Islamic EconoFundamentalism: Egypt's FX Rationing

♠ Posted by Emmanuel in , at 12/30/2012 08:01:00 AM
Is sound money management a normative activity? I would tend to think so since depreciation, inflation and so on tend to have widespread negative effects on the population's well-being. However, it comes as no real surprise that the Egyptian central bank has taken what are arguably steps on the road to a full-blown economic crisis, namely: (a) rapid currency devaluation and (b) foreign exchange rationing. For our dear Arabic readers, the press release is up on the Central Bank of Egypt website--an, er, exciting place to work in there ever was one. Reuters has the pertinent details: Egypt's central bank said it would start...
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Back in America: Is "Reshoring" Overblown?

♠ Posted by Emmanuel in at 12/30/2012 07:22:00 AM
There's an interesting feature over at The Atlantic on how more American manufacturers are moving back to the United States since expected savings from moving more production to the likes of China didn't materialize. To be sure, the world economy has also changed since the offshore fad peaked (see this earlier post on why offshoring and outsourcing are not synonymous--and why the article should have been entitled the "reshoring boom" instead of the "insourcing boom" to be more accurate). How has the world changed? They given the following bullet points: Oil prices are three times what they were in 2000, making cargo-ship...
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South Korea as the Catholic Church's Asian Tiger

♠ Posted by Emmanuel in , at 12/24/2012 08:46:00 AM
Long lay the world in sin and error pining... The Roman Catholic Church is savvy enough to know that its game is for the most part up in Western Europe. Lip service to a "Catholic revival" in that part of the world aside, we all know a declining market when we see one. Its resources are not really being used to fight a rearguard motion for a European reconquista. While there are some holdouts alike Poland, it's obviously in Eastern Europe. Nosediving church attendance, skyrocketing rates of illegitimacy and all the rest of it tell the tale. I fear that a Catholic revival in Europe is as much a lost cause as a surplus-running...
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The Argentine Isolationist Grinch Who Stole Xmas

♠ Posted by Emmanuel in , at 12/24/2012 06:20:00 AM
In addition to cooking the books, Argentina appears stuck in an import substitution industrialization [ISI] time warp. I sure would love to sell bell-bottom pants there for the full retro flavour, but they are of course throwing impediments to all sorts of imports. As the blog's subtitle goes, I affected an attitude of elegant desperation at an Associated Press article that discussed the growing unavailability of bicycles in Argentina despite its self-styled populist government promoting their use. Now Americans are known for their mind-boggling levels of mega-obesity and hyperpollution. Rightly identifying more with progressive Europeans than Americans, Argentinians have taken up the cause of bicycling in urban centres. Doing so doubly makes sense: not only do you get much-needed exercise, but you also cut down on carbon emissions getting stuck in interminable traffic. Or so the reasoning would go since the government's neo-ISI policies have created [surprise!] a shortage of...
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History Repeats Itself: Greek Crises 1832-1897

♠ Posted by Emmanuel in ,, at 12/22/2012 02:28:00 PM
Just as some folks spell T-R-O-U-B-L-E, certain nations have the reputation for it going a looooong way back. For a blog purporting to be the IPE Zone, you may have noticed that I have had very few posts on the EU project as of late and the myriad crises on its periphery. Honestly, I tired of this story a very long time ago and have as much interest in it now as the details of a root canal operation. While I found it amusing when the Greek finance minister responsible for hiding the true extent of his nation's debts came to the LSE and faced a very hostile audience, it's been blah ever since. Essentially the Greek story...
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Park Geun-hye's Lump of Coal for Chaebol Haters

♠ Posted by Emmanuel in , at 12/20/2012 09:14:00 AM
When it comes to showing the West how things differ in Asian nations, I suppose nothing quite beats electing a military dictator's daughter to power via freely contested polls. But that of course is just what has transpired in prosperous South Korea. And General Park is a rather revered figure for spearheading their nation's rise to the top tier (OECD) of the global pecking order culminating with the hosting of the 1988 Seoul Olympics. Park Chung-hee has set off lots of debate about the merits of authoritarian development that continue to this day. For more on the specifics from an obviously supportive POV, I refer you to...
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There's No Power Shift (or Western Decline Either)

♠ Posted by Emmanuel at 12/20/2012 06:33:00 AM
...or so says our LSE IDEAS head honcho Michael Cox. To say I disagree with him is an understatement, but he of course deserves to be heard as one of it not the best-recognized scholars of US foreign policy in Britain. We have no "shop" opinions at LSE IDEAS, and I believe such diversity is welcome as it isn't usually seen at other thinktanks. Head here. ...
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The Yen Also Falls: To Negative Nominal Rates?

