by Chip Krakoff on June 29, 2009
in Africa, Asia, Competitiveness, Countries, Development, Eastern Europe, Economic Reform, Growth, Investment, Trade, protectionism
Welcome back!
“The Vital Wave Consulting” blog has an interesting post from June 26 – “Is the Rest of the World Ready for a Unified BRIC?” - about last week’s summit in Moscow of the four “BRIC” countries: Brazil, Russia, India, and China. The article ponts out that trade among the four countries is too small to justify talk of a new trading bloc, but remarks that they have some common interests with respect to world trade, notably reducing reliance on the U.S. dollar. The BRIC countries are hard to overlook. Together they comprise about 43% of the world’s population and 15% of its GDP, and hold over 40% of the world’s gold and foreign exchange reserves. Their economies are growing at more than double the pace of developed economies. That they are holding a summit at all indicates that they are looking for ways to throw their combined weight around for mutual benefit. [click to continue…]
Tagged as:
agriculture,
Belarus,
Brazil,
BRIC,
Cairns Group,
China,
economic growth,
India,
liberalization,
Nigeria,
Russia,
South Africa,
subsidies,
trade bloc
by Chip Krakoff on April 15, 2009
in Africa, Asia, Competitiveness, Countries, Crisis, Eastern Europe, Economic Reform, Education, Middle East, Trade, Western Europe
Milton Friedman is routinely blamed for most of the ills of modern society, often by people who show little sign of ever having read or understood his work. Naomi Klein wrote an entire book – The Shock Doctrine - in which she accuses Friedman and his disciples not only of exploiting disasters to undertake sweeping economic reforms but of conspiring to produce them to create more opportunities to impose his “fundamentalist form of capitalism [that] has always needed disasters to advance.” Klein accuses Dr. Friedman, the architect of free market reforms in Augusto Pinochet’s Chile, of conniving in the dictator’s human rights abuses, and she goes on to say that “for [Friedman's] vision to be implemented in its complete form, authoritarian or quasi-authoritarian conditions are required.” This comes as a surprise to those of us who consider Milton Friedman one of the most vigorous and reasoned defenders of liberty since John Stuart Mill. It is also a surprise if you consider that Chile, largely as a result of Friedman’s influence, is today one of the most prosperous, free, democratic, and stable societies going. [click to continue…]
Tagged as:
Adam Smith,
Milton Friedman,
neo-liberalism
China has just proposed creation of a new international reserve currency or, rather, the revival of an existing measure of value, the Special Drawing Right (SDR), