{
"authors": [
"Albert Keidel"
],
"type": "legacyinthemedia",
"centerAffiliationAll": "dc",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [],
"englishNewsletterAll": "asia",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "AP",
"programs": [
"Asia"
],
"projects": [],
"regions": [
"North America",
"United States",
"China"
],
"topics": [
"Economy"
]
}
Source: Getty
The United States is witnessing, at least temporarily, the collapse of effective liquidity for the complex financial instruments that have long been used to conduct transactions. But the real crisis is a Keynesian downward spiral, whereby declining consumption and declining investment reinforce each other.
Source: The Diane Rehm Show
The United States is witnessing, at least temporarily, the collapse of effective liquidity for the complex financial instruments that have long been used to underpin transactions. For that reason, it is dubious to state that enough money has been injected into the credit market. It is also misleading to look at current price/earnings ratios to assess what the true bottom of this crisis is. The real potential crisis, he believes, is a Keynesian downward spiral, whereby declining consumption and declining investment reinforce each other.
Keidel noted that China, Japan, and India are faring better than most economies amidst the current global turmoil. It remains to be seen how smaller Asian economies will fare in the face of exchange rate pressures since they do not have strong mechanisms for handling capital flight.
There are precedents for solving credit crises, but developed countries are not accustomed to having to resort to using them. The U.S. government needs to take over failing banks, fix them, and resell them. The presidential candidates should not be stressing budgetary responsibility. Keidel maintains that America will have to engage in major deficit spending, just as it has during every serious downturn.
Click here to listen to Albert Keidel on the Diane Rehm Show.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
EU member states clash over how to boost the union’s competitiveness: Some want to favor European industries in public procurement, while others worry this could deter foreign investment. So, can the EU simultaneously attract global capital and reduce dependencies?
Rym Momtaz, ed.
Europe’s policy of subservience to the Trump administration has failed. For Washington to take the EU seriously, its leaders now need to combine engagement with robust pushback.
Stefan Lehne
The EU lacks leadership and strategic planning in the South Caucasus, while the United States is leading the charge. To secure its geopolitical interests, Brussels must invest in new connectivity for the region.
Zaur Shiriyev
In return for a trade deal and the release of political prisoners, the United States has lifted sanctions on Belarus, breaking the previous Western policy consensus. Should Europeans follow suit, using their leverage to extract concessions from Lukashenko, or continue to isolate a key Kremlin ally?
Thomas de Waal, ed.
As European leadership prepares for the sixteenth EU-India Summit, both sides must reckon with trade-offs in order to secure a mutually beneficial Free Trade Agreement.
Dinakar Peri