News and Analysis: 30 Jan-10 Feb 12 | EmergingFrontierMarkets.com

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Posted on Fri, 10 Feb 12:

Greece on strike as bailout deal in limbo, AP, 10 Feb 12 [self-updating link, courtesy Toronto Star]:
Thousands took to the streets of Athens as unions launched a two-day general strike vs planned austerity measures on Fri, a day after Greece's crucial int'l bailout was put in limbo by its partners in the 17-nation euro zone. The gov't had hoped some of the heat had been taken out of the crisis after leaders agreed Thu to a raft of austerity measures they hoped would pave the way for the €130 bln ($173 bln) bailout package (Greece needs deeper reforms to overcome crisis, IMF Survey Mag, Dec '11)

Greg Mankiw: A better tax system (Assembly instructions included), NY Times, 22 Jan 12 [PDF, courtesy Harvard]:
It's that time again. Start filing all those forms and scraps of paper you'll need for your annual tax return. No doubt, this isn't your favorite activity. At some point, you may ask yourself whether there's a better way. There is. Economists who study public finance have long agreed with fmr Treas Secy William Simon, who said that "the nation should have a tax system that looks like someone designed it on purpose". Here are 4 principles of tax reform that most of those economists would endorse, says fmr US pres Council Econ Advisers chair/ Harvard prof

A hollowing middle class, OECD Yearbook 2012, by P Hollinger, 16 Jan 12:
Aristotle said it more than 2,300 years ago. "Great then is the good fortune of a state in which the citizens have a moderate and sufficient property; for where some possess much, and the others nothing ... a tyranny may grow out of either extreme. Where the middle class is large, there are least likely to be factions and dissensions." The great philosopher's words, set down in his treatise Politics, are as true today as they were then

Posted on Wed, 8 Feb 12:

Joseph Stiglitz: Capturing the ECB, Project Syndicate, 6 Feb 12 [courtesy Social Europe Jl]:
Nothing illustrates better the political crosscurrents, special interests, and shortsighted economics now at play in Europe than the debate over the restructuring of Greece's sovereign debt. Germany insists on a deep restructuring - at least a 50% 'haircut' for bondholders - whereas the European Central Bank insists that any debt restructuring must be voluntary, says Nobel Laureate '01/ fmr World Bank chief economist

Coffers: Professors say companies should rethink investment options, Harvard Univ, 24 Jan 12:
Trying to make sense of the breadth and complexity of the financial markets can be a Herculean task, one that frustrates even the most seasoned investors. Why, then, do many firms ask their employees to do just that? They shouldn't, acc to the winners of this year's Paul Samuelson Award for outstanding scholarly writing on lifelong financial security. Participants in the study were asked to allocate $10,000 across 4 S&P 500 index funds, and were paid acc to how their investments performed

Global trends - First quarter, Eurasia Group/ PwC, Jan '12 [PDF, 1.3MB]:
The extraordinary breadth and depth of the current worldwide econ turmoil and its gradual stabilization create new uncertainties in int'l and local political environments. Now, more than ever, it is crucial to understand emerging global trends: 1) Another year of uncertainty for the Euro zone; 2) Arab Spring gives way to diverse business challenges; 3) Capitalizing on emerging market ties; 4) The politics and business of demographic change; and 5) Business uncertainty under directionless int'l climate policy

Posted on Mon, 6 Feb 12:

Thomas Sargent: An American history lesson for Europe, Wall St Journal, 3 Feb 12 [courtesy Stanford U Hoover Inst]:
In 1789, the political price for our federal constitution included a bailout of the 13 indebted states. But it was by refusing to bail out the states a 2nd time in the 1840s that the US preserved its federal system, with substantial fiscal independence for state govts. Facing a similar moment, Europe might learn from our experience. Why did Alexander Hamilton and George Washington want the federal govt to bail out the 13 states?, asks Nobel Laureate '11/ Inst senior fellow

Shadi Hamid: Egypt's economy is dependent on its politics, NY Times, 1 Feb 12 [courtesy Brookings Inst]:
Experts differ on just how bad Egypt's economy is. But they all agree it's pretty bad. Let's not confuse our priorities, though. The foundation for real, sustainable economic recovery is a stable political regime. Markets - and investors - have little patience for uncertainty, and since its revolution a year ago, the country now finds itself under sway of competing power centers: the ruling military council, a new parliament dominated by Islamists and, of course, the street, says Inst Doha Ctr research dir

The influence of emerging giants, Stanford Univ, Dec-Feb '12:
In '78, Chinese leader Deng Xiaoping and his advisors began a bold experiment: they permitted farmers to sell surplus production at market prices. It was a radical idea at a time when China's centrally planned economy required farmers to meet quotas and sell at controlled prices. Food and other farm output increased along with farmers' income and prices. Seeing the results, Deng contacted then World Bank pres McNamara, not to ask for money but for advice (Where will new US jobs come from?)

