Posts of January 2009

The Baccarat Apparatchiks: Macau Under Pressure

♠ Posted by Emmanuel in Casino Capitalism,China at 1/30/2009 12:16:00 PM

A family friend who regularly visits Macau recently commented on how empty the place has become. (I've been there before and it's certainly worth a visit. Heaven knows they could use some tourists.) She asserts that the reason is simple: ever since the PRC cracked down on granting Chinese officials visas to visit the place, business has suffered. A simple search brought me a recent New York Times article suggesting pretty much the same thing. That is, the recent boom in the world's top destination by gambling revenues is in no small part driven by corrupt PRC officials siphoning state funds to spin the wheels of fortune. Another...

Those Sexy Political Scientists; Unsexy Economists

♠ Posted by Emmanuel in Education at 1/30/2009 08:04:00 AM

Let's face it: those of us aspiring to a career in academia as political scientists don't get paid much compared to say, business instructors. However, I am glad to say that there are fringe benefits. Henry Brighouse over at Crooked Timber made a nice discovery recently that sheds light on this assertion via a research paper he found. Felton et al. (2006) make a serious study [nudge-nudge, wink-wink] concerning how instructor sexiness is related to teachers evaluations on RateMyProfessors.com. Before turning to this activity, the authors made a ranking of the perceived hotness of various academic groups:I haven't the foggiest...

I Stand Trial Over Misrepresenting US-China Trade

♠ Posted by Emmanuel in China,Litigation,Trade at 1/29/2009 08:07:00 AM

Que barbaridad! Now I really know how Michael Corleone feels about being dragged back by ghosts of the past into business he wants to move away from. I am certain that many IPE Zone readers are not that interested in China-US economics relations. However, our friends at IPE@UNC keep referencing me on the matter, so I believe I'm obliged to respond out of politeness. Hence, I will make this post and try to move on until major developments arise. Recently, the group bloggers at Chapel Hill brought out trade expert Thomas Oatley to chime in on the matter and find little old me culpable of economic ignorance. The good professor...

Stupid Protectionist Tricks, French Aerospace Edn

♠ Posted by Emmanuel in Credit Crisis,Europe,Litigation at 1/29/2009 07:18:00 AM

The French are famous for industrial policy under the guise of dirigisme. This has, time and again, gotten them into trouble--especially with the coming of the WTO. Today's post concerns the never-ending Boeing-Airbus pot-calling-the-kettle-black show. At the moment, the EU and US have cases against each other pending at the WTO over aerospace subsidies. There is even a whiff of industrial espionage. I am of the opinion that both cases are a lot of hot air. Both sides have given sizeable subsidies, meaning that their claims against each other tend to cancel out.Perhaps cognizant of this fact, France is now upping the sweepstakes...

Stupid Protectionist Tricks, Buy American Edition

♠ Posted by Emmanuel in Credit Crisis,Trade at 1/29/2009 07:07:00 AM

It is with great pleasure that I announce that blogging buddy Ben Muse is back in action after a short lapse. He notes that "Buy American" clauses in the forthcoming US stimulus package are subject to WTO contestation, to no one's real surprise. Here's the relevant quote from the trade lobbies concerning violations of agreements on government procurement:Violate the United States’ international commitments, depending upon the actual proposal. The United States, through its membership in the World Trade Organization Government Procurement Agreement (GPA) and several bilateral and regional trade agreements, has guaranteed non-discriminatory access to the procurement markets of many of our largest trading partners. In return, the United States has agreed to provide non-discriminatory access to our own procurement markets for projects above certain dollar thresholds. The U.S. approach, crafted over successive Democratic and Republican Administrations, preserves many safeguards in...

Same Old: Russian Ruble Devalues, France Strikes

♠ Posted by Emmanuel in Europe at 1/29/2009 06:35:00 AM

I guess we're back to the bad old days when you could always count on two things. First, Russia's ruble losing value fast:Russia’s ruble had its biggest two- day drop in a decade against the dollar as investors speculated the central bank will be forced to widen its target trading band after draining 35 percent of foreign-currency reserves.The ruble depreciated 3 percent today to 34.9189 per dollar, the weakest since January 1998. The currency lost 5.2 percent in two days, the most since March 1999. It slipped as much as 2.3 percent to 45.6615 per euro, the lowest since the European currency’s introduction in 1999.While Bank Rossii pledged last week to defend the ruble at 36 per dollar, that target may be “very quickly” breached, said Gaelle Blanchard at Societe Generale SA in London. Russia spent a record $11 billion in a day last week to support the exchange rate, after a 30 percent plunge against the dollar since August, according to Moscow’s Trust Investment Bank. Russia’s...

