News and Analysis: 17-29 June 2015 | EmergingFrontierMarkets.com

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Posted on Mon, 29 June 2015:

Greek referendum is superfluous, Deutsche Welle, by B Riegert, 28 June 15:
By holding a referendum, the Greek gov't wants to wash its hands of the responsibility for the looming chaos. That's a rather obvious plan. Syriza and the rightwing party don't have exclusive rights to, nor have they invented, democracy. You cannot opt out of debt or financial responsibility. The Greeks have to understand that they don't just vote for or against an aid package, but on their future political direction

A democratic Europe should allow Greek people to decide on their future, Bruegel (blog), by Z Darvas, 28 June 15:
In a European Union founded on the principle of democracy the referendum should be welcomed. All other politically feasible solutions would have just prolonged the uncertainty. The Greek gov't perceives that its mandate received from last Jan.'s election does not allow it to accept the creditors' offer. Hence, any forced agreement on a slightly modified version of the conditionality demanded by creditors would have likely led to future problems, writes Inst senior fellow

Barry Eichengreen: Path to Grexit tragedy paved by political incompetence, Conversation, 28 June 15:
Nearly a decade ago, I had concluded that the probability of a Grexit, or any Otherexit, was close to nil. Where I need to revise my views, however, is for underestimating the role of politics. If the Greek gov't was unwilling to accept the creditors' final offer, then it should have simply stated its refusal. Calling a referendum in midstream only heightened uncertainty. Still, this incompetence pales in comparison with that of the European Commission, ECB and IMF, writes U Calif-Berkeley prof

Posted on Fri, 26 June 2015:

Merkel, Hollande dangle financing before Greece's Tsipras, Reuters, 26 June 15 [self-updating link]:
The leaders of Germany and France offered to release billions in frozen aid on Fri in a last-minute push to talk Greek PM Tsipras into contentious pension reforms in exchange for filling Athens' empty coffers until Nov. The two EU leaders held a 45-minute private meeting with Tsipras before the final session of an EU summit at which they went through details of immediate funding for Greece if it would sign the deal

World economy may be slipping into 1930s Great Depression problems - India's Rajan, Press Trust of India, 26 June 15 (via Times of India):
India's central bank governor Raghuram Rajan has asked central banks from across the world to define 'new rules of the game' as he warned that the global economy may be slipping into problems similar to the Great Depression of the 1930s. Rajan has been warning against competitive monetary policy easing by central banks. He was addressing a conference at the London Business School on the subject of 'The Central Banker Perspective'

R Dossani and R Swanger: Can the 'Asian Tigers' continue to roar?, Rand Corp (blog), 16 June 15:
A potential crisis is looming for Japan and the 'Asian Tigers' -- Hong Kong, Korea, Singapore and Taiwan. Their populations are aging far faster than even the developed countries of Europe. To solve this emerging problem, these Asian neighbors may need to find fresh solutions and develop a thriving spirit of cooperation, writes Corp's Asia Pacific Policy Ctr dir; and Graduate School assoc dean

Posted on Wed, 24 June 2015:

H Kharas and J McArthur: The hunger game -- How to end global malnutrition, Foreign Affairs, 16 June 15:
In tackling the global challenge, inspiration can be drawn from Brazil, Latin America's largest country, where ending hunger was fmr Pres Lula da Silva's signature election campaign promise. His national 'Zero Hunger' program was multifaceted, sustained over time, and driven by science. The core elements of Brazil's success can be replicated elsewhere, writes Brookings senior fellows

Alice Rivlin: Let's cross inflation off our list of worries and get back to the real world, Int'l Economy, 18 June 15 [via Brookings Inst]:
It would be really nice to have to worry about inflation again. If the economic outlook were for robust growth, tight labor markets, rising wages, even a few shortages of skilled workers, economic policy makers would feel more cheerful. The Federal Reserve could then confidently raise interest rates to what used to be considered 'normal' levels, writes fmr Fed vice chair / Inst senior fellow

Investment and inequality -- Stock markets for whom?, OECD Yearbook, by R Trumka, June '15:
The world economy desperately needs more productive investment: to create jobs, to increase productivity and to meet critical global goals like combating climate change. But instead of more productive investment, we are getting rising stock markets. Sadly too many policy makers and journalists don't know the difference, writes pres of AFL-CIO (Amer Federation of Labor & Congress of Industrial Orgs)

