News & Commentary:

October 2013 Archives


Energy: The toll on coal Financial Times Subscription Required
Pilita Clark, James Wilson and Lucy Hornby (FT) Oct 1, 2013
Increasing environmental regulation and China’s slowing economy are threatening to sap coal’s dominance as the world’s leading fuel.

China's Rising Tide in the Caribbean Wall Street Journal Subscription Required
Rush Doshi and David Walter (WSJ) Oct 1, 2013
Beijing's study of the Soviet Union's strategy in the islands is paying dividends.

Appetite for Destruction Foreign Policy Subscription Required
Damien Ma and William Adams (FP) Oct 1, 2013
Why feeding China's 1.3 billion people could leave the rest of the world hungry.

The IMF’s Next Test
Gita Gopinath (Project Syndicate) Oct 1, 2013
With the Fed considering a QE exit and interest-rate hikes in the next year, global markets are set to experience significant turbulence. Rather than waiting for a crisis to develop before intervening, the IMF should provide “forward guidance” on how it will mitigate looming volatility.

Filling the Global Leadership Vacuum
Yoon Young-kwan (Project Syndicate) Oct 1, 2013
America's declining interest in global leadership, together with other major powers' unwillingness or inability to take over, has undermined the effectiveness of international institutions. The US and China must achieve a grand compromise that reconciles their basic interests, allowing them to provide and protect global public goods.

America’s Endless Budget Battle
Kenneth Rogoff (Project Syndicate) Oct 1, 2013
Perhaps investors are becoming inured to America's annual debt-ceiling debacle, now playing out for the third year in a row. But, as the short-term antics become more routine, the risks of long-term dysfunction become more apparent.

Understanding China’s unbalanced growth
Yukon Huang (EABER) Oct 1, 2013
That China’s growth is unbalanced is a fact. Consumption as a share of GDP has declined steadily over the past decade to 35 per cent, while investment as a share of GDP has risen to above 45 per cent — the lowest and the highest rates of any major economy respectively. But are these imbalances a vulnerability — as most observers believe — or a consequence of China’s economic rise, and therefore not inherently problematic?

The Anti-Debt-Relief Crowd Is Wrong on Greece
Charles Wyplosz (Bloomberg) Oct 1, 2013
On the very day Germans voted for a new government last month, a team from Greece’s international creditors was visiting Athens amid the widespread expectation that a new aid package would be needed, including debt relief.

Tax-policy procyclicality
Carlos A. Vegh & Guillermo Vuletin (VoxEU) Oct 1, 2013
Government spending is procyclical in developing countries, exacerbating the business cycle. However, an analysis of tax policy is also required in order to properly assess the overall stance of fiscal policy. This column presents recent research showing that tax policy tends to be procyclical in developing countries and acyclical in developed countries. Although some developing countries have managed to escape the procyclical fiscal policy trap, some developed nations – notably Eurozone members – are falling into it.

Indonesia: winning friends and influence Financial Times Subscription Required
Ben Bland (FT) Oct 2, 2013
Dramatic economic growth over past decade and changing geopolitical environment have placed Jakarta in strong position to boost global influence.

Dollar-based system inherently unstable Financial Times Subscription Required
Ousmène Mandeng (FT) Oct 2, 2013
The relationship between the dollar and the international importance of US assets implies that the spillovers of US monetary policy are unmatched.

Bank Funding Safer Since Crisis
IMF Survey Oct 2, 2013
How banks fund their operations is slowly changing for the better in the wake of the crisis, although some distressed banks are still having difficulties.

India’s Wealthy Must Open Their Gates and Fight Chaos
Ravi Venkatesan (Bloomberg) Oct 2, 2013
Lately India has been in the news for all the wrong reasons. Its once tigerish economy is growing at its slowest rate in more than a decade. Newspapers are filled with ever more depressing stories of rape, official plunder and gut-wrenching poverty. To an outsider the headlines can seem surreal: Last week the cabinet actually voted to allow convicted criminals to serve in Parliament and state legislatures, before being forced to back down.

Spain: Seeds of recovery Financial Times Subscription Required
Tobias Buck (FT) Oct 3, 2013
The country is emerging from the recession with a more competitive economy but critics claim confidence is both premature and dangerous.

Don’t ignore rate rise risk to banks Financial Times Subscription Required
Gillian Tett (FT) Oct 3, 2013
There has been little effort by the official sector to conduct public analysis of what surging interest rates might do to banks or asset managers.

Slow Progress on WTO Food Stockholding Talks
Bridges Weekly Trade News Digest, Volume 17, Number 32 Oct 3, 2013
Trade negotiators have made slow progress in informal talks on amending WTO rules on food stockholding ahead of the global trade body's upcoming ninth ministerial conference in Bali, Indonesia, this December.

EU, US Trade Chiefs Address Regulatory Concerns Ahead of Negotiating Round
Bridges Weekly Trade News Digest, Volume 17, Number 32 Oct 3, 2013
Top trade officials from both the EU and the US sought this week to dispel fears that regulatory differences could stymy efforts at reaching a bilateral trade deal, as negotiators prepare to kick off the second round of negotiations in Brussels on 7 October. The trade chiefs have jointly asked negotiators to aim for a "commonly agreed" outline of the regulatory and rules component of the bilateral pact – openly acknowledged to be the most difficult part of the talks – by January.

Political Engagement Needed for Bali Success, Azevêdo Warns
Bridges Weekly Trade News Digest, Volume 17, Number 32 Oct 3, 2013
The past weeks of negotiations have yielded some encouraging advances, Director-General Roberto Azevêdo reported to WTO members on Monday. However, the pace of the Bali talks remains worryingly slow, he warned, given the few working days left between now and the December ministerial, and political engagement from capitals will be key to ensuring a successful outcome in the weeks to come.

UN Assembly Ramps-up Pressure on MDGs, Clarifies Post-2015 Goals
Bridges Weekly Trade News Digest, Volume 17, Number 32 Oct 3, 2013
Heads of state and senior officials attending the UN General Assembly have agreed to accelerate progress on achieving the Millennium Development Goals (MDGs), while taking another step forward in clarifying the post-2015 agenda. Leaders pledged to place a special emphasis on the "most off-track MDGs and those where progress has stalled" in the final stretch before the MDGs expire in 2015.

The End of Convergence?
Kemal Dervis (Project Syndicate) Oct 3, 2013
Until recently, there was a broad consensus that this was to be the emerging countries’ century. But America’s impending exit from quantitative easing is raising questions about emerging economies’ growth prospects – questions that will surely spur heated debate at the meetings of the IMF and the World Bank this month.

Europe’s Responsible Solidarity
Enrico Letta (Project Syndicate) Oct 3, 2013
If Europe is to reverse the growing divisions among eurozone countries, it must extend the principle of shared responsibility to all major EU economic-policy initiatives. But doing so requires a broader view of supranational coordination, with all the implications for political legitimacy and accountability that would follow.

The Paradox of Central-Bank Cooperation
Harold James (Project Syndicate) Oct 3, 2013
While the Fed’s recent decision to continue its purchases of long-term assets – so-called quantitative easing – was motivated largely by domestic economic uncertainty, the prospect of interest-rate spikes in emerging economies added significant pressure. But should central banks account for monetary policy’s spillover effects?