The World Social Forum Lives! (Well, Kind Of)

♠ Posted by Emmanuel in Anti-Globalization,Latin America,Neoliberalism at 1/28/2009 08:39:00 AM

Every year around this time, two gatherings occur. The first is the World Economic Forum hosted by Klaus Schwab in Davos, Switzerland, where the world's elites gather to talk about the current state of the world economy. Given that it's not so hot right now, planning to hobnob with the good and the great can get you fired. Go ask John Thain. Hold the champagne and caviar, me lovelies. Naturally, this event receives masses of press coverage. At the same time, there has been an annual counterevent staged by globalization skeptics to coincide with the World Economic Forum held in different third world locations.I got a bit worried...

Some Great New Blog Finds

♠ Posted by Emmanuel in Bretton Woods Twins,Service Announcement at 1/28/2009 07:38:00 AM

Dear readers, I have been remiss in providing this blogging staple of pointing out fine new blogs that address similar fare to what you get here at the IPE Zone. Let me now correct this deficiency.By all means, make a visit to the Global Economic Governance blog run by, well, the Global Economic Governance program at Oxford. Among the blogs mentioned here, it is the closest analog to yours truly's site. Although posting there is not very heavy, each topic receives thoughtful, in-depth coverage from acknowledged experts such as IPE godfather Robert Keohane talking about the possibilities for a global cap-and-trade climate change regime.The credit crisis watchers among you will have probably seen the Baseline Scenario, a blog run by the insightful James Kwak and former IMF Chief Economist Simon Johnson. There is probably no more comprehensive source for up-to-the-minute commentary on the unfolding crisis. If you're thinking that Johnson and Co. are just rehashing the IMF line,...

US 3, China 0: America Victorious in WTO IP Case

♠ Posted by Emmanuel in China,Litigation,Trade at 1/27/2009 08:03:00 AM

I have to run, but note that the US has upped its effective tally in cases brought to the WTO dispute settlement mechanism (DSM) to three. For the record:China backed down and agreed to a settlement before a case concerning export rebates given to exporters was formally investigated;China lost its appeal in the case concerning discrimination against foreign auto parts manufacturers;Now, reports suggest the US has chalked up another one against China regarding intellectual property violations. From the US Trade Representative's site -Acting U.S. Trade Representative Peter Allgeier [subbing until Ron Kirk is confirmed] announced today that a World Trade Organization (WTO) dispute settlement panel has found important aspects of China’s intellectual property rights (IPR) regime to be inconsistent with China’s obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement). The United States brought claims against China because of serious...

IMF Rope-a-Dope on China's Currency Policies

♠ Posted by Emmanuel in China,Trade at 1/26/2009 07:22:00 PM

My goodness, this story never ends. The FT has an informative article about infighting going on at the IMF over whether to brand the yuan as "fundamentally misaligned." If you will recall, the US forced the IMF's hand to come up with a gimmick for bashing China's currency regime in 2007. However, IMF officials have been wary of siding with the US likely knowing full well that LDCs will not play along. Notably, the IMF hasn't performed Article IV consultations with China since 2006 (see this PDF) when all members are, in theory, required to undergo this procedure yearly. Out of fear of offending China, the IMF has passed the...

China's Next Cultural Revolution Meets Frank Zappa

♠ Posted by Emmanuel in China,Credit Crisis at 1/26/2009 06:03:00 PM

Like other countries in the region, China has good reason to be wary of student unrest. After all, the 1989 Beijing massacre was in no small part triggered by student protests. Then, as now, economic turmoil may be emboldening students to push for democracy and other Western capitalist nonsense. It is thus with little surprise that the PRC leadership is looking to avoid a 1989 rehash. In effect, the Communist Party is looking to replace flowery idealism a la the Beatles' Sgt. Pepper's Lonely Hearts Club Band with Frank Zappa and the Mothers of Invention-style realism a la We're Only In It For the Money (fake idealism). What...

