Monday Morning Economic Headlines

China Facing Real Challenges In Demographic Change
Gordon Chang writes in Forbes that in the next decade, China will have to come to terms with an unfortunate reality – its population of working age citizens is declining.

Beijing’s National Bureau of Statistics announced that China’s working age” population totaled 937.27 million last year, which represents a decline of 3.45 million from 2011. The workforce in 2012 comprised 69.2% of the population, 0.6% less than in 2011.

Chang says the pace of that change will require “economic adjustments could very well be more painful than most analysts now believe,” adding that “the most pernicious economic effect of a declining population will be on urbanization.”

How To Improve Global Financial Regulation
So far, the move to implement global financial regulations devised following the financial crisis has been slow. This is due in part to the varying interests and regulatory systems in which systemically important financial institutions operate.

Is there a way to improve financial governance? Economic analyst Viral Acharya and T Sabri Öncü contend there is a better alternative that can “harmonise existing regulations and is reasonably immune to the risks posed by shadow banking evolution.”

In an article on the economic blog, Vox, they argue that “regulators such as the Financial Stability Board should design the architecture of global finance around the safety and soundness of systemically important financial instruments.”

Who Will Replace Ben Bernanke At The Fed?
Much attention has been paid to who will step in to fill the shoes of Treasury Secretary Timothy Geithner, who is leaving the administration in a few weeks. Perhaps a more important choice for President Obama is who will replace Ben Bernanke at the Federal Reserve.

Bloomberg News’ Simon Johnson provides a cheat sheet on who is in the running. According to Johnson, the three most plausible candidates are Janet Yellen, a current member of the Board of Governors, Dallas Fed President Richard Fisher, and Geithner.

More Reading: The Economist sits down with departing Treasury Secretary Geithner.

Transcripts From 2007 Provide Insight Into Fed’s Actions
Matthew O’Brien of The Atlantic looks at recently-released transcripts from meetings at the Federal Reserve “months before the economy entered its worst recession since the Great Depression” and concludes that “they just didn’t quite understand the labyrinthine web of financial interconnections until it was too late.” With historic hindsight, O’Brien selects some of the more interesting quotes from the pages of transcripts.





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