Argentina Defaults: The Day After

Argentina has defaulted. The long-running court drama that ran for over ten years and pitted Argentina against a small group of holdout creditors was decided decisively in favor of the holdouts in June, and Argentina subsequently refused to make payments as required by the courts. As a result, neither the holdouts nor the holders of […]

Russian Sanctions: The United States Takes the Lead

The United States has taken what, on first read, looks to be a significant step today, extending sanctions ( see also here) to block new debt and equity issuance by a number of energy, financial and military companies.  It is not quite full “sectoral” sanctions–both because it is limited in what it blocks (new debt and equity of […]

China Chooses Growth Over Reform

The Wall Street Journal piece on rapid credit growth in China yesterday describes the sharp tradeoff for the Chinese government: achieving growth targets in the near term comes at the expense of reform delays and further rapid debt accumulation. With growth likely to decelerate in 2015 without additional stimulus, the prospects for meaningful economic reform are receding. […]

BRICS and Mortals

Leaders of the BRICS–Brazil, Russia, India, China, and South Africa–meet in Rio today to swap World Cup stories and launch a long-discussed “BRICS Bank.” The bank creates two funds–a development lending facility (New Development Bank or NDB) backed by $50 billion in capital ($10 billion from each of the BRICs), and a $100 billion rescue […]

Argentina Wins/Loses

Argentina won an important contest last night at the World Cup, on a fine Messi goal.  However, while I’m a firm believer that nothing is more important than football, Argentina’s loss at the U.S. Supreme Court this morning may have larger long-term consequences. Without comment, the court rejected Argentina’s appeal of an earlier lower court […]

Ukraine: Now Comes the Hard Part

Petro Poroshenko’s convincing first-round victory in yesterday’s Ukrainian presidential elections, with 54 percent of the vote, is an important step toward political stability. But hard work lies ahead, as attention now returns to the even-more-daunting task of restoring economic stability. Remember that the political crisis of the last six months began as an economic crisis […]

Russian Contagion, Geopolitical Risk and Markets

Yesterday, I published my Global Economics Monthly. I argue that further economic sanctions against Russia would have significant global economic effects because of the Russia’s connectedness to energy and financial markets. Why then, are markets apparently so sanguine? Is it because investors, by and large, expect de-escalation? Is it a view that Russia does not matter […]

Changing Course: Financial Sanctions on Russia

There are reports this morning that the Obama administration is contemplating extending economic sanctions against two large Russian banks– Gazprombank and  Vnesheconombank (VEB).  This is a step I have called for here and here.  If true, this is a significant event and, given the magnitude of Russia’s links to global financial markets, introduces a new era in the use of economic sanctions.  It also […]

Ukraine and IMF: Step Forward Now

The IMF announced today that it has reached an agreement in principle on a two-year program (stand-by arrangement) with Ukraine. The headline numbers are $14-18 billion of IMF money and overall financing of $27 billion, which is lower than some had hoped, but don’t be fooled. This is a three-to-six month program, designed to meet Ukraine’s critical […]

IMF Reform and the Ukraine Package

The debate over congressional passage of IMF reform has reached a critical juncture. The Senate Foreign Relations Committee  today approved legislation providing loan guarantees for Ukraine and supporting sanctions, and the bill includes language implementing the long-delayed IMF reform. Assuming passage by the full Senate, the debate next moves to conference, where both sides will […]

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