Geezernomics: Can Migration Revive Japan, Inc?

♠ Posted by Emmanuel in , at 11/27/2008 08:46:00 AM
Can a country's level of xenophobia be so high that it would rather sacrifice its economic future than admit more immigrants? That, my friends, is what I wonder about when it comes to Japan. It is ironic that some of the most closed societies are the ones that can benefit the most from migration. The archetypal case in point is, of course, Japan. The roots of its current economic malaise are in large part demographic. Never forget that the benefits from social cohesion borne out of homogeneity have costs in terms of economic dynamism.Efforts to spur domestic consumption at a time of export weakness face huge difficulties...
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Thai Airport Sieges and Japanese Marxist Tactics

♠ Posted by Emmanuel in , at 11/26/2008 08:21:00 PM
Images of Thai protesters camping in Thailand's brand-spanking new airport as dumbfounded foreign tourists bemoan their fortunes are being beamed around the globe thanks to the wonders of modern communications technology. If disrupting the Thai political economy was their objective, they've certainly done the business by hitting it where it hurts. The "Land of Smiles" is quite dependent on tourism for its economic well-being, with various estimates pegging its contribution to Thai GDP between 7% and 12%. Thai tourist arrivals have already been hurt by the credit crunch; this disruption near the peak of the tourist season as Westerners seek escape to warmer climes cannot be a welcome development.The recent Prime Ministers of Thailand since Thaksin's removal have been, to say the least, a colorful bunch. Prior to the current PM, a TV chef with loyalties to Thaksin, Samak Sundaravej was selected by the People Power Party (PPP). The PPP is formed of remnants of Thaksin's now-defunct...
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Her Name Was Rio (Tinto), She Was a No-Buy

♠ Posted by Emmanuel in , at 11/25/2008 07:02:00 PM
It appears the bizarre commodity love triangle of BHP Billiton - Rio Tinto - PRC has come to an abrupt end as Billiton is now dropping its previous takeover bid for Rio. There will be no merger of the mammoth Australian mining firms. China can now rest from its efforts to frustrate this proposed pairing and the pricing power it might have created over China. In large part, this turn of events is due to spectacularly falling commodity prices. In contrast to earlier scenarios where continued global growth would occur due to a "decoupling" of the rest of the world with America's downturn, things have recoupled in spectacular fashion.The story roughly goes like this, as you all know--nearly insolvent American consumers, battered by stagnant incomes and falling home and equity prices, have hit the wall. In turn, export-oriented economies like that of China have seen less demand for consumer goods. With less demand for consumer goods, China has less need for commodity exports such...
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Japan Explores "Manga Diplomacy"

♠ Posted by Emmanuel in , at 11/21/2008 12:33:00 PM
TIME has a neat article on how, despite (or perhaps because of) a domestic economy mired in yet another recession, Japan is becoming keen on reaching out to the world. Among other things, it's sending global goodwill ambassadors, buying up foreign firms, proposing to give the IMF $100B in emergency funds, increasing foreign aid, establishing more embassies abroad, and creating cartoon ambassadors like Doraemon here. Elsewhere, the article notes how foreign opinion of Japan is now only exceeded by that of Germany. Is there something to WWII aggressors trying harder to make amends with everyone else? While commercial interests...
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Will US Sovereign Debt Ever Be Downgraded?

♠ Posted by Emmanuel in , at 11/20/2008 07:12:00 PM
MarketWatch commentator Paul B. Farrell has just penned a typically entertaining op-ed on why the US is headed for an even greater world of trouble come 2011. Among other things, entitlement spending is going to spiral upwards given the imminent retirement of the baby boom generation. Throw in stagnant wage growth for almost an entire decade with a collective unwillingness to contemplate tax increases and the US is in a fiscal bind of enormous proportions that will only grow. I have few difficulties with Farrell's bleak prognosis: the US is the world's biggest economic basket case and it is dragging the rest of the world down...
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Detroit Needs...an American Bob Geldof

♠ Posted by Emmanuel in at 11/18/2008 01:23:00 PM
Everyone is aware that the endgame for Detroit nears. Desperate cash-raising measures are being made by automakers to at least try and make it to the purportedly more automaker-friendly Obama administration. That, of course, is no guaranteed thing. GM is selling its stake in Suzuki, while Ford its stake in Mazda. Although I remain firmly opposed to all forms of government bailout, there is a good point many are making that automakers are not so insignificant compared to banks in America's economic fortunes. Why them, not Detroit?So Detroit's lobbying presence and representation of former industrialists in government may be...
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What a G-20 That Didn't Matter Looked Like

