News and Analysis: 13-24 Feb 12 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 24 Feb 12:

Understanding Greece's bond swap deal - Q&A, AP, 23 Feb 12 [courtesy Statesman Jl]:
Greece has struck a vital debt relief deal with representatives of private investors to avoid a disastrous default. The agreement will help shield Europe's already weak financial system, even though banks, pension funds and other bond investors have to accept multibillion-dollar losses. Here are some Q&A about the agreement: Q: What are the main points of the deal? Why is this agreement so important? And if Greece were to miss its next bond payment, then what?

M Porter and J Rivkin: Choosing the United States, Harvard Business Review, Mar '12:
A location decision is, in many respects, a referendum on a nation's competitiveness. When a company decides, say, to build a factory with good jobs in China or Poland rather than in the US, it is effectively voting on the question of which nation can best enable its success in the global marketplace. Those votes matter. Govts, esp. those of the most dynamic nations, compete fiercely for each vote, say Harvard profs (Heineman: In defense of responsible offshoring/ outsourcing | Special report on restoring US competitiveness)

Richard Florida: A floating Silicon Valley for techies without green card, Atlantic Cities, Dec '11:
America's leadership has turned immigration reform into a political football and appears incapable of achieving solid progress on this vital issue. The situation has gotten so dire that private groups are taking the matter into their own hands. A Silicon Valley start-up is trying to do an end run around the broken immigration system by dreaming up a 'floating start-up incubator', says author of The Great Reset (2010)/ Univ Toronto's Martin Prosperity Inst dir (Saxenian: The new Argonauts, World Bank, 2009) [PDF,4MB, courtesy UC-Berkeley]

Posted on Wed, 22 Feb 12:

Default averted - Euro zone agrees on 130-billion-euro bailout for Greece, Der Spiegel, 21 Feb 12:
Following marathon talks in Brussels, euro-zone finance ministers have agreed upon a 2nd rescue package for Greece, worth 130 billion euros. The deal saves Athens from having to default in Mar. As part of the agreement, the private sector will take a 53.5% haircut on its holdings of Greek debt (EU Comm. names 12 EU states with macro imbalances, MNI, 14 Feb | EU Comm. presents its 1st annual Alert Mechanism Report)

Interview with Paul Krugman, Playboy, 16 Feb 12 [This article for a general audience is, however, in a Web site for a mature audience--Ed.]:
This magazine sent noted econ writer Jonathan Tasini to find out Krugman's thinking about the current econ crisis. After many hours of conversation, he says, "Krugman is a man who made his reputation, in part, on his fascination with and intellectual work on financial panics and collapses. And the global economy is giving him a great canvas to draw a depressing picture, but he's also agitating for action that he says can get us out of the mess we're in"

Eswar Prasad: A clarion call for emerging markets, Project Syndicate, 14 Feb 12:
With '12 underway, it is worth reflecting on how a decade of strong econ growth in emerging markets led to last year's resounding political transformations. From the dramatic events in the Mideast, to the groundswell of support for the anti-corruption crusader Anna Hazare in India, leaders in emerging markets are getting a clear message from the streets that growth is not everything. They ignore this message at their peril, says Brookings Inst senior fellow/ Cornell U prof

Posted on Mon, 20 Feb 12:

Learning from the Great Depression - Christina Romer | Robert Barro, Five Books, 17 Feb 12 and 4 June 10:
Romer, a UC-Berkeley prof who served as chair of Pres Obama's Council of Economic Advisers, says we've learned that terrible downturns can still occur, but also that the right policy response can make a huge difference to the outcome. However, Barro, a Harvard prof, takes issue with some common assumptions about the Great Depression, and how America got out of it. And he doesn't mince his words about the present, "the stimulus package was very stupid; it was awful"

New research exposes the hidden global malnutrition crisis, Save the Children, 15 Feb 12:
In a wide-ranging survey conducted with some of the world's poorest families, a third of parents revealed that their children complained they didn't have enough to eat, and one in six said their children were skipping school to work for food. A new report, 'A Life Free from Hunger: Tackling Child Malnutrition', outlines the pitifully slow progress on global malnutrition rates among children (News sources highlight nutrition research, Int'l Food Policy Res Inst)

Ian Stewart: The math equation that caused the banks to crash, Observer, 12 Feb 12:
It was the holy grail of investors. The Black-Scholes equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry, says author of 17 Equations That Changed the World (2012)/ U Warwick emeritus math prof (The formula that shook the world, Nova on PBS, Feb 2000)

Posted on Fri, 17 Feb 12:

Zoellick resignation reignites debate over Western leadership, Globe and Mail, 16 Feb 12:
Zoellick's decision to step down as World Bank head has rekindled a simmering argument over whether the US should automatically command one of the globe's premier econ institutions. The Obama admin moved quickly to signal that it expects the WB's top job to stay in American hands, as it has been since the WB was created after WW2. That expectation was widely criticized in emerging markets, where officials declared the time has come to choose a new head on merit, not nationality (Open letter to all governors of the WB, by 56 civil society orgs)

