News and Analysis: 4-15 June 12 | EmergingFrontierMarkets.com

Based in: Manila, Philippines

Posted on Fri, 15 June 12:

Greece's exit from Euro may not be as shocking as collapse of Lehman, NY Times, 15 June 12 [courtesy Econ Times/India]:
Greek elections on Sun. could soon bring real-world urgency to a debate that had been largely academic: whether the euro zone can withstand the departure of one of its members. With a good chance that the elections will produce either a political stalemate or a populist left-wing gov't, even people who do not believe Greece will drop out are digging in for the possibility that sooner or later it might happen. Lehman was a surprise. But Typhoon Greece has been swirling offshore for months if not years

N Ferguson and N Roubini: The perils of ignoring history, Der Spiegel, 12 June 12:
Astonishingly, few Europeans (incl bankers) seem to remember what happened in May 1931 when Creditanstalt, the biggest Austrian bank, had to be bailed out by a gov't that was itself on the brink of insolvency. The ensuing European bank crisis, which saw the failure of 2 of Germany's biggest banks, ushered in the 2nd half of the Great Depression. If the 1st half had been dominated by the US stock market crash, the 2nd was all about European banks going bust, say Harvard biz historian and NYU economist

Lawrence Summers: Breaking the negative feedback loop, Reuters, 3 June 12 [courtesy Harvard]:
With the dismal US jobs data, signs of increasing financial strain in Europe, and discouraging news from China, the proposition that the global economy is returning to a path of healthy growth looks highly implausible. It is more likely that negative feedback loops are again taking over as falling incomes lead to falling confidence, which leads to reduced spending and yet further declines in income. The question is not whether the current policy path is acceptable but what should be done?, says fmr chair of Pres. Obama's Nat'l Econ Council/ Harvard prof

Posted on Thu, 14 June 12:

Paul Volcker: Is global financial reform possible?, Project Syndicate, 12 June 12 [courtesy TodayOnline/S'pore]:
The freedom of money, financial markets and people to move - and, thus, to escape regulation and taxation - might be an acceptable, even constructive, brake on excessive official intervention, but not if a deregulatory race to the bottom prevents adoption of needed ethical and prudential standards. Perhaps most important is a coherent, consistent approach to dealing with the imminent failure of 'systemically important' institutions, says fmr chair of US Fed / fmr head of Pres Obama's Econ Recovery Advisory Board

B DeLong and B Eichengreen: 'A rerun of Europe in 1931', Vox EU, 12 June 12:
New preface to Charles Kindleberger's World in Depression, 1929-1939: The parallels between Europe in the 1930s and Europe today are stark, striking, and increasingly frightening. Both the existence of these parallels and their tragic nature would not have escaped Kindleberger, whose classic book was published exactly 40 years ago, in 1973, say 2 leading econ historians at UC-Berkeley

Jeffrey Frankel: Off the beaten path, Foreign Policy, 16 Feb 12:
Looking for novel solutions to public policy problems? You might want to follow a path truly less traveled. While the world has long been accustomed to looking to the industrial nations for models in econ policy, they don't have a monopoly on good ideas. Smaller, less affluent nations that would ordinarily slip under the radar can serve as laboratories for innovation. Here are a few that come to mind, says fmr member of US Pres.'s Council of Econ Advisers/ Harvard prof

Posted on Wed, 13 June 12:

Syria prints new money 'as deficit grows', Reuters, 13 June 12 [courtesy Gulf News/UAE]:
Syria has released new cash into circulation to finance its fiscal deficit, flirting with inflation after violence and sanctions wiped out revenues and led to a severe economic contraction, bankers in Damascus say. Four Damascus-based bankers told this news agency that new banknotes printed in Russia were circulating in trial amounts in the capital and Aleppo, the 1st such step since a popular revolt against Pres Assad began in '11

Olivier Blanchard: Lessons from Latvia, Weblog at IMF, 11 June 12:
Latvia in '08 was widely seen as an econ 'basket case', a textbook example of a boom turned to bust. From 2005/07, average annual growth had exceeded 10%, the current account deficit had increased to more than 20% of GDP. By early '08 however, the boom had come to an end. The treatment seemed straightforward: a sharp nominal depreciation, together with a steady fiscal consolidation. But the Latvian gov't wanted to keep its currency peg, says IMF chief economist/ MIT prof (Rodrik: What I learned in Latvia)

Dipak Jain: Curious? You'd better be, OECD Observer, 15 May 12:
It's our responsibility to shape the world we want, even as we react to market changes. This view is implicit in Peter Drucker's remark: "The best way to predict the future is to create it." We can acquire new skills relatively easily, but acquiring the right skills, and then putting them into practice, is more difficult. Skills gained without wisdom offer no guarantee of success - in fact, they may produce the opposite effect. Yes, wisdom is a notoriously opaque term, says European Inst of Bus. Admin (INSEAD) dean

