News and Analysis: 8-19 Nov 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 19 Nov 10:

SKorea supports bond tax to stem foreign cash: SKorea said Thu it favors imposing a tax on foreign investment in gov't bonds, aiming to fend off a potentially destabilizing flood of outside money after the Federal Reserve's decision to pump $600bn into the US economy. The announcement comes as emerging markets try to stem a tide of so-called 'hot money' that they say drives up the value of their currencies and destabilizes their markets as foreign investors seek higher returns in fast-growing economies,   AP (courtesy NPR), 18 Nov 10 (Data spotlight - Coping with capital inflow surges, Finance & Development, Sep '10)

IMF criticized for 'fancy footwork' over real reforms: In what the IMF is calling a historic moment, the institution recently approved long-awaited reforms that would shift some decision-making weight to emerging economies. Some obsevers, however, do not see the reform as nearly that momentous. One says that of the total of 6% shares shifted, industrial European economies only gave up 1.7% of their shares while such nations as SAfrica and Nigeria lost 25% of theirs. "So where did those shares come from? It's not from industrial Europe - only a small portion did," she notes,   Inter Press Svce, 8 Nov 10 (On IMF quota changes, spin war emerges, Inner City Press, 18 Nov)

Posted earlier (15 Nov): Economists urge IMF overhaul,   Asia Times/ HK, 30 Sep 10 (An open letter to the IMF Board of Governors [PDF] | IMF Board approves far-reaching governance reforms, IMF Survey Mag, 5 Nov)

'Rising Above the Gathering Storm', revisited - Rapidly approaching Category 5: US competitive position has further declined in past 5 years, report says--Five years ago, at the request of Congress, the Nat'l Academies of Sciences, Engineering, and Medicine issued the landmark report, 'Rising Above the Gathering Storm'. Now, an updated report finds that the US's ability to compete for quality jobs in the global economy has continued to deteriorate, and the nation needs a sustained investment in education and basic research to keep from slipping further. It notes that China has replaced the US as the world's no.1 high-tech exporter, and the World Econ Forum ranks the US 48th in the quality of its math/ sci educ,   Nat'l Acad Sci Engg Med, 23 Sep 10 (Further investments in sci/ tech vital to nat'l econ competitiveness, distinguished panel tells House cmte, US Congress)

Posted on Wed, 17 Nov 10:

An open letter to Ben Bernanke: We believe the Federal Reserve's large-scale asset purchase plan (so-called 'quantitative easing') should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment,   24 Economists and Commentators, 15 Nov 10 (An open letter to Bernanke of dubious authorship, The Big Picture (Weblog) | Frankel: The pot again calls the kettle red, Weblog at Harvard)

Posted earlier (5 Nov): Ben Bernanke--Aiding the economy - What the Fed did and why,   Washington Post (courtesy Federal Reserve), 4 Nov 10

The Greek crisis - Argentina revisited?: We compare Greece's recent experience with events in Argentina in '01. Argentina was then in the midst of a crisis characterized by high indebtedness, a fixed exchange rate regime, and an economy in the throes of a recession. IMF assistance, which was conditioned on a fiscal austerity program, was not enough to prevent a gov't debt default and abandonment of its currency's peg to the dollar. The Argentine example has many parallels with that of Greece, which is characterized by high debt levels, a stagnant economy, and use of the euro, the equivalent of a hard currency peg. And like Argentina, it is carrying out an IMF fiscal adjustment and reform program, by F Nechio,   San Fran Fed Res Bank Econ Letter, Nov '10 (Irish banks edge closer to EU, IMF bailout, EurActiv, 17 Nov)

Posted on Mon, 15 Nov 10:

Aung San Suu Kyi strikes the right note in Burma: Beauty, persistent courage, an unmatched revolutionary pedigree and a steely resolve to put country before family - all these make Miss Suu Kyi a formidable opponent. And formidable she must be if she is to persuade the Burmese junta to subject itself to democratic scrutiny. The generals evidently feel that the cards are stacked in their favor; otherwise, they would not have permitted her release from house arrest over the weekend. She has to play a hand that is at once weak and strong with great finesse. We wish her well, says Daily Telegraph's editorial, 15 Nov 10

Economists urge IMF overhaul: Thirteen leading int'l economists and dev't specialists have called for a major reform of the governing body of the IMF and the way it does business. Their open letter goes beyond the Obama admin's demands for European nations to reduce their share of spots on its board in order to ensure greater representation for emerging powers. It calls for the adoption of additional reforms that would eliminate Washington's veto power over major policy decisions and ensure greater transparency in its often-opaque procedures, Asia Times/ HK, 30 Sep 10 (An open letter to the IMF Board of Governors [PDF] | IMF Board approves far-reaching governance reforms, IMF Survey Mag, 5 Nov)

Andrew Cooper: G20 membership and process - The unspoken issues--To a certain degree, there is the impression that G20 is a 'concert' of big nations that can dictate the new rules to all the others. This view has been strongly expressed in the UN by outliers, incl Bolivia, Cuba, Nicaragua and Venezuela during the June '09 "G192 Summit" on the financial crisis. A more nuanced and significant sign of a backlash comes via the Global Governance Group (3G) led by Singapore, Switzerland and Qatar that promotes a more inclusive form of global governance, says Ctr distinguished fellow, Ctr In'l Govern Innov/ Can., June '10 (Norway takes aim at G20, Der Spiegel, June '10 | 3G seeks constructive outcome at G20 summit, Inter Press Svce, 10 Nov | UN Gen. Assembly--Strengthening the framework for G20 engagement of non-members, Mar '10; and 3G inputs to G20 Working Grp on Dev't, Sep '10 [PDF])

Posted on Fri, 12 Nov 10:

G20 closes ranks but skims over toughest tasks: G20 leaders closed ranks on Fri and agreed to a watered-down commitment to watch out for dangerous imbalances, yet offered investors little proof that the world was any safer from econ catastrophe. After an acrimonious start, the developing and emerging nations agreed at a summit in Seoul to set vague 'indicative guidelines' for measuring imbalances between their multi-speed economies. Calling a timeout to let tempers cool, they left the details to be discussed in the first half of next year,   Reuters (courtesy Kyiv Post/ Ukraine), 12 Nov 10 (G20 site | G20 addresses need to close development gap, Korea Herald | G20 summit cracks open door to 5 non-members, Inter Press Svce, Sep '10)

Obscure pact seen as seed for trans-Pacific free trade zone: A little-known trade pact promoted by US Pres Obama has emerged as a key vehicle towards ambitions of creating a free-trade treaty embracing more than half the world’s economy.  The pact, called the Trans-Pacific Partnership (TPP), is seen as a vital building block for a Free Trade Area of the Asia Pacific - which currently remains an undefined and long-term goal. Japan, host of the Asia Pacific Economic Cooperation summit in Yokohama this weekend, has announced it is exploring the idea of joining the TPP. The US also wants to avoid being marginalized in an increasing web of Asia-centric bilateral and regional free-trade agreements that have evolved after the WTO Doha talks collapsed in July '08,   Ag. France-Presse (courtesy Dawn/ Pakistan), 11 Nov 10 (APEC site)

Amartya Sen: Introduction to the 20th anniversary ed. of the Human Development Report (HDR)--In '90, public understanding of dev't was galvanized by the appearance of the first HDR. Led by the visionary Mahbub ul Haq, it had a profound effect on the way policy makers, public officials and the news media, as well as economists and other social scientists, view societal advancement. Rather than concentrating on only a few traditional indicators of econ progress (such as GNP per capita), "human dev't accounting" proposed a systematic examination of a rich variety of info related to different aspects of human life, says Nobel Laureate '98/ Harvard prof,   UNDP, 4 Nov 10 [PDF, go to p6]

