For those of you who doubt China's increasing clout in the global political economy, this new phenomenon may make you think again. It is no secret that the European PIIGS of Portugal, Ireland, Greece and Spain have some fiscal issues to work out. However, such concerns may be assuaged somewhat when the world's largest reserve holder indicates that it is willing to buy some euro-denominated debt from them. Ever so aware of the situation in countries he visits, Premier Wen Jiabao now makes boilerplate statements about China considering the purchase of public debt to prop up any number of PIGS.Earlier this month, we had Greece trying to get on China's good books if and when it starts issuing longer-dated paper again:China offered on Saturday to buy Greek government bonds when Athens resumes issuing, in a show of support for the country whose debt burden pushed the euro zone into crisis and required an international bailout. Premier Wen Jiabao made the offer at the start of a two-day...
Africa's Security, Governance & Development Nexus
♠ Posted by Emmanuel in Africa,Development
at 10/29/2010 12:27:00 AM
I was very intrigued by this contribution from Knox Chitiyo from the Royal United Servicemens' Institute (RUSI) to our IDEAS maiden publication commemorating the launch of our African International Affairs programme. However, it's only now that I've had the chance to mention it. The general gist is that security, governance and development are interlinked in Africa. Whereas most tend to come at it from one of the three perspectives, it is perhaps better to view them as a set of overlapping challenges.While the likes of William Easterly think that traditional development scholars mucking about with security matters is beside the point--see his criticism of Paul Collier's advocacy of intervention [1, 2]--there may be a path that is less activist yet keeps security matters in sight as a precursor and not a side-issue to economic development:The 2002 transition from the organisation of African Unity (OAU) to the African Union has been the catalyst for an African road map for Africa’s...
A Bloody Project: Tweaking SGP in the EU Treaty
♠ Posted by Emmanuel in Credit Crisis,Europe
at 10/28/2010 12:51:00 AM
Boy oh boy, this story never seems to end. As even I am becoming confused with all the melodrama, let's try to make sense of what's happened to the European Union in recent times. To make a very, very long story short:Plans to implement a European Constitution were shot down by several publics in referenda, most notably the French and Dutch in 2005;In place of a European Constitution, the burghers of Brussels came up with the Lisbon Treaty which retained a lot of the mooted constitution's text but discarded its overtly supranational features;Wary of plebiscites, many EU member states ratified the Lisbon Treaty in their legislatures;Except for the Irish that is, who turned in down in a referendum;Rather annoyed, the EU bigwigs made Ireland hold another referendum. Fearful of being marginalized in the EU at a difficult time--October 2009--the Irish public relented just a year and a quarter after rejecting it;Despite murmurs from dyspeptic Eurosceptic leaders in the Czech Republic...
Trouble Merging Singapore, Oz Stock Exchanges
♠ Posted by Emmanuel in Southeast Asia
at 10/28/2010 12:00:00 AM
Well this is a way to douse excitement over frantic mergers and acquisitions activity in the Asia-Pacific. Just a few days ago I was all excited about Singapore Exchange's (SGX) proposed takeover of Australia's largest stock exchange, the Australian Stock Exchange (ASX) in Sydney. After the initial euphoria over creating further economies of scale (more companies being traded on the same platform can help reduce transaction costs for investors) and scope (more financial products can be availed of to meet investors' needs), we come crashing down to the reality of a bare-knuckle political contest brewing down under.Once more,...
Ha-Joon Chang Bids Capital Controls Farewell
And so the death knell for Washington Consensus-style policies tolls even louder. While it's certainly debatable whether the excesses of liberalization, deregulation, and privatization helped bring about the current US-led subprime globalization mess, there are undeniable signs that laissez-faire has had its day as Gordon Brown once said. First, the architect of many such efforts stateside, the archetypal ugly American Larry Summers, is soon to exit the White House. Whether he went or was pushed is quite immaterial; the bigger point is that no one seems to be lamenting his demise. Second, current IMF leadership embodied by...
A Brief History of Foreign Aid Levels, 1960-2010
♠ Posted by Emmanuel in Development
at 10/26/2010 12:05:00 AM
My curiosity about regarding official development aid was piqued by a recent New York Times article profiling Dr. Rajiv Shah, the head of the US Agency for International Development (USAID). In recent years, USAID's stature within American policy circles has diminished somewhat, though it is supposedly in the ascendant once more given its closer ties nowadays to the State Department. Hopefully, USAID's efforts may become less politicized as well. That is, instead of aid being predicated on pet American causes as it's been in the past, it can move towards more impartial determinants of disbursing aid.One of my more popular...