Long-term barriers to growth
Enrico Spolaore & Romain Wacziarg (VoxEU) Oct 3, 2013
There is now widespread agreement that ‘deep’ history matters for comparative development. Recent research has shown that ancestry – the transmission of genetic and cultural traits across generations – matters more than the history of geographic regions. This column argues that long-term divergences in inherited traits can create barriers to the diffusion of technology. The greater a population’s genetic distance to the population on the technological frontier, the lower its relative income will be. Development policies should aim at reducing barriers to exchange and communication.

China’s Economy, Back on Track New York Times Subscription Required
Henry M. Paulson Jr (NYT) Oct 4, 2013
Momentum for reform is growing. So is the leadership’s will.

Pacific Trade Protectionists Wall Street Journal Subscription Required
WSJ Oct 4, 2013
Special pleaders are trying to undermine Obama's trade opening.

Unconventional monetary policies revisited (Part I)
Biagio Bossone (VoxEU) Oct 4, 2013
In response to the Global Crisis and Great Recession central banks have embarked on a variety of unconventional monetary policies. This column, part of a two-column series, reviews the range of unconventional measures that have been implemented or proposed. The second instalment will compare the various policies.

ICT and global supply chains
Sergi Basco & Martí Mestieri (VoxEU) Oct 5, 2013
The ICT revolution has fostered internationalisation of production networks, but the impact has been uneven across sectors. This column presents evidence that ICT interacts with monitoring difficulties to explain differences in international firm organisation at the sector level. ICT is one way that developing nations can ascend in the global supply chain. Those countries that invest in ICT technologies gain a comparative advantage in harder-to-monitor industries, which tend to be more skill-intensive.

When it all comes down to number 400 Financial Times Subscription Required
John Authers (FT) Oct 6, 2013
Stock market historian Russell Napier has cult status among investors for his book which looked at 20th century lows, all of which were excellent times to buy.

Shinzo Abe: ‘Our road is the only way’ Financial Times Subscription Required
David Pilling and Jonathan Soble (FT) Oct 7, 2013
Japan’s prime minister is basking in the initial success of his plan to rekindle the economy but admits that structural reforms will be much tougher.

Time Argentina talked to its creditors Financial Times Subscription Required
Jay Newman (FT) Oct 7, 2013
Fair resolution of the 2001 default would deliver significant benefits, reining in galloping inflation and reducing borrowing costs.

Too soon to mourn emerging markets Financial Times Subscription Required
Arvind Subramanian (FT) Oct 7, 2013
It is true that such economies do not face an easy task but their challenges remain overwhelmingly domestic. Medium-term EM growth is misunderstood.

The International Trolling Commission Wall Street Journal Subscription Required
Charlotte R. Lane (WSJ) Oct 7, 2013
Patent trolls find a friend in a federal agency that has drifted from its original mission.

Protectionist Policies Stagnate Mercosur Countries
Juan de Onis (World Affairs) Oct 7, 2013
Launched in 1994, Mercosur hoped to make South America a global economic force. But its protectionist policies and infighting have divided the members and stunted growth.

Central Banks Can Plan Smooth Exit From Policies to Fight Crisis
IMF Survey Oct 7, 2013
Central banks have the tools to limit volatility from an exit from the unconventional monetary policies that helped the global economy begin to recover after the financial crisis in 2008. But some market reactions remain beyond the control of central banks, and the exit could still be bumpy at times.

As Global Crisis Recedes, Path Ahead Involves Difficult Transitions, Says Lipton
IMF Survey Oct 7, 2013
The 2013 World Bank-IMF Annual Meetings to focus on difficult transitions for the global economy—transitions that will last years, says IMF’s First Deputy Managing Director Lipton.

Will Unconventional Policy Be the New Normal?
John C. Williams (FRBSF Economic Letter) Oct 7, 2013
Unconventional monetary policies such as asset purchases and forward policy guidance have given the Federal Reserve much-needed tools when the traditional policy interest rate is near zero. Looking ahead to normal times, certain types of unconventional policies are best kept in reserve. If another situation arises where the Fed needs to call on these tools, it is ready and prepared to do so.

Asia's Economies Come Up Short
Megan McArdle (Bloomberg) Oct 7, 2013
The World Bank just sharply cut its forecast for Asian economic growth this year.

Reason and the End of Poverty
Kaushik Basu (Project Syndicate) Oct 7, 2013
Do the benefits of economic growth trickle down on their own, benefiting all, or do we need targeted redistributive policies to reduce extreme and chronic poverty? Many people remain in the growth-only camp only because of an error in deductive reasoning.

China’s Investment Addiction
Yu Yongding (Project Syndicate) Oct 7, 2013
China’s economy slowed unexpectedly in the second quarter of this year, and, just as unexpectedly, most data released since July suggest that China’s growth has stabilized – eliciting a collective sigh of relief in markets worldwide. But investors should still be holding their breaths.

Angela Merkel’s Pyrrhic Victory
George Soros (Project Syndicate) Oct 7, 2013
As far as Germany is concerned, the euro crisis is over – a sentiment reflected in Chancellor Angela Merkel's overwhelming election victory in September. In fact, the crisis has become a nightmare, inflicting tremendous suffering that could be easily avoided if the taboos that sustain it – mainly Merkel's – were dispelled.

The pain of rebalancing global growth Financial Times Subscription Required
Martin Wolf (FT) Oct 8, 2013
The picture of the world economy that has been painted by the IMF is for the most part encouraging – so long as nothing bad happens.

Time for a new model of bank for SMEs Financial Times Subscription Required
Ana Botin (FT) Oct 8, 2013
We need a compromise that allows smaller, high-growth companies access to the services they need while also keeping lenders safe.

Brazil’s Next Steps New York Times Subscription Required
NYT Oct 8, 2013
After a decade of growth and development, the country has hit a rough patch. Now it needs reforms and public investment.

The Strategy Behind China's Aid Expansion
Charles Wolf Jr (WSJ) Oct 8, 2013
Between 2001 and 2011, China's pledged foreign aid was $671 billion.

In Defense of World Government
Nancy Birdsall (Project Syndicate) Oct 8, 2013
Despite their many weaknesses, international institutions ultimately do far more good than harm. Globally minded citizens must now push their governments to strengthen and democratize such institutions, enabling them to advance policies that minimize risk and maximize opportunity for all.

Global Growth Patterns Shifting, Says IMF WEO
IMF Survey Oct 8, 2013
Global growth is still in low gear and its drivers are shifting, says the IMF’s latest WEO report, which forecasts global growth to average 2.9 percent in 2013—below the 3.2 percent recorded in 2012—and to rise to 3.6 percent in 2014.

International cooperation and central banks
Harold James (VoxEU) Oct 8, 2013
The global nature of the recent financial crisis required a coordinated response from central banks. After the fall of Lehman Brothers, several of them simultaneously reduced their policy rates, and the Fed extended dollar swap lines to its overseas counterparts. However, the second phase of the crisis has put increasing strain on international cooperation. This column presents two explanations. First, the Eurozone crisis threatens the solvency of governments, thus creating conflict over who will pay the costs of maintaining financial stability. Second, unconventional monetary policy has had spillover effects in developing countries.

The new gas guzzler Financial Times Subscription Required
Ed Crooks and Lucy Hornby (FT) Oct 9, 2013
China’s status as the top oil importer will push it to become more engaged in global security.

Trade is the test of global green shoots Financial Times Subscription Required
Ashoka Mody (FT) Oct 9, 2013
A necessary amplifying force for a global recovery is missing. In fact, economic distress is being spread through global trade.

