News and Analysis: 10-14 May 10 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 14 May 10:

Ian Buruma: The powerlessness of the powerful--More and more people in democratic nations feel unrepresented, anxious, and angry. And they blame the elites. Thailand might face the hardest problems. Reliance on a self-promoting tycoon like Thaksin is not the best way to boost democracy, but nor is reliance on military coups and kingly intervention. Most Thais would agree about the military. And it is illegal to even begin to discuss the role of the king. But without discussion, democracy is surely doomed, says Erasmus Prize Laureate ('08) and democracy/ human rights prof at Bard College/ NY, Proj Syndicate (courtesy New Straits Times/ Malaysia), 9 May 10

Gary Burtless: Why do investors still believe the rating agencies?--The big credit rating agencies - Fitch, Moody's, Standard & Poor's - are in the news. They almost certainly find themselves on the front pages of newspapers more often than they would like. Their opinions carry heavy weight. Consider the consequences for European financial markets when S & P downgraded its rating of the bonds issued by Greece, Portugal, and Spain. Some people may find their influence puzzling. After all, these agencies did a spectacularly bad job judging the risks of securities backed by subprime mortgages, notes Inst senior fellow, National Journal (courtesy Brookings Inst), 3 May 10

Questioning a chastened priesthood--An interview w/ psychologist Daniel Kahneman, Nobel Laureate ('02) in economics: Kahneman has in the past likened the econ profession to a priesthood to which heretics have difficulty getting access. But he recognizes how far econ has advanced in the past 3 decades in embracing psychological research and elements of other social sciences. He points to his collaboration w/ longtime research partner/ friend Richard Thaler, econ/ behavioral science prof at U Chicago, as contributing to the development of the field of behavioral economics, Finance & Devt, Sep-Nov '09

Posted on Thu, 13 May 10:

Afghanistan economic update 2010: In spite of the security, social, and political difficulties, the nation has enjoyed mostly favorable macroeconomic conditions, w/ a historically high GDP growth (22.5%) and declining prices in '09/'10. GDP growth is expected to continue to grow at 8.6% in '10/'11, inflation low at about 2%. Though the poverty-ratio was estimated at 36% in '07/'08, nearly half the population lives on less than 120% of the poverty line. Outside of harvest seasons, more people drift into poverty, World Bank, 10 May 10

Luigi Zingales: A better plan for Greece--Just as US Treas Secy Paulson did, Germany's Merkel and France's Sarkozy have artfully presented the situation as a choice bet. bailout and catastrophe. Any reasonable person would choose to avoid the disaster that an uncontrolled default would cause and reluctantly back a bailout. But there is another way out: restructuring, which was a feasible option in the Paulson case and is feasible now as well. Just as many private firms do when facing the threat of default, the Greek govt could restructure its debt. In fact, as a sovereign borrower, it is in a much stronger bargaining position than a private co., says U Chicago finance prof, City Journal/ Manhattan Inst, 7 May 10

Coffers: Israeli markets face substantial challenges on reclassification to developed' status in '10--Israel's graduation to 'developed' status in the Morgan Stanley Capital Intl Index (MSCI) is a much-anticipated event - a tribute to the strides it has made in opening its econ to market competition and globalization. But w/ its graduation from MSCI's Emerging Markets Index come major challenges, incl the potential decline of $2.5 bil. of foreign equity investment, acc to a new report 'Israel and the global equity market' [pdf,1.8MB]. Businesses, govt agencies and capital-market regulators will need to step up to compete in this environment w/ new measures to increase liquidity and broaden the base of portfolio investors, Milken Inst, 2 Nov 09

Posted on Wed, 12 May 10:

UK markets in lukewarm response to new govt: Britain's financial markets gave a subdued welcome to the nation's 1st coalition govt since WW2, w/ both the pound and stocks down from earlier highs Wed. An analyst said the markets will await details of how the new Conservative/ Liberal Democrat coalition govt will tackle the budget deficit, expected to be over 160 bil. pounds this yr. Meanwhile, the Bank of England's governor hinted that the economy may need some further support over the mths ahead for the recovery to become fully entrenched, AP (courtesy Black Enterprise), 12 May 10