♠ Posted by Emmanuel in , at 11/16/2008 03:07:00 PM
If you've read the previous post, you know that I was not expecting a wide-ranging rethink of the international economic order. As with many of these gatherings, the most tangible outcome was, er, holding another gathering in the near future (more specifically, "by April 30, 2009"). It was, to my mind, pretty much wasted time--except for those whose main interest is in preserving the status quo. Which, as I've suggested, is the Bushian BATNA in negotiation-speak. Reading the G-20 Summit Declaration is instructive. Just as Bush did before going into the summit, we get the usual affirmation of the virtues of free market capitalism:Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.So far, so what. We don't expect a Hugo Chavez-style denunciation of capitalism's...
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What'd a G-20 Agenda That Mattered Look Like?

♠ Posted by Emmanuel in at 11/15/2008 01:09:00 PM
Today may be remembered as an important one in the annals of economic history; then again, it may be largely forgotten. The so-called Summit on Financial Markets and World Economy has been styled as a successor to the now-legendary Bretton Woods meeting. (See the natty logo I picked up from the US Treasury site.) Sebastian Mallaby and others have styled it as a 21st Century Bretton Woods, though those attending the summit are more circumspect. To me, their circumspection may prove to be correct in the sense that far-reaching changes in the global economic architecture will not be forthcoming. Not only is Bush a lame duck,...
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EU Readies WTO Litigation on US Auto Subsidies

♠ Posted by Emmanuel in , at 11/15/2008 11:18:00 AM
As if we needed further proof that official aid for America's dying automakers was a bad idea--truly a "sunset industry" if there ever was one--here come more bad news. EU-US conflicts at the WTO are usually interesting, from Boeing versus Airbus to genetically modified foodstuffs. Deutsche Welle now reports that the US disbursing $25B in automaker aid will likely result in the EU taking the US to the WTO's dispute settlement mechanism:The EU is ready to go to the World Trade Organization should US governmental aid to its struggling auto industry be deemed "illegal" by European lawyers, Commission head Jose Manuel Barroso said Friday."We are looking at the (US) plan. The plan has not yet been made official but certainly, if it amounts to illegal state aid we will act at the WTO," Barroso told Europe 1 radio when asked about the US bailout package.An aid package worth $25 billion was approved by the US Congress in September. The package was earmarked for investment in new generation...
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How to Run a $273B Budget Deficit - In a Month

♠ Posted by Emmanuel in , at 11/14/2008 03:16:00 PM
Sometimes you don't need to look very far for things to blog about. Ironically, I was cutting store coupons--an American invention, mind you--when the front page of Yahoo! featured a story on the US budget deficit swelling to $273.2B in October alone--the first month of fiscal year 2009. The juxtaposition was nearly perfect: here I was taking advantage of a useful American money-saving idea just as its government has just run up over a quarter trillion dollar deficit--in a single month.In a burst of inspiration (or depravity depending on your POV), I recently wrote that the US was embarking on "a level of (fiscal) debauchery...
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Is a Doha Round Deal Really Imminent?

♠ Posted by Emmanuel in at 11/13/2008 11:16:00 AM
Here we go again with rumblings that the Doha Development Agenda (DDA), better known to the rest of us as the Doha Round, is nearing completion. A few days ago, newly installed EU Trade Commissioner Catherine Ashton commented that the upcoming G-20 summit in Washington holds the key for at last finishing this bit of tricky business.What strikes me at this point in time is that Brazil and India seem to be just as keen on getting Doha done as their US and EU counterparts. LDCs seem to be buying into WTO Director-General Pascal Lamy's idea that the completion of Doha should shore up the trust vital to functioning of world markets. Which, of course, makes me fearful that people are overselling Doha: how can an agreement on tariff reductions be the "magic bullet" that cures the world's credit ailments? Didn't global economic imbalances triggered by further trade liberalization contribute to the current mess?If folks battered by the current crisis are soothed by the completion of...
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Sell Ford and GM to the Chinese (Part 3)

♠ Posted by Emmanuel in , at 11/12/2008 12:32:00 PM
I am absolutely gobsmacked that, even now, I am about the sole voice calling for the US automakers to be sold to the Chinese [1, 2]. Unlike, say, defense technology gear, sellers of cars can hardly say that they're vital to America's national security needs. Now, everyone and her dog knows American carmakers have been begging Uncle Sam for federal mercy to the tune of some $50 billion. When Obama takes his oath and the even more Democrat-laden Congress goes back into session, it will be hard not to expect automaker aid from Washington. As always, I remain unconvinced of this meddling: whereas the Koreans had reason to help...
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Is the 'Fair Trade' Movement Exploitative?