Stress tests must prompt debt revamp Financial Times Subscription Required
Gene Frieda (FT) Oct 9, 2013
A network of bad banks should be established with European Central Bank-backed.

Global greying
FlipChart Rick (Pieria) Oct 9, 2013
The ageing population is often seen as a problem for Western countries. It's not. The rest of the world is ageing too. The advanced economies are just a little further down the road

IMF Says Countries Should ‘Buckle Up,’ Move To Financial Stability
IMF Survey Oct 9, 2013
Could Be Bumpy Policymakers need to carefully navigate a series of important transitions facing the global financial system, according to the IMF’s latest Global Financial Stability Report. A failure to implement effective policies and reforms could potentially derail a smooth transition to greater financial stability.

Re-Decentralizing the Fed
Amar Bhidé (Project Syndicate) Oct 9, 2013
Financial circles are buzzing about Janet Yellen’s nomination to take over as Chair of the US Federal Reserve. But they are largely ignoring another, more fundamental question: How much discretion should the Fed be given to conduct daring monetary-policy experiments like the vast quantitative easing of the last five years?

The Myth of German Euroskepticism
Daniel Gros (Project Syndicate) Oct 9, 2013
According to conventional wisdom, the eurozone crisis has reduced citizens’ trust in the EU and in European institutions in general across all member states, with several recent reports claiming that the German public, in particular, has turned its back on Europe. But the conventional wisdom is simply wrong.

The Miracle of Growth and ‘The Great Escape’
Clive Crook (Bloomberg) Oct 9, 2013
In “The Great Escape: Health, Wealth and the Origins of Inequality,” Angus Deaton sets out to tell a familiar story -- that of the long arc of global economic advance -- in a fresh way. The author is an economics professor at Princeton University, a renowned development economist and an exceptionally gifted teacher. Even those familiar with his accomplishments might be surprised by how brilliantly his book succeeds.

Big Pharma's Expansion Into Emerging Markets
Cesar Chelala (Globalist) Oct 9, 2013
More harmful practices by Big Pharma as U.S. sales decline and patents expire.

System-wide exposures to emerging markets
Dirk Schoenmaker & Wolf Wagner (VoxEU) Oct 9, 2013
Recent turmoil in emerging markets has shifted attention to the vulnerability of the developed world to events in emerging economies. We propose new metrics to gauge the systemic exposure of the European banking system to emerging markets and argue that these metrics should be part of the macroprudential tools of the European Systemic Risk Board.

America’s retreat threatens China’s rise Financial Times Subscription Required
Philip Stephens (FT) Oct 10, 2013
Just as the US is scaling back its provision of global security, so it is taking a more hard-edged view of its role as guarantor of the open economic system.

Gender matters in central banking Financial Times Subscription Required
Diane Coyle (FT) Oct 10, 2013
Janet Yellen’s nomination to head the Fed is good news because it is unacceptable to have monetary policy and financial regulation as a male preserve.

Brazil: Given the brush-off Financial Times Subscription Required
Joe Leahy (FT) Oct 10, 2013
The appeal against convictions in a landmark corruption case is a test of the country’s ability to combat graft at the highest levels.

Shanghai's Zone of Timidity Wall Street Journal Subscription Required
WSJ Oct 10, 2013
Capital controls prevent a serious challenge to Hong Kong.

TPP Leaders: Negotiations "On Track," Pushing for 2013 Finish
Bridges Weekly Trade News Digest, Volume 17, Number 33 Oct 10, 2013
Negotiations for the proposed Trans-Pacific Partnership (TPP) Agreement remain "on track," leaders from the 12-country group reported on Tuesday, reiterating their goal of concluding the talks this year. Despite these reports of "significant progress," however, some officials have lately hinted that the process could drag on into 2014.

UN Body to Develop Global Aviation Emissions Plan
Bridges Weekly Trade News Digest, Volume 17, Number 33 Oct 10, 2013
Members of the UN's civil aviation body agreed last week to develop a global plan for reducing airline carbon emissions, in a move that was touted by members as a "landmark" decision. The result, however, has also cast into doubt the next steps for the aviation component of the EU’s own Emissions Trading System (ETS).

Asia-Pacific Leaders Press for WTO Outcome in Bali
Bridges Weekly Trade News Digest, Volume 17, Number 33 Oct 10, 2013
Success at the WTO's upcoming ministerial conference is of "utmost importance," leaders from 21 Asia-Pacific nations urged during their annual summit this past week, warning that a failure to clinch a deal for the December meeting could have lasting ramifications for the multilateral trading system. The political push comes as Geneva-based negotiators race to meet an end-October deadline to conclude their main negotiations.

The Fed’s Surprise and Yellen’s Challenge
Mohamed A. El-Erian (Project Syndicate) Oct 10, 2013
To ask what Janet L. Yellen, the nominee to succeed Ben Bernanke as Chair of the Federal Reserve, has in store for US monetary policy is to pose the wrong question. The real issue is the decline of the Fed’s policy effectiveness.

The Dollar and the Debt Ceiling
Barry Eichengreen (Project Syndicate) Oct 10, 2013
Sane governments do not default when they have a choice, especially not when they enjoy the “exorbitant privilege” of issuing the only true global currency. We are about to find out whether the US still has a sane government.

An EU-US trade deal: Good or bad for the rest of the world?
Aaditya Mattoo (VoxEU) Oct 10, 2013
The recent launch of negotiations on a transatlantic trade and investment deal has been widely welcomed by policymakers. This column warns that the aspect of the deal that provokes the greatest excitement – its focus on regulatory barriers like mandatory product standards– should evoke the greatest concern. Regional harmonisation may increase intra-regional trade yet exports from excluded developing countries could be hurt.

Stalin and Soviet industrialisation
Anton Cheremukhin, Mikhail Golosov, Sergei Guriev & Aleh Tsyvinski (VoxEU) Oct 10, 2013
Soviet Russia’s industrialisation was a pivotal episode in the 20th century, and economic historians have spent decades debating the role of Stalin’s policies in bringing it about. This column argues that Stalin’s industrialisation was disastrous even in purely economic terms. The brutal policy of collectivisation devastated productivity, both in manufacturing and in agriculture. The massive welfare losses in the years 1928-40 outweighed any hypothetical gains from Stalin’s policies after 1940, and Russia would have been better off under a continuation of the ‘New Economic Policy’.

Emerging Markets Need ‘Second Generation’ of Reforms
IMF Survey Oct 10, 2013
After years of strong performance, emerging economies are experiencing a slowdown, and a new round of reforms will be necessary if growth is to be sustained in the face of a more challenging external environments, panelists told a seminar.

The Arab Sunset Foreign Affairs Subscription Required
Christopher Davidson (FA) Oct 10, 2013
The coming collapse of the Gulf monarchies,

How Bolivian Farmers Made the World Crave Quinoa
Jim Yong Kim (Bloomberg) Oct 13, 2013
On a recent trip to Bolivia, I traveled by helicopter with President Evo Morales to Santa Ana de Chipaya, a settlement almost 13,000 feet (3,960 meters) above sea level that is home to the last 3,800 speakers of the Chipaya language. There, we played soccer with members of the community, who then served us a lunch of lamb and quinoa, a grain-like crop that people in and around Chipaya have grown for thousands of years.

The Perils of Premature Deindustrialization
Dani Rodrik (Project Syndicate) Oct 11, 2013
Only a few developing countries, typically in East Asia, have been able to emulate the pattern of industrialization set by today's advanced economies. The general pattern in the developing world has been slow industrialization, followed by deindustrialization much sooner, with serious economic, social, and political implications.

