News and Analysis: 1-13 Sep 2013 | EmergingFrontierMarkets.com

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Posted on Fri, 13 Sep 13:

Obama to nominate Summers as Fed chief - Nikkei, Reuters, 13 Sep 13:
US Pres Obama will name fmr Treasury Secy Lawrence Summers as Fed chair, Japan's Nikkei newspaper said on Fri. The newspaper, quoting unnamed sources, said in its original Japanese version that Obama was "in the final stages" and moving toward naming Summers. The English version said the pres "is set to" name Summers as early as late next week (Obama team denies report Summers is Fed pick, USA Today | Yellen fans urge Obama to choose her for Fed chief, Women's eNews | Online open letter in support of Yellen)

World's ultra wealthy population reaches all-time record, UBS/Wealth-X, 10 Sep 13:
Despite ongoing econ and geopolitical uncertainties, the world's ultra wealthy population reached an all-time high of 199,235 individuals with a combined fortune of nearly US$28 tril. in '13, growing by more than 6% in pop. size from the previous year. The 1st Wealth-X and UBS World Ultra Wealth Report also identified more than 2,000 billionaires globally, or 1% of the world's ultra high net worth (UHNW) pop. It defines UHNW individuals as those with total net assets of US$30 mil. and above

Transparency and accountability -- Bringing the politics back in, World Bank (blog), by A Menocal, 21 May 13:
Over the past 2 decades, citizen-led initiatives to hold power holders to account have taken the world by storm. The promise embedded in such efforts--that more enlightened and engaged citizens demanding greater accountability around issues that they care about can have a decisive impact in improving development effectiveness, the quality of (democratic) governance and the nature of state-society relations--has led to a mushrooming of transparency and accountability initiatives

Posted on Wed, 11 Sep 13:

The rich get richer through the recovery, NY Times (blog), by A Lowrey, 10 Sep 13:
The top 10% of earners took more than half of America's total income in '12, the highest level recorded since the govt began collecting the relevant data a century ago, acc. to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty. The figures underscore that even after the recession the nation remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the '30s (Saez at MacArthur Found. | Piketty/assoc: What to do about inequality, Boston Rev)

Report calls on policy makers to make happiness a key measure, target of development, UN Solutions Network, 9 Sep 13:
As heads of state get ready for the UN Gen Assembly in 2 weeks, the 2nd World Happiness Report further strengthens the case that well-being should be a critical component of how the world measures its econ and social dev't. The report identifies the top 5 nations with the highest levels of happiness: Denmark, Norway, Switzerland, Netherlands, and Sweden. It is edited by J Helliwell, of the Brit Columbia U and Canadian Inst Adv Res, R Layard, London Sch Econ's Well-Being prog dir, and J Sachs, Columbia U Earth Inst dir

Ronald McKinnon: The near-zero interest rate trap, Wall Street Journal, 30 July 13 [PDF, courtesy Stanford U]:
The problem is that as banks and other financial institutions get used to near-zero interest rates and accumulate low-interest bonds for some years, they end up in a trap from which escape is difficult. The trap was revealed for all to see after Fed Chair Bernanke's suggestion, on 22 May, that the central bank might slow down its huge purchases of long-term Treasury bonds, writes author of The Unloved Dollar Standard: From Bretton Woods to the rise of China (2013) / Stanford prof

Posted on Mon, 9 Sep 13:

James Hamilton: Syria and the world oil market, Econbrowser, 8 Sep 13:
The growing likelihood of US military action in Syria seems to be one factor in the recent sharp rise in oil prices. That is not because Syria itself is an important producer of oil. The nation was producing less than 370,000 barrels a day in 2010, only half a percent of the world total. And civil unrest and an embargo had brought that down to 71,000 barrels this May, less than 1/10 of 1% of global supplies. But the question is whether the conflict would be neatly contained within Syria, writes U Calif-San Diego prof

