“The American Century Will Survive the Rise of China”

 

Op-Ed, Financial Times

March 25, 2015

Author: Joseph S. Nye, Harvard University Distinguished Service Professor

Belfer Center Programs or Projects: International Security

In 1941 Time editor Henry Luce proclaimed “the American century”. Some now see this coming to an end as a result of the nation’s economic and political decline. Many point to the example of US failure to convince its allies to stay out of the Asian Infrastructure Investment Bank, Beijing’s rival to the World Bank; but this was more an example of a faulty decision than evidence of decline, which raises the question of what is the natural life cycle of a nation.

A century is generally the limit for a human organism but countries are social constructs. Rome did not collapse until more than three centuries after it reached its apogee of power in 117AD. After American independence in 1776 Horace Walpole, the British politician, lamented that his nation had been reduced to the level of Sardinia, just as Britain was about to enter the industrial revolution that powered its second century as a global power….

Continue reading (log in  may be required): http://www.ft.com/intl/cms/s/0/48c84460-d250-11e4-ae91-00144feab7de.html?siteedition=intl#axzz3VbMIzk1u

Updates on the IMF project and the final

Hi everybody,

Here’s the summary of what we discussed today in class for the following work on the IMF project:

– the final will consist in a huge table of BOTH spending and tax policy advice in the GFMs and Article IVs of each one’s country from 2009-2014. People who’s countries have an imbalanced high or low number of matches can team up to equalize the workload.

– our work for the final is only the tables and the coding (NO context part like for the midterm), Professor Ban will do the final analysis.

– special attention on the dates of publication of the GFMs and Article IVs: always refer to the latest GFM BEFORE the given Article IV.

– in case of few matches between the GFM and Article IV, you can refer to the “Selected Issues” paper of your country.

– the table for the final will be a horizontal compilation of all our findings: the GFMs statements in rows and the countries in the columns.

– in order to easily combine the columns and avoid confusion, we will decide on a logical order of the GFM statements and give them name codes.

– the coding itself works on a scale from -2 to 2 (-2 being strongly disagree, -1 moderately disagree, 0 not mentioned, 1 moderately agree, 2 strongly agree) that will in the following be specified and trained.

Hope that was clear. Do not hesitate to add things in case I forgot something. Good luck everyone!

Midterm

Dear all:

I see that some people are still confused about the nature of the midterm. Based on the posts that clarify the expectations in writing and my remarks in class, let me say it again: we evaluate article IVs following 2012, 2013 and 2014 GFMs based on the stated requirements. The addition of 2012 and 2013 was made clear on the blog on Saturday for good reasons that had to do with how many reports were out there, which was based on people’s own research. I therefore uploaded 2012 and 2013 tax policy line.

If you need more time, I will still accept papers by Friday at 9 pm.

Meanwhile, I am happy to answer your questions.

Clarification

In response to some queries, let me clarify that we need article IVs following the 2012, 2013 and 2014 GFMs.

This was made clear last week in the blog post that says: 1. Fewer countries than expected released their reports after the 2014 GFM. To address this problem, please take a look at the tax theory of the 2012 and 2013 GFM that I culled from the IMF for your use.

Onwards! And don’t hesitate to ask. I will respond quickly.

Asia challenges IMF dominance

IMF, ADB add to supporters for China-led development bank

BEIJING Sun Mar 22, 2015 7:43am EDT

China's Finance Minister Lou Jiwei speaks at a news conference in Beijing March 6, 2015. REUTERS/Kim Kyung-Hoon

China’s Finance Minister Lou Jiwei speaks at a news conference in Beijing March 6, 2015.

Credit: Reuters/Kim Kyung-Hoon

(Reuters) – China received critical support from the International Monetary Forum and Asian Development Bank on Sunday for its goal of establishing a new Chinese-led multilateral lender, adding to a growing wave of endorsements that has worried the United States.

Leaders of the IMF and ADB, speaking at a conference in Beijing, said they were in talks with or happy to cooperate with the Asian Infrastructure Investment Bank (AIIB), a $50 billion lender to be majority funded by China that is seen by some as a rival to these established international financial institutions.

The United States, concerned about China’s growing diplomatic clout, has urged countries to think twice about signing up and questioned whether the AIIB will have sufficient standards of governance and environmental and social safeguards.

Some 27 countries have already signed up to participate in the AIIB, China’s Finance Minister Lou Jiwei told China National Radio on Saturday. It will provide project loans to developing countries and is slated to begin operations at the end of 2015.

The United States’ key strategic allies in the region, Australia, Japan and South Korea, are also considering joining the proposed Beijing-based bank.

Early opposition to the AIIB from Western countries partially dissolved after Britain said this month it would join, with France, Germany and Italy swiftly following suit.

Canberra could formally decide to sign up to the AIIB when the full cabinet meets on Monday, Australian media have said.

At least eight more countries may join the lender by the March 31 deadline, Jin Liqun, secretary-general of the interim secretariat that is establishing the AIIB, told a panel at the conference on Sunday.

The fund will have approval from its shareholders at the start to double its capitalization to $100 billion, he said.

“China will follow the rules of the international community and will not bully other members but work together with them and try to reach consensus in all the decisions we make without brandishing the majority shareholder status,” he said.

BANDWAGON

In an editorial published on the same day, China’s official Xinhua news agency suggested that the United States might be embarrassed that many of its allies had not heeded its warnings.

“For decision-makers in the United States, they really have to be reminded that if they do not jump on the bandwagon of change in time, they will soon be overrun by the bandwagon itself,” it said.

IMF Managing Director Christine Lagarde said on Sunday that the fund would be “delighted” to cooperate with the AIIB.

China’s Lou and ADB President Takehiko Nakao said at the conference they had held discussions on possible cooperation, with the Chinese finance minister adding that topics discussed included safeguard standards.

Lou has previously said AIIB would complement rather than compete with other institutions such as the ADB, the Manila-based multilateral lender dominated by Japan and the United States.

The AIIB’s Jin said developing countries in Asia would receive the bulk of loans for infrastructure projects, which could be co-provided with commercial banks and pension funds.

Non-Asian countries would also only hold 25 percent of the AIIB’s shareholding, lower than their stakes at the founding of the ADB, he said.

Wall Street wolves and financial trading woes

Flash Boys, the author’s best-selling exposé of high-speed trading, made some of Wall Street’s richest people very angry. Dissecting the reaction, he argues that the furor has obscured his book’s real news.

hen I sat down to write Flash Boys, in 2013, I didn’t intend to see just how angry I could make the richest people on Wall Street. I was far more interested in the characters and the situation in which they found themselves. Led by an obscure 35-year-old trader at the Royal Bank of Canada named Brad Katsuyama, they were all well-regarded professionals in the U.S. stock market. The situation was that they no longer understood that market. And their ignorance was forgivable. It would have been difficult to find anyone, circa 2009, able to give you an honest account of the inner workings of the American stock market—by then fully automated, spectacularly fragmented, and complicated beyond belief by possibly well-intentioned regulators and less well-intentioned insiders. That the American stock market had become a mystery struck me as interesting. How does that happen? And who benefits?

More here:

http://www.vanityfair.com/news/2015/03/michael-lewis-flash-boys-one-year-later

What is high frequency trading?

http://www.forbes.com/sites/billconerly/2014/04/14/high-frequency-trading-explained-simply/

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