America’s current account deficit is ballooning, making the US the world’s largest external debtor (only, of course, in absolute terms, as the US is far from the worst performer if the trade deficit is measured as a share of GDP). Yet despite huge and growing deficits, the dollar continues to soar. Although we have learned not to worry so much about falling stock markets, should we now worry about the US trade deficit and the almighty dollar? Indeed, isn’t the dollar poised to sink simply of its own bloated weight? Two things can bring the dollar down: loose talk from America’s Secretary of the Treasury, or a sharp deterioration in America’s relative economic performance compared to the rest of the world. Both risks have been tested this year. As a result, the dollar has vacillated. Both risks are now coming under control and so continuing strength for the dollar must be anticipated. There are two kinds of US Treasury Secretaries. The first are like Robert Rubin and understand that a strong dollar helps secure low interest rates and that low rates make for a long and broad boom. The other kind is found in the current US Treasury Secretary, Paul O’Neill, who think too much about competitiveness and know too little about capital markets. They like intervention, industrial cartels, target zones for currencies and the sundry other gimmicks that got a bad name back in the woeful economic era of President Jimmy Carter. Secretary of the Treasury O’Neill came into office from the world of manufacturing and so thinks like a manufacturer. But no matter how successful they were in their industry, manufacturers look at the economy from the rabbit hole up. They think a weak dollar is good for exports and a hard dollar hurts sales and market share. Hence they wince when they face a strong dollar and offer wishy-washy answers to any question concerning their policy toward the dollar. Secretary O’Neill, indeed, has been ambivalent about the dollar from day one. Instead of looking journalists firmly in the eye and pronouncing Robert Rubin’s reassuring mantra –
European Union leaders meeting in Brussels have given the go-ahead to talks with Britain on post-Brexit trade relations. But, as European Council President Donald Tusk has said, the most difficult challenge – forging a workable deal that secures broad political support on both sides – still lies ahead.
Jean Pisani-Ferry argues that Britain has no clear objective, owing to divisions in the ruling Conservative party, and that the EU-27 should provide the missing vision.
Harold James sees two possible outcomes to the talks: a “Hamlet" ending, with the stage littered with corpses, or a scenario recalling one of the Bard’s bleaker comedies, "All’s Well That Ends Well."
Rupert Murdoch’s sale of 21st Century Fox’s entertainment assets to Disney for $66 billion may mark the end of the media mogul’s career, which will long be remembered for its corrosive effect on democratic discourse on both sides of the Atlantic.
From enabling the rise of Donald Trump to hacking the telephone of a murdered British schoolgirl, Murdoch’s media empire has staked its success on stoking populist rage.
For Nina L Khrushcheva, Murdoch is the ultimate Guilty Man responsible for fueling the political polarization that has eroded governance in the US.
The late Jonathan Schell believed that Murdoch's power mostly stemmed from his willingness to pander to atavism and anti-Semitism to boost Fox News’ ratings.
But Murdoch hasn't been acting alone, argues Lucy P. Marcus, for he has been enabled by shareholders who turn a blind eye to his methods and toxic corporate culture.
As inequality continues to deepen worldwide, we do not have the luxury of sticking to the status quo.
Unless we confront the inequality challenge head on – as we have just begun to do with another existential threat, climate change – social cohesion, and especially democracy, will come under growing threat.
Despite seemingly robust indicators, the world economy may not be nearly as resilient to shocks and systemic challenges as the consensus view seems to believe. The absence of a vigorous rebound from the Great Recession means that the global economy never recouped lost growth.
Since the hyperinflation of the 1970s, which central banks were right to combat by whatever means necessary, maintaining positive but low inflation has become a monetary-policy obsession. But, because the world economy has changed dramatically since then, central bankers have started to miss the monetary-policy forest for the trees.
Jeffrey Frankel, a professor at Harvard University’s Kennedy School of Government and a former member of President Bill Clinton’s Council of Economic Advisers, outlines the five criteria he uses to judge the efficacy of tax reform efforts. And in his view, the US Republicans’ most recent offering fails miserably.
CRISPR-Cas – a gene-editing technique that is far more precise and efficient than any that has come before it – is poised to change the world. But ensuring that those changes are positive – helping to fight tumors and mosquito-borne illnesses, for example – will require scientists to apply the utmost caution.
The Year Ahead 2018
The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.