News and Analysis: 2-13 Jan 12 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 13 Jan 12:

J Lin and A Sanghi: The economics of disaster, Project Syndicate, 13 Jan 12:
Two years ago, on 12 Jan 10, a devastating earthquake struck Haiti, which killed more than 220,000 people and shattered the nation's prospects. Acc to a recent World Bank-UN report, an ounce of prevention in planning for disasters is worth a pound of cure. Hence, prevention pays, if done right. And that means getting incentives right, say WB chief economist and report team leader

Union threatens oil production shutdown in Nigeria, AP, 12 Jan 12 [courtesy NPR]:
A major union threatened Thu to stop the beating heart of Nigeria's economy - crude oil production - as part of a nationwide strike and protests gripping Africa's most populous nation. It has been paralyzed by a strike that began Mon after the gov't abandoned subsidies that kept gas prices low. Overnight, prices at the pump more than doubled. The costs of food and transportation also doubled in a nation where most people live on less than $2 a day (Fuel subsidy cuts test faith in African govts, Reuters)

World's top economies in 2050 will be…, CNN, 12 Jan 12 [courtesy WBalTV]:
The world's top economy in 2050, acc to HSBC prognosticators, will be China, followed by the US. No surprises there. However, among the smaller, developing nations, there are several surprises. By 2050, the Philippines will leapfrog 27 places to become the world's 16th largest economy. Peru's economy will jump 20 places to 26th place - ahead of Iran, Columbia and Switzerland. Other strong performers will be Egypt, Nigeria, Turkey, Malaysia and Ukraine

Posted on Wed, 11 Jan 12:

Economic, social turmoil risk reversing gains of globalization, report warns, World Economic Forum, 11 Jan 12:
Some 469 experts and industry leaders have been polled on what risks the world's leaders should have been addressing, and the results are reported in Global Risks 2012, done in collaboration with the Wharton Ctr Risk Mgmt, among others. Chronic fiscal imbalances and severe income disparity are the risks seen as most prevalent over the next 10 years. This year's report indicates a shift of concern from environmental to socioeconomic risks compared to a year ago

Robert Barro: The exit strategy from the euro, Wall St Journal, 9 Jan 12 [courtesy Harvard]:
Until recently, the euro seemed destined to encompass all of Europe. No longer. None of the remaining outsider EU nations seems likely to embrace the common currency. Two non-euro members of the EU - UK and Denmark - have explicit opt-out provisions from the common currency, and popular opinion has recently turned strongly vs euro membership. In light of the political response to the ongoing fiscal and currency crisis, I suggest it would be better to reverse course, says Stanford's Hoover Inst senior fellow/ Harvard prof

Edward Glaeser: The elections predictor, Boston Globe, 30 Dec 11 [courtesy Harvard]:
On New Year's eve, the urge to prognosticate is harder for a columnist to resist than a glass of champagne. For politics, I look to the electronic prediction markets for a shortcut to insight. For '12, they suggest that Mitt Romney will be the Republican nominee, Barack Obama will win the general election, and Republicans will control both the House and Senate. While centrists might welcome divided gov’t, a closer look at these markets implies that a more extreme outcome is likely - a one-party rule, says Rappaport Inst dir/ Harvard prof

Posted on Mon, 9 Jan 12:

Mohamed Ariff: Malaysia's fiscal, political uncertainties continue through '11, East Asia Forum, 5 Jan 12:
Looking to the future, Malaysia's challenge is to free itself from the 'middle-income trap'. Its vision is to achieve developed country status by 2020 with a per capita income of US$15,000. To be in the league of high-income nations, it needs to reinvent its economy and move up the value chain. This requires bold policy reforms, which do not sit well with the country's powerful vested interests - the beneficiaries of the current order premised on patronage, says Malaysia's Int'l Ctr Educ Islamic Finance prof (Malaysia's dilemma: Can it reform and discriminate?, Reuters Special Report, July '11) [PDF, 1.2MB]

"Escape straitjacket of scientific and math methods," think tanks told, Ctr Int'l Governce Innov, 12 Dec 11:
Think tanks can influence public debates and policy discussions, but they must operate in an environment where "logical leaps of the mind are nurtured" and not confined to epistemological straitjackets, says a new Ctr report. Entitled 'Can think tanks make a difference?', the report's key points include the importance of evidence-based research, using clear and concise language with the public and policy community (Is it time we rethought think tanks?, Waterloo Region Record, Sep '11)

Stern unveils global systemic risk rankings, New York Univ, Nov '11:
NYU Stern Business School announced the launch of a global version of its 'Systemic Risk Rankings', extending the weekly US rating and ordering by level of risk to encompass the global banking system. The global rating complements the 'Systemic Risk Rankings' (released in Apr '10) that tracks the largest US financial institutions and the risk they bring to the financial system. The new rankings provide an early warning that will help regulators and politicians identify threats to the financial system

Posted on Fri, 6 Jan 12:

