Last week I gave a speech at the UN General Assembly (UNGA). I was the keynote speaker for a session on the global economy and the Millennium Development Goals. I came away with mixed feelings. On one hand, the inefficiency of the UN can be maddening—the place is badly overdue for a good skewering on The Daily Show.
Last week our CGD and Peterson Institute colleague Arvind Subramanian called on the IMF to speak truth to power, in an elegant cri de coeur in the Financial Times. The IMF, he notes: “has not provided independent intellectual leadership, most evidently on the eurozone crisis. And it is unprepared to provide stability for the next big global crisis.”
Last week I was one of a handful of speakers at the annual meeting of the Bretton Woods Committee, a non-partisan group that works to promote international economic cooperation and to foster strong, effective Bretton Woods institutions (i.e. the IMF and World Bank). Other speakers at the meeting, which was titled “From Vicious to Virtuous: The Cycle of Debt, Stability, and Growth” included U.S. Rep.
This post originally appeared on the blog of the Peterson Institute for International Economics
A letter to Christine Lagarde, Managing Director of the International Monetary Fund (IMF)
Dear Madame Lagarde,
Europe is in deep trouble, possibly on the verge of catastrophe, and as a consequence so might be the world. You represent that world and you need to act quickly and decisively, and I am afraid somewhat solitarily. You need to quickly mobilize international resources to help address the problem in Europe, which in turn would help minimize the risks to the rest of the world.
Judging from her first public speech since taking office last July, Christine Lagarde is all that her many supporters say she is: tough-minded, articulate, charming. In a talk hosted by the Woodrow Wilson Center in Washington’s Ronald Reagan International Trade Center, she deftly laid out key challenges facing the global economy: “an anemic and bumpy recovery with unacceptably high unemployment” in the high-income countries, the debt crisis in Europe, and mounting public debt in the United States.
The spectacle of U.S. politicians pushing the country to the brink of default is likely to have lingering effects on global financial markets and hence on development, the eleventh-hour compromise notwithstanding. In the near-term, however, the main issue is the U.S. economic slump and the increased likelihood that the world’s biggest economy will fall back into recession.
Recently the Latin American Shadow Financial Regulatory Committee (CLAAF), over which I preside, held its bi-annual meeting at CGD and issued its 24th statement. Among the CLAAF members that participated were several renowned economists, including Guillermo Calvo, Carmen Reinhart, Pablo Guidotti, Guillermo Ortiz and Roque Fernandez.
Today with Francis Fukuyama, I participated in a Council on Foreign Relations “Academic Conference Call” (listen here) with undergraduate and graduate students from over 40 universities. We answered questions about our March/April Foreign Affairs article, The Post-Washington Consensus: Development after the Crisis. (The article is based on a book due out any day now from Johns Hopkins University Press: New Ideas on Developm
The Financial Times published my letter to the editor last week responding to Gillian Tett’s article “Will sovereign debt be the new subprime?” I elaborated on the risks of increasing public debt in the U.S. and other developed countries, and warned that mere perception of an excessive supply of sovereign debt can reduce the real value of that debt. Here’s my letter:
