So, When Does Russia Exhaust Its Forex Reserves?

♠ Posted by Emmanuel in ,, at 9/30/2014 01:30:00 AM
Sergey Lavrov, bang your shoe on the lectern for emphasis. Poor, poor Russian Foreign Minister Sergey Lavrov. He spent most of his time lamenting the unfairness of this world during his visit to the UN over the weekend. Regardless of what you think about Russia's actions with regard to Ukraine--I think it's a money drain the Westerners should've been left to sort out if Russia had any sense--there's no doubting that its economy is in bad shape. It was already in recession a few months ago, and the additional sanctions from its largest trading partner, the European Union, will certainly not help. As much as Russia benefits...
Read More

Drill Baby Drill! In the Philippines' Disputed Waters

♠ Posted by Emmanuel in ,,, at 9/29/2014 01:30:00 AM
For a profit, would you dare to fight the Chinese? The mother of all "political risk"-laden investments is probably this one: Say a country embroiled in territorial disputes over potentially oil- and gas-rich waters auctions blocks for exploration. If you were an energy firm, would you dare bid and, more bravely, invest in disputed waters? Let's also add this complication: exploring these areas may anger the region's strongest power with its largest military. It's just asking for trouble, right? Better safe than sorry, eh? This situation is exactly what faces the Filipino-British concern Forum Energy PLC, whose chairman...
Read More

Hong Kong Phooey: Rebel Yell vs Tycoon Pushback

♠ Posted by Emmanuel in at 9/28/2014 01:30:00 AM
Armagideon time has come to the capital of capitalism--Hong Kong. [NOTE: Younger readers who don't get the post title's cartoon reference, head here.] Protester vs. cop action seems to be a growth area in Hong Kong and Singapore, capitalist shrines which normally care more about making money than about corny things like Western-style "freedom." But alas, order has been upended as the PRC has--surprise!--provided a rather conservative interpretation of "one country, two systems" that keeps the Communist Party's say in vetting Hong Kong's leader intact. I could have seen this coming as early as, oh, 1984. (RIP, Baroness Thatcher.)...
Read More

Next Stop ¥120: Pol Eco of Weak Japanese Yen

♠ Posted by Emmanuel in ,, at 9/26/2014 01:30:00 AM
Albert Edwards of SocGen, ever on the lookout for trouble in the world economy, is pointing us in the direction of a weakening yen. What's so bad about improving the competitiveness of Japan, a country that's been mired in a quarter of a decade-long slump? As with other international political economy matters, you need to understand the effects of Japan's devaluation alongside other countries in the region and, indeed, the rest of the world. Being Albert Edwards, he's foreseeing (surprise!) dire consequences for the world economy: China’s economy will see a further rise in its already strong real exchange rate, especially...
Read More

Unionizing & Daytimizing Philippine Outsourcing [?]

♠ Posted by Emmanuel in ,, at 9/25/2014 01:30:00 AM
They work the early morning hours...for good reason. There's an interesting article over at Bloomberg talking about the Philippines' emergence as a global hub for business process outsourcing (BPO) industries. At the same time, it points out disturbing proposed legislation that may kill the goose that lays the golden egg. As Daniel Pink explains, these BPO industries do mostly routine tasks, not the more creative ones that cannot (yet) be performed outside Western metropoles. Still, they have made significant contributions to the Philippine economy. Let us begin with some figures: During the past decade, business process...
Read More

G-77, Vulture Funds and a Default Workout Mechanism

♠ Posted by Emmanuel in , at 9/24/2014 01:30:00 AM
Vulture Man: NML Capital's Paul Singer v. Argentinian President Cristina Fernandez. File this under: dream on, buddy. A few weeks ago I discussed the quandary faced by Argentina as a US court prohibited it from paying off restructured loans until it had compensated holdouts. To Argentina and the latter's critics, these are "vulture funds" who picked up defaulted debt for a few cents on the dollar, refused to participate in debt restructuring, and succeeded in using American courts to wangle a huge payday. Martin Khor of the South Centre, which my country and most other developing countries contribute to, offers this recap: The...
Read More

Jeff Koons & Hokum as America's Defining Characteristic

♠ Posted by Emmanuel in ,, at 9/23/2014 01:30:00 AM
To understand America, explain why "Orange Balloon Dog" is worth $58.4 million. At best, Americanism is a good-natured kind of hucksterism that does not take itself too seriously and invites us to be part of an inside joke of grand proportions. ("Can you believe our largest media conglomerate was built on the image of a common household pest?") At worst, Americanism is an ill-natured kind of hypocrisy that takes itself too seriously in attempting to tell the rest of us how superior the United States is despite its patently obvious contradictions. The above paragraph sounds pretty good as a summation of America to those...
Read More

Lose Money Quick Scheme: EU Airlines in, er, Europe

♠ Posted by Emmanuel in ,, at 9/22/2014 01:30:00 AM
Those were the days, my friend: aboard Lufthansa in the Fifties. My grandparents belonged to a generation when there was still novelty and romance associated with commercial flight. They would dress in their finest as they jetted off to American or European capitals for work or leisure. "Put on your finest suit, dear; we're flying to Vienna tonight." I am sure this memory was not something I made up: until the early Seventies, it really was like this. Since air travel was oh so very costly. you might as well live it up while airborne. For better or worse, deregulation and the accompanying democratization of flight has made...
Read More

The Fate of French-Made Warships Ordered by Russia

♠ Posted by Emmanuel in ,, at 9/19/2014 01:30:00 AM
Like giving matches to a pyromaniac? French-built warships ordered by Russia. It is no secret that the French economy is not doing so well. Its President Francois Hollande faced a no-confidence vote just this week, largely due to discontent over the state of the economy. After famously applying top taxes rates over 50%, his administration is backing down somewhat on the more socialist elements of his economic plan. A pro-business Hollande; who'd have though of it? I guess approval ratings south of, oh, 15% concentrates the mind. Aside from class warfare taking a backseat to economic reality, another concerns the recent...
Read More

Ruble in Trouble; Russia Raids SWF Soon?

