MT @levi_m: My @ForeignAffairs essay arguing for a "most of the above" #energy strategy: http://t.co/wc86HXTgNE
13 minutes ago
Emerging Market Channel: Latest Posts
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Emerging Markets
A new architecture for global financial regulation
At the G20 summit in Washington this month, it was agreed that global growth will require sound new global regulation of financial markets. But what would it take to achieve such regulation?
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Asia
China is now America’s largest creditor
America is the largest debtor nation in history. And given the economic weakness in the global economy right now, the debt load is likely to get worse. Recently, China surpassed Japan to become America’s largest creditor.
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Emerging Markets
Regulation should be international
In their expansive communiqué on the global financial crisis last weekend, the Group of 20 leaders bemoaned the pro-cylicality of financial regulation caused by lax regulators, inattentive rating agencies and greedy financial institutions. Curiously absent, however, is a candid acknowledgement of politicians’ central contribution to the mix. That is most unfortunate. Finding ways to insulate financial regulation from political meddling is critical to creating a more robust global financial system in the future.
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Emerging Markets
The Rising Sun in the Coming APEC Summit in Lima
Peru will host, this coming weekend, the annual summit of heads of state of the Asia Pacific Economic Cooperation (APEC[1]), China’s President Hu Jintao included. The APEC forum was established in 1989 to enhance economic growth in the region and to strengthen links between both shores of Pacific .APEC has 21 member countries which account for approximately 41% of the world’s population ( 2.7 billion ) , 55% of world GDP, and about 49% of world trade. The timing of the summit could not be better for Peru. The reason is that it offers the ideal silver-lining to exhibit, to participating leaders and businessmen, the resilience and strength of Peru’s economy in the midst of the global crisis. The marketing pitch: Peru as a good place to invest even in bad times.
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Emerging Markets
Venezuela: Contradictions in Style
With less than a week to go until the regional elections, many investors are expecting President Hugo Chavez to suffer a major defeat. Unfortunately, they will be disappointed. The nationalization of the RCN television network led to a decline in the president’s support. Food shortages, due to the use of price controls, and the constant tirades against world leaders only made matters worse. The disillusion with the Chavez Administration manifested itself in the rejection of the national referendum at the end of last year. The initiative sought to amend 33 constitutional articles—including the abolition of presidential term limits. The rejection of the referendum was the first electoral defeat for the Venezuelan president, and he vowed to relaunch his initiative. However, given the recent collapse in oil prices, many people thought that Chavez’s days were numbered. Unfortunately, a close look at the polling data suggests that he will win a majority of the states and municipalities, but this does not mean that he will sweep the electorate.
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Emerging Markets
Colombia: El Subrpimo
The credit crisis tore into Colombia, casting a dark cloud over the economy. In contrast to its regional brethren, who benefited from the commodity bonanza, Colombia took advantage of the high levels of international liquidity to finance a security-propelled consumer boom. The perception of greater public safety and better leadership imbued Colombians with the sense of confidence needed to embark on an unprecedented spending spree. Years of cowering in fear of terrorist attacks and kidnappings were replaced with reckless abandon. New automobiles choke the thoroughfares of Bogota, Cali and Medellin. Plasma televisions adorn homes, and international vacations are de rigueur for most members of the middle class. High levels of foreign investment, thanks to privatizations, bond issues and IPOs boosted the level of international reserves to an impressive $24 billion. However, the country has one of the worst current account deficits in the region–an alarming 3.5% of GDP. This means that Colombia would be extremely vulnerable whenever the credit crunch hit, and now it is manifesting itself in the oddest of places.
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Asia
Always look on the bright side of … economic data?
If things are really grim, it helps to have an indefatigable nature, and there’s no doubt that RBA Deputy Governor Ric Battellino has that in spades—at least in the speeches he makes at public conferences. Were I being crucified, I’d like to have Ric up there with me, singing “Cheer up Brian!…”, to take my mind off the nails. -
Asia
Would a trade war help solve the problem of excess capacity?
On Friday Chinese stock markets capped one of the best weeks in an awfully long time, with the SSE Composite closing at 1986, up 3.1% for the day and 13.7% for the week. Although a lot of local analysts have been saying that the rally is long overdue and represents confirmation that we have bottomed out economically, I think the rally was caused almost exclusively by the resurgence of rumors about the creation of a major stock market stabilization fund by the government.
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Don't Shoot the Messenger
Inflation Is Dead In Spain, Fasten Up Your Seat Belts For A Sharp Dose Of Deflation
As Barcelona-based property consultants Aguirre Newman publish a report that suggests Spanish property prices may need to fall by at least 23% for the market to return to any kind of normality, we learn today that Spain’s annual inflation dropped almost a full percentage point to 3.6 percent in October, according to data from the Spanish National Statistics Office. This was the lowest level in a year as energy and food costs fell and the real economy slowed dramatically. October’s figure, in line with estimates, was down from 4.5 percent a month before, but this piece of information obscures more of Spain’s current inflation dynamic than it actually reveals.
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RGE Analysts
More on the Chinese fiscal stimulus
The Chinese fiscal stimulus has provoked much debate since being announced last Sunday as analysts try to assess its impact. Will it succeed in cushioning China’s economic performance, will it contribute to more domestic imbalances? a first area of debate fixates around how much of the investment to be approved is “new” that is not included in the current 5 year plan and budgeted as such. Around 1/3-1/2 of the projects seem to be new, previously unannounced spending while much of it is a compilation of initiatives already announced or items that were already scheduled in the current five year plan.