Mohamed El-Erian: Lehman's morbid legacy, Project Syndicate, 27 Aug 13:
As the 5th anniversary of the disorderly collapse of the investment bank Lehman Bros approaches, analysts will revisit the causes of an historic global 'sudden stop' that resulted in enormous econ and financial disruptions. I hope, however, that we will also see another genre: analyses of the previously unthinkable outcomes that have become reality and that our systems of governance have yet to address properly, writes CEO/co-chief invest.officer of global invest.firm PIMCO

Coffers: Burton Malkiel--You're paying too much for investment help, Wall St Jl, 28 May 13 [PDF, courtesy Wealthfront]:
From 1980 to '06, the US financial services sector grew from 4.9% to 8.3% of GDP. A substantial share of that increase represented increases in asset management fees. In my judgment, investors have received no benefit from this increase in expense ratios, writes author of A Random Walk Down Wall Street / Princeton emeritus prof (MIT's Andrew Lo, co-author of A Non-Random Walk Down Wall Street: Survival of the richest, Harvard Bus.Rev) [courtesy Alpha Simplex]

Posted on Fri, 6 Sep 13:

G20 wrangles over stimulus exit, Bloomberg, 6 Sep 13 [via Worcester Telegram]:
Leaders of the world's biggest economies at a Group of 20 summit in Russia grappled with threats to the global economy as the effects of the Syrian conflict added to the fallout from a potential stimulus exit. The BRICS (Brazil, Russia, India, China and SAfrica) pledged Thu to create a $100 bil. pool of currency reserves to guard vs shocks, even as Russia said US Pres Obama sought to ease concern about an abrupt pullback. Chinese and Italian officials warned that military intervention in Syria would risk harming the global economy

India's new central bank chief may have short honeymoon, NY Times, 5 Sep 13 [via NDTV/India]:
Indian newspapers have been gushing about the new central bank governor, Raghuram Rajan, in terms usually reserved for Bollywood film stars: his trim physique, his long-distance running, even his 'rather photogenic appeal', as a Mumbai tabloid wrote this week. This may not last long. Rajan, 50, took charge Wed. of the Reserve Bank of India, with all of his policy options carrying big risks that could antagonize large sectors of the public, who will soon forget the rapturous accounts of his athleticism and charm

Singapore now Asia's largest foreign exchange center, Straits Times/S'pore, 6 Sep 13 [via Jakarta Post/Indon.]:
Singapore has leapfrogged Tokyo over the past 3 years to become the largest foreign exchange center in Asia. Globally, it is now the 3rd-largest forex center, behind London and New York, said the Bank for Int'l Settlements. The figures were revealed in the latest BIS triennial central bank survey of turnover in forex markets. The BIS also said on Thu that trading volumes in global forex markets averaged US$5.3 tril. a day in April this year, up 32.5% from 3 years ago. The US dollar remained the dominant 'vehicle' currency

Posted on Wed, 4 Sep 13:

Switzerland, Singapore, Finland top global competitiveness ranking, World Econ Forum, 4 Sep 13:
Excellent innovation and strong institutional environments are increasingly influencing economies’ competitiveness, acc. to the Global Competitiveness Report 2013-14. The report places Switzerland at the top of the ranking for the 5th year running. Singapore and Finland remain in 2nd and 3rd spots, followed by Germany and US. Of the five BRICS, China (at 29th) continues to lead the group, followed by SAfrica (53rd), Brazil (56th), India (60th) and Russia (64th) (Country rankings) [PDF]

The global dimension of tapering, Bruegel (Belgium), by J Cohen-Setton, 2 Sep 13:
Emerging markets have had a tough summer, as central banks of advanced economies have made clear that the normalization of monetary policy was underway. Although this development has generated a renewed interest in the international transmission of monetary policy and was a central part of the discussion at Jackson Hole, it remains unclear whether this sudden reversal in capital flows will remain mostly benign or will deteriorate into a full-fledged emerging market crisis

