News and Analysis: 12-23 Sep 11 | EmergingFrontierMarkets.com

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Posted on Fri, 23 Sep 11:

Global financial system risks escalate, IMF Survey Mag, 21 Sep 11:
Financial stability risks have risen sharply in recent months, as slower econ growth and market turbulence in Europe and the US have weighed on the global financial system, acc to the latest Global Financial Stability Report. Financial markets have begun to question the ability of policy makers to command broad political support for needed policy actions. The report said balance sheets - a snapshot of the assets and liabilities held by a gov't, financial institution or household - are strained by mounting debt or assets that have lost value    (IMF steps up analysis of risks for low-income nations)

Lex Rieffel:  US should wish bon voyage to the World Bank, Globalist, 16 Sep 11 [courtesy Brookings Inst]:
Most of the proposed reforms of the 3 pillars of post-WW2 econ architecture focus on governance, esp. reducing the dominant position of the US and the EU and giving the rising powers such as Brazil, China and India more of a stake in these institutions. However, there is one other way of strengthening these institutions that is rarely mentioned and merits consideration. While the WTO is based in Geneva, both the IMF and the World Bank are headquartered in Wash. The time has come to move at least one of them out of the US, says Inst visiting senior fellow

Jonas Gahr Støre: The Palestinian case at the UN, Bergens Tidende, 1 Sep 11 [courtesy Norway's UN Mission]:
I have visited Israel and the Palestinian Territory on a regular basis over the last 6 years. After many open talks, I have gotten to know their leaders, and personal ties have developed between us. We may disagree in both camps, but I believe both know that Norway is not taking sides: we are a friend of both Israel and the Palestinians. I cannot remember a time when the Israeli and Palestinian perspectives were more contradictory. Each side says it is ready to resume negotiations immediately, but that the other side is not. It is clear that both cannot be right, says Norway's Foreign Min/ chair of the Ad Hoc Liaison Cmte for assistance to the Palestinians    (Palestinians ready for statehood - donor nations, AP) [courtesy Beaver County Times]

Posted on Wed, 21 Sep 11:

Republicans urge Fed: Stop easing, AP, 20 Sep 11 [courtesy Chicago Sun-Times]:
In an unusual move, Republican leaders of the House and Senate are urging Fed policy makers vs taking further steps to lower interest rates. On the eve of the Fed's 2-day policy meeting, the leaders sent a letter to the Fed chair warning that the Fed's policies could harm an already weak US economy. The letter, sent Mon, was signed by Senate Republican Leader McConnell, Senate Republican Whip Kyl, House Speaker Boehner and House Majority Leader Cantor    (Republican leaders' letter to Bernanke) [courtesy Weblog at WSJ]

World economic outlook - Weak and bumpy recovery ahead, IMF Survey Mag, 20 Sep 11:
The global economy is in a dangerous new phase. Global activity has weakened and become more uneven, confidence has fallen sharply recently, and downside risks are growing, says the latest World Econ Outlook. The report, released Tue, says strong and coordinated action is necessary to avert a decade of lost growth in the advanced economies. Real GDP is expected to grow by a fairly robust 6.4% in emerging and developing economies but by only 1.6% in advanced economies in '11    (Fiscal monitor - Govts confront policy dilemma on debt, growth)

Robert Zoellick: Empowering women powers nations, Politico, 19 Sep 11 [courtesy World Bank]:
Imagine if a city of almost 4 mln people disappeared every year. A Los Angeles, Johannesburg, Yokohama. It would be hard to miss. Yet it goes largely unnoticed that almost 4 mln girls and women 'go missing' each year in developing nations when compared to their female counterparts in developed nations. About two-fifths are never born; a sixth die in early childhood, and more than a third die in their reproductive years. High mortality rates are just one of many barriers to equality between men and women, as argued in the Bank's latest World Dev't Report, says WB pres    (The education of a gender skeptic)

Posted on Mon, 19 Sep 11:

Euro zone bonds would aid global econ stability - report, Dow Jones Newswires, 19 Sep 11 [courtesy Nasdaq]:
A group of leading economists today backed the issuance of euro zone bonds, not as a way of resolving the currency area's fiscal crisis, but as way of making the global monetary system more stable. In a new report, Harvard's Fahri, UC-Berkeley's Gourinchas, and London Bus. School's Rey also recommended that swap agreements between leading central banks be made permanent, that the IMF be allowed to borrow in the bond markets to boost its lending capacity, that foreign exchange reserves be pooled, and that capital controls be used to curb 'excessive and volatile' investment flows to developing economies (Winners of Bernácer Prize in macro/ finance)

Andrew Cooper: Small nations weathering the recession - Crashing and burning or rising from the ashes?, HuffPost, 4 Sep 11 [courtesy Ctr Int'l Gov Innov]:
The post-Cold War years were good for the fortunes of small nations. Small states did indeed seem beautiful in the '90s and early 2000s. The end of bipolarity and the competing alliances ended the vulnerability of small nations to choose between bandwagoning with or balancing vs either the US or the USSR. Hyper-globalization allowed them flexibility to find profitable niches in the global economy. The financial crisis of '08 and beyond reversed this course. Being small took on a troubled ugly dimension, says Ctr distinguished fellow

Upstream capital flows - Why emerging markets send savings to advanced economies, by S Cociuba, Dallas Fed Econ Letter, May '11:
Emerging market econ growth during the global recovery has exceeded performance in advanced economies. This differential has triggered a rush of private capital inflows to the emerging markets from investors seeking to maximize returns. At the same time, public capital is flowing from emerging to advanced economies. Over the past decade, the govts of major emerging markets have channeled increasing amounts of domestic savings into int'l capital markets. There are several possible reasons why emerging markets have ramped up saving at home and invested surpluses abroad