♠ Posted by Emmanuel in , at 12/17/2012 07:17:00 AM
Everything is less than zero - Elvis Costello I am constantly befuddled by foreign exchange markets since they tend to display even more "irrational" behaviour than stock markets. Witness Japan and its currency. Beginning 1999 or so, Japan has conducted aggressive monetary easing via its zero-interest rate policy (ZIRP) that entails [duh] near-zero nominal interest rates. However, this and quantitative easing (QE) have done little to pull Japan out of its funk since the bubble burst in 1990. I of course think there are lessons to be learned here for Westerners who do the same Stupid Monetary Tricks, but others would say...
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Harming Schoolkids: US & China are Rather Alike

♠ Posted by Emmanuel at 12/16/2012 09:43:00 AM
There is an adage about people hating those who are so much like them because they cannot stand being reminded of their own failings. Think of a rooster that sees a mirror image of itself, raises its hackles and wants to fight it. Being the world's largest carbon emitters aside, nowhere is this adage tragically truer than with the US and China in the matter of harming schoolchildren. While assorted American crazies like that Batman fanboy have topped global attention for years and years, unbeknownst to many, China has been giving the US a run for its money. As it so happens, a Chinese nutter also tried to harm schoolchildren...
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Google's Top Search Result for IPE is This Blog!

♠ Posted by Emmanuel in at 12/15/2012 11:44:00 AM
To my surprise today, I entered "international political economy" into Google and lo and behold, the very site you're looking at has emerged as the top search result. While I've found that results do vary from country to country--don't ask me why, ask Google--IPE Zone is usually in the top five. But, having acquired a track record over the five years it's been in existence, I suppose that all the incoming links have brought me up to today's result... and find I'm King of the Hill, Top of the Heap, A#1! It's particularly rewarding to me to have (finally) bested the wretched Wikipedia entry, which if you ask me, is a FrankenPage...
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And the World's Best Finance Minister is...

♠ Posted by Emmanuel in , at 12/14/2012 06:22:00 AM
Cesar Purisima of the Philippines for 2012 according to Euromoney. It just goes to show you how far the United States has fallen in the opinion of those in the know that an American has not won this award since Bob Rubin back in 1996 (before being tarnished by all that Citi stuff during the global financial crisis). Nowadays, of course, being US Treasury Secretary doesn't involve much more than writing $1,000,000,000,000+ worth of IOUs year in and year out. However, the rest of the world (surprise!) doesn't think that prudent macroeconomic management involves such shameful behaviour. Appropriately enough, this award is usually given at the World Bank / IMF meetings, this year famously held in Tokyo, Japan. Cesar V. Purisima has been named “2012 Finance Minister of the Year” by leading global banking and finance magazine Euromoney for his “careful and successful stewardship” of the Philippine economy, and for his initiatives in promoting capital markets, both in the Philippines...
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Michael Pettis Should Read More, Blog Less

♠ Posted by Emmanuel in ,, at 12/13/2012 10:45:00 AM
Skip the maths, will ya? I have in the past tied Michael Pettis to the whipping post for uncritically accepting Bernanke's self-serving notion of a "global savings glut" amidst falling levels of savings worldwide and a fantasyland assertion that the US household savings rate would hit double digits. It didn't, and I still don't quite understand why someone who keeps making factually inaccurate statements and predictions remains popular. If you read blogs to keep ahead of the curve of mainstream media or to understand the antecedents of various economic events, well, I would not be so sure about that if you are a regular...
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Egypt Falls at First Hurdle to Get $4.8B IMF Loan

♠ Posted by Emmanuel at 12/11/2012 07:23:00 PM
As Egypt falls into a Morsi-made crisis by him trying to ramrod an Islamist-designed, next-to-no other public consultation constitution via a hastily called referendum this Saturday, its financial rescue prospects get even cloudier. Public order has gotten even worse than in recent months--which is in turn a marked deterioration from the Mubarak years. I guess the IMF's wish for a broad-based consensus is a pipe dream: How exactly is the current government going to gain any semblance of approval from non-hardline Islamist stakeholders for harsh conditionalities after these constitutional manoeuvrings? Apparently, Morsi's allies have now decided not to push through with the IMF loan for now since they understand that the opposition will only be stoked further should bitter medicine be forced on the Egyptian people in addition to a constitution only a Muslim Brother could love: A vital $4.8 billion International Monetary Fund loan to Egypt will be delayed until next month, its...
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Lord Patten, 'Fat Pang', on the 21st 'Asian Century'