Fareed Zakaria on Restoring the American Dream
♠ Posted by Emmanuel in Hegemony
at 10/26/2010 12:03:00 AM
TIME-CNN has evidently hired former Newsweek editor Fareed Zakaria lock, stock, and barrel. Before, he already had his GPS programme on CNN. With Newsweek being sold for $1, he's evidently transferred his print commitments to TIME magazine as well. Not one to dwell with small topics like yours truly, he attempts to explain no less than how to restore the American Dream. You needn't ask me what I think of it as it's probably dead and gone. Indeed, the standard of living of the current generation of folks living in that subprime pastime paradise will, on current trends, be assuredly lower than that of their predecessors. Before getting to his article, I 'd also like to point out that he would have done better had he mentioned a host of other things I've covered in one way or another:No mention of reducing inequality that spreads benefits per increment of national income better;No mention of increasing very limited social mobility (the Horatio Alger part of the American dream or,...
Currency Anarchy: Toshiba Prepares for ¥70 per $
♠ Posted by Emmanuel in Currencies,Japan
at 10/25/2010 02:30:00 PM
Oh the humanity. An apparently ineffectual G-20 has not stemmed further gains in the Japanese yen as the US seems to have gotten its way by escaping censure over its intentions to helicopter drop dollars en masse over the coming weeks. Hence, the yen is ominously poised to breach the 80 yen to 1 US dollar handle and break the postwar mark of 79,75. As someone said before, it's nothing less than a call to arms.Now, I don't believe the Japanese consumer electronics firm Toshiba needs any introduction to IPE Zone readers as its laptops and personal computing peripherals are well-known the world over. Having shifted a lot of manufacturing...
Are IMF Reforms Favouring LDCs Truly 'Historic'?
♠ Posted by Emmanuel in Governance,IMF
at 10/25/2010 12:06:00 AM
So it has finally been agreed upon: In addition to the much-ballyhooed ceasefire of sorts on the international currency war front [1, 2], G-20 participants at the recently concluded finance ministers meeting in Gyeongju, South Korea also finalized plans to reallocate Executive Board seats and thus contributions to the International Monetary Fund. In effect, European countries that were prominent in the postwar world will vacate two seats at the IMF's Executive Board that developing countries will now occupy. The IMF write-up summarizes these changes and how it believes its legitimacy will be enhanced by virtue of representing more voices from the developing world that are undeniably gaining clout in the world economy:Ministers of the Group of Twenty (G-20) industrialized and emerging market economies agreed on a proposed raft of reforms of the IMF that will shift country representation at the IMF toward large, dynamic emerging market and developing countries.Meeting in Gyeongju,...
G-20 Cops Out on Currencies, CA Balances
♠ Posted by Emmanuel in Currencies,G-20
at 10/23/2010 01:31:00 PM
Continuing from the previous post, there has been some lip service paid to what must be done about "international currency war" and global economic imbalances in the G-20 communique. For the former, currencies have been mentioned for the first time, though chronic surplus-running countries have repeated my point that helicopter dropping paper money alike what's being done by a certain North American country is indeed tantamount to declaring currency war. For the latter, there were no numerical percentage targets given to running a current account deficit or surplus as suggested by US Treasury Secretary Tim Geithner (plus/minus 4%). Supposedly, they're to be investigated and discussed further, but there's no definitive timetable. In other words, it's been left alone for now. As for using the IMF for beefed up macroeconomic surveillance, that unsurprisingly went untouched.So, it's likely same old, same old. Continue as you were--America certainly appears to have no intention of...
Today's US G-20 Gimmick: Geithner on CA Limits
♠ Posted by Emmanuel in Currencies,G-20
at 10/22/2010 07:42:00 PM
Here's more from the white man & forked tongue department: Perhaps unsurprisingly, the Yanks are first out of the chute prior to this weekend's G-20 gathering in South Korea with yet another plan to get its way. Instead of focusing on undervalued currencies--which it in any case is wont to let go of as you'll soon see in the second paragraph below--their latest tack is calling for limits on the external imbalances participating states can run (got that, China?) There's also a continuation here of the longstanding call to use the IMF as a tool to beat other countries into submission via enhanced surveillance that, surprise, developing countries are not particularly keen on. Aside from having limited participation because of limited IMF reform of voting rights, where's the joy in giving the America a multilateral stick to bash your head with over "currency manipulation"?At any rate, here is the text of the letter Geithner sent to other G20 member economies in its entirety...
