Maybe the Washington Consensus Wasn't So Bad

♠ Posted by Emmanuel in at 9/30/2008 06:39:00 PM
The mere mention of the "Washington Consensus" is all you need to get anti-globalization types foaming at the mouth over American imperialism, corporate globalization, and other sorts of unmentionables. Even I am no fan of the standard recipe of liberalization, deregulation, and privatization. Especially after Joseph Stiglitz released his polemic Globalization and Its Discontents, the term has been associated with quite negative connotations. Indeed, some have even mooted the existence of a more LDC-friendly "Beijing Consensus." If I can make money off it, I'll even write an "IPE Zone Consensus" for you (quote your price and...
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Not Even Jah the Maker Will Save America Now

♠ Posted by Emmanuel in at 9/29/2008 08:35:00 PM
I was confident that the $700 billion giveaway package wouldn't pass in the US House. Hence, I was surprised to see the Dow Jones Industrial Average momentarily fall by 700+ points. Except for the cheerleaders at CNBC, did anyone really expect this hackneyed piece of legislation to pass? The folks over at MarketWatch have put a headline in what I reckon is 70-point font to not-so-subtly underline the market tumult. (Click on the image to appreciate just how large it is.) What font size is this according to this Bob Marley and the Wailers fan? "Not Even Jah the Maker Will Save America Now"-size font. Expecting the debt-addled...
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What Would Jesus Do About the MDGs?

♠ Posted by Emmanuel in , at 9/29/2008 06:43:00 PM
My fellow Catholics should be apprised that our church is closely following the financial markets. Why? Is the Holy See a day trader? Probably not. Like Jeffrey Sachs, the Vatican's permanent advisor to the UN notes the irony behind rich Western countries finding oodles of money to bail out their financial systems yet not finding more modest amounts to help meet the Millennium Development Goals. My stock retort, of course, would be that were the US to send more aid, it would only borrow more from LDCs like Asian exporters and Mideast oilers to send to Africa. In effect, the US wouldn't really be "aiding" Africa (it is quite hard up), but merely acting as an intermediary.Setting aside the question of the efficacy of the MDGs (which I personally harbor doubts about), the Vatican does raise an important question of what the obligations of wealthy Westerners are to their less fortunate brethren. Alas, that's a post for another day. This from the Catholic News Agency:On Thursday,...
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The "De-Feminization" of Philippine Labor Exports

♠ Posted by Emmanuel in , at 9/28/2008 04:33:00 PM
The Philippines is known as a labor exporting country par excellence. In the absence of local opportunities, millions upon millions of Filipinos have gone abroad in search of gainful employment. Last year, it sent an all-time high number of laborers abroad, eclipsing even the 2006 mark when overseas contract workers first topped a million. As long as the local economic situation does not improve significantly, Philippine labor exports look set to continue. Certainly, the sheer number of persons working abroad is astounding.An interesting trend though is the seeming de-feminization of labor exports. When the Philippines first...
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EU's Mandelson: SWFs = "Savior Wealth Funds"

♠ Posted by Emmanuel in ,, at 9/28/2008 04:24:00 PM
I was monitoring Bloomberg when an interesting story scrolling on the ticker caught my eye entitled "EU's Mandelson, Airbus's Enders See 'Savior' in Sovereign Funds." It seems the intrepid EU Trade Commissioner and the Airbus big kahuna Tom Enders have recently been to China. While there, they reckoned that sovereign wealth funds (SWFs) ought to take a bigger role in global economic affairs by using their funds to help cushion the blow from the ongoing credit turmoil by--you guessed it--providing Western firms with increasingly scarce funding.Nevermind that the SWFs came a cropper riding to the rescue of ailing Western banks in 2007 as the share prices of these banks had much more to fall. What Mandelson and Enders seem to imply here is, "Hey, so you got burned investing in the smoke and mirrors world of high finance. Instead, why not invest in tangible things like manufacturing?" Once more, I am wary of Western preconditions of wanting to disavow SWFs of controlling stakes in...
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How Hard Will Asia Be Hit By US-Led Slowdown?

♠ Posted by Emmanuel in , at 9/28/2008 04:05:00 PM
For those of from Asia, I am afraid the prognosis isn't as swell as those who hold a "decoupling" theory would suggest. In fact, things may be even worse now than they were in the past as far as lower dependence on exports to the US and other Western economies is concerned. Although I keep hammering this point, there is only so much Asian countries can do to spur consumer demand in the US that they fail to do at home. The two natural limits to US mega-consumption are becoming more evident these days. Respectively, they're called "bankruptcy" and "foreclosure" (though they often go together). In a recent TIME op-ed, veteran...
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Fun With Math: Guess the 2009 US Budget Deficit

♠ Posted by Emmanuel in at 9/26/2008 09:51:00 AM
Here's a really fun game you can invite your family, friends, and neighbors to play. I call it "How Much More Will Sammy the Beggar Owe in 2009?" Basically, the objective of this game is to guess how much the US will add to its national debt in fiscal year 2009 (October 2008 through September 2009). Needless to say, the US will set astounding new records for outright national profligacy over a one-year period. Even now, political matters are in a state of flux as the mother of all bailouts is still being fought over (although it should be finalized shortly) and Senate Democrats are proposing yet another economic stimulus package....
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Will Subprime Crisis Lead to Protectionism?

