News and Analysis: 7-18 Nov 11 | EmergingFrontierMarkets.com

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Posted on Fri, 18 Nov 11:

Existential euro debate - Franco-German battle over the European Central Bank intensifies, Der Spiegel, 17 Nov 11:
When Greece 1st ran into serious debt problems, the debate in Europe was more of a philosophical one. EU member states, said many, should not be forced to pay the debts of fellow members. Now, the discussion has taken an existential turn. With an increasing number of nations becoming infected by the debt contagion, serious questions have been raised as to whether the EU is even able to help out its struggling members. And the heart of the debate as to what should happen next has become the ongoing clash between France and Germany. Should the ECB become the lender of last resort or not?

Felix Salmon: Krugman vs Summers - The debate, Weblog at Reuters, 15 Nov 11:
The motion was that 'North America faces a Japan-style era of high unemployment and slow growth'. Paul Krugman was arguing for it, while Larry Summers was arguing against. This was an inspired match-up: esp. in election season, one of the most important criteria for any debate is that it not cleave easily and obviously along party-political lines. That way people just end up voting their party and rehearsing tired party-political talking points (Foster: Woody Allen vs John Maynard Keynes, or Keynesian vs Keynesian, Financial Post)

Towards reconciliation in Myanmar: Q&A with historian-writer Thant Myint-U, Hindu, 3 Nov 11:
Since Mar '11, a series of subtle moves by the Myanmar gov't appear to foreshadow a major transition towards the accommodation of pro-democracy forces led by Aung San Suu Kyi. In an interview by email from Yangon, the author of a new book, Where China Meets India: Burma and the new crossroads of Asia, told us that the political changes that are afoot will benefit his strategically located nation and its people, who have suffered under the combined effects of prolonged military rule and int'l econ sanctions (Asia's new great game, Foreign Policy, Sep '11)

Posted on Wed, 16 Nov 11:

Ernie Bower: Two models for integrating Asia - A must win for Pres Obama, Weblog at Ctr Strategic & Int'l Studies, 11 Nov 11:
There is a real competition under way to define how econ integration of Asia will proceed. The 2 competing models are those of the US-led Trans-Pacific Partnership and the China-led ASEAN plus 3 - ASEAN plus China, Japan, and SKorea. The US-led model is deep and requires massive political commitments by govts to legally bind themselves and reform current regulations. The China-led model is relatively shallow and easier for govts to join, says Ctr senior adviser (East Asia Summit - Next step is structure)

Jagdish Bhagwati: America's free-trade abdication, Project Syndicate, 6 Oct 11 [courtesy American Interest]:
Congress and the pres apparently have plenty of time to discuss preferential bilateral Free Trade Agreements with SKorea, Colombia, and Panama, as well as the regional Trans-Pacific Partnership, but none for negotiating the non-discriminatory Doha Round, now languishing in its 10th year of talks. This was highlighted in an 'Open letter to Obama' that I organized, with the signatures of nearly 50 of today's most influential trade experts worldwide, says NY Council on For. Relations senior fellow/ Columbia U prof

Krishna Kumar: All models fail in certain situations, FT, 31 Aug 11 [courtesy Rand]:
In his article "Economics - Rituals of rigor", John Kay provides a useful critique of economic modeling. A model is like a map. It provides a schematic representation of the path from point A to point B. If one follows a map, but finds an overnight storm has felled a tree that blocks the path, one just takes a detour until the path is cleared of the tree. Models are metaphors, and all of them fail in certain situations, but there is much to be learnt from why and how exactly they fail. The best of economists readily see the fallen tree, says Rand senior economist

Posted on Mon, 14 Nov 11:

Coffee/tea room: No aloha - Obama skips out on APEC tradition, AP, 14 Nov 11 (GMT) [courtesy Marin Indep.]:
Chinese Pres Hu Jintao in pastels and plumerias? Russian Pres Medvedev sporting pineapples and palm trees? It didn't happen. Pres Obama on Sun. chose not to continue a tradition started by Pres Clinton nearly 2 decades ago. Leaders at the Asia-Pacific Econ Cooperation forum in Obama's native Hawaii were photographed together in the customary, stodgy pres'l wear - neckties and dark suits - not the casual, colorful Hawaiian aloha shirts that many were hoping to see them in. There wasn't even a single floral lei

Students walk out of Ec 10 in solidarity with 'Occupy', Harvard Crimson, 3 Nov 11:
Nearly 70 Harvard student protesters walked out of Economics 10 on 2 Nov, expressing dissatisfaction with what they perceive to be an overly conservative bias in the introductory course. The walkout was meant to be a show of support for the 'Occupy' movement's principal criticism that conservative econ policies have increased income inequality in the US. Economics 10 - more commonly referred to as 'Ec 10' - is taught by Prof Greg Mankiw, and has the highest enrollment of any course at the college, boasting over 700 enrollees (Harvard econ students protest perceived bias, Nat'l Public Radio | An open letter to Greg Mankiw)

Gregory Mankiw: Four nations, four lessons, New York Times, 22 Oct 11 [PDF, courtesy Harvard]:
As the US economy languishes, politicians and pundits are debating what to do next. When we look around the world, it's hard to find positive role models. But as we search for answers, it is useful to keep in mind those fates that we would like to avoid. The recent econ histories of 4 nations are noteworthy: France, Greece, Japan and Zimbabwe. Each illustrates a kind of policy mistake that could, if we are not careful, presage the future of the US. Think of them as the 4 horsemen of the econ apocalypse, says fmr US pres.'s Council of Econ Advisers chair/ Harvard prof

