Category: Economics

Greenspan notes Fed's flaws

March 19th, 2010 in Economics 0 comments

Alan GreenspanEx-Federal Reserve Chairman Alan Greenspan has acknowledged the Fed’s failure to grasp the magnitude of the housing bubble, but offered some policy prescriptions to avoid another crash.  Economics Professor Laurence Kotlikoff, whose new book “Jimmy Stewart is Dead” is about bankings’s future, applauds Greenspan for saying banks should have to hold bonds that automatically covert to equity when capital falls below a certain threshold.

“That’s a big step toward ‘Limited Purpose Banking,’ which I’ve been proposing and which Bank of England Governor Mervyn King is very strongly considering.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

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Gov't contracts to better workers' lot

February 26th, 2010 in Economics 0 comments

governmentThe Obama administration plans to use government buying power to prod private companies to improve benefits and wages for millions of workers.  School of Management economics Professor David Weil, an authority on labor-market policy, says there’s a long history of assuring that companies contracting with Uncle Sam adhere to workplace, environmental, and consumer protection laws.

“The Obama administration proposals are very much in line with that tradition — and appropriate, given the major role that the public sector is playing in this difficult economic time.”

Contact David Weil, 617-353-4615, daveweil@bu.edu

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Saving Greece's economy

February 26th, 2010 in Economics 0 comments

Travel Photos - GreeceGreece is preparing a bond issue aimed at restructing its economy as the European Union is pushing the country to adopt new austerity measures to cut its crippling budget deficit.  Economics Professor Laurence Kotlikoff, as he explains in his blog, says there’s a way in his view for Greece to to devalue without devaluing. 

“The government can implement wage and price controls for, say, the next three months, with these controls covering not just the growth in wages and prices over the next three months, but also their initial levels … [then] the German and French governments could commit to servicing some fraction (say 30 percent) of Greece’s current public and private external debt with the understanding that this servicing ceases if Greece misses it’s spending and tax rate targets.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

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IMF eases thoughts on capital controls

February 22nd, 2010 in Economics 0 comments

IMF sealThe International Monetary Fund is apparently rethinking some of its long-held ideas about how unfettered capital flows between countries are “a fundamentally benign phenomenon.”  International relations Professor Kevin Gallagher, co-author of “Capital Controls and 21st Century Financial Crises,” says it’s about time the IMF sees that some capital controls are useful and necessary.

The U.S. National Bureau of Economic Research published an assessment in 2007 that came to the same conclusion.  Now, the challenge for both the IMF and the United States is to ‘practice what you preach.’ The U.S. needs to put its policy on capital controls in tune with economic science.”

Contact Kevin Gallagher, 617-353-9348, kpg@bu.edu

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EU seeks Greece economic rescue

February 10th, 2010 in Economics 0 comments

eurosEuropean Union governments are grappling how to manage the debt crisis in Greece that threatens to undermine the shared euro currency.  Economics Professor Laurence Kotlikoff, who a decade ago in Foreign Affairs magazine predicted the euro’s collapse, says Greece’s debt woes are a precursor to what may happen in the U.S.

“Greece is where the United States is heading. Indeed, there is strong reason to believe that the U.S. is in much worse fiscal shape than is Greece.”

Contact Laurence Kotlikoff, 617-353-4002, kotlikoff@bu.edu

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The challenge to doubling U.S. exports

February 4th, 2010 in Economics 0 comments

export tankerCommerce Secretary Gary Locke outlined a strategy to meet President Obama’s goal of doubling U.S. exports over the next five years.  It includes government advocacy for U.S. exporters globally, more export financing, and tough enforcement of existing trade agreements.  International Relations Professor Kevin Gallagher, an authority on globalization and development, says it’s going to take a lot more than that.

“The U.S. has fallen behind on research and development and support for industry, and our currency is not competitive.  The only way to have a chance would be to revive U.S. industrial policy and get the Chinese to appreciate its currency well beyond the levels that the market would…”

Contact Kevin Gallagher, 617-353-9348, kpg@bu.edu

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UBS tax deal in trouble

January 27th, 2010 in Banks, Economics, Finance, International Relations, Law 0 comments

ubsThe Swiss government says it may have to renegotiate that deal with the U.S. Internal Revenue Service to hand over names of thousands of tax cheats in return for ending legal proceedings against the Swiss banking giant UBS.  Law Professor Daniel Berman, a former U.S. Treasury deputy international tax counsel, says the Swiss government has no choice but to comply with the agreement.

“If doing so will require a change in the domestic laws of Switzerland, then Switzerland will have to modify its laws.”

Contact Daniel Berman, 617-353-3105, bermand@bu.edu

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AIG backlash heats up

December 24th, 2009 in Economics 0 comments

The heat continues to increase on insurance giant AIG, which got $182 billion in taxpayer bailouts yet gave out $165 million in bonuses.  New York Senator Chuck Schumer says President Obama’s pay czar should be given the power to recover the “outrageous” bonuses.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law, says taxpayers also must be concerned about AIG’s ability to unravel and the complex debt obligations that led to the financial meltdown.

“Refusing to pay back ’08 bonuses, and maneuvering for ’09 payouts, gives us little confidence that their efforts at unwinding the complex products they created will be done in the best interests of the company’s taxpayer-shareholders. Why should we be trusting the same AIG folks that created these products to drive the hard bargain with counterparties to AIG?  Where is Elizabeth Warren and her TARP oversight white hat when needed?”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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Citigroup repayment costs taxpayers

December 16th, 2009 in Economics 0 comments

CitiOn the one hand Citigroup is repaying Uncle Sam that TARP bailout money, which is good for taxpayers.  On the other hand, they’re getting a multi-billion dollar tax break in the process.  Economics Professor Laurence Kotlikoff, a former senior economist in the White House Council of Economic Advisors, doesn’t like the tax breaks built into the repayment program.

“This is Uncle Sam handing out money under the rug. This is expected of a third-world dictatorship, not our country.”

Contact Laurence Kotlikoff, 617-353-4002, or kotlikoff@bu.edu

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France and U.K. curb bankers' pay

December 11th, 2009 in Banks, Economics 0 comments

money rollEngland has been joined by France in slapping a supertax on bank bonuses in an effort to push other countries, including the U.S., do so likewise.  Law Professor Cornelius Hurley, director of the Morin Center for Banking and Financial Law and former counsel to the Fed Board of Governors, says it’s disgaceful the United States didn’t lead the way.

“In this country, we should be having a debate about recouping bonuses paid to executives and traders in the years leading up to the financial melt-down. Instead, we condone lavish rewards to the leaders of the very firms that owe their continued existence to taxpayer generosity.”

Contact Cornelius Hurley, 617-353-5427, ckhurley@bu.edu

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