Posts of February 2011

Fire Sale America, Way to Fix US Budget Woes?

♠ Posted by Emmanuel in Americana,Hegemony at 2/28/2011 12:03:00 AM

Here's a fun Newsweek article I missed by none other than LSE IDEAS' own Niall Ferguson. Yes, the same Newsweek sold for $1--a once-great American institution fallen under hard times like so many others. While I suspect that I may be writing more about shutting down American government for a prolonged period of time in the next few days--something I want to do, mind you--here's some food for thought in the meantime. There are a number of things obvious about the modern-day United States. It's mind-bogglingly broke at the federal level. Many states and cities there are no better off, either. At the same time, though, Americans...

US Air Force Tanker Wars: Boeing Upends EADS

♠ Posted by Emmanuel in Europe,Security,Trade at 2/26/2011 12:54:00 AM

Here is another instance where waving the red, white, and blue seems to have paid off for an American firm. I have made a lengthy earlier post on US Air Force efforts to replace it ancient, 50-some-year-old fleet of KC-135 air refuelling tankers. To make a long story short, the world's two largest purveyors of commercial jets, Boeing and EADS (the parent company of Airbus), have played rough in pursuit of the lucrative $35 billion contract.Round one of the bidding process went to Boeing in 2003, but it turned out that Boeing's former CFO promised the concerned Air Force procurement officer a lucrative job afterwards, resulting...

Reform Interruptus: IMF Kudos for Pre-Crisis Libya

♠ Posted by Emmanuel in IMF,Middle East at 2/25/2011 09:12:00 AM

This post is a follow-up to one I have just made on the reformist direction Libya was headed prior to the present crisis. In no small part due to Saif al-Islam Qadhafi's prodding, there were indications that the state was indeed normalizing itself as a market-based economy.From the last (meaning previous, one hopes) Article IV IMF consultation dated 9 February 2011, we gather a number of interesting factoids:An ambitious program to privatize banks and develop the nascent financial sector is underway. Banks have been partially privatized, interest rates decontrolled, and competition encouraged. Ongoing efforts to restructure and modernize the CBL are underway with assistance from the Fund. Capital and financial markets, however, are still underdeveloped with a very limited role in the economy. There are no markets for government or private debt and the foreign exchange market is small.Structural reforms in other areas have progressed. The passing in early 2010 of a number of far-...

Bad Timing: PM Cameron in Mideast Selling Arms

♠ Posted by Emmanuel in Middle East,Security at 2/24/2011 10:52:00 PM

The British press is having a field day with the coalition government's apparent delay in retrieving its citizens from Libya. Delay aside, let's say there are a lot of incidents suggesting the government was caught unawares. Foreign Secretary William Hague made a gaffe a few days ago in suggesting Moammar Qadhafi was on his way to Venezuela to join his good friend Hugo Chavez. Meanwhile, Deputy PM Nick Clegg forgot he was in charge while Cameron was away on...an interesting business trip.As it turns out, part of the reason for the slack government response has been PM David Cameron being away on business in the Middle East. Among the wares he was hawking on behalf of British industrialists included, er, weaponry. While the UK decries what's happening in Libya with the ruling Qadhafi clan in last stand mode, it's probable that arms the current government continued to sell to Libya figure into Qadhafi's current repression. From Defence Management [!]:Prime Minister David Cameron...

Siberian Shuffle 2011: Russia Finally Joins WTO?

♠ Posted by Emmanuel in Europe,Russia,Trade at 2/24/2011 12:01:00 AM

Holy moley, I have written about Russia joining the WTO for practically the entire time this blog has been in existence [1, 2, 3, 4, 5, 6, 7, 8]. To be sure, the Russians themselves have been the source of delay more often that not. It had ill-advised run-ins with neighbouring states Georgia and the Ukraine--precisely those it could not afford to offend since it needs all existing members' assent for it to join the WTO. Then the Russians floated the weird idea of it, Belarus and Kazakhstan applying jointly as a customs union. On the balance, there has been a whole lot of posturing, but it appears Russia is now concentrating...

LSE Alum Saif Qadhafi, Libyan Michael Corleone?

♠ Posted by Emmanuel in Education,Middle East at 2/23/2011 12:04:00 AM

Just when I thought I was out...they pull me back in - Al Pacino as "Michael Corleone" in The Godfather III.When I was a wee lad, my uncle who was a big fan of The Godfather series forced me to watch these movies with him when I would much rather have watched The Smurfs. Being older--wiser I am not so sure of--I have gained a grudging appreciation for a genre that was already hackneyed in its heyday. We follow Michael Corleone, scion of a family with a colourful history, evolve. Although he tried to move on, make the Corleone name shed its past and go legitimate--events, dear boy, events conspire to bring him back to confront...

IPE Zone Fully Endorses US Gov't Shutdown

♠ Posted by Emmanuel in Americana at 2/22/2011 10:31:00 PM

It was quite an easy decision. After all, I am the sole author of the IPE Zone ;-)But seriously, I gather that one of the most popular video game series in the United States is called Unreal Tournament. In fact, I get the same feeling of unreality with budgetary discussions in the country that spawned Unreal Tournament. States alike Wisconsin, Indiana, and Ohio are becoming battlegrounds for the mother of all showdowns in Washington. That is, the looming March 4 cut-off point at the federal level. The combatants in the American arena line up thusly: Republicans do not understand that revenue generation can be part of the...

