News and Analysis: 15-19 Feb 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 19 Feb 10:

US Fed begins pullback from easy money policies: The Federal Reserve has officially begun its retreat from easy money by raising the rate it charges banks on emergency short-term loans, signaling a return to more normal conditions in the financial system. Fed governors voted unanimously Thu to raise the so-called 'discount rate' from 0.5% to 0.75%. Fed chair Bernanke signaled last wk the move was coming in a presentation to a congressional cmte. But the announcement's timing - coming after the close of NAmer stock markets and bet. regularly scheduled Fed meetings - still caused a stir in after-hours trading and forex markets, sending the dollar sharply higher. That's because the move, although largely symbolic, marks the 1st concrete step to raise the interest rate after a historic period of near-zero rates, Globe and Mail/ Canada, 19 Feb 10

UN climate leader Yvo de Boer to step down: In an unexpected move, the head of a major UN climate body resigned Thu. Yvo de Boer, secy of the UN Framework Convention on Climate Change, announced that in a few mths he will leave his post. While he acknowledged disappointment w/ the recent Copenhagen talks, he insisted that wasn't why he was quitting. His resignation comes at an awkward time as the Intergovernmental Panel on Climate Change has come under increasing fire, w/ critics calling for its dtr's resignation. Policy experts meanwhile are working desperately to prepare for another round of climate negotiations in Mexico later this yr, ScienceInsider, 18 Feb 10 (UN News--UN climate chief stepping down)

Will stabilization limit protectionism?: After the tumult of the 1st half of last yr, many economies stabilized and some even began to recover in the 4th qtr. Using info compiled through to late Jan, a new report examines whether macroecon stabilization has altered govts resort to protectionism. Has econ recovery advanced enough so that policy makers now feel little or no pressure to restrict intl commerce? Or is the recovery so nascent that govts continue to discriminate vs foreign commercial interests, much as they did during the darker days of '09? The answers to these questions will determine what contribution exports and the world trading system are likely to play in fostering growth this yr, Global Trade Alert, 18 Feb 10 (w/ link to exec sum)

Posted on Thu, 18 Feb 10:

Sarkozy announces big aid plan for Haiti, says France ready to help impoverished fmr colony: On the 1st visit by a French pres to Haiti, Sarkozy promised hundreds of millions in aid Wed, saying France will help its fmr colony turn a new page in a history bedeviled by slavery, debt and poverty. As he spoke at a news confab, a few hundred protesters outside blamed France for Haiti's poverty. They demanded the French pay back, w/ interest, the 90 mil. gold francs demanded by Napoleon to recognize Haiti's 1804 independence - the world's 1st black republic and the only nation to stage a successful slave rebellion, Canadian Press (courtesy MetroNews), 18 Feb 10 GMT (Inter-Amer Devt Bank--Haiti reconstruction cost may near $14 bil.)

Italy is top threat to euro, Columbia's Mundell says: Italy, saddled w/ the euro region's 2nd-largest debt, is the 'biggest threat' to the economy of the 16-member single-currency bloc, acc to Nobel Laureate '99 Robert Mundell, Bloomberg News, 17 Feb 10 (EU should limit appreciation of euro | Concise Ency Econ--Robert Mundell | Inst Res Public Policy--Debate between Mundell and Milton Friedman on 'One world, one money?' ('01) [pdf])

Posted on Wed, 17 Feb 10:

Millennium development goals (MDGs) in Asia-Pacific under threat from global econ crisis: A new report today warns that the global crisis could trap an additional 21 mil. people in the region in extreme poverty, living on less than $1.25 a day. Produced by the UN Econ/ Social Comm for Asia-Pacific, Asian Devt Bank and UN Devt Prog, it notes that most stimulus measures have focused on areas other than social expenditure. If stimulus packages have a strong 'social spending' component, this is likely to produce a double dividend - not only boosting growth more rapidly, but also accelerating progress towards the MDGs, UN-ADB, 17 Feb 10 [pdf]