Posted on Wed, 10 Nov 10:

At home in Indonesia, Obama reaches out to Muslim world: 'Let me begin with a simple statement: Indonesia is part of me,' he said in Indonesian during a morning speech Wed. at the Univ Indonesia. Beaming with pride, Obama delivered perhaps the most intensely personal speech of his presidency, speaking phrases in Indonesian to a cheering crowd of young people who claimed him as their own. Earlier, Obama visited the Istiqlal Mosque, the largest in SEAsia - one that he noted was under construction when he lived in the nation as a boy from '67 to '71. The speech came ahead of a meeting of the Group of 20 major econ powers that begins Wed. evening in Seoul, SKorea, AP (courtesy Jakarta Globe), 10 Nov 10 (Indonesia's economy - Strong with room for improvements, IMF Survey Mag, Sep '10)

Kenneth Rogoff: Beware of wounded lions--G20 leaders who scoff at the US proposal for numerical trade-balance limits should know that they are playing with fire. The US is not making a demand as much as it is issuing a plea for help. In light of America's current difficulties, its new proposal for addressing the perennial problem of global imbalances should be seen as a constructive gesture. Rather than harping endlessly on China's currency peg, which is only a small part of the problem, the US has asked for help where it counts: on the bottom line, says fmr IMF chief economist/ Harvard prof, Proj Syndicate (courtesy Korea Times), 7 Nov 10

A national economy - without the nation: Ramallah's historic landscape of rolling hills and groves of knotty olive trees is undergoing something of a transformation. Multistory villas fronted by ornamental porticos and columns are rising on this city's hilltops along with glass and marble office buildings. There are newly paved roads. The city's 1st 5-star hotel is opening this month. Outside Nablus, new car dealerships sell everything from BMWs to Hyundais. Inside the ancient city, the 1st movie house to open in 20 years is hugely popular. Israeli and Palestinian negotiators may equivocate over peace, but an economy is breaking out in the West Bank, Time, 11 Oct 10

Posted on Mon, 8 Nov 10:

US, UK lead financial development index despite weaknesses; Risks in emerging markets highlighted: The US and UK managed to hold top spots ahead of Asian financial centers Hong Kong and Singapore, while Australia dropped to 5th place, acc to the 3rd annual Financial Development Report. Emerging markets Malaysia, Chile, Brazil, Slovak Rep., Mexico, Morocco, China and Peru scored in the top 20 of the financial stability pillar. However, there are other risks posed by the performance of financial systems in these markets,   World Economic Forum, 4 Nov 10 (Country rankings) [PDF]

Lex Rieffel: The economy of Burma/Myanmar on the eve of the '10 elections (scroll for English ver.)--This report examines Burma's econ at a crucial moment in SEAsia's most troubled nation. A low-intensity conflict based on ethnic and religious differences has simmered since independence in '48. Its military rulers have been waging an existential struggle with a democratic movement led by Nobel Laureate Aung San Suu Kyi since they repudiated her party's election victory in '90. Now, there is an election that is more about transferring power to a new generation of military officers than making a transition to civilian rule. This report draws on the discussion at a recent day-long workshop, says Brookings Inst senior fellow,   US Inst of Peace, July '10 (w/ exec sum)

J Bhagwati and A Panagariya: Don't give it currency--India has joined the US in 'China bashing', calling upon the latter to revalue its currency. Yet leading scholars of the subject, incl Columbia's Nobel Laureate Robert Mundell, Stanford's Ronald McKinnon, and U Melbourne's W M Corden, have contested the argument that the Chinese surplus and US deficit in their external current accounts are to be explained primarily by an undervalued renminbi. India also makes a major tactical error by lending its voice to the calls for the renminbi's appreciation. With its savings rate high and rising, it too could run into the Chinese 'problem' of a current account surplus, say NY Council on Foreign Relations senior fellow and Columbia U economists,   Times of India, May '10

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