Posted on Fri, 8 June 12:

John Taylor: Jumpstart the economy!, Stanford's Hoover Inst, 6 June 12:
The best way to understand the problems confronting the US economy is to go back to the 1st principles of economic freedom upon which the nation was founded. Our problem now is that we are paying too little attention to these principles, and even worse, we are moving in the wrong direction. The good news is that if we begin to apply these principles to our current circumstances, we can restore prosperity and our confidence in the future, says fmr Treasury undersecy/ author of First Principles: Five keys to restoring American prosperity (2012)

Joseph Stiglitz: The 1 percent's problem, Vanity Fair, 31 May 12:
Why won't America's 1% be a bit more. . .selfish? As the widening financial divide cripples the US economy, even those at the top will pay a steep price. There are good reasons why plutocrats should care about inequality anyway. The rich do not exist in a vacuum. They need a functioning society around them to sustain their position, says Nobel Laureate '01, whose latest book, The Price of Inequality, will be out in June (Q&A on why the Reagan admin was America's inequality turning point)

Coffee/Tea Room: Masters of nothing at all, Credit Suisse Bulletin, by S Schramm, Mar '12:
It is both the most useful and the most dangerous of all numbers. First invented by the Babylonians, Alexander the Great exported the concept to the East, then Arab traders reintroduced it. But for a long time, the West wanted nothing to do with it. Without it our numeric system wouldn't even be possible. It is the most important tool in mathematics and the focus of the most profound problems in physics. For a long time it was even feared as a threat to the entire world order, to philosophy and religion

Posted on Thu, 7 June 12:

European bailout - Possible deal takes shape on aid for Spain's banks, Der Spiegel, 6 June 12:
Spain has been reluctant to ask for European bailout money for its struggling banking sector. Spain needs help, that much is clear. The country's banks are teetering under billions of euros in bad real estate loans with experts estimating that between 75 bln and 100 bln euros are needed to recapitalize them. Just what that help might look like, however, has been a matter of some debate. Now, a compromise to the standoff appears to be taking shape

Jeffrey Sachs: The future of dev't goals, Commonwealth Ministers Reference Book 2012, June '12 [PDF,2MB, courtesy Columbia]:
The earth scientists have christened our age the 'Anthropocene', a new geological epoch of the planet in which the earth's processes are driven by humanity. Another way to put this is that humanity is trespassing over key 'planetary boundaries', thereby risking major destabilization of the very ecosystems that sustain human life and well-being. The Anthropocene marks an unprecedented challenge for humanity, says Columbia Earth Inst dir

Angus Deaton: Letter from America - Weathering the storm, UK Royal Economic Society, Apr '12:
One of the achievements of the 'happiness' literature has been to show that being unemployed is very bad for people's well-being. Most people have always known this, though economists have tended to resist, if only because the standard textbook model assumes that leisure is good and that the harm of unemployment resides only in the fact that it reduces income, a harm that is at least partially offset by the leisure that comes with not having to go to work, says Amer Econ Assn fmr pres/ Princeton prof

Posted on Wed, 6 June 12:

Robert Barro: Why this slow recovery is like no recovery, Wall Street Journal, 5 June 12 [PDF, courtesy Harvard]:
The Obama admin likes to blame the nation's weak econ performance on the Bush admin, Europe's debt crisis, Japan's tsunami and so on. It seems to think that individual incentives and serious fiscal reforms are of no great importance and policy should emphasize Keynesian-style demand stimulus (public works, prolonged benefits) along with bits of industrial policy (loans and grants to 'green' energy companies). This approach has failed for 3 years, says Stanford U Hoover Inst senior fellow/ Harvard prof

Robert Kuttner: Our most widely ignored public intellectuals, American Prospect, 4 June 12:
A prophet, says the Bible, is not without honor save in his own country. As the most prestigious economic dissenters of this era, Joseph Stiglitz and Paul Krugman form a category of two: astonishingly prescient, widely read, and largely ignored by those in power. Taken together, the two occupy something like the indispensable role that John Maynard Keynes played in the period between 1919 and his death in 1946, says this mag's co-founder and co-editor/ Demos's senior fellow

Amartya Sen: Europe's crisis - of democracy, New York Times, 25 May 12 [courtesy Biz Standard/India]:
If proof were needed of the maxim that the road to hell is paved with good intentions, the econ crisis in Europe provides it. The worthy but narrow intentions of EU's policy makers have been inadequate for a sound European economy and have produced instead a world of misery, chaos and confusion. There are two reasons for this, says Nobel Laureate '98/ Harvard prof (Euro zone needs strategy for reviving growth, IMF Survey Mag, 4 June)

EmergingFrontierMarkets.com

emerging and frontier markets:

the unofficial field guide