Thomas Friedman: Global weirding is here--Of the festivals of nonsense that periodically overtake US politics, surely the silliest is the argument that because Washington is having a particularly snowy winter it proves that climate change is a hoax and, therefore, we need not bother with all this girly-man stuff like renewable energy, solar panels and carbon taxes. Just drill, baby, drill, writes Hot, Flat, and Crowded ('08) author, NYTimes (free registr reqd), 17 Feb 10

New voices urge UN climate panel chief to step down: The credibility crisis facing the UN's climate panel over errors in its report has cast a shadow on its chair, Rajendra Pachauri. The panel recently admitted it had erred in forecasting that Himalayan glaciers would disappear by 2035, a claim it has since retracted. The mistake was originally published as part of the panel's '07 report, which serves as the scientific authority for climate change issues, Deutsche Welle, 10 Feb 10

Posted on Tue, 16 Feb 10:

Barry Eichengreen: Europe's Trojan horse--Some will say that the fatal mistake was allowing Greece to adopt the euro in the 1st place. But given that signs of dysfunction are not limited to Greece, was the real mistake creating the euro in the 1st place? Since I was one of the few Americans to advocate a single European currency, you would be justified in asking: Am I having second thoughts?, notes UC-Berkeley economist, Proj Syndicate (courtesy Today's Zaman/ Turkey), 16 Feb 10 (Finance & Devt, June '09: Stress test for the euro | Wyplosz--The euro's finest hour?)

Forecasters expect continued US growth: The US economy will grow at an annual rate of 2.7% over each of the next 5 qtrs, acc to 42 forecasters in the latest Survey of Professional Forecasters, the oldest quarterly survey of macroeconomic forecasts in US. The forecasters are reducing the chance of a contraction in real GDP in any of the next 3 qtrs. They have cut their estimate of the risk of a downturn this qtr to 9.9% compared w/ 15.9% previously, Philadephia Fed, 12 Feb 10

Posted on Mon, 15 Feb 10:

For Romer, economy not 'Rosy' scenario: Proudly referring to herself as 'Miss Rosy', White House Council of Econ Advisers chair Christina Romer strongly defended the Obama admin's econ policy during its 1st yr, but acknowledged that today's econ climate leaves much to be desired. In terms of the unemployment rate, it is not likely to get much better any time soon, the admin warned in its 1st annual Econ Report of the Pres released Thu. It projects that payrolls will increase by about 95,000 jobs per mth this yr, but that is not enough to absorb the 100,000 workers that enter the labor force each mth, Wash. Times, 15 Feb 10 (White House--Guide to Econ Report of the Pres)

One Family: Haiti charity single hits number one--The Helping Haiti single has gone straight to no.1 on the official singles chart selling nearly half a million copies in a wk. The cover of REM's "Everybody Hurts" features Leona Lewis, Alexandra Burke, Robbie Williams, Cheryl Cole and Susan Boyle. It was organized by Simon Cowell w/ all proceeds going to the earthquake-hit nation. Another group of stars - incl Justin Bieber, Usher, Lady GaGa and Barbara Streisand - have re-recorded "We Are The World" for the same cause and is expected to be released later this mth, Charities Aid Foundation/ UK, 15 Feb 10 (MTV--Haiti single set for no.1 | Haiti single takes top spot)

Global foreign direct investment flows down by 39% in '09: Global inflows of foreign direct investment (FDI) fell by 39% to a little over $1 trillion last yr. The decline in FDI was widespread across all major groups of economies. FDI flows remained relatively stable during the 3rd qtr but at a low level. No pickup was detected in the 4th qtr, Unctad, 19 Jan 10 [pdf] (OECD--Intl investment collapses in '09, Dec '09)

EmergingFrontierMarkets.com

emerging and frontier markets:

the unofficial field guide