Posted on Mon, 22 June 2015:

Yanis Varoufakis: A pressing question before Monday's meeting on Greece, Irish Times, 19 June 15:
Last Thu's euro group meeting went down in history as a lost opportunity to produce an already belated agreement between Greece and its creditors. Perhaps the most telling remark by any finance minister in that meeting came from Ireland's Michael Noonan. He protested that ministers had not been made privy to the three institutions' proposal to my gov't before being asked to participate in the discussion, writes Greek finance minister

Boardroom/C-suite: How to understand (and avoid) political risk, Stanford Univ, 18 June 15:
Shortly after being elected Ecuador's pres, Rafael Correa made good on a campaign promise. He announced plans to unilaterally change the contracts held by foreign oil firms. It's a salient reminder of two things, says Ken Shotts, political economy prof. First, political risk is inevitable in any arrangement between a company and a sovereign state. And second, expropriation isn't simply a matter of greed

Sustainable Dev't Goals require effective national, global financial regulation, says European Dev't Report, Global Policy Watch (blog), 15 May 15:
As negotiations resume at the UN on the draft outcome of the Financing for Development Conference in Addis Ababa this July, the European Commission launches its 2015 European Report on Development titled "Combining finance and policies to implement a transformative post-2015 development agenda". In short, the achievement of the SDGs needs finance, and finance needs effective policies to deliver on the expectations of the post 2015 agenda

Posted on Fri, 19 June 2015:

Greek bank run accelerates as European Central Bank holds emergency meeting, Irish Times, 19 Jun 15 [self-updating link]:
Greeks pulled more than €1 billion out of their banks in a single day, banking sources said on Fri., as the country edged closer to the brink of default despite upbeat remarks from PM Alexis Tsipras. With less than two weeks left before Greece will default on an IMF loan unless the gov't reaches a deal with creditors, financial markets fear the authorities may have to impose capital controls to prevent savers from emptying the banks

Olivier Blanchard: Greece - A credible deal will require difficult decisions by all sides, IMF (blog), 14 Jun 15:
At the core of the negotiations is a simple question: how much of an adjustment has to be made by Greece, and how much by its official creditors? While the Greek gov't has to offer credible measures to reach the lower target budget surplus, and show its commitment to the more limited set of reforms, the European creditors would have to agree to significant additional financing and debt relief, writes IMF chief economist / MIT emeritus prof

US House approves presidential fast-track for trade deals, Reuters, 19 Jun 15 [via Stuff/NZ]:
The House of Representatives on Thu. reversed course, approving 'fast-track' legislation central to Pres Obama's trade deal with Pacific nations, and sending it back to the Senate. The House's vote, 218 to 208, was its 2nd in less than a week on fast-track, which would restrict lawmakers to a yes-or-no vote on trade deals. Democrats last week blocked it by voting down a companion measure to extend aid for workers hurt by trade

Posted on Wed, 17 June 2015:

Zimbabwe admits hyperinflation defeat, urges currency trade-in for US dollar bills, CBC News, 12 Jun 15:
Zimbabwe's central bank says banknotes from its old currency, which collapsed and was discarded years ago because of runaway inflation, can be exchanged for American dollars. But 100 trillion Zimbabwean dollars will fetch only 40 US cents. Zimbabwe in 2009 abandoned its currency for a system dominated by the US dollar and the South African rand after inflation hit 230 million percent

Kanbur and Wagstaff: Inequality of opportunity vs inequality of outcome, Vox EU, 10 Jun 15:
In policy and political discourse, 'equality of opportunity' is the new motherhood and apple pie. The position is that equality of outcomes should be irrelevant to policy; what matters is equality of opportunity. But can we, in practice, make a clean separation between inequality of opportunity and inequality of outcome?, ask Cornell prof; and World Bank research manager

Shift of global economic power to emerging economies set to continue, despite marked slowdown in China, PwC, 16 Feb 15:
The global economic power shift away from the industrial economies in North America, Western Europe and Japan will continue over the next 35 years - despite a projected slowdown in Chinese growth after around 2020. A new report indicates that the world economy is projected to double in size by 2037 and nearly triple by 2050. But the rate of expansion in China and some other major emerging economies will moderate to a more sustainable long-term rate

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