News and Analysis: 26 Sep-7 Oct 11 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 7 Oct 11:

Robert Solow: Working in the dark, New Republic, 28 Sep 11:
I thought I knew what Sylvia Nasar's book was going to be about when I started it, but by the time I came to the end I was no longer sure. The book is not 'the story of economic genius' that is promised in the subtitle. It is instead the story of the public and private lives of a handful of major figures in econ. Most surprisingly, there is not much about the evolution of econ ideas in this book. There is a lot of quite fascinating biographical detail about a series of interesting economists, and even more about the political, financial, and econ setting in which they functioned. They were indeed all public figures of one kind or another, says Nobel Laureate '87/ MIT emeritus prof (Sandmo: Economics Evolving: A history of econ thought [2010], Princeton U Pr)

Posted on Aug '05: "You've got to find what you love" - Steve Jobs, Stanford U, June '05:
I am honored to be with you today at your commencement from one of the finest universities in the world. I never graduated from college. Truth be told, this is the closest I've ever gotten to a college graduation. . .Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary. . . Stay hungry. Stay foolish

Jean Pisani-Ferry: A comment on Summers - Euro-zone nations can't afford more fiscal stimulus, FT, 19 Sep 11 [courtesy Bruegel]:
There is a big difference between the Vietnam War and the euro battle: it is hard to think that the former could have been won whatever the means deployed. But as regards the latter, he is right to point out that instead of acting promptly with overwhelming force, Europe has consistently been one day late and one euro short. The Greek crisis was after all a very small problem when it emerged. Denial, procrastination and parsimony have now led to contagion to the core. But bygones are bygones and the only question that matters is, what to do now?, asks think tank dir/ Univ Paris-Dauphine prof

Posted on 29 Sep: Lawrence Summers--The world must insist that Europe act, FT, 19 Sep 11 [courtesy Harvard]:
In his celebrated '72 essay "The quagmire myth and the stalemate machine", Daniel Ellsberg drew out the lesson regarding the Vietnam war that came out of the 8,000 pp. of the Pentagon Papers, which he had secretly copied a few years earlier. It was simply this: policy makers acted without illusion. At every juncture they made the minimum commitments necessary to avoid imminent disaster - offering optimistic rhetoric, but never taking the steps that even they believed could offer the prospect of decisive victory. They were tragically caught in a kind of "no-man's-land", says Pres Obama's fmr chief econ adviser/ Harvard prof (Mr. Pres, we need a 10-year plan, Newsweek)

Posted on Wed, 5 Oct 11:

Concerns shift to Europe's banking sector as Greece is left dangling, Deutsche Welle, 5 Oct 11:
European finance ministers wrapped up 2 days of talks with an agreement to take concerted action to protect the banking sector. However, they also agreed to take no action yet on Greece, where new protests began. Earlier yesterday, Belgium and France moved to provide guarantees to depositors and creditors of the Franco-Belgian Dexia bank, which had been battered on the stock markets due to concerns about its exposure to Greek debt. At one point during the day, the bank had lost 37% of its value on the markets

L Bilmes and J Stiglitz: America's costly war machine, Los Angeles Times, 18 Sep 11 [courtesy Harvard]:
To date, the US has spent more than $2.5 trillion on the wars in Iraq and Afghanistan, the Pentagon spending spree that accompanied it and a battery of new homeland security measures instituted after 9/11. How have we paid for this? Entirely through borrowing. Spending on the wars and on added security at home has accounted for more than one-quarter of the total increase in US gov't debt since '01. The toxic combination of lower revenues and higher spending has brought the nation to its current political stalemate, say co-authors of The Three Trillion Dollar War (2008)/ Harvard prof and Nobel Laureate '01/ Columbia U prof