The Drawbacks of Forward Guidance
Marcel Fratzscher (Project Syndicate) Oct 11, 2013
The problem for the Fed and other central banks lies not in monetary accommodation, but in their communication strategies. Indeed, investors appeared less concerned about understanding the real economic story than about the Fed’s response to it.

Institutions and ethnicities in Africa
Stelios Michalopoulos & Elias Papaioannou (VoxEU) Oct 11, 2013
During the ‘Scramble for Africa,’ the arbitrary design of colonial borders partitioned many ethnicities across two or more contemporary African states. This column presents recent research that exploits this quasi-experiment to study the effect of institutions on development. The overall effect of institutions is insignificant; but this masks considerable heterogeneity driven by diminishing government influence in remote areas. These findings conflict with previous cross-country work in economics, but support arguments put forward by the African historiography.

How Much Longer Will the Dollar be the Reserve Currency
Patrick Barron (Mises Daily) Oct 12, 2013
We use the term “reserve currency” when referring to the common use of the dollar by other countries when settling their international trade accounts. For example, if Canada buys goods from China, it may pay China in US dollars rather than Canadian dollars, and vice versa. However, the foundation from which the term originated no longer exists, and today the dollar is called a “reserve currency” simply because foreign countries hold it in great quantity to facilitate trade.

Blame bad policy for Europe’s lost growth Financial Times Subscription Required
Wolfgang Munchau (FT) Oct 13, 2013
If the eurozone had fixed the banking system as in 2008, as the US did, it would now by now be on its way back to its pre-crisis growth trend.

Commonsense ideas behind Taleb’s rhetorical flourishes Financial Times Subscription Required
John Authers (FT) Oct 13, 2013
Western economy is overcentralised, creating extra risk.

Ireland: Back on the market Financial Times Subscription Required
Jamie Smyth (FT) Oct 13, 2013
Although the country has been lauded for its austerity programme and is about to leave the EU and IMF bailout, concerns about its recovery persist.

April 19, 2002: Knitting the World Together New York Times Subscription Required
Daniel Yergin (NYT) Oct 13, 2013
The rapid pace of globalization in all its dimensions requires new rules of the game.

The Western World's Day of Fiscal Reckoning, Part I
Daniel Stelter (Globalist) Oct 13, 2013
The first step is to acknowledge the facts of the global fiscal condition.

US energy revolution ends old Opec regime Financial Times Subscription Required
Ed Morse (FT) Oct 14, 2013
North America’s energy independence is creating a new supply hub and while governments are not intervening, markets may be working their magic

Oil processing: A refined model Financial Times Subscription Required
Sylvia Pfeifer (FT) Oct 14, 2013
The European refining industry is undergoing a shake-out with more specialised entrants seeing opportunities as the oil majors retreat.

Why OPEC No Longer Calls the Shots Wall Street Journal Subscription Required
Daniel Yergin (WSJ) Oct 14, 2013
The oil embargo 40 years ago spurred an energy revolution. World production is 50% higher today than in 1973.

Asia's Challenge to Europe New York Times Subscription Required
Keith Bradsher (NYT) Oct 14, 2013
The economies of China and India could scarcely be more different, yet each will test the Continent's ability to adapt to more difficult environment.

Chastening the Giant Banks New York Times Subscription Required
Peter Eavis (NYT) Oct 14, 2013
Banks have lost some of their swagger, but they're back in fighting form. Will they always be too big to fail?

Ethiopia: The African tiger
Claire Schaffnit-Chatterjee (DB Research) Oct 14, 2013
The East African country has been experiencing impressive economic growth: double-digit between 2004 and 2010, it has averaged 8.7% annually over the past five years thanks to the expansion of agriculture and services. Ethiopia has thus been the fastest-growing economy in Sub-Saharan Africa (SSA). Projected at 6.5% annually over the next five years, it is set to remain on a robust growth path.

Nobel Prize Shows Both Wisdom and Madness of Crowds
Richard Holden and Justin Wolfers (Bloomberg) Oct 14, 2013
Financial markets provide a useful reminder of just how humble we economists should be about our understanding of the world. The three winners of the 2013 Nobel Memorial Prize in Economic Sciences neatly capture this tension.

The High Cost of Ocean Decline
Andrés Velasco (Project Syndicate) Oct 14, 2013
Ocean degradation is not as visible as deforestation, but it is at least as dangerous. Addressing it requires not only quantifying the economic costs of allowing it to continue, but also devising new governance mechanisms to ensure that it does not.

The Still-Emerging Markets
Richard Cooper and Jaana Remes (Project Syndicate) Oct 14, 2013
Emerging economies today are much more than a collection of new consumer markets and plentiful (and increasingly skilled) labor. They are also home to thousands of new companies, many of which are quickly becoming large, global leaders in their fields.

Unpopular Populism
Rodrigo Pardo (Project Syndicate) Oct 14, 2013
In 2005, George W. Bush’s project for a pan-American trade area was sunk by loud protests during the fourth Summit of the Americas in Argentina. Now, as Latin America’s heads of state prepare to meet in Panama, the region's political environment is very different, with neither populism nor liberalism likely to take hold.

Liquidity coverage ratios and monetary policy
Clemens Bonner & Sylvester Eijffinger (VoxEU) Oct 14, 2013
Liquidity requirements like the Basel III Liquidity Coverage Ratio are aimed at reducing banks’ reliance on short-term funding. This may have implications for the implementation of monetary policy, which usually operates through short-term interbank interest rates. This column looks at how banks reacted to the Dutch quantitative liquidity requirement. The authors conclude that liquidity requirements will only reduce overnight interest rates if they cause an aggregate liquidity shortage.

China should cut its lending to America Financial Times Subscription Required
David Li (FT) Oct 15, 2013
The shutdown debacle demonstrates clearly that buying US Treasuries carries significant and unnecessary risks.

South America’s golden era of growth dims Financial Times Subscription Required
John Paul Rathbone (FT) Oct 15, 2013
The commodity boom subsides and the region no longer has the capital it had but election prospects imply that democracy is more vigorous than ever

EMH and Treasury yields
Chan Akya (AT) Oct 15, 2013
The Nobel economics prize has brought public attention to the Efficient Market Hypothesis. Yet the present US government crisis and widespread central bank intervention that has skewed asset prices globally mean that now is certainly not the time for anyone to depend on EMH.

Reports of Russia’s death are exaggerated
Spengler (AT) Oct 15, 2013
The United States can make strategic plans in Asia on the premise that Russia's recent return to world power status will ultimately be undermined by demographic disaster triggered by long-term social collapse. But while that outcome - put forward in Ilan Berman's new volume, cannot be excluded, neither is it likely. Russia will be around for quite a while, and requires strength, not bluff, to handle. (Oct 15, '13)

The Western World's Day of Fiscal Reckoning, Part II
Daniel Stelter (Globalist) Oct 15, 2013
In theory, there are four options to address the West’s debt overhang.

China Says Debt Debacle Is the End of Pax Americana
Adam Minter (Bloomberg) Oct 15, 2013
Excuse the Chinese government for not caring who in the U.S. is responsible for the debt-ceiling impasse. Democrats and Republicans have their reasons for doing what they do, but from Beijing or Shanghai’s perspective, the potential results are the same: a default on about $1.28 trillion of Chinese-owned debt and a global recession to boot. The U.S. promised to make good on the debt when it bought it, and that promise seems dangerously close to being broken. For China, that’s a huge economic risk -- and a tremendous public- relations opportunity.