IMF: Global Growth Estimate Down to 0.5% in 2009

♠ Posted by Emmanuel in Bretton Woods Twins at 1/26/2009 05:43:00 PM

This is a quick one. Just five days ago, the IMF had this to say about its forthcoming updated forecast for world growth in 2009 (there's also a summary of current financial crisis borrowers):[Dominique Strauss-Kahn] said the IMF would significantly adjust downward its forecast for world growth for 2009 when the 185-member international institution announces a revised assessment of the global economy on January 28. In an update released last November, the IMF had said that advanced economies would see a contraction in output in 2009—the first since World War II—but that growth in major emerging markets would still enable the global economy to advance by 2.2 percent in 2009.Reuters now says a G-20 minister has leaked the IMF estimate at 0.5%:The International Monetary Fund (IMF) has slashed its forecasts for 2009 global growth to 0.5 percent from 2.2 percent in its last economic outlook in November, a Group of 20 (G20) finance official told Reuters on Monday.The Fund forecast...

Why Chinese Think Geithner is Wet Behind the Ears

♠ Posted by Emmanuel in China,Trade at 1/25/2009 10:59:00 AM

Kindred blogger Kindred raises some interesting points in his most recent posts at IPE@UNC. First, despite being an IPE guy, he comes to the defense of economists receiving a thrashing at the hands of one Will Wilkinson. Even within IPE, readers should note that there are clear differences among practitioners--especially across a transatlantic divide. Benjamin Cohen has come out with an article in the Review of International Political Economy asking why American and British IPE are so different. (There's a non-subscription version, too.) Having studied IPE in both educational systems, I vouch for Cohen's idea that US IPE is...

China/US: Cut the Crap and Just Fight Each Other

♠ Posted by Emmanuel in China,Trade at 1/24/2009 11:01:00 AM

Now this is more like it in the "pot calling the kettle black" sweepstakes. China has now come out with an official response that takes great umbrage to just-installed US Treasury Secretary Timothy Geithner going along with the characterization of China as a "currency manipulator." From Reuters:A Chinese central banker denounced accusations by U.S. Treasury Secretary-designate Timothy Geithner that China was manipulating its yuan currency, calling them misleading and warning against "excuses" for protectionism.Su Ning, a vice governor of the People's Bank of China, called the comments by Geithner "out of keeping with the facts"...

Today's Trope: Britain May Need IMF Bailout

♠ Posted by Emmanuel in Bretton Woods Twins,Europe at 1/23/2009 09:08:00 AM

Asking for an IMF bailout is among the worst things countries can do in terms of damaging national prestige. It's the global political economy equivalent of cadging distant relatives (i.e., "the international community") for money to help tide you over. I've covered several of the most recent approaches to the IMF including Iceland, Ukraine, and Hungary. Now, the leader of the British Conservatives, David Cameron, is leading a charge that the United Kingdom may soon go hat in hand to un grand seducteur Dominique Strauss-Kahn. From the Independent:Britain risks bankruptcy and a humiliating bailout by the International Monetary Fund (IMF) because of Gordon Brown's borrowing, David Cameron said yesterday. With official confirmation that the economy has entered recession expected today, the Tory leader delivered his strongest warning yet: "If we continue on Labour's path of fiscal irresponsibility, at some point – and it could be very soon – the money will simply run out."His speech...

China Unhappy About Yuan Manipulator Taunt

♠ Posted by Emmanuel in China,Trade at 1/23/2009 07:09:00 AM

This place was among the first to note Timothy Geithner's more aggressive stance against China's foreign exchange policy. The New York Times has since covered the issue and so has fellow blogger Yves Smith. Trying to be at the forefront, it's my sworn duty to report that Chinese officialdom is not taking this accusation in stride as the following Reuters article notes. However, for someone curious about the outcomes of a possible trade war, I am not touting deliverance just yet as both sides are holding back from laying down the gauntlet with no chance of turning back. The text of the testimony is here (HT Trade and Taxes).Again, the US Treasury issues biannual reports determining whether trade partners are practicing currency manipulation. I, for one, doubt whether there is sufficient political pressure to get this done at the first instance. On the Chinese side, they've taken the attitude of listening to what is said through diplomatic channels, choosing to ignore what's said...