Asian Economic Integration, Meet the 'Anti-Region'
Yesterday evening, we at LSE IDEAS hosted an event titled "Contesting East Asian Economic Integration: China, Japan, US" featuring two of the UK's foremost authorities on the subject matter in Shaun Breslin of the University of Warwick and Christopher Dent of the University of Leeds. Those with an interest in regions or regionalization--particularly in the Asia-Pacific--should find both names exceedingly familiar. As I was the speaker introducing the topic at this roundtable presentation, I set the table with the presentation slides above. (The content of PowerPoints above are much updated from the lecture slides I uploaded earlier.) Understandably, free trade agreements are always coloured by political considerations--whom to include, what goods and services to include, and so forth.
As such, various countries tout their own preferred groupings--including the world's three largest economies. China wants to stick with ASEAN+3 or the ten ASEAN countries plus China, Japan and...
Chile, From Rescuing Miners to Rescuing the US$
♠ Posted by Emmanuel in Currencies,Latin America
at 10/21/2010 12:22:00 AM
This week, the Chilean President Sebastian Pinera Echenique did his victory lap here at the LSE after the successful and heartwarming rescue of the stranded miners. Again, do bear with me as I wasn't able to attend that event since LSE IDEAS' own Niall Ferguson was presenting at the same time. However, you can of course listen to President Pinera's presentation via video and podcast which you can follow through the link above.And speaking of Chile, we turn to the more nitty-gritty, nasty business of protecting oneself from serial dollar bombardment from the US. Almost exactly a month ago, I discussed the many different countries...
World Bank: US Started World Currency War
♠ Posted by Emmanuel in Bretton Woods Twins,Currencies
at 10/20/2010 12:10:00 AM
Well, in so many words. As you know, I needn't be convinced who the aggressors are in "international currency war" [1, 2, 3] as the American game plan of further bulking up its central bank's balance sheet with junk assets purchased through debased currency are well-known. What I didn't expect, however, is that World Bank research would come to the same conclusion:Inflows of capital are posing a growing risk to East Asian macro-economic stability, according to the World Bank’s half-yearly review of regional trends. The report comes amid concern in Asia that a likely fresh round of US Federal Reserve quantitative easing, dubbed “QE2”, will unleash a destablising wash of funds into the region.Capital flows driven by easy monetary policies, low yields in advanced nations and confidence in East Asian prospects were helping to drive up asset valuations in some countries, “precipitating fears of a new bubble”, the World Bank said in its East Asia and Pacific Economic Update.The report...
Building the New Silk Road Leads to Tehran
Having attended an interesting [to say the least] conference on multiculturalism in Tehran over the summer, I of course took notice of another event going on there concerning the rebuilding the New Silk Road. Since it doesn't look too exciting, the Western press has not paid much attention to a gathering ostensibly concerned with customs regulations, but its implications may be far-ranging indeed in the near future. For, another post I made spoke of the Chinese spearheading this effort to establish a New Silk Road by relinking the Silk Road via their high-speed rail technology. The reasons for doing so are obvious. In contrast...
Why Merkel Fails Multiculturalism, Not Vice-Versa
It's interesting times in Germany-outwardly one of the most insular EU countries when it comes to discussions of multiculturalism. There is, of course, the still-unresolved matter of the French and Germans blocking several chapters for Turkish accession to the EU. (As a champion of Turkish EU membership, I even placed a clip of "Everyone's a Little Bit Racist" from the hit musical Avenue Q.) Now, we have an even more vehement statement of cultural insularity care of Chancellor Angela Merkel. Addressing the youth wing of the CDU, she avers that "multiculturalism has failed." This, of course, is partially aimed at the large Turkish minority in Germany who came as gastarbeiter (guest workers) but never left:In a speech to supporters, Chancellor Angela Merkel said multiculturalism in Germany has not been successful. Party leaders also sparred over immigrants' role in filling the country's shortage of skilled workers. Attempts to build a multicultural society in Germany have "utterly...