African Leaders’ Eyes on the Prize
Jeffrey Frankel (Project Syndicate) Oct 15, 2013
Critics of the Ibrahim Prize – a $5 million award given to democratically elected African heads of state or government who left office constitutionally and demonstrated exceptional leadership – argue that politicians should not be "bribed" to be good. But is it really so bad if the prospect of winning keeps a leader on the high road?

IMF failings in the EZ crisis
Susan Schadler (VoxEU) Oct 15, 2013
The IMF loans to Greece, Ireland and Portugal are considered controversial by some analysts. This column argues that these loans – granted without having agreed on convincing paths to manageable debt levels – constituted a substantial departure from IMF principles. The situation is costly for Europe and, having now permanently changed the principles guiding large IMF loans, it will be costly for crises to come. A serious rethink of the management and decision-making structure of the IMF is needed.

Is China in better shape than it looks? Financial Times Subscription Required
David Pilling (FT) Oct 16, 2013
The transition to consumption-driven growth may be more advanced than previously thought.

The new globalization
Robert J. Samuelson (WP) Oct 16, 2013
As growth slows, globalization’s discontents pick up steam.

The Western World's Day of Fiscal Reckoning, Part III
Daniel Stelter (Globalist) Oct 16, 2013
Politicians might conclude that debt restructuring is inevitable.

The End of OPEC Foreign Policy Subscription Required
Amy Myers Jaffe and Ed Morse (FP) Oct 16, 2013
Forty years after the Arab oil embargo, new technologies are dramatically reshaping the geopolitics of the Middle East.

Revoking America’s Exorbitant Privilege
José Antonio Ocampo (Project Syndicate) Oct 16, 2013
The threat of a US default may well end in a political agreement to raise the US government’s debt ceiling, as occurred in 2011. But, whatever the outcome, the latest episode makes it abundantly clear that our globalized world deserves a better international monetary system than one in which the US can veto major decisions.

No alternative to dollar except chaos Financial Times Subscription Required
Stephen King (FT) Oct 17, 2013
US dollar and Treasuries provide the anchor for the global financial system, so we breathe a sigh of relief and hope that, next time, not too much blood will be spilt.

The power of a globalised renminbi Financial Times Subscription Required
Danny Quah (FT) Oct 17, 2013
The Chinese will see how the lifting of controls on information flows – in Shanghai, in the UK capital – is bound up with modern economic success.

Why the Dollar-Renminbi Transition Is Getting Much Closer Despite Debt Deal
Arvind Subramanian (PIIE) Oct 17, 2013
The debt deal will do little to delay the day of reckoning for the dollar as the world’s reserve currency. In my book, Eclipse: Living in the Shadow of China’s Economic Dominance, I argued that the renminbi could overtake the dollar as the world’s premier reserve currency sometime during the next decade.

Inequality seen as bar to development
Thalif Deen (AT) Oct 17, 2013
With the richest 1% of the population now owning 40% of global assets, and the bottom half sharing just 1%, inequality is fast being recognized as a stubborn underlying obstacle to development.

US Fiscal Woes Cast Shadow over IMF Annual Meeting
Bridges Weekly Trade News Digest, Volume 17, Number 34 Oct 17, 2013
The US Congress reached an eleventh-hour deal preventing Washington from defaulting on its debts on Wednesday, within hours of an impending deadline. The prospect of a US default – and the likely ramifications abroad – had dominated last week's Annual Meeting of the International Monetary Fund, which had aimed to focus primarily on the state of the global economy.

WTO Farm Talks: Negotiators on Final Lap Before Bali Ministerial
Bridges Weekly Trade News Digest, Volume 17, Number 34 Oct 17, 2013
Trade officials have entered the last stretch of talks before the WTO's ninth ministerial meeting in Bali, Indonesia, with an outline deal for a "small package" of measures now due to be wrapped up by the first week of November – a month before the conference.

ITA, GPA Processes Aim for Bali Ministerial Outcome
Bridges Weekly Trade News Digest, Volume 17, Number 34 Oct 17, 2013
Members working to expand the coverage of the WTO's plurilateral deal on trade in information and communication technology products are set to resume their negotiations next week, following a three-month suspension. Meanwhile, efforts to ratify the global trade body's revised agreement on government procurement – another plurilateral – in time for the WTO's December ministerial conference continue underway, sources say.

What Saved the Rupee?
Arvind Subramanian (PIIE/Business Standard) Oct 17, 2013
The near-crisis witnessed this year will be the subject of many future exegeses. "History is that certainty produced at the point where the imperfections of memory meet the inadequacies of documentation," says a character in Julian Barnes' Booker-winning novel, The Sense of an Ending. Preempting the writing of such "certain" future histories requires exploiting the objectivity that recency provides, to get the facts down, straight and quick.

In Praise of Debt Ceilings
Hans-Werner Sinn (Project Syndicate) Oct 17, 2013
The recent wrangling about raising the US government’s borrowing limit underscores the hazards posed by excessive state indebtedness. Governments nowadays are essentially running gigantic redistribution machines that steer funds from taxpayers to transfer recipients and other beneficiaries of public expenditure.

The Decline of the East Wall Street Journal Subscription Required
WSJ Oct 18, 2013
Neighbors of Russia and China fear their political control.

The Winning Case Against Megabanks
Simon Johnson (Bloomberg) Oct 18, 2013
There continues to be a forceful economic debate about the cost of financial companies that are regarded -- by officials and by credit markets -- as “too big to fail.”

Private and public debt in crises: 1870 to now
Òscar Jordà, Moritz Schularick & Alan Taylor (VoxEU) Oct 18, 2013
In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.

The Lessons of Japan’s Economy New York Times Subscription Required
Steven Rattner (NYT) Oct 19, 2013
Despite improvements, some unsexy reforms are desperately needed.

To Save Europe, Free the Markets
Frank Hollenbeck (Mises Daily) Oct 19, 2013
The current European economic strategy is to kick the can down the road. Debt levels in almost all European countries continue to rise and growth seems to be a long forgotten memory. The day of reckoning is around the corner, as Rudi Dornbush once warned, “[t]he crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought, and that’s sort of exactly the Mexican story. It took forever and then it took a night.”

EZ crisis and historical trilemmas
Michael Bordo & Harold James (VoxEU) Oct 19, 2013
The Eurozone’s tangle of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This column argues that it is reminiscent of the interwar situation. The interwar slump was so intractable not just due to financial issues, but also a crisis of democracy, of social stability, and of the international political system. The big difference in the EZ is that nations cannot go off the euro as they went off the gold standard. That is why the initial EZ crisis may not have been so acute as some of the gold standard sudden stops, but the recovery or bounce back is painfully slow and protracted.

Economic uncertainty and the effectiveness of monetary policy
Knut Are Aastveit, Gisle James Natvik & Sergio Sola (VoxEU) Oct 19, 2013
Many analysts blame uncertainty for at least part of advance nations’ poor economic performance since the crisis. This column discusses new research showing that the economic impact of monetary policy is dampened when uncertainty is high. This means that high uncertainty forces monetary policymakers into a trade-off between acting decisively and acting correctly as policy must be more aggressive than otherwise in order to stabilise economic activity. The finding is particularly stark when uncertainty measures from financial markets are utilised.