♠ Posted by Emmanuel in , at 9/25/2008 11:38:00 AM
With commentators often calling the current subprime crisis "the worst economic downturn since the Great Depression," it is hardly surprising that many are warning of a potential outbreak of global trade protectionism akin to the aftermath of the cataclysmic events of 1929. Only yesterday, WTO Director-General Pascal Lamy discussed this very topic, naturally bringing up Messrs. Smoot and Hawley as progenitors of protectionist trade armageddon which led to similar barriers being put up by other countries.Note, however, that some still dispute the negative effects attributable to the Smoot-Hawley Act. Nonetheless, its passage did usher in a period when sentiment towards trade became more negative around the world. Can the same happen again? Lamy thinks so and warns against it. Here, Lamy addressing an NGO forum perhaps demonstrates a greater WTO willingness to address civil society concerns. I suggest that you read Lamy's short speech where he (of course) suggests that soon-to-restart...
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Whither St. Petersburg, the "Russian Detroit"?

♠ Posted by Emmanuel in , at 9/24/2008 02:51:00 PM
I have been to Detroit and it's not a particularly scenic place. In part, its run-down condition reflects the waning fortunes of America's automotive industry. Not only are automotive sales in America down overall, but those of GM, Ford, and Chrysler more so. However, it may surprise some of you that high gas prices have not dented car sales the world over. Russia, of all places, is a booming automotive market. Aside from the ranks of the nouveau riche who owe their fortunes to Russia's burgeoning exports during a time of rising commodity prices, decades of repression has made Russians clamor for the joys of the open road--although...
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The $700B Bailout Needs a National Referendum

♠ Posted by Emmanuel in , at 9/24/2008 02:04:00 PM
The (surveyed) people have spoken, and they are unhappy with the $700B bailout plan being assembled in the halls of the Federal Reserve, Treasury, and Congress. This from a recent Bloomberg/LA Times poll:Americans oppose government rescues of ailing financial companies by a decisive margin...[b]y a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy, according to the latest Bloomberg/Los Angeles Times poll.Note, however, that dissimilar results have been found depending on how the question is phrased. As anyone who has conducted surveys or studied survey design can attest,many factors can influence the results. For instance:A poll by the Pew Research Center for the People and the Press, asking a different question, found that Americans, by 57-30 percent, favored government action to save financial companies.The Pew poll told respondents that...
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Sachs and Bono Blog on MDGs @ FT

♠ Posted by Emmanuel in , at 9/24/2008 11:32:00 AM
I sometimes wonder if everyone and his dog has a blog. A few weeks ago, I mentioned the Bill Gates-inspired "Creative Capitalism" site. With world leaders now gathering at the United Nations to discuss progress (or the lack thereof) in meeting the Millennium Development Goals (MDGs) at the midpoint to 2015, the Financial Times has appropriately unveiled the formidable blogging team of Bono and Jeffrey Sachs. I am alternately cheered and dismayed by what they say. But first, let us start with Paul Collier's latest missive against the MDGs in a New York Times op-ed. Needless to say, my thinking is more similar to Collier's than...
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A Kinder, Gentler WTO?

♠ Posted by Emmanuel in , at 9/23/2008 09:10:00 AM
I was searching for something else when this op-ed in India's Financial Express caught my eye about how the "WTO has changed its spots." Unsurprisingly, most of us political science types are less enamored with the WTO than our economist counterparts. Reading the title, I reflexively thought to myself, "just what we need, another economist cheering on the WTO." Imagine the shock I received when I looked at the byline and found that the author was none other than Cambridge's Amrita Narlikar--another IPE type (albeit one who's far more widely known). Oh well, read the op-ed and decide for yourselves whether the new LDC-friendly WTO is in the offing, negotiation paralysis nothwithstanding:The World Trade Organization has changed. It is a much fairer organisation than the organisation that became the target of the Seattle demonstrations in 1999, and is (at least in some important ways) a much nicer and evolved progeny of the GATT’s. Is it not time that this multilateral body gets...
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Coca-Cola's Huiyuan Bid: Protectionist Payback?