Posted on Fri, 3 Feb 12:

Asia holding firm despite slowing global demand, IMF Survey Mag, 1 Feb 12:
Lower demand for exports from Asia is acting as a drag on growth in the region, but Asian economies continue to hold relatively firm buoyed by continuing strong domestic demand, say IMF experts. They warned that a further deterioration in global financial conditions could have significant, negative knock-on effects. However, in the event of a further global slowdown, its Asia region head told journalists that most nations in the region had room for a strong policy response

Simon Zadek: Global sustainability - Pursuing the elusive prize, Ctr Int'l Governce Innov, 30 Jan 12:
Today the UN launches the report of the UN Sec-Gen's High-Level Panel on Global Sustainability. Co-chaired by SAfrican Pres Zuma and Finnish Pres Halonen, the panel seeks to build on the Brundtland Report, now a quarter-of-a-century old, to shape our common future. Most significant is that sustainable development since Brundtland has embraced the economics imperative - development, growth, income and jobs, says Ctr senior fellow/ Harvard Ctr Biz & Gov't fellow

Diana Negroponte: Stimulating innovation on the periphery, Weblog at Brookings Inst, 27 Jan 12:
Davos moves from plenary meetings to relative small group discussions where interaction with the audience provides a stimulating environment. One discussion on the creation of startups demonstrated the growing links between innovative scientists working in places were costs were lower (the periphery) and headquarters in the industrialized world (the center). How did these transfers of innovation both to and from the periphery work?, asks Inst senior fellow

Posted on Wed, 1 Feb 12:

Robert Zoellick: A blueprint for Germany to save the Euro zone, FT, 24 Jan 12 [courtesy World Bank]:
Germany needs to expand its proposal for a fiscal pact into a plan that offers incentives and support to nations that translate words into action. Germany cannot and should not save nations if they do not act to save themselves, but it can assist reformers to sustain political support. Rather than be dragged grudgingly to help bit-by-bit at the last moment, Germany and its European partners should put incentives on the table now. What might a revival plan look like?, asks WB pres

Southeast Asia to see solid growth over next 5 years, Viet Nam News, 8 Dec 11:
Regional econ growth remains solid in the middle term, an OECD Development Center economist said. Average growth for the 6 ASEAN countries of Indonesia, Malaysia, Philippines, Singapore, Thailand and Viet Nam is projected to be 5.6% for the period of 2012/16. However if one looks at the near term, the growth rate for most of these countries may be more moderate, averaging 5% this year (OECD: Southeast Asia's growth remains solid in the medium term | Southeast Asian Economic Outlook 2011/12)

Edmund Phelps: Keynes vs Hayek - Stumbling blocks to spending our way to prosperity, Reuters, 8 Nov 11 [PDF, courtesy Columbia U]:
A recent event entitled 'Keynes vs. Hayek: An Economics Debate', had the following proposition: "Was John Maynard Keynes correct, can gov't fix the mass unemployment generated by a financial slump? Or is that a dangerous delusion as argued by his arch critic, Friedrich von Hayek?" A major deflation is a telltale symptom of a monetary problem. Ever since the '30s, the followers of Keynes see every slump as monetary, says Nobel Laureate '06/ Columbia U Ctr Capitalism & Society dir

Posted on Mon, 30 Jan 12:

Restoring confidence crucial to rebuilding world recovery, IMF Survey Mag, 28 Jan 12:
Rapidly restoring confidence in both Europe and globally is crucial to protecting the battered int'l financial system and rebuilding the ailing recovery, threatened particularly by strains within the euro zone, panelists at a discussion on the global econ outlook said in Davos.  To restore confidence more immediately, the euro zone must develop a strong firewall to protect its members    (Session on: Global economic outlook 2012)

Global FDI flows in 2011 exceed pre-crisis levels, despite turmoil in global economy, Unctad, 24 Jan 12:
Despite turmoil in the global economy, global Foreign Direct Investment inflows rose by 17% in '11, to US$1.5 trillion, surpassing their pre-crisis average, acc to the latest Global Investment Trends Monitor [PDF]. The rise of FDI was widespread, incl all 3 major groups of economies - developed, developing and transition - though the reasons for this increase differed across the globe

Kenneth Rogoff: Is modern capitalism sustainable?, Project Syndicate, 6 Dec 11 [courtesy Straits Times/ S'pore]:
I am often asked if the recent global financial crisis marks the beginning of the end of modern capitalism. It is a curious question, because it seems to presume that there is a viable replacement waiting in the wings.  Modern-day capitalism has had an extraordinary run since the start of the Industrial Revolution two centuries ago, says co-author with C Reinhart of award-winning book This Time is Different (2009)/ fmr IMF chief economist

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