China: A place to call home Financial Times Subscription Required
Simon Rabinovitch (FT) Oct 20, 2013
Beijing’s programme to build 36m affordable homes is failing to cool the red-hot property market amid fears that corruption is damaging the scheme.

Opposites devise clear plan for investing Financial Times Subscription Required
John Authers (FT) Oct 20, 2013
Economists with contrasting views have produced insights on which all can agree and which leave us with a far better idea of how to invest.

Sending a Bad Message to Big Banks Wall Street Journal Subscription Required
Richard J. Parsons (WSJ) Oct 20, 2013
The feds' hypocrisy about J.P. Morgan's takeover of Bear Stearns will make other banks wary in the next crisis.

Lessons From a Crisis New York Times Subscription Required
Jacob J. Lew (NYT) Oct 20, 2013
The sensible center is not out of reach. It should now focus on job creation.

American Debt, Chinese Anxiety New York Times Subscription Required
Menzie D. Chinn (NYT) Oct 20, 2013
The overarching reality is that over the longer term, U.S. government finances are simply not sustainable.

Does business-cycle volatility matter?
Ian Dew-Becker & Stefano Giglio (VoxEU) Oct 20, 2013
Stabilisation policy should focus on the frequencies consumers care most about. This column presents evidence from stock-market returns suggesting that consumers are willing to pay the most to avoid – and are therefore most concerned about – fluctuations that last tens or hundreds of years. Modern macroeconomic theory tends to view the role of monetary policy as smoothing out inflation and unemployment over the business cycle. The authors’ findings suggest that resources would be better spent on policies that smooth out longer-run fluctuations.

When the Best and Brightest Leave India and China
Pankaj Mishra (Bloomberg) Oct 20, 2013
In the 1970s, long before the word “globalization” achieved common currency, the buzzword in India was “brain drain” -- an apparent problem that almost everyone in my family and circle of friends wanted to be part of.

Emerging markets: While the sun shone Financial Times Subscription Required
Jonathan Wheatley (FT) Oct 21, 2013
Only a few developing nations used their boom years to enact crucial structural reforms.

Bail-ins are no better than fool’s gold Financial Times Subscription Required
Avinash Persaud (FT) Oct 21, 2013
Once regulation has failed and a crisis is upon us, the only operator with enough of the assets that matter – liquidity and credit – is the taxpayer.

Rough ride in store for EM currencies Financial Times Subscription Required
Mark Haefele (FT) Oct 21, 2013
For vulnerable economies the pace of foreign exchange reserve drawdowns will increase, and investors will need to watch where buffers are dwindling.

Carried Away by the Shale Gale
Prakash Loungani (Globalist) Oct 21, 2013
Is the so-called shale boom in the United States just hype?

U.S. Shale Gas: All It's Cracked Up to Be?
Stephan Richter (Globalist) Oct 21, 2013
The shale boom in the United States isn't the game-changer its proponents claim.

Forget Free Trade. Try Free Immigration.
Pankaj Mishra (Bloomberg) Oct 21, 2013
Hundreds of destitute migrants from Africa and the Middle East died in two shipwrecks this month while attempting to reach the shores of Italy. In the meantime, wealthy Chinese, Indians, Russians and South Africans continue to glide serenely to their favored European destinations as they flee their increasingly unstable countries.

China’s Wake-Up Call from Washington
Stephen S. Roach (Project Syndicate) Oct 21, 2013
With 90 days left to bridge the ideological and partisan divide before another crisis erupts, the fuse on America’s debt bomb is getting shorter and shorter. As a dysfunctional US government peers into the abyss, China – America’s largest foreign creditor – has much at stake.

Budget wars: 1575 version
Carlos Álvarez-Nogal & Christophe Chamley (VoxEU) Oct 21, 2013
The recent showdown over the US debt ceiling can be thought of as a game of chicken over the repayment of sovereign debt, with potentially severe consequences. This column describes an analogous historical episode in Spain, in which city delegates in the Cortes resisted tax increases, and Phillip II responded by suspending payments on a portion of the sovereign debt. By the time the cities caved to a doubling of their tax contribution two years later, the resulting bank failures and credit freeze had caused lasting economic damage.

Corporate India and New Delhi rift widens Financial Times Subscription Required
James Crabtree (FT) Oct 22, 2013
Industrialists in the country increasingly feel that only a change of political administration can limit the drift that hampers growth.

China: Foreign values Financial Times Subscription Required
Paul J Davies (FT) Oct 22, 2013
Consumers favour overseas brands in many sectors, eroding Beijing’s attempts to boost domestic profits.

When Blocs Collide
José Luis Machinea (Project Syndicate) Oct 22, 2013
The Pacific Alliance and Mercosur have adopted very different strategies for achieving the same goal: further integration into the world economy. Whether they succeed, thereby securing Latin America’s status as one of the global economy’s major players, will depend on whether their strategies complement or clash with each other.

The Peace-Prosperity Cycle
Steve Killelea (Project Syndicate) Oct 22, 2013
At the 68th session of the UN General Assembly, world leaders are laying the foundations of a post-2015 development agenda. But, in order to make genuine progress, policymakers must address the factors that constrain development, particularly violence and conflict.

Europe’s Flight from Futility
Hubert Védrine (Project Syndicate) Oct 22, 2013
In the coming decades, Europe’s share of the world population and global GDP is expected to fall considerably. To prevent inexorable decline, Europe must reach clear decisions in three crucial areas: how to pull the eurozone out of crisis, how much national sovereignty to cede to the EU, and how far to take enlargement.

Eurozone recovery: A job half-done Financial Times Subscription Required
James Fontanella-Khan and Peter Wise (FT) Oct 23, 2013
Data suggest the bloc is finally emerging from recession but stubbornly high unemployment is undermining the economic revival.

America’s debt crisis may drag the eurozone down Financial Times Subscription Required
Lorenzo Bini Smaghi (FT) Oct 23, 2013
US politicians are playing a game of chicken like the one Europeans played, bringing the eurozone close to collapse.

EU Ministers Approve Launch of China, ASEAN Investment Talks
Bridges Weekly Trade News Digest, Volume 17, Number 35 Oct 23, 2013
EU trade ministers signed off last week on launching investment talks with China, paving the way for the negotiations to begin as early as next month. Member states have also agreed on a revised mandate for Brussels to develop investment deals with the ten members of the Association of Southeast Asian Nations (ASEAN).

Canada, EU Reach Trade Pact
Bridges Weekly Trade News Digest, Volume 17, Number 35 Oct 23, 2013
Canada and the EU announced that they have reached an "agreement in principle" last week on a comprehensive bilateral trade pact linking two of the world's largest economies. The deal would cover a market of over 530 million people, and is expected by some trade observers to serve as a possible template for future agreements – such as the EU's negotiations with the US.

How Europe Can Save Its Banks
Bloomberg View Oct 23, 2013
Europe is finally mounting a serious effort to restore confidence in a crippled banking sector that presents one of the greatest obstacles to the area’s economic recovery. Unfortunately, European leaders have yet to provide a good answer to the crucial question: What will they do with banks that are really in trouble?

Can Europe's Banks Handle Draghi's Exams?
Jonathan Weil (Bloomberg) Oct 23, 2013
The European Central Bank's plan to conduct reviews and stress tests of euro-area banks might achieve the opposite of the intended effect.