♠ Posted by Emmanuel in , at 9/22/2008 10:25:00 AM
The instances where Chinese firms seeking to buy stakes in Western companies were rebuffed over "national security" concerns are well-known: CNOOC decided not to make a bid for American energy firm Unocal over lawmaker bellyaching. Huawei was discouraged from buying trifling bits of 3Com over the latter handling sensitive defence technologies.Now, it seems Coca-Cola is testing the waters to see if American protectionism will be returned with its attempted purchase of Huiyuan Juice Company for the sum of $2.4 billion. (Huiyuan is the PRC's largest juice maker.) Something Coca-Cola needs to clear is the newly passed "Anti-Monopoly...
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Bilateral Trade Pacts: US / Colombia & EU / Russia

♠ Posted by Emmanuel in ,, at 9/22/2008 09:20:00 AM
Bilateral trade deals look set to multiply exponentially as the Doha round flounders. It goes without saying that if countries didn't find benefits from trade, they wouldn't be so keen on engaging in trade pacts. Commentators such as WTO Director-General Pascal Lamy have noted the proliferation of such deals, and the trend looks like it won't die down anytime soon. Today, though, we look at two deals which are challenged by domestic factors. In the case of US - Colombia, American lawmakers have become increasingly sceptical about trade's benefits. In the case of EU - Russia, the recent conflict between Russia and Georgia may herald a cooling of relations between the West and Russia.Largely overlooked during this time of America-sourced financial turmoil is that Bush talked about the ongoing crisis while Colombian President Alvaro Uribe was paying the White House a visit. Alongside the usual paeans to the benefits of trade, Bush took pains to mention the strides made by Colombia...
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This is a Test of Asia's Emergency System

♠ Posted by Emmanuel in , at 9/21/2008 10:24:00 AM
A decade after the Asian financial crisis, countries in the region now have the (admittedly unwelcome chance) to test whether the preparations they have made during the intervening years have bulked up their defence mechanisms to withstand the "animal spirits" unleashed by periodic dislocations, this time the US-led subprime crisis. Let us begin with South Korea, a country strongly beset the last time around that was forced to borrow from the IMF as lender of last resort. Although its president believes the country's larger firms are now "action-ready" come what may, the traditionally more interwoven role of the "development state" is still there as the government claims that it stands ready to assist smaller firms which may come under duress:South Korean President Lee Myung Bak urged officials to take ``immediate and active'' steps to protect against fallout from the global credit squeeze, including aid to any small companies facing cash shortages.``Most recently, the local...
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Sell Ford and GM to the Chinese (Part 2)

♠ Posted by Emmanuel in , at 9/19/2008 05:55:00 PM
I am quite frankly bemused that the Big Three (or whatever is left of them) are once again badgering old, broke, and tired Uncle Sam for moolah. The current mortgage mess is dredging up endless mentions of the Chrysler bailout of so long ago. It reminds that, in nearly three decades, Detroit's fortunes have gone nowhere but down. I do not need to elaborate on the following points as they should be self-evident to any reasonable, unbiased observer:(1) That the automakers are now billing themselves as environmental champions keen on high fuel efficiency and alternative power sources is bunk. For starters, they have been combating...
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My Big Mouth: Is Full Nationalization the US Plan?

♠ Posted by Emmanuel in at 9/19/2008 05:50:00 PM
Bonehead here may live to regret saying this just two posts back: The US can try to bail out the whole damn banking system if it wants. The real question, though, is the above: But who will bail out America? If you want further proof of the unlimited amount of fear attending to the markets at the current time, an as-yet undeveloped plan to mop up toxic securities from the US financial system caused the DJIA to jump 400+ points yesterday and perhaps the same amount today. Berpaulosi (see picture) to the rescue, eh? You'd think that most commentators would have learned their lesson by now, but this latest Jah comes down from...
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The World Bank's Remittance Comparison Site

♠ Posted by Emmanuel in , at 9/18/2008 02:20:00 PM
Workers' remittances are big money: in 2007, the World Bank estimates that $317 billion was sent internationally as remittance flows. Given the seeming inevitability of further migration, this amount should increase even further. Those with an interest in migration should welcome the news that the World Bank now has a new website comparing the rates for sending remittances internationally in 120 common North to South corridors. In remittance-speak, a corridor is simply a country pairing such as Italy-Serbia or US-Ecuador. The World Bank site complements the UK Department for International Development (DfID) site SendMoneyHome.org,...
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Dead Ducks IV: But Who Will Bail Out America?

♠ Posted by Emmanuel in at 9/17/2008 06:00:00 PM
The picture here depicts insurance policy holders in AIG's Singaporean subsidiary taking whatever they can from the stumbling institution. What can I say? These Singaporeans are well-advised to cut their losses to AIG given who owns it now--the US government. Given America's bludgeoning deficits, can you blame these Singaporeans if they lack confidence in Uncle Sam's financial management skills? As Nouriel Roubini intones, the United States cannot indefinitely continue bailing out failing financial institutions lest it become insolvent itself. In effect, American shareholders are being made to foot an open tab without clear...
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Dead Ducks III: Over at the Securitization Lobby...

♠ Posted by Emmanuel in at 9/17/2008 04:43:00 PM
Believe it or not, there is an industry group championing the spread of asset securitization. In this day and age of housing contagion, I suppose that the American Securitization Forum (ASF) would get more members if it were the "Root Canal Fun Society" or the "Gary Glitter Kiddie Klub." It seems no one wants a piece of subprime.A few months ago, I highlighted the rich symbolism of the ASF holding its annual conference in Las Vegas, of all places. This was not apt as the securitization of subprime mortgages and related detritus has played a large part in the fiasco now roiling US and global financial markets. First, Las Vegas...
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