Robert Barro: How to really save the economy, New York Times, 10 Sep 11 [PDF, courtesy Harvard]:
The US is in the 3rd year of a grand experiment by the Obama admin to revive the economy through enormous borrowing and spending by the gov't, with the Fed playing a supporting role by keeping interest rates at record lows. How is the experiment going? By the looks of it, not well. The poor results should not surprise us given the macro policies the gov't has pursued. I agree that the recession warranted fiscal deficits in 2008-10, but the vast increase of public debt since '07 and the uncertainty about the country's long-run fiscal path mean that we no longer have the luxury of combating the weak econ with more deficits. Today's priority has to be austerity, not stimulus, says Harvard prof

Posted on Mon, 3 Oct 11:

Stocks tank as Greece admits it won't hit targets, AP, 3 Oct 11 [courtesy Taiwan News]:
Stocks took a battering today after Greece admitted it wouldn't meet its deficit reduction targets, raising renewed fears that the nation will not get crucial bailout loans it needs to avoid a default on its debts. On Sun, Greece's finance ministry said the deficit this year will likely be 8.5% of gross domestic product, higher than the 7.8% previously anticipated. The ministry blamed a deeper-than-expected recession for the failure to meet the target. The Greek economy is expected to shrink by a further 5.5% this year vs the previous forecast of 3.8%

N Taleb and M Spitznagel: The great bank robbery, Project Syndicate, 4 Sep 11 [courtesy Bangkok Post]:
For the US - and for other advanced economies - the elephant in the room is the amount of money paid to bankers over the last 5 years. For banks that have filings with the US SEC, the sum stands at an astounding $2.2 trillion. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both Pres Obama's admin and his Republican opponents seem willing to cut from further gov't deficits, says author of The Black Swan (2007)/ NYU prof and hedge-fund manager

Trading places, by R Harmsen and N Riad, Finance & Dev't, Sep-Nov '11 [PDF]:
For nearly 40 years, the historic seaport of Rotterdam held the uncontested position of world's busiest. It was overtaken in '06 by Singapore, which in turn ceded the title to Shanghai this year. Shanghai now handles more than 29 mln standard container units a year. China is home to 6 of the top 10 busiest ports, mirroring its phenomenal ascent in global trade over the past 2 decades as it overtook Germany and Japan to become the world's 2nd-largest trader after the US. China is the lead player in a move by emerging markets from the periphery of global trade to become major systemic trading centers

Posted on Fri, 30 Sep 11:

Michael Clemens: Trillion-dollar bills on the sidewalk, HuffPost, 7 Sep 11:
Economists who study globalization pay lots of attention to trade and capital flows. They have spent generations researching how much better off the world could be if there were fewer int'l obstacles to voluntary, mutually beneficial trade and investment. If there's a twenty-dollar bill on the sidewalk - economists' old catch-phrase, meaning an opportunity for big gain at small cost - why not pick it up?, asks Center for Global Dev't senior fellow (Economics and emigration: Trillion-dollar bills on the sidewalk?, J Econ Perspectives, June-Aug '11)

Rogoff: A whiff of inflation now?, Harvard Mag, Aug '11 [PDF, courtesy Harvard]:
Kenneth Rogoff has advanced the idea of aiming for a higher rate of inflation as a partial cure to the current, protracted recession. Given his reputation as an econ conservative, with rather mainstream credentials (like being a fmr IMF chief economist), this policy proposal has raised eyebrows and underscored the seriousness of the current econ circumstances: protracted, very high unemployment and continuing depressed real-estate values, which have continued to sap consumer confidence and retard sustainable growth (Wolf: Struggling with a great contraction, FT) [PDF]

Raghuram Rajan: Is inflation the answer?, Univ Chicago, Aug '11:
We have just experienced financial panic. Paradoxically, a downgrade of US debt has triggered a flight to liquidity towards the assets that have been downgraded. Ultimately, the cure for financial market paranoia is strong econ growth. Recently, a number of commentators have proposed a sharp contained bout of inflation as a way to reenergize growth in the US, and the rest of the industrial world. Are they right?, asks author of award-winning Fault Lines (2010)/ fmr IMF chief economist

Posted on Thu, 29 Sep 11:

German parliament passes euro fund expansion, Der Spiegel, 29 Sep 11:
German MPs today approved 523 vs 85 the planned expansion of the European Financial Stability Facility, with 3 abstentions. Its passage is a vital step in euro-zone efforts to increase the fund's lending capacity from its current €250 bln ($338 bln) to €440 bln. Germany's share of guarantees for the fund will rise from €120 bln to €211 bln, though several other euro-zone parliaments must still vote on the expansion. The reform of the EFSF is just one step in the ongoing effort to prevent the common currency from collapsing as a result of the sovereign debt crisis which has struck several euro-zone member states

Lawrence Summers: The world must insist that Europe act, FT, 19 Sep 11 [courtesy Harvard]:
In his celebrated '72 essay "The quagmire myth and the stalemate machine", Daniel Ellsberg drew out the lesson regarding the Vietnam war that came out of the 8,000 pp. of the Pentagon Papers, which he had secretly copied a few years earlier. It was simply this: policy makers acted without illusion. At every juncture they made the minimum commitments necessary to avoid imminent disaster - offering optimistic rhetoric, but never taking the steps that even they believed could offer the prospect of decisive victory. They were tragically caught in a kind of "no-man's-land", says Pres Obama's fmr chief econ adviser/ Harvard prof (Mr. Pres, we need a 10-year plan, Newsweek)

Ready for takeoff - China's advancing aerospace industry, by R Cliff, C Ohlandt and D Yang, Rand, 25 Mar 11:
China's aerospace industry has advanced at an impressive rate over the past decade, partly due to the increasing participation of its aerospace industry in the global commercial aerospace market and the supply chains of the world's leading aerospace firms. China's current ability to meet demand with indigenous aircraft is limited, however, and imported aircraft will fill much of the demand. On the other hand, China's space capabilities have improved rapidly and it has developed and deployed an increasingly wide range of satellites [w/ exec sum]

Posted on Mon, 26 Sep 11:

Mohamed El-Erian: Volatility is with us for awhile longer, HuffPost, 25 Sep 11:
Last week, investors suffered an ave. market decline of 6.5% in the equity component of their 401Ks, the largest fall since the dark days of Oct '08. With $1 trillion of paper wealth evaporating in the process, they enter this week with a mix of apprehension and concern, and rightly so. Once again, bad co. news was not the reason for the market debacle. The corporate sector remains in great shape with lots of cash on hand and a favorable debt profile. But, like others with healthy balance sheets in the global economy (and there are quite a few sectors), cos.' willingness to hire and invest awaits better policy making in both the US and Europe, says co-CEO/ co-CIO of Pimco

IMF members vow to confront crisis, prevent escalation, IMF Survey Mag, 24 Sep 11:
Determined to prevent the global econ worsening further and plunging into stagnation, IMF members vowed collectively to do whatever it takes to tackle a 'precarious situation' and restore both confidence and financial stability, said the Singapore finance min, who chairs the IMF's main policy-setting body known as the IMFC. "We face a confluence of sovereign debt and banking risks, with the epicenter of that being the euro zone. But it is underpinned and complicated by the fact that we also face a weakening global economy, esp. in the advanced economies, incl the US," he said

Sci/ tech and industry scoreboard - Innovation and growth in knowledge economies, Weblog at OECD, 22 Sep 11:
When the Rev. William Whewell invented the term 'scientist' in 1834, a natural philosopher could probably have read everything published in his (or very rarely her) field and would have known most if not all of the other researchers. Today, Pubmed alone has 21 mln articles, adding an average of one every minute. The latest Sci/ Tech and Industry Scoreboard uses an index of how this mass of info is cited to explore trends in where research is being done and what impact it has. One of the most striking parts of its industry section is the relative decline of manufacturing in OECD nations. In '90 the G7 nations accounted for two-thirds of world manufacturing value added but they now account for less than half. By '09, China had almost caught up with the US (and may have overtaken it by now)

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