Forward Guidance: A new Vox eBook
Wouter den Haan (VoxEU) Oct 23, 2013
Forward guidance is the practice of communicating the future path of monetary policy instruments. This column introduces a new eBook on the subject that collects the views of central bankers from the Fed, ECB, Bank of Japan, and Bank of England together with those of scholars and market participants. Forward guidance could be the key to unwinding massive central-bank balance sheets without severe disruptions.

Banking union for Europe – where do we stand?
Thorsten Beck (VoxEU) Oct 23, 2013
Much has happened since VoxEU published an eBook on the banking union in Europe one year ago. In this column, the editor of the eBook reviews the developments and plans of the past year. Many of the issues flagged by eBook contributors are still relevant and have not yet been addressed. While immediate pressures seemed to have receded, the crisis is still very much with us and is still awaiting resolution.

Crisis masks Italian success Financial Times Subscription Required
Tony Barber (FT) Oct 24, 2013
Companies listing in Milan are setting tone for an age defined less rigidly by the venerable financial and industrial groups of post-1945 Italy Read more >>

Brazil celebrates auction with one bidder Financial Times Subscription Required
Joe Leahy (FT) Oct 24, 2013
Brazil has one of world’s biggest debt burdens to service. So the government is wary of squeezing Petrobras too much. Hence delight at outcome Read more >>

China conjures up ‘bad bank’ magic trick Financial Times Subscription Required
Henny Sender (FT) Oct 24, 2013
Solution to prospect of growing bad debts is same as in the past: socialise the debt through creation of a new generation of asset management companies

Trade: Into uncharted waters Financial Times Subscription Required
Shawn Donnan (FT) Oct 24, 2013
A 30-year trend of trade growing at twice the speed of the global economy has ended, raising the question of a structural shift in world business.

From Credit to Crisis
Nicholas Borst (Caixin) Oct 24, 2013
The Chinese financial system has come a long way since the banking cleanup in the 1990s. A large commitment of government resources, deep internal restructuring, and assistance from foreign strategic investors helped to improve the performance of Chinese banks dramatically. Whether measured by profitability, capital levels, or non-performing loans, China's banking system is functioning much better than it used to.

The world is watching China
Fareed Zakaria (WP) Oct 24, 2013
Southeast Asians realize they must understand Beijing.

Exports No Longer Sole Path To Economic Rescue
Will Hickey (YaleGlobal) Oct 24, 2013
The global economy is in flux. Emerging economies await signals of an improving US economy and for Federal Reserve plans to pull back from bond purchases on the order of $85 billion per month. Anticipating an end to those capital flows, investors began withdrawing capital from emerging markets, prompting currencies to fall in nations like India and Indonesia, explains trade analyst Will Hickey.

New Players on the World Stage: Chinese Provinces and Indian States Recommended!
William Antholis (Brookings) Oct 25, 2013
How local units are shaping the global future.

Hidden debt must be repaid
Michael Pettis (AT) Oct 25, 2013
A bad argument has resurfaced that China doesn't have to worry about rising bad debts because it can use foreign reserves to recapitalize its banks. Like the fallacy that debt misallocation doesn't matter, this must be refuted. Debt always matters because it must always be paid for by someone.

Greece in the Caribbean Economist Subscription Required
Economist Oct 26, 2013
Stuck with a real debt crisis in its back yard, America can learn from Europe's Aegean follies.

Cash to the poor: Pennies from heaven Economist Subscription Required
Economist Oct 26, 2013
Giving money directly to poor people works surprisingly well. But it cannot deal with the deeper causes of poverty

Finance and growth
Thorsten Beck (VoxEU) Oct 27, 2013
A well-functioning financial system is critical for economic growth. However, some studies find a negative relationship between the two at high levels of financial development. This column discusses why this is the case and suggests some policy implications. It argues that reforms that refocus the financial system on enterprise credit and on internalising the downside risks can be beneficial.

Debt: A deceptive calm Financial Times Subscription Required
Ralph Atkins (FT) Oct 27, 2013
Investors are wary that the tranquility in eurozone bond markets could breed complacency, and fear risks such as overreliance on domestic buyers.

No end to the euro crisis in sight Financial Times Subscription Required
Wolfgang Münchau (FT) Oct 27, 2013
Put bluntly: the scale of necessary eurozone internal adjustment is absolutely enormous. The IMF does not believe that this is going to happen.

Beijing’s caution on reforms makes sense Financial Times Subscription Required
Eswar Prasad (FT) Oct 27, 2013
Narratives must be translated into action. China does not have the luxury to postpone all reforms until the conditions are ripe.

Tapering Without Tears—How to End QE3 Wall Street Journal Subscription Required
Ronald McKinnon (WSJ) Oct 27, 2013
The Fed can start by raising short-term interest rates, later phasing out its bond-buying program altogether.

Hopes of Market Reforms in China Tempered by Political Realities New York Times Subscription Required
Chris Buckley (NYT) Oct 27, 2013
“Plan 383,” a government research body’s proposal to liberalize parts of the economy, has attracted attention, but experts call sweeping changes unlikely.

Europe and Asia United At Last
Globalist Oct 27, 2013
Turkey finally realizes the dream of connecting the two continents underneath the Bosphorus.

London can be an Islamic finance hub Financial Times Subscription Required
George Osborne (FT) Oct 28, 2013
A sukuk bond issue will act as a catalyst for corporate institutions to follow suit and promote overseas investment in infrastructure.

EM bonds in better shape after sell-off Financial Times Subscription Required
Andreas Utermann (FT) Oct 28, 2013
While some may be banking on quantitative easing being prolonged, fundamentals will come to the fore once certainty on tapering is established.

The Curious Case of India and China New York Times Subscription Required
Samir Saran (NYT) Oct 28, 2013
India and China remain prisoners of their perceived insecurities and imagined magnificence.

Overhauling aid to Egypt
Stephen McInerney and Cole Bockenfeld (WP) Oct 28, 2013
The U.S. must restructure the relationship.

China Can’t Talk Its Way Out of Slowing Growth
William Pesek (Bloomberg) Oct 28, 2013
If imitation really is the greatest form of flattery, Shinzo Abe should be thrilled the Chinese are copying his “Abenomics” strategy to excite investors. The rest of the world shouldn’t be.

Which Asian Century?
Richard N. Haass (Project Syndicate) Oct 28, 2013
To point to Asia’s growing importance says nothing about the region's character. There can be two, very different Asian centuries, and the one that emerges will have profound consequences for the region’s peoples and governments – and for the world.

Greenland's Rare Earths Gold Rush Foreign Affairs Subscription Required
Anna-Katarina Gravgaard (FA) Oct 28, 2013
Global power brokers once dismissed Greenland as a white blot on the world map. No longer: Investors from Australia to Canada to China are flocking to the island in the next great contest for mineral riches. Large-scale mining, however, will not be without risks.

A digital currency could transform Africa Financial Times Subscription Required
Jonathan Ledgard and John Clippinger (FT) Oct 29, 2013
The continent can take a leap into a dynamic new future with a technology that will raise standards of performance and transparency.

Curse of euro lands ECB in tricky dilemma Financial Times Subscription Required
Ralph Atkins (FT) Oct 29, 2013
Since July last year when region’s crisis was most intense, euro has risen 10% on a trade-weighted basis. Against the dollar it has hit two-year highs.

The Coming Carbon Asset Bubble Wall Street Journal Subscription Required
Al Gore and David Blood (WSJ) Oct 29, 2013
Fossil-fuel investments are destined to lose their economic value. Investors need to adjust now.