♠ Posted by Emmanuel in ,, at 12/11/2012 08:29:00 AM
Though not always, expatriates often develop piercing insights into the often strange political economy of Asian nations as outsiders looking in. Lord Christopher Patten of Barnes should be familiar to all scholars of Asia as the last British governor of Hong Kong. He remains controversial to this day for, in so many words, attempting to enshrine democratic processes in the colony prior to the 1997 handover. Jaded Hong Kong residents even grew a fondness for him--well, at least outside the business community--for his instincts as a retail politician did not go away when appointed for the post. From Andrew Craig-Bennett's...
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Venezuelan Bonds: Pricing Hugo Chavez's Demise

♠ Posted by Emmanuel in , at 12/09/2012 08:55:00 AM
While I am certainly no fan of Hugo Chavez, I do not wish terminal illness on anyone as a God-fearing Christian. That said, financial markets make it their business to peer into the crystal ball to foresee the future. Will Venezuela open itself up again to foreign investment in the energy sector, for instance? Nowhere is the practice of divination more visible than with Venezuelan sovereign debt, which has been on a roller-coaster ride as of late given its president's reportedly serious medical condition. News reports out of Caracas are, in a word, manic. Let me provide some examples here. Early Friday morning, Bloomberg was commenting on the rally in 15-year bonds as Chavez's situation was viewed as dire and he was in Cuba for advanced medical treatment. Whereas Venezuelans used to regard his trips to Cuba with more curiosity, they had supposedly grown indifferent: “In times past, when he’s gone to Cuba for treatment, there’s always been video of him getting on or off the...
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Why (They Say) Somali Piracy is Falling

♠ Posted by Emmanuel in ,, at 12/07/2012 07:56:00 AM
 ...or so they say. Given my nationality, I have been particularly interested in this issue. Providing between one-fifth to one-fourth of all seafarers depending on your source, the Philippines has been particularly hard-hit by Somali piracy since its seafarers literally have a 1-in-5 to 1-in-4 chance of being on board a vessel hijacked in the Gulf of Aden. However, including even the BushBama years, all bad things must come to and end. Just as maritime piracy has been curbed in the traditional hotspot of the Malacca Straits due to littoral states engaging in more vigilant patrolling of these waters, so too does it...
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Ramchandra Guha on Why London Outdoes NY

♠ Posted by Emmanuel in ,, at 12/06/2012 07:51:00 AM
With all due respect to our readers from the Big Apple, I still hold that London is the world's capital for reasons both fair and foul. Quantitatively speaking, you can cite trading volumes in various financial markets to argue that London truly deserves the title of "the world's financial capital" unlike what you keep hearing on CNBC. It is also considered more open to all comers regardless of race, colour, or creed (unless you're an intolerant sort like Captain Hook). Throw in the astonishing buoyancy of its real estate market even as economic times are difficult--not something that can necessarily be said of New York--and the quantitative evidence for London's supremacy is overwhelming. But, there are also qualitative aspects to this designation. Ramchandra Guha, the renowned Indian historian who succeeded Niall Ferguson at our LSE IDEAS as the Philippe Romain chair (see his recent WSJ interview as well), serves up a fond reminisce of his year in London that also bolsters...
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Will Remittances Outstrip FDI to LDCs?

♠ Posted by Emmanuel in at 12/04/2012 07:50:00 AM
In an older post, I reiterated the argument that if rich countries were truly interested in promoting world development, then they would allow more persons from poor countries to work there. As we all know, however, significantly increased liberalization of migration is not likely because of the politics in rich countries. Labour protectionism, unvarnished racism, and misplaced fears of terror all work against making globalization live up to the name instead of the half-baked sort we have today which favours rich countries. That is, the free movement of capital, goods and services benefits those who have plenty of those--rich...
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Gadgets Make the World Go Round: 15 Yrs of ITA

♠ Posted by Emmanuel in ,, at 12/03/2012 12:07:00 AM
During these dark days of Doha Round deadlock, good news from the WTO is hard to come by. But, even your ever-pessimistic correspondent has managed to fetch--wait for it--reasonably good news involving the WTO. Although many people do not know of it, the Information Technology Agreement (ITA) signed under the auspices of the WTO way back in 1996 was a seminal event in the formation of global value chains in  the electronics industry. By gradually encompassing more and more countries in tariff-free arrangements in the production of electronic goods, disparate nations have benefited. To use commercial lingo, ITA enabled...
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