France: British Pound is Getting Too Pounded

♠ Posted by Emmanuel in Europe,Neoliberalism at 1/22/2009 08:45:00 AM

It is unfortunate that we must consider the British as "Americanized Europeans" in the negative sense. Like the Americans, the British are full of consumer debt borne of financial innovation. Both had massive property bubbles. Now that the UK's banking shenanigans are coming undone, the British government is similarly opening the spigots to hose down an incipient crisis with liquidity to little positive effect. Again like America, Britain has allowed its industries manufacturing tradable goods to dwindle vis-a-vis a burgeoning financial services sector. Unlike the US dollar, however, the British pound does not have the luxury...

Is Geithner Climbing the China-Bashing Bandwagon?

♠ Posted by Emmanuel in China,Trade at 1/21/2009 07:15:00 PM

Beats me, actually. Reuters reports Geithner's coy statements before his Senate confirmation hearing. More or less, it's "I'll get back to you on that." Still, I must say that he appears more forthright in his criticism of China's practices than his Bush administration predecessors. Whether this is a prelude to some action will be very interesting to monitor:Geithner was asked at his Senate Finance Committee confirmation hearing whether he thought China's "manipulation" of its currency remained a serious concern. "I do believe it is a significant issue," he told Sen. Jim Bunning, a Kentucky Republican who has sponsored legislation to press China to move a more flexible exchange rate policy. [That would be Bunning-Stabenow-Bayh, S.796.]"As I said earlier, I believe it is important for the United States and the global economy that our major trading partners operate with a flexible exchange rate system and that market forces determine the level of those exchange rates," Geithner...

Guiyu, China's Americanized e-Waste Capital

♠ Posted by Emmanuel in China,Environment at 1/21/2009 10:19:00 AM

If you ever wondered where your disposed-of electronics go, chances are that it will find its way back to the country where it was originally manufactured. TIME recently had an interesting article on Guiyu, China. Notably, the US is once again an enviro-villain as it is the only developed country not to have ratified the Basel Convention on hazardous waste exports to LDCs. Is this the "way of life" Obama doesn't want to apologize for? It would be appalling if the answer was "yes":The U.S. is the only industrialized country that refused to ratify the 19-year-old Basel Convention, an international treaty designed to regulate...

Explaining the Postwar Economic Order in One Chart

♠ Posted by Emmanuel in Credit Crisis,Hegemony,Trade at 1/20/2009 07:24:00 AM

What follows may be an oversimplification of the post-WWII order, but you may find that there is no small amount of truth to it. In a few hours, our American friends will inaugurate a new president. Although I am 100% percent certain that he and his advisors are not IPE Zone readers, the economic challenges they face--and indeed, the rest of us as well--can be informed by the following chart. It depicts historical US personal savings rates and is taken from ch. 9 of the EBRI Databook on Employee Benefits:The important thing for me is, regardless of how you interpret this chart--the US as a spendthrift nation (negative view)...

Fight Time: EU to Slap 25% Duties on PRC Steel

♠ Posted by Emmanuel in China,Europe,Trade at 1/20/2009 06:28:00 AM

With folks like me prattling on and on about an impending US-China trade war, don't forget that there are many other disgruntled nations that have come up against the mighty Chinese export machine. Today's case in point is the EU. In late 2007, there were already rumblings about an impending EU sanction, with angry noises being made about China's pollution-intensive manufacturing methods. Fast-forward to early 2009 and we now appear to have impending EU duties on Chinese concrete rebar and the like. (My apologies for not bringing this news earlier.) From Reuters: A key European Union trade panel voted in favour on Thursday of imposing temporary antidumping duties of 25 percent on imports of Chinese-made steel wire rods, EU sources familiar with the case said. "The vote was in favour of the duties," one source told Reuters on condition of anonymity.European steel producers requested the additional tariffs on the rods, used among other things to reinforce tyres and concrete. They...