The Coming Carbon Asset Bubble Wall Street Journal Subscription Required
Al Gore and David Blood (WSJ) Oct 29, 2013
Fossil-fuel investments are destined to lose their economic value. Investors need to adjust now.

The Beginning of the End of the Financial Crisis New York Times Subscription Required
Phillip Swagel (NYT) Oct 29, 2013
Five years later, it is clear that the decisive actions to stabilize the financial system were those of Oct. 14, 2008, when the United States government put taxpayer money into banks and guaranteed their lending..

Tom Friedman Is Too Optimistic About China’s Schools
Adam Minter (Bloomberg) Oct 29, 2013
The New York Times recently published “The Shanghai Secret,” a column by Thomas Friedman that explained how Shanghai’s students received the world’s top scores on the 2009 Program for International Student Assessment exams. Administered every three years (the 2012 results will be released Dec. 3), PISA is designed to assess how well 15-year- olds worldwide are prepared to apply their educations to real- world situations.

Islamic Finance Can Save the World
Leonid Bershidsky (Bloomberg) Oct 29, 2013
Western leaders might want to consider some Islamic principles as they try to fix the global financial system.

A Pop History of the European Union
Yanis Varoufakis (Globalist) Oct 29, 2013
The EU was supposed to make Europe one. But the crisis is being handled as many.

Winning the Fight Against Killer Diseases
Jeffrey D. Sachs (Project Syndicate) Oct 29, 2013
One of the greatest successes in development aid in the past decade has been the Global Fund to Fight AIDS, Tuberculosis, and Malaria, which has saved millions of lives. When government leaders meet in early December to decide on further financing, they should act on the basis of evidence, not ideology.

India’s gold rush: Part of the fabric Financial Times Subscription Required
Avantika Chilkoti and James Crabtree (FT) Oct 30, 2013
Can the government curb the insatiable appetite for gold that is pushing Asia’s third-largest economy towards financial crisis?

End west’s deference to petrodollars Financial Times Subscription Required
David Gardner (FT) Oct 30, 2013
Riyadh unquestionably has a point about US policy in the Middle East, but is it Syria and Palestine that are really driving Saudi thinking?

Liquidity dilemma poses test for ECB Financial Times Subscription Required
Michael Steen (FT) Oct 30, 2013
By doling out cheap liquidity, bank supervisor may end up propping up the very institutions whose weaknesses it is trying to uncover.

Don't Believe China's Sky-High Growth Numbers Wall Street Journal Subscription Required
Ruchir Sharma (WSJ) Oct 30, 2013
Huge new flows of credit and public investment are delaying needed reforms and inflating a real estate bubble.

A new world order and China's key role
Henry C K Liu (AT) Oct 30, 2013
The continuing financial crisis offers Asia an opportunity to forge a fairer deal in its economic relations with the rest of the world. China has a key role to play, but it must reduce its reliance on foreign trade and free itself from dollar hegemony.

Prosperity Lives in the City
Jim O’Neill (Bloomberg) Oct 30, 2013
If you study the biggest and most rapidly emerging economies, as I have for many years, you are bound to be struck by the power of urbanization and the pivotal role of thriving cities. More often than not, cities are the engine that powers economic growth. When a country’s cities succeed -- and I do mean cities, plural -- the economy is much more likely to prosper.

Are China’s Banks Next?
Simon Johnson (Project Syndicate) Oct 30, 2013
Despite its advantages, China harbors a weakness that is quite similar to what has caused so much trouble in the US and Europe: big banks that have an incentive not to be careful. While China may enjoy some years of greater prominence, its encouragement of its financial institutions to go global is likely to lead to serious trouble.

The Tacit-Knowledge Economy
Ricardo Hausmann (Project Syndicate) Oct 30, 2013
Knowhow resides in brains, and emerging and developing countries should focus on attracting them, instead of erecting barriers to skilled immigration. Because knowledge moves when people do, they should tap into their diasporas, attract foreign direct investment in new areas, and acquire foreign firms if possible.

Alternatives to credit-rating-agency assessment
Vito Polito & Mike Wickens (VoxEU) Oct 30, 2013
A good credit rating has become a key fiscal objective, even if it requires austerity when unemployment is high. Recent experience has raised doubts about the sovereign ratings provided by the credit-rating agencies. This column suggests a new way to measure credit ratings based on a country’s ability to meet its liabilities using fiscal policy. This measure would have identified and signalled to market participants signs of the impending European sovereign-debt crisis well before 2010, when the rating agencies first reacted to the crisis.

Don’t worry about too much easy money Financial Times Subscription Required
Samuel Brittan (FT) Oct 31, 2013
The most serious objection is that overstimulated bank lending may create asset bubbles which it might be difficult, but not impossible, to deflate.

Money mirage exposes emerging markets Financial Times Subscription Required
Gillian Tett (FT) Oct 31, 2013
As money has rushed into emerging markets in recent years, this has created an image of abundant liquidity. But this image may be dangerously illusory.

Azevêdo: WTO Preparations for Bali Ministerial Entering "Last Mile"
Bridges Weekly Trade News Digest, Volume 17, Number 36 Oct 31, 2013
Preparations for the WTO's upcoming ministerial conference have continued to intensify in Geneva over the past couple of weeks, sources say, as negotiators race to conclude the terms of a draft package by mid-November.

WTO Ministerial: Services Waiver, Rules of Origin Advance
Bridges Weekly Trade News Digest, Volume 17, Number 36 Oct 31, 2013
Negotiators are making progress on two of the four topics being tabled as specific outcomes for the WTO's poorest members, officials announced last week. The news of these "draft decisions" comes as negotiators work to conclude the terms of a package for the global trade body's upcoming ministerial conference, which is scheduled for 3-6 December in the Indonesian province of Bali.

How Indians keep themselves poor
Jiwan Kshetry (AT) Oct 31, 2013
Indians from the lower and middle classes blame official corruption for widespread poverty and regressive trends such as modern-day slavery. However, graft and government failings are only partly responsible. The people also bear responsibility for adapting too readily to stagnation, manifested in turning to alcohol and blind faith.

Better Global Conditions Set to Boost African Growth
IMF Survey Oct 31, 2013
The IMF’s latest Regional Economic Outlook for sub-Saharan Africa projects an acceleration of GDP growth to 6 percent in 2014 from around 5 percent in 2013 that will be strongest among oil exporting and low-income countries.

Population Growth and Interest Rates
Euronomist (Pieria) Oct 31, 2013
Why population matters when it comes to interest rates.

Europe’s Elusive Growth Consensus
Jean Pisani-Ferry (Project Syndicate) Oct 31, 2013
In most European countries, per capita GDP is currently lower than it was six years ago. Worse still, many Europeans appear to have concluded that economic growth does more harm than good in environmental and social terms.

Bubbles in the Broth
Nouriel Roubini (Project Syndicate) Oct 31, 2013
As below-trend GDP growth and high unemployment continue to afflict most advanced economies, their central banks have served up an alphabet soup of unconventional monetary policy measures. But, with asset prices continuing to rise, many countries may have more helpings than they can stand.

Do multinationals that expand abroad invest less at home?
Theodore H. Moran & Lindsay Oldenski (VoxEU) Oct 31, 2013
Criticism of 'offshoring' by US multinationals is widespread among politicians. The underlying assumption is that multinational corporations substitute domestic economic activity for foreign. This column presents evidence that foreign and domestic investment go hand-in-hand at the firm level. This suggests that policies penalising firms for investing abroad will hurt, rather than help, the US economy.

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