The world’s largest emerging markets recovered quickly from the 2008 financial crisis because consumers and companies went on a borrowing binge. Now that credit spree is coming back to haunt banks in those countries.
Federal Reserve Chairman Ben S. Bernanke said a process under development that would allow regulators to take down a failing bank will help ensure investors discipline weak firms and prevent them from taking risks without consequence.
The blog of New York Times columnist Paul Krugman recently featured a chart plotting the U.K.’s ratio of government debt to gross domestic product against the nominal yield on long-term government bonds from about 1700 to the present. See Figure 1.
Kenneth Rogoff, a Harvard University professor known for his studies of recessions, bought a co-operative apartment on Manhattan’s Upper West Side for $3 million, about 9 percent more than the asking price.
Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.
By now, you’re probably tired of all the back-and-forth on Reinhart and Rogoff. That would be Harvard University’s Carmen Reinhart and Kenneth Rogoff, the economists who co-authored the 2009 best-seller, “This Time Is Different: Eight Centuries of Financial Folly,” and who are now on the firing line because of minor data errors in a 2010 working paper.
China and Japan, which together hold more than $2.4 trillion in U.S. Treasuries, raised pressure on the U.S. to resolve a political impasse on its debt ceiling that threatens to destabilize global financial markets.