♠ Posted by Emmanuel in ,, at 11/11/2008 12:36:00 PM
I fortuitously came across this back-and-forth exchange while looking for something almost entirely unrelated: Free trade supporters have long faulted the fair trade movement and vice-versa. Whereas the fair trade movement often presupposes that--for the lack of a better term--"conventional trade" fails to give proper remuneration to farmers in the developing world, free trade supporters cast doubt on whether the fair trade agenda can achieve a scale that can result in material improvements for developing world farmers. In a series of posts, Dani Rodrik cast doubt on the efficacy of the fair trade movement because (1) it...
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Rahm Emanuel: A Good Wall Street Investment

♠ Posted by Emmanuel in at 11/06/2008 04:40:00 PM
Phew! If I have kept strangely silent on the matter of the US elections, let me explain. Obama's victory has been a foregone conclusion for quite some time now. Thus, instead of weighing how much candidate Obama's (more populist) rhetoric compares to McCain's, the post-election period will better establish how much his talk translates into action. The post before this presents a problem Obama must face right away concerning rather overt rent-seeking behavior, while this post discusses why fears of a commie pinko Obama are wildly overblown.Readers of the Wall Street Journal editorial pages and similar commentary are doubtlessly familiar with the allegedly Marxist stylings of Barack Obama. Those who share similar concerns will no doubt be comforted that he is reportedly choosing among very business-friendly alternatives to be the next Treasury secretary. Now comes news that Obama is selecting Rahm Emanuel as his chief of staff, which should set the hearts of financiers leaping...
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Obama's Job #1: Save Big Three (Perhaps)

♠ Posted by Emmanuel in at 11/06/2008 01:13:00 PM
After soliciting the support of the automobile industry during the current election cycle (as Democratic candidates for president typically do), Obama will be put to an immediate test: GM, Ford, and Chrysler are in imminent danger of being driven off to the Great Car Dealership in the Sky. Aside from Americans demanding more fuel-efficient (usually foreign) cars after oil prices went up, all carmakers now have to deal with scarce auto financing. With over three-fourths of cars sold in America on financed terms, this is no minor problem. Indeed, President Bush's [remember him?] reluctance to bail out the auto industry is worrying as these carmakers may not even make it to the start of the Obama years. From Reuters:President-elect Barack Obama courted distressed U.S. automakers during his campaign and pledged to help them, but the industry's health is so bad it may not be able to wait for him to take office."He's not here until January (20th) and that's a long time in the life...
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Pascal Lamy Wants 4 More Years as WTO Chief

♠ Posted by Emmanuel in at 11/05/2008 02:02:00 AM
Care of the International Economic Law and Policy blog comes word that Pascal Lamy will seek a second term as WTO Director-General. Below is part of his statement on the matter:In keeping with the procedures established in document WT/L/509, I would hereby like to notify you of my decision to seek reappointment as Director-General of the World Trade Organisation for a further term upon the expiry of the current one on 31 August 2009.On my appointment as Director-General on 1 September 2005, I undertook to reinforce multilateralism, to work to ensure that trade opening continues to contribute to development and that the interests of developing countries are placed at the heart of the world trading system. I said then and, I believe it is as valid – if not more - today, that concluding the Doha Development Agenda Round of trade talks goes a long way in achieving these goals...All of this, and in particular the Doha Round, will not materialise without a concerted effort by all members,...
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EuroMartyrdom: Budget Rules to Prevail in EC

♠ Posted by Emmanuel in , at 11/04/2008 12:35:00 PM
With apologies to The Man of La Mancha:This is my quest, to follow that Pact No matter how painful, no matter how wracked To fight for the right, without question or pauseTo be willing to tighten purse strings for a Heavenly cause...Regular readers should be aware of my strong predilection for euro currency over the American equivalent. Is it irrational? This bit of news suggests otherwise as our European friends are hellbent on maintaining a semblance of fiscal conservatism in the face of a full-blown global slowdown. Pump priming is, to these fine fellows, overpumped. Yes, The Man of La Mancha is real, it's just that he's...
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