Ronald Coase, Nobel Laureate '91, 1910-2013, Univ Chicago, 2 Sep 13:
Coase, who spent most of his career at the U Chicago Law School, died at the age of 102 on 2 Sep. He was the oldest living Nobel laureate, acc. to the Nobel Foundation. He helped create the field of law and econ through groundbreaking scholarship that earned him the '91 Nobel Prize in Econ. He is best known for his '37 paper, 'The Nature of the Firm', which established the field of transaction cost econ, and 'The Problem of Social Cost', in '60, which set out what is now known as the Coase Theorem

Posted on Mon, 2 Sep 13:

Could US intervention in Syria derail the global economic recovery?, Amer Enterp Inst (blog), 28 Aug 13:
Capital Economics isn't so worried about how a military strike on Syria would affect oil prices and the global economy: "It is far from clear how oil supplies would be disrupted. The Syrian regime is in no position to strike back against Western interests. Its only significant ally in the region, Iran, has already been threatening to block the Strait of Hormuz for many years but has failed to follow through on these threats. Russia and China may oppose Western intervention but they are even less likely to do anything about it. . ."

Adam Posen: The global economy is now distinctly Victorian, FT, 6 Aug 13 [courtesy Peterson Inst]:
The underlying realities of globalization--rapid tech convergence between rich and poor nations in a multipolar world--are similar to the 'Old Normal' of the late 19th century. The global econ is returning to unfettered markets and more volatile econ conditions at the national level. But as was the case from the 1840s until WW1, today's convergence and competition can, and I believe, will persist for a long time without globalization breaking down, writes Inst pres / fmr Bank of England monetary policy cmte member

Barry Carin: No clear definition in 'inequality' debate, Ottawa Citizen, 22 July 13 [courtesy Ctr Intl Governance Innov]:
'Inequality' appears to be the flavor of the year in the dev't discourse. The UN High Level Panel report on post 2015 dev't goals used the word 24 times. The debate will be more influential if it focuses on inclusivity instead of inequality. There is no consensus on definitions of 'income inequality' or of 'equitable'. Inclusivity, at least, can be defined by access measures and be represented by minimum standards and income floors, writes Ctr senior fellow / fmr senior govt official in Canada

Posted on Sun, 1 Sep 13:

Paul Krugman: The unsaved world, NY Times, 31 Aug 13 [via Pittsburgh Post-Gazette]:
The rupiah is falling! Head for the hills! On 2nd thought, keep calm and carry on. In case you're wondering, the rupiah is Indonesia's currency and, like many other emerging-market currencies, it has fallen a lot recently. The thing is, the last big rupiah plunge was in '97-'98, when Indonesia was the epicenter of an Asian financial crisis. In retrospect, that crisis was a sort of dress rehearsal for the much bigger financial crisis a decade later. So should we be terrified about Asia all over again?, asks Nobel Laureate '08 / NYT op-ed columnist

Otaviano Canuto: Emerging markets sell-off - what's next?, World Bank (blog), 28 Aug 13:
The past weeks have been marked by renewed pressure of capital outflows and exchange rate devaluations in several systemically relevant emerging markets. In fact, this is just the latest round of a global portfolio rebalancing that has been in motion since 22 May, when talk of the US Fed shrinking--and eventually reversing--its asset purchase program (QE, or quantitative easing) was made public. Significant portfolio rebalancing adjustments are intrinsically bumpy, writes WB senior advisor on BRICS

People in economics: A class act - Stanley Fischer, Finance & Dev't, Sep/Nov '13:
Fischer's turn on the policy making stage came in '94 when he was appointed to the IMF's No.2 post. Over the next 7 years, he dealt with crises in Mexico, Russia, several Asian nations, Brazil, Argentina, and Turkey. During the Mexican crisis of '94-'95, he was content to 'leave the driving' to the IMF chief. Then, in mid-'97, a financial crisis hit Thailand and spread quickly to many other Asian nations. By then, Fischer had gained the IMF chief's confidence and was ready to co-captain with him in navigating through the crises

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