Posted on Fri, 11 Nov 11:

Aloha APEC shifts focus from debt to trade, AP, 11 Nov 11 [courtesy Taiwan News]:
Asian-Pacific leaders gathering in Honolulu this week will be searching for ways to kickstart faster growth through freer trade, moving on from the gloom over European debt that prevailed days earlier at the G20 summit in Cannes. In an era of debt crises and protests over inequality, the role of the annual Asia Pacific Economic Cooperation summit may turn out to be just as much about confidence building as it is about combating protectionism. For Pres Obama, the Aloha APEC, as the event is being dubbed, is a chance to spotlight progress on re-energizing exports, while pushing for a major Pacific Rim trade pact

Bernard Gordon: The Trans-Pacific Partnership and the rise of China, Foreign Affairs, 7 Nov 11:
With congressional approval of the US-Korea free trade pact now behind him, Obama seeks to cement the US econ role in Asia by finalizing the Trans-Pacific Partnership agreement, a free trade pact currently being negotiated by Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, US and Vietnam. Given its expansiveness, US Trade Rep Kirk has touted it as a '21st century' pact that will lead to a flourishing of regional trade, says author of America's Trade Follies/ Univ New Hampshire prof (Trans-Pacific Partnership)

Lucas Papademos: The pitfalls of euro-zone sovereign debt restructuring, Vox EU, 26 Oct 11:
The most effective and prudent way to reduce Greece's debt burden is to implement the July agreement, reinforced by "firewalls" to protect financial institutions and avoid contagion. Both require a substantial increase in the European Financial Stability Facility's "firepower". Bank recapitalization is necessary, but not sufficient, says fmr European Central Bank vice-pres/ newly-named Greek PM

Posted on Wed, 9 Nov 11:

Barry Eichengreen: Europe's darkness at noon, Project Syndicate, 8 Nov 11 [courtesy Social Europe Jl]:
The European Central Bank needs to increase its purchases of Italian bonds. Unless yields on those bonds fall to German levels, there is no way that Italy's debt arithmetic can be made to add up. But the new ECB head has indicated that he is reluctant to see the ECB become a lender to govts. Reassuring the markets by adopting structural reforms, he has said, is properly the responsibility of those govts, not of the ECB. But structural reforms cannot be accomplished overnight. Italy needs time to put its pro-growth reforms in place. Not providing that time would sound the death knell for the euro, says UC-Berkeley prof

Human Development Index '11 - Norway at top, DR Congo last, UNDP, 2 Nov 11:
Norway, Australia and the Netherlands lead the world in the latest Human Dev't Index, while the Dem. Rep. of the Congo, Niger and Burundi are at the bottom of the annual rankings. When the index is adjusted for inequality, some of the wealthiest nations drop out of the top 20, like the US, S Korea, and Israel. The IHDI (adjusted for inequality) and 2 other composite indices - the Multidimensional Poverty Index and the Gender Inequality Index - were designed to complement the HDI, which is based on nat'l averages in schooling, life expectancy, and per capita income (Ravallion: Human Dev't Index debate - UNDP, you're still wrong, AidWatch, 13 Dec 10)

Understanding the second Great Contraction - Q&A with Harvard's Kenneth Rogoff, McKinsey Quarterly, Oct '11 [PDF, courtesy Harvard]:
He explains what history can teach us about the global downturn and why climbing out of it is still rife with risks. Q: a) What does history tell you about where we are on the timeline of the econ contraction we've been living through?; b) Is there any way to accelerate our pullout from this contraction?; c) What other policy responses would make sense?; d) Financial innovation, in the form of derivatives, credit default swaps, and other instruments, was supposed to make the world a better place. Did they have a role - good, bad, or neutral - in creating the crisis?

Posted on Mon, 7 Nov 11:

Italy gov't borrowing rates hit euro-era high, BBC News, 7 Nov 11:
The Italian govt's borrowing cost has risen as fears grow over political uncertainty in Rome. It is feared that Italy, the euro zone's 3rd biggest economy, could become the next victim of the debt crisis. PM Berlusconi faces a crunch vote on public finance on Tue. Concerns over Italy are overshadowing developments in Greece, where PM Papandreou has agreed to stand down. He sealed a deal with the opposition to form a new coalition gov't to approve an EU-IMF bailout package

'Poor Economics' by Banerjee and Duflo wins best business book award, FT-Goldman Sachs, 3 Nov 11:
Abhijit Banerjee and Esther Duflo won the Business Book of the Year Award '11 for Poor Economics: A radical rethinking of the way to fight global poverty, published by Perseus Books. The book is a journey into the multi-faceted and complex lives of the poor, based on over 15 years of work they have done with the poor, trying to understand the specific problems that come with poverty - and to find proven solutions. The award aims to find the book that provides 'the most compelling and enjoyable insight into modern business issues'

On poverty and redistribution - Q&A with Nobel Laureate '96 James Mirrlees, now a distinguished prof-at-large at the Chinese Univ of Hong Kong, Asian Dev't Bank, 2 Nov 11:
Q: a) Do redistributive programs actually work to reduce poverty? b) How do you transfer that redistributive tax system model in Europe and make it work in the context of developing Asia? c) Increasing the tax base is a key issue for developing nations struggling to reduce poverty. What policies should govts be pursuing to ensure many more people are paying tax? d) Can you give some examples of where subsidies have made a significant impact on poverty reduction?

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