Richard Thaler: Making good citizenship fun, NY Times, 13 Feb 12 [PDF, courtesy U Chicago]:
Govts typically use 2 tools to encourage citizens to engage in civic behavior like paying their taxes, driving safely or recycling their garbage: exhortation and fines. These efforts are often ineffective. So it might be a good time to expand the govt's repertory to include positive reinforcement. Rewarding good behavior can work. As every successful parent learns, one way to encourage good behavior, from room-cleaning to tooth-brushing, is to make it fun, says co-author, with C Sunstein, of Nudge (2008)/ U Chicago prof

Mario Pezzini: An emerging middle class, OECD Yearbook 2012, 24 Jan 12:
While the middle class is rapidly expanding in emerging and developing nations, in rich nations it is shrinking and feels incapable of defending the standards of living that have characterized a middle-class lifestyle for centuries. The rising expectations of the expanding middle class in developing nations contrast with the stagnating living standards of a shrinking middle class in rich nations. Today both middle classes are awakening. Each with its own specificities, will these middle classes be agents of change?, asks Dev’t Ctr dir

Posted on Wed, 15 Feb 12:

Nancy Birdsall: The next World Bank pres - A White House stuck between promises and political realities, Ctr Glob Dev't, 13 Feb 12:
The insider talk on the next WB pres is heating up, with rumors that Zoellick will initiate the process shortly by indicating to the White House that he will step down at the end of his term in June. Then begins the collision in the White House between its promises to the global community and political realities at home. The collision boils down to the question of whether or not it will try to ensure that the longstanding US privilege of picking the WB pres prevails - arguing that the Europeans got their way at the IMF last year, says Ctr pres

Euro zone austerity - Will the medicine kill the patient?, International Economy, Dec-Feb '12 [PDF]:
Will the various EU summits' fiscal austerity measures alone be enough to resolve the debt crisis, or will the proposed reforms simply stymie econ growth? Is the euro zone entering a vicious cycle in which efforts at fiscal reform to demonstrate fiscal rectitude to financial markets actually lead to a weaker economy and lower tax receipts, thus exacerbating the debt situation? A symposium of views, from analysts incl Laura Tyson, Martin Baily, Fred Bergsten, Nigel Lawson, and Richard Cooper, among others

Coffers: Retirement advice - Don't get old, don't get sick, don't retire, Forbes, Aug '11:
"That's what I tell my students," says Olivia Mitchell, Pension Research Council exec dir at Univ Penn's Wharton. Not exactly what someone with dreams of beachfront golden years wants to hear. She has starkly realistic expectations for what the future may hold for baby boomers and the generations to come. Since being formed in '54, the council has focused on the 3 phases of saving for retirement - saving money, growing money via investment and managing funds throughout retirement (Q&A with Mitchell)

Posted on Mon, 13 Feb 12:

Athens smoulders after blazing protests over austerity, AFP, 13 Feb 12 [courtesy EUbusiness]:
One of Athens' landmark cinemas lay in smouldering ruins Mon. as stunned Greeks contemplated the aftermath of widespread rioting that saw the destruction of dozens of buildings. Officials say 45 buildings were wholly or partly destroyed by fire as violence erupted during demonstrations while MPs voted Sun. for tough new austerity measures demanded by the EU and IMF as the price of a 2nd 130-bln-euro ($172 bln) debt rescue to avert imminent bankruptcy and keep Greece in the eurozone (Greek history prof worries about his homeland's future, UC-Berkeley News)

Eswar Prasad: Will China's yuan rival the dollar?, Wall St Journal, 8 Feb 12 [courtesy Brookings Inst]:
The Chinese currency invariably provokes overwrought reactions. One view is that it will soon knock the dollar off its pedestal as the dominant global reserve currency. The other is that China is creating enormous risks by letting capital account liberalization get ahead of domestic reforms. The reality is far more nuanced than much of the overblown rhetoric suggests, says Inst senior fellow/ Cornell U prof (New book argues China must adopt new growth model, Peterson Inst)

Robert Shiller: Does austerity promote econ growth?, Proj Syndicate, 19 Jan 12 [courtesy Straits Times/S'pore]:
In his classic Fable of the Bees: or, Private Vices, Public Benefits (1724), Bernard Mandeville, the philosopher/satirist, described - in verse - a prosperous society (of bees) that suddenly chose to make a virtue of austerity, dropping all extravagant consumption. What then happened sounds a lot like what many advanced nations have been going through, after austerity plans were launched. Is Mandeville a genuine prophet for our times?, asks co-author, with G Akerlof, of award-winning book Animal Spirits (2009)/ Yale prof

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