club Dinner, in Boston, Massachusetts on monetary policy last night. Yellen emphasized the need for the Fed to remain…

From a game theory perspective, the moment one of the 17 eurozone member countries realises it would be better off outside the eurozone, it has everything to gain from being the first mover. We have all been led to believe that a break-up…

The eurozone’s architects failed to follow through with the logic of a political union. Nobody cares about “trade imbalances” in the Canadian confederation. And nobody would care if Alberta, for example, were to run perpetual trade…