Who Needs a “G-2”? Here Comes the S&ED



Tomorrow, senior government officials from the U.S. and China will meet in Washington for the inaugural Strategic and Economic Dialogue, a.k.a. the S&ED, which is the successor to the Bush Administration’s Strategic Economic Dialogue – or SED.
The meeting, at which top level delegations from the world’s two most powerful nations get down to business and discuss some of the world’s most pressing issues side by side – or at least across the same table, represents far more than a shift in punctuation. It is a test of whether the Obama Administration can present a unified front and demonstrate that it is serious about working together to improve and expand the U.S.’s relationship with China.

Dangerous Ambiguities



In politics, we are often told, we should not let the perfect be the enemy of the good. That’s why so much of what comes out of our policy-making process ends up as politically-driven compromise. In Washington, splitting the baby is often considered better than no baby at all. But, as the financial crisis brings the worlds of finance and politics into increasingly overlapping orbits, we need to take note that what may be acceptable compromise in politics can be…

Rebalancing Global Currency Reserves



At this morning’s superb economic event at the New America Foundation and in testimony before the Senate Foreign Relations Committee yesterday, there was a lot of discussion about China’s recent proposal to consider a move away from the US dollar and towards the use of a new “super-sovereign reserve currency.” The intention according to China’s central bank governor, Zhou Xiaochuan, would be to ultimately “create an international reserve currency that is disconnected from individual nations and is able to remain…

Finally, a Brilliant Idea on Toxic Assets



On Simon Johnson’s excellent blog, the Baseline Scenario, this morning, I came across the best idea I have seen to address the toxic asset issue while taking into account the populist sense that the little guy is taking all the pain and getting none of the potential gain. In short, a reader to Simon’s blog suggests that, if the US Government is going to subsidize private capital to entice it with the prospect of outsize returns on these illiquid/toxic assets,…

The London Summit: Bold Re-Think or Small Steps?



The London Summit takes place on April 2nd. While this will mark Barack Obama’s first global summit as president of the United States, the meeting hasn’t received much attention in the US – in sharp contrast to much of the rest of the world, which is highly focused on the event and collectively hopeful that it will result in some dramatic fix for the global economic crisis. This meeting was scheduled back in November, 2008 as a follow up to…

A Trillion Here, A Trillion There…



In England, home of the English language, the word “trillion” is rarely used. Instead, the phrase “a thousand billion” is used instead. I recommend that the US follows suit. It is not that I am an anglophile, but rather that I believe we have reached the point where the number “one trillion” simply fails to capture just how big it (and the financial crisis that causes us to use this number on a regular basis) really is. A thousand billion…