Posted on Fri, 16 Sep 11:

Greece and Portugal should ditch the euro - Feldstein, Deutsche Welle, 16 Sep 11:
In an article published 5 years before the launch of the euro, fmr chair of US pres.'s Council of Econ Advisers Martin Feldstein wrote that the new currency could lead to severe friction in Europe. Now the noted Harvard economist says several nations should leave the euro. Q: In a prescient article from Nov '97 you predicted that a European Monetary Union, which led to the introduction of the euro in '02, could cause serious conflict inside and outside of Europe. Looking at the current crisis, do you feel vindicated? (Blejer/ Levy-Yeyati: Leaving the euro - Lessons from Argentina, World Fincl Rev, Dec '10)

Lagarde urges collective action to restore confidence, IMF Survey Mag, 15 Sep 11:
As uncertainty continues to roil the world's financial markets, world leaders should act together to address the three main challenges facing the global economy: debt pressures sapping growth, risk of instability in the core of the global economic system, and social tension, the IMF head said at the Woodrow Wilson Ctr in Wash. To address the rising risks that major economies may slip back instead of moving forward, policy makers need to address four key policy dimensions

Sylvia Nasar: Grand Pursuit - The beautiful minds that created modern economics, Simon & Schuster, 7 Sep 11 [courtesy Bloomberg]:
The idea that mankind could master its material circumstances was born in Charles Dickens's London. Over the next century and a half, the grand pursuit of thinkers was to overcome scarcity, to loosen the grip of iron necessity on ordinary lives and minds. Here, in a 5-part series, are stories of the men and women who helped speed that transformation - and in the process invented an apparatus of the mind that is modern econ, says author of Beautiful Mind/ Columbia U journ prof (Pt 2: 1886 - Webb, Churchill and the birth of the welfare state | Pt 3: 1919 - Keynes, Schumpeter and the great post-war mistake | Pt 4: 1929 - Fisher, the Crash and an 'economics of the whole' | Pt 5: 1943 - Hayek, Keynes and how to prevent econ crises)

Posted on Wed, 14 Sep 11:

Greek PM to hold crisis talks with Merkel, Sarkozy, AP, 14 Sep 11 [courtesy Atlanta Journal-Constitution]:
The leaders of Greece, France and Germany will seek ways to contain the spiraling debt crisis and prevent it from further roiling global financial markets in a teleconference on Wed evening. Fears in recent days that Greece was heading rapidly towards a chaotic default have sent the interest rates on 10-year gov't bonds soaring to new record highs. On Wed, they stood at the alarming level of 25.3%, more than 23 points higher than the German equivalent, suggesting investors have all but given up on Greece being able to fix its public finances

Developing Asia's growth to moderate amid global uncertainty, Asian Dev't Bank, 14 Sep 11:
The ADB has cut its '11 and '12 growth forecasts for developing Asia amid ongoing worries about weak external demand from its key trading partners. In its Asian Dev't Outlook Update released today, it trimmed its full year forecast to 7.5% from 7.8% seen in April. The slowdown in demand from the US and Europe continues to cast a cloud over the region, with export growth easing substantially in the 2nd qtr in leading economies, incl China (Emerging East Asia's bond markets expand, still in demand, 1 Sep)

The master artisan - The first woman to win the economics Nobel, Finance & Dev't, 13 Sep 11:
Elinor Ostrom, Nobel Laureate '09, is perhaps best known for debunking the 'tragedy of the commons', a theory put forth by biologist Garret Hardin in '68. In an article in Science, Hardin theorized that if each herdsman sharing a piece of common grazing land made the individually rational economic decision of increasing the number of cattle he keeps on the land, the collective effect would deplete or destroy the commons

Posted on Mon, 12 Sep 11:

Barry Eichengreen: Europe on the verge of a political breakdown, Proj Syndicate, 12 Sep 11 [courtesy Zaman/ Turkey]:
Europe is again on the precipice. The most recent Greek rescue, put in place barely six weeks ago, is on the brink of collapse. The crisis of confidence has infected the euro zone's big nations. The euro's survival and, indeed, that of the EU hang in the balance. European leaders have responded with a cacophony of proposals for restoring confidence. If these proposals have one thing in common, it is that they all fail to address the euro zone's immediate problems, says UC-Berkeley prof

Special economic zones - What have we learned?, by T Farole, Economic Premise, Sep '11 [PDF]:
Ask 3 people to describe an SEZ and 3 different images may emerge. The 1st person may describe a fenced-in estate in a developing nation, in which footloose multinational firms enjoy tax breaks. In contrast, the 2nd person may recount the 'miracle of Shenzen', a fishing village in China transformed into a cosmopolitan city. A 3rd person may think about places like Dubai and Singapore, whose ports serve as the basis for a wide range of trade- and logistics-oriented activities

Shane Greenstein: An honest policy wonk, IEEE Micro (Inst Electr & Electro Engr), 10 Aug 11 [courtesy Virulent Word of Mouse]:
Captured regulators routinely take the blame for the ills of regulatory policy in electricity, telephony, and broadcasting. 'Captured regulator' has been a pejorative term in these industries for decades. It's hard to say when it happened exactly, but this conversation migrated into electronics and the commercial Internet in the past decade, as both industries melded with communications and media businesses. Quite a bit of nuance got lost in the migration, says Northwestern U prof

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