News and Analysis: 16-27 July 12 | EmergingFrontierMarkets.com

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Posted on Fri, 27 July 12:

Martin Feldstein: A rapid fall in the euro can save Spain, FT, 24 July 12 [courtesy Harvard]:
The possible breakup of the euro zone is now openly discussed by policy officials and financial execs. The interest rate on Spanish gov't debt has soared above 7%, reflecting its lack of progress in reducing its fiscal deficit and those of Valencia and other regional govts. Meanwhile, financial markets may already be in the process of forcing a solution upon Brussels. The declining value of the euro holds the key to the euro zone's survival, says fmr chair of the US pres.'s Council of Econ Advisers/Harvard prof

Global Trends - 3rd Qtr, Eurasia Group/PwC, July '12 [PDF]:
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) Politics, sustainability, and the retail and consumer sector; 2) Gas boom feeds power sector shift; 3) The illusion of European growth strategies; 4) Implications of the Euro zone crisis for Africa; and 5) The lure of protectionism: Crisis measure or emerging trend?

Martin Ravallion: Understanding the differing fortunes of the poor in India and China, UK Int'l Growth Center (blog), 18 July 12:
Forty years ago, India had far less poverty than China. Now it is the reverse. What can explain this difference? Both nations have reformed their economies to become more market oriented. China was the 1st to do so. Twenty-five years of a controlled economy in China had left plenty of room for improvement from the reforms that started in the late '70s. India followed in earnest at the start of the '90s, says World Bank acting chief economist/senior vice pres

Posted on Wed, 25 July 12:

Coffers: John Kay--Finance needs stewards, not toll collectors, FT, 22 July 12 [courtesy Author's Web site]:
Trust in the financial sector is at an all-time low: only 10% of respondents in a recent opinion poll believed that bankers told the truth. That places bankers even lower than journalists and politicians. Yet trust is the essence of financial intermediation. The core purpose of a financial system is to enable savers to have confidence in borrowers whom they do not know. This is the issue explored in the study of the UK equity markets that I led, at the UK govt's request, published on 23 July, says Oxford U Bus. School's founding dir

No food crisis yet as grain prices soar--UN, AlertNet, 20 July 12:
World markets are not yet facing a crisis of the kind seen in 2007/08 when high food prices sparked riots in some poorer nations, although soaring grain prices fueled by an intense US drought are a cause for concern, the UN's food agency said. A UN grain expert said plentiful supplies of rice and better availability of wheat meant the situation was not as serious as 4 to 5 years ago (Why is Yemen's food crisis off the world's humanitarian radar?, Guardian, 24 July)

Stirring up the South China Sea - Regional responses, Int'l Crisis Group, 24 July 12:
The dispute between China and some of its Southeast Asian neighbors--Vietnam, Philippines, Malaysia and Brunei--has reached an impasse. Increasingly assertive positions among claimants have pushed regional tensions to new heights. Driven by potential hydrocarbon reserves and declining fish stocks, the claimants are taking a more confrontational posture (Battle for the Pacific--Naval arms race in the China Sea, Toronto Star, 14 July | Le Miere: A sea by any other name, Int'l Inst Strat.Studies, Aug '11 | Should the name 'South China Sea' be changed to 'Southeast Asia Sea'? )

Posted on Mon, 23 July 12:

Berlin, IMF to refuse fresh aid for Greece, Der Spiegel, 23 July 12:
Germany and other important int'l creditors are not prepared to extend further loans to Greece beyond what has already been agreed, a German newspaper reported on Mon. In addition, Spiegel has learned that the IMF also has signaled it won't take part in any additional financing for Greece. Athens wants to soften the terms of a 2nd rescue package, agreed to last Mar with the EU and IMF, to lessen their impact on an economy going through its worst recession since WW2

Departing IMF economist blasts fund for Euro zone 'failure'; Lagarde is 'tainted', CNN, 20 July 12:
A senior economist at the institution spearheading the bailouts of 3 euro zone nations has lambasted its lack of leadership and said its 1st female chief is not fit for the job. In a letter obtained by CNN [PDF] and addressed to the dean of the IMF executive board, 20-year veteran Peter Doyle says he is "ashamed to have had any association with the Fund at all." Doyle is a former advisor to the IMF's European Dept, which runs its programs for Greece, Portugal and Ireland

New York, London, Paris and Tokyo are top 'global cities', Chicago Council on Global Affairs, Apr '12:
New York and London remain the world's most global cities, while major emerging-market cities strengthened their ability to challenge global leaders in the next 10 to 20 years, acc to the 2012 A T Kearney Global Cities Index, which was developed with the Chicago Council and released in collaboration with Bloomberg. This edition includes the Emerging Cities Outlook, which features the emerging cities that have the potential to improve their global standing in future years (Global Power City Index 2011, Inst for Urban Strategies/Japan, Oct '11)