Verandah: Committee of experts named to review UN climate panel--An organization of the world's science academies announced that an economist and fmr pres of Princeton U and U Michigan will chair a 12-member cmte to conduct an independent review of the procedures and processes of the Intergovernmental Panel on Climate Change (IPCC). The review was requested in Mar by the UN secy-gen and IPCC chair. The cmte's findings will be submitted to the UN by 30 Aug, InterAcademy Council, 3 May 10 ('Stop McCarthy-like attacks on climate science,' Nature [Web log], 7 May | Open letter by 255 US Natl Acad Sci members, Science, 7 May [pdf])

Sweden tops rankings of global technology report for 1st time: Sweden is followed by Singapore and Denmark, which was No.1 for the last 3 yrs., w/ Switzerland and US in 4th and 5th. The 9th annual ed. of the Global Information Technology Report covers 133 economies and highlights the impact of ICT on the development process, World Economic Forum, 25 Mar 10

Posted on Tue, 11 May 10:

Philippines' voters hope Benigno Aquino lives up to family name: Sen. Aquino (aka 'Noynoy'), who looks set to be confirmed as pres, has ridden a wave of popular support not seen in the nation since the 'People Power' movement led by his parents. His mother, Corazon 'Cory' Aquino, led the nonviolent revolution that overthrew the dictator Marcos in '86, and then served as pres for 6 yrs marred by right-wing coup attempts to overthrow her. His father, Benigno 'Ninoy' Aquino, was shot dead in '83 after returning from US exile to lead the democracy movement vs Marcos. Unlike the Marcoses and other wealthy families involved for generations in politics, the Aquinos have clean reputations, Ag. France-Presse (courtesy Daily Telegraph), 11 May 10

Estonia, Israel and Slovenia invited to join OECD: OECD nations agreed to invite the 3 nations to become members of the organization, paving the way for its membership to grow to 34 nations. The 3 were invited to open accession talks in '07, along w/ Chile and Russia. Chile became a member earlier this yr and membership talks w/ Russia are progressing. During the accession negotiations, the 3 were reviewed by 18 committees w/ respect to their compliance w/ OECD standards and benchmarks, OECD, 10 May 10

Coffers: Robert Merton--Solutions for the future: Most people do not like managing their personal finances and never look at their pension plans again after setting them up. As a result, responsibility for ensuring that workers can support themselves in their retirement has increasingly spun back around to employers. This is right because the stakes are so high and because most people look to their employer as the most trusted source of guidance about their retirement savings, says Nobel Laureate ('97) economist/ Harvard biz prof, Pensions Insight, Feb '10

Posted on Mon, 10 May 10:

Europe's 'shock and awe' deal sends markets soaring: Global stock markets and the euro have soared after the biggest intl intervention since the '08 banking crisis was agreed at all-night talks in Brussels. European nations and the IMF set up a nearly one-trillion-dollar war chest to support the euro while central banks around the world joined the battle to lift market fears of a growing debt crisis. EU finance ministers agreed the $975 bil. package of loan guarantees and credits in talks lasting more than 11 hrs that ended early Mon, Ag. France-Presse (courtesy Malta Times), 10 May 10 (IMF approves 30 bil. euro loan for Greece on fast track, IMF Survey Mag, 9 May)

Remittance flows to developing nations remained resilient in '09, expected to recover during '10-'11: Officially recorded remittance flows to developing nations reached $316 bil. in '09, down 6% from '08. With improved prospects for the global economy, remittance flows are expected to increase at 6.2% in '10 and 7.1% in '11. The regional trends reveal that: a) the more diverse the migration destinations, the more resilient are remittances; and b) the lower the barriers to labor mobility, the stronger the link bet. remittances and econ cycles, World Bank (Web log), 23 Apr 10

D Brady and M Spence: The ingredients of growth--Rather than suggesting a single recipe for econ growth, our research reveals that there are different paths to development. Here, we detail how this view plays out in 3 high-growth nations and eras: China from '78-'05, Japan from '50-'83, and Korea from 1960-2000. As the case of China shows, democracy is not a prerequisite for continuous and impressive growth, though some degree of econ freedom is. Meanwhile, Japan and Korea's export-driven, dominant-party democracy follows a trajectory more typical of booming economies in Asia, say Stanford biz prof and Nobel Laureate ('01) economist/ Comm on Growth and Devt chair, Stanford Social Innov Rev, 22 Apr 10 (Do leaders matter?, Northwestern Univ, June '07)

EmergingFrontierMarkets.com

emerging and frontier markets:

the unofficial field guide