Olivier Blanchard: 2011 in review - Four hard truths, Weblog at IMF, 21 Dec 11:
What a difference a year makes. We started '11 in recovery mode, admittedly weak and unbalanced, but there was hope. Yet, as the year ended, the recovery in many advanced economies is at a standstill, with some investors even exploring the implications of a potential breakup of the euro zone, and the real possibility that conditions may be worse than we saw in '08. I draw 4 main lessons from what has happened, says IMF chief economist/ fmr MIT prof (Financial regulators, central banks share financial stability role, Nov '11)

Coffers: New global hot spots for investors, Fortune, 16 Dec 11:
Today, essentially 2 global economies exist side by side. The US and its advanced peers continue to struggle with high unemployment, idle capacity, depressed housing markets, and anemic growth. By contrast, the global financial crisis has "left no lasting wounds" on China, India, Brazil, and other emerging markets, acc to a recent IMF report. What does all this mean for investors? (Roxburgh/ Lund: Beware the global 'equity gap', WSJ, 20 Dec | The emerging equity gap - Growth and stability in the new investor landscape, McKinsey, Dec '11)

Branko Milanovic: Why so many feel left behind - Inequality and its discontents, Foreign Affairs, Aug '11:
As income inequality increased in the past quarter century in most parts of the world, it was strangely absent from mainstream econ discussions. Even in the run-up to and immediate aftermath of the 2007/08 financial crisis, it did not elicit much attention. Since then, however, from Tunisia to Egypt, from the US to the UK, inequality is cited as a chief cause of revolution, econ disintegration, and unrest, says World Bank research grp lead economist/ author of The Haves and the Have-Nots (2010) (Book excerpts: What Pride and Prejudice can teach us about inequality, Atlantic | Who was the richest person ever?, Globalist)

Posted on Wed, 4 Jan 12:

Top risks for 2012, Eurasia Group, 3 Jan 11:
In its latest yearly report, a leading global political risk consulting firm identifies the new year's key geopolitical areas to watch for global investors and market participants. The greatest risk in '12, acc to the report, is the 'end of the 9/11 era'. The report describes this as "a shift toward an order in which politics is driving the global economy while economics are driving geopolitics. Against a volatile 'G-Zero' backdrop, where global leadership is in short supply, that's the biggest global risk"

Why Iran's currency dropped to worst low in two decades, CSMonitor, 3 Jan 11:
Iran's currency, the rial, has plummeted to its lowest value vs the dollar in more than 2 decades after Pres Obama signed legislation Sat. targeting Iran's central bank. The rial dropped almost 30% in 2 days, hitting exchange rates as low as 17,800 rials per dollar on Mon as Iranians rushed to sell their local currency holdings in favor of havens such as the euro, the United Arab Emirates dirham, the US dollar, and gold (Iran grapples with currency market turmoil, AFP, 4 Jan) [courtesy Google]

Nook and cranny: Michael Woodford--Forward guidance for monetary policy: Is it still possible?, Vox EU, Jan '08:
Central banks have experimented with 'forward guidance' - sending signals about the future path of interest rate policy more than just one decision ahead - as a way of stabilizing medium-to-longer run expectations. Is it in fact appropriate for central banks to try to communicate about future interest rates, or is this a point on which they are better advised to say as little as possible?, asks Deutsche Bank financial economics prize '07 awardee/ Columbia U prof

Posted on Mon, 2 Jan 12:

Mohamed El-Erian: The US triple-A credit rating is vulnerable, Washington Post, 30 Dec 11:
Remember the US triple-A credit rating? The benchmark that was eroded during the debt-ceiling standoff last year? The highest-quality measure of creditworthiness matters greatly in this nation and beyond. Skeptics should not question the value of what remains of the US triple-A credit rating. What has happened so far - or, put another way, the calm that has prevailed - is a reflection of some peculiar factors that are unlikely to persist for many years, says CEO and co-chief invest. officer of invest. mgmt firm Pimco (Rogoff: The euro zone will cast a lengthening shadow in '12, Weblog at FT, 22 Dec) [PDF, courtesy Harvard]

G20 nations fail to lead in trade openness, ICC index indicates, Int'l Chamber Commerce, 16 Dec 11:
The most open of the G20 nations is Germany, followed by UK, Saudi Arabia, France and Australia, acc to the ICC Open Market Index [PDF], which was conducted for the 1st time this year by the ICC Research Foundation. Nations selected in the index - which covers 95% of world imports of goods and services in '09 - provide broad coverage, incl 35 developed nations, 37 developing nations and 3 successor states of the fmr USSR. The aim of ICC's index is to monitor openness to trade and investment, and to provide a business benchmark for policy makers

Jeffrey Sachs: Challenges at the cutting edge of fighting global poverty, Huff Post, 4 Dec 11 [PDF, courtesy Columbia U]:
We launched the Millennium Village Project in 2005/06 in order to accelerate progress towards the Millennium Dev't Goals in the poorest regions of rural Africa. The project has its share of critics and skeptics. This is natural. We in the project are making a strong claim: that dev't aid and partnerships can break the cycle of hunger, disease, and poverty if properly deployed. The experience in the Millennium Villages will help to answer the feasibility of rapid progress vs long-standing scourges. The skeptics argue many points, says Earth Inst dir

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