US Fed stuns investors with 'new money' plans; Chinese government says no to Coke; Obama administration looks to double Afghan security force; and more
Top of the Agenda: Fed Purchase Plan
With interest rates at zero and options limited, the U.S. Federal Reserve announced a dramatic plan (WSJ) to buy up to $300 billion of U.S. Treasury bonds and spend hundreds of billions more on other securities purchases, in an effort to buoy investors and get credit markets flowing again. The goal, analysts say, is to pump new money into the financial system and try to lower effective interest rates. TheFinancial Times reports the move "stunned investors" and led to a sell-off of both bonds and the dollar, though major stock indices finished the day with solid gains. The FT also reports that the Fed is now expected to keep interest rates near zero for an "extended period" of time.
The Washington Post reports that the Fed's total expenditures on the program could reach $1.2 trillion, a good portion of which could be spent on mortgage debt. The New York Times notes that the move was the Fed's biggest foray yet into markets; in one swoop it will nearly double all the measures it has implemented in the last year.
Meanwhile, the Times also reports on the ongoing AIG scandal, following testimony from the firm's CEO before Congress yesterday. The article says questions about why Treasury Secretary Timothy Geithner did not know about executive bonuses the firm planned to give out using bailout money now threaten to undermine the Obama administration's nascent economic agenda.
Background:
- CFR.org has a new three-part timeline looking at the financial crisis, the history of financial regulation, and the history of economic theory.
PACIFIC RIM: China-Coca Cola
The Wall Street Journal reports China's decision to block the U.S. firm Coca-Cola from buying a Chinese juice company could prompt a backlash against Chinese investment abroad as well as foreign investment into China. Xinhua reports Chinese officials are denyingthat the decision was made for protectionist reasons. Still, theEconomist says the decision could have broad consequences, and indicates that a new anti-monopoly law in the country may in fact bedesigned to target foreign firms.
In a recent CFR meeting, former U.S. Trade Representative Carla Hills and other experts discuss the implications of the global economic crisis for free trade.
S.KOREA: The Korea Times outlines expert opinion on a new campaign by Seoul to revamp its national brand, noting that some experts think the country's plan is "too ambitious."
This Backgrounder explains the practice of "nation branding," parsing when such campaigns are and aren't likely to succeed.
Elsewhere:
News reports indicate U.S. planning to more than double Afghan security force.
Cuba's neighbors to restore diplomatic ties with Havana.
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.