♠ Posted by Emmanuel in ,, at 9/18/2014 01:30:00 AM
Sorry, Vlad, but your currency is more worthless than the dollar right about now. No, no, it's not what you may think--Russia may raid its sovereign wealth fund, AKA stabilization fund or rainy day fund, soon. To be precise, it's the "Russia Direct Investment Fund." But first, a little bit of background from current events: new and recent EU sanctions have sent the Russian ruble tumbling to all-time lows. Whereas US sanctions had limited direct effect on Russian trade, EU sanctions have hit it squarely in the gut since the grouping is Russia's largest trading partner: Russia's currency dropped to an all-time low against...
Read More

Unpaid Advert: IMF's Lagarde Plugs IPE

♠ Posted by Emmanuel in at 9/17/2014 01:30:00 AM
Christine Lagarde is famously the first non-economist to head the International Monetary Fund. Aside from being in charge during a time of transition when more developing countries want greater representation at the lender of last resort--see the cartoon above and an earlier post on this matter--the economics profession is coming under fire post-global financial crisis. Do economists really know how to run an economy, let alone a world economy? Nowadays, of course, "everything else" is beginning to gain more consideration in global economic governance. Not only do we need to bring political, social and technological factors...
Read More

Bitcoin Crashed, But Will Apple Pay Take Off?

♠ Posted by Emmanuel in , at 9/16/2014 01:30:00 AM
You're showing your age if you remember "master charge" (all small caps). I'm kind of surprised Apple didn't name its payments service "iPay." It could have eased the terminological transition to lending, "iOwe," and the unfortunately common American phenomenon of being unable to pay debt on time, "iDefault"--which, in direr circumstances, leads to the state of being "i(M)Bankrupt." All kidding aside, "Apple Pay" is an expected development that nevertheless holds much promise, the first emanating from it being an Apple service and the expectations people have that it will have a higher chance of success in the company's...
Read More

Can German-Style Apprenticeships Save America?

♠ Posted by Emmanuel in ,, at 9/15/2014 01:30:00 AM
Stamping out ignorance and providing work is the German way. There's an excellent feature in the WSJ on German firm Festo, a supplier to German firms like VW and Mercedes-Benz, following these MNCs Stateside. Not only is it bringing manufacturing know-how to the US but also vocational knowledge in the form of the German apprenticeship model. The latter has proven to be more successful in avoiding the job-skill mismatches prevalent in US higher education. Festo even has a specialized unit dedicated to training. After all, what is the point of having an ever-increasingly expensive college degree in the face of ever-decreasing...
Read More

BRICS Fight, Brazil v PRC: 'Valemax' Cargo Ships

♠ Posted by Emmanuel in ,, at 9/13/2014 01:30:00 AM
Frank, it's the big hit...the mothership! [Captain Beefheart] The height of the pre-global financial crisis frenzy was manic not just in financial markets but also in others. Most notably, there was this great expectation that China was the be-all and end-all of global commerce as commodity prices surged globally. After all, who would feed materials to this giant workshop to the world? Post-global financial crisis, we are learning that even the great China growth story has its limits. With many of the markets for its finished goods in less-than-fighting condition, Chinese growth has slowed down too. Unfortunately, one...
Read More

Poland's Turn to Experience Russian Gas Pains

♠ Posted by Emmanuel in ,,, at 9/12/2014 01:30:00 AM
Where'd all the gas go? Nobody may really know...except the Russians. Energy geopolitics between Russia and its European "customers" are fascinating to watch. On one hand, Russia has no marketing concept whatsoever about "fulfilling the contract" and other niceties in dealing with Western and Central Europeans it treats with utter contempt. Take that, NATO members! On the other hand, those Europeans are not exactly spoiled for choice when it comes to other sources of energy, so they must grin and bear Russia using energy as a weapon. Those Germans couldn't have picked a worse time to discontinue nuclear power, for instance....
Read More

Counting Illicit Outflows from Brazil, 1960-2012

♠ Posted by Emmanuel in , at 9/11/2014 01:30:00 AM
A Reuters news article points us to a new study from Global Financial Integrity (GFI) on the level of illicit outflows from Brazil. GFI has produced reports for several other developing countries, but Brazil is of particular importance as a Latin American bellwether. Given the uncertainties surrounding developing countries in this region, questionable capital flows are of some interest: The Brazilian economy lost at least US$401.6 billion in illicit financial outflows from 1960 to 2012. These outflows represent the proceeds of crime, corruption, and tax evasion, and have serious negative consequences for Brazil....
Read More

Reviving Japan: From Abenomics to Womenomics

♠ Posted by Emmanuel in ,, at 9/10/2014 01:30:00 AM
While Japan is a country which much to be proud of, its record in promoting gender equality may not be one of them--yet. Among OECD countries, the wage disparity among sexes is third greatest in Japan after South Korea and Estonia. Prime Minister Shinzo Abe recently made a gesture towards rebalancing this disparity by appointing five female cabinet ministers, matching the previous record. Why not more, you may ask? Remember that in a parliamentary system like Japan's, cabinet members are not political appointees but sitting ministers. With admittedly few female Liberal Democratic Party parliamentarians, selection is made...
Read More