Yanqui Protectionism: CFIUS, Huawei, and 3Leaf

♠ Posted by Emmanuel in China,Security at 2/22/2011 12:04:00 AM

Here's another entry in the seemingly non-stop catalogue of US-China dustups. Given America's chronic external deficit, it must attract at least an equivalent amount of capital inflows to compensate. To date, the Chinese have been willing to purchase US Treasuries (perhaps more reluctantly in recent years). However a natural misgiving given the rock-bottom near-zero interest rate policy (ZIRP) being pursued Stateside is that the yields China receives may not adequately compensate for the risk China takes. First, there are local grumbles that so much money is better spent at home where many problems alike poverty and pollution...

Middle East 'Political Risk' - Bahrain F1 Edition

♠ Posted by Emmanuel in Middle East,Sports at 2/21/2011 05:52:00 PM

There's an interesting feature from Reuters on what unrest in Middle East / North Africa means:The winds of change blowing across the Northern Sahara all but demand a look at foreign operations disclosures, particularly as many companies are deeply entrenched in preparing this year’s annual reports. Political risk has many guises—war, expropriation, currency devaluation—but for companies doing business abroad, these risks don’t begin to give a complete picture of potential threats to earnings. Just six weeks into 2011, a number of well-known companies have already provided a glimpse of what’s keeping their board members awake at night.Just two days ago, I discussed the Bahrain Grand Prix as just the sort of Western-sponsored event at risk in the region. (While watching the BBC, the commentator mentioned that the kingdom spent £25 million to host the 2011 race plus another £11 million for having the first race of the season. These come on top of £92 million to build the Sakhir...

China Shows Its G-20 Might, Wins on Imbalances

♠ Posted by Emmanuel in China,Credit Crisis at 2/21/2011 12:01:00 AM

In case you missed it, and I can't blame you if you did because it mostly consisted of theatrics as opposed to anything substantial, the G-20 convened a meeting on the question of global economic imbalances over the weekend in Paris and issued a tame communique. Instead of having a substantial bearing on such imbalances, however, it casts more insight on that perpetual question of "Hu's the daddy of the world economy?" Coming into this meeting, the Chinese position was already well understood on the matter of using indicators for imbalances. Which is to say that overall the lesser, the better. At the meeting proper, the PRC...

Bahrain GP in Jeopardy: F1 and Authoritarianism

♠ Posted by Emmanuel in China,CSR,Middle East,Southeast Asia,Sports at 2/19/2011 08:01:00 PM

In olden days a glimpse of stockingWas looked on as something shockingBut now, heaven knows - anything goesIt's weekend feature time. I suppose that hosting a Formula One grand prix is, above all else, a vanity project. In the same way that hosting the World Cup or the Winter or Summer Olympics is a way of saying that you've arrived on the world stage, so too does having a spot on the F1 calendar. Unfortunately, however, it's another truism that vanity projects do not always make money. For instance, there were worries over even whether the Shanghai Grand Prix would get a contract extension from the F1 powers-that-be this...

Behavioural Economics? Try Biological Economics

♠ Posted by Emmanuel in Credit Crisis at 2/18/2011 12:02:00 AM

By now, all and sundry should be familiar with behavioural economics. In contrast to homo economicus or rational economic man, real humans are subject to all sorts of foibles during decision-making processes. This body of work was most memorably crystallized in Kahneman and Tversky's prospect theory which won a Nobel Prize in Economics a few years back. If anything else, the idea of "bounded rationality" was visibly displayed by the easy fallibility of financial services workers of all stripes during the subprime crisis.Although behavioural economics is now rightly drawing its share of adherents, there is yet another emerging field that may help our understanding of international finance in particular. No, I am not talking about neuroeconomics, though that too is an interesting area. Rather, we may be on the verge of mainstreaming what was previously esoteric in biological economics. Drawing on natural phenomena, there may be patterns in how financial markets operate that can...

BRICs Guy Jim O'Neill: China's Rise Benefits All

♠ Posted by Emmanuel in China,Development at 2/16/2011 12:07:00 AM

Jim O'Neill of Morgan Stanley should be familiar to one and all as the fellow who coined the acronym "BRICs" for the major emerging economies Brazil, Russia, India, and China (though he sometimes expresses regret putting Russia in there). Although a less neat acronym would be required, he's also alluded to including Mexico, South Korea, Turkey and Indonesia. While I'd be inclined not to include South Korea since it famously industrialized earlier as part of the Asian tigers and is not that large population-wise alongside the others, it's his list to make--not mine. Given his track record, he's definitely considered among the...

Let the PRC Fund (Broke) US Primary Schools

♠ Posted by Emmanuel in Americana,China,Education at 2/16/2011 12:01:00 AM

We see in China things we used to see in ourselves...can do, initiative...that used to be us! - Thomas FriedmanI've been watching the BBC's interesting series The Chinese are Coming documenting the effects of China's rise on the continents of Africa [episode 1], South America and North America [episode 2]. Sorry readers outside the UK, these are supposed to be only available to local viewers--but that should give you a clue about what to do if you really want to watch. Display some Chinese-style initiative instead of American-style La-Z-Boy sloth.This blog has long featured stories on China's activities in Africa and its associated...