Posted on Fri, 20 July 12:

China pledges $20 billion in Africa loans, NY Times, 20 July 12 [courtesy U-T San Diego]:
Pres Hu Jintao said Thu that China would lend $20 bln to African govts for infrastructure and agriculture in the next 3 years, in a speech to a gathering of African leaders. The loans outlined by Hu, which doubled the amount offered at the last such conference here, in '09, signaled that China was pressing ahead with aid programs in African nations with abundant energy and mineral resources but with more focus on grass-roots projects (New Asia's money redraws the aid map, Sydney MH, June '11 | The Dragon's Gift: The real story of China in Africa--Book rev., Foreign Affairs, Feb '10)

Allan Meltzer: Why capitalism?, Hoover Inst, 23 May 12:
The US gov't is on course to run the largest peacetime deficits in its history--at least $1 trillion a year for ten years or more--with no end in sight. It is a big problem, but not a new one. There is a tendency to make estimates of future costs that are overly precise and that later prove entirely wrong--mostly too low. The future is uncertain. By any measure, the costs of fulfilling the promises that have been made in the past are unsustainable, says Carnegie Mellon U prof/Inst distinguished visiting fellow

An interview with Chris Sims, 2011 Nobel Laureate, Atlanta Fed, Apr ‘12:
Sims explains the econ impact of monetary policy, compares European and US policy models, and shares practical advice for budding economists. Q: For teachers, how would you suggest that they introduce the basic idea of econometric modeling to their students?; One type of question that we get from teachers occasionally is, they see econ forecasts in the media sometimes and their impression is that they're not that accurate. So, what does the current research say about the forecasting accuracy of models, even the latest generation of models?

Posted on Wed, 18 July 12:

Worst drought in 5 decades ravages US, sends grain prices soaring, AFP, 18 July 12 [courtesy Times of India]:
Weather forecasters see no end in sight to the US drought, a blistering heatwave that has wilted crops across America's crucial breadbasket and sent grain prices soaring. Pres Obama was slated to meet with his agriculture secretary on Wed. to review options to deal with the drought, while a World Bank official said they were watching to see how it could impact global food supplies, after sharp surges in food prices in '08 and '10 dealt harsh blows to poor, food-importing nations

Is the German economist Sinn exacerbating the Euro crisis?, Der Spiegel, 17 July 12:
With his tirades against what he characterizes as Europe's bailout monstrosities, Hans-Werner Sinn isn't just trying to show that it is possible, contrary to the prevailing view, to express the complicated issues facing the Euro in simple terms. He is also demonstrating to the nation that he has added a new type of individual to the German academic community, the economist campaigner (Munchau: The Eurosceptics once again have the best lines, FT) [courtesy Biz.Day/S Africa]

Richard Layard: Why measure subjective well-being?, OECD Observer, 15 May 12:
Only 8 years ago the OECD 1st asked 'What is progress?'. Until now, the OECD has, probably wisely, been pulling its punches. It has been saying that many things are important--subjective well-being, yes, but also education, health, law and order, governance, income, and so on. However, we have now had the Social Indicators movement for about 50 years, during which time the grip of GDP as the talisman of nat'l performance became ever stronger, says London Sch Econ Well-being Prog dir

Posted on Mon, 16 July 12:

Operations begin at UAE oil pipeline bypassing key strait that Iran has threatened to shut, AP, 15 July 12 [courtesy Can.Biz]:
The United Arab Emirates on Sun. inaugurated a much-anticipated overland oil pipeline that bypasses the Strait of Hormuz, giving the OPEC member insurance against Iranian threats to block the strategic waterway. The 380-km (236-mile) pipeline snakes across western desert dunes and over the craggy Hajar mountains to the city of Fujairah on the UAE's Indian Ocean coast, south of the strait. Until now, all Emirati exports were loaded in the Gulf and then sailed out through Hormuz (Map of pipeline at Newser)

With feigned outrage over 'outsourcing', Obama and Romney do Americans no favors, Globe and Mail, 12 July 12:
The US has actively pursued free-trade agreements for more than 2 decades, and neither of the men vying to lead it for the next 4 years has any serious intention of reversing course. So it is troubling to see them pandering to voters with feigned outrage over the consequences of globalization, resulting in a phony debate over 'outsourcing' that distracts from far more serious conversations about econ recovery and growth (Offshoring creates as many US jobs as it kills-study, WashPost [Blog])

Are dev't aid agencies facing an existential threat?, Overseas Dev't Inst/UK, 10 July 12:
By 2025, the locus of global poverty will overwhelmingly be in fragile, mainly low-income and African, states, contrary to current policy preoccupations with the transitory phenomenon of poverty concentration in middle-income nations. That's the estimate of a new report, 'Horizon 2025: Creative destruction in the aid industry'. Against this backdrop, new institutions, business models and practices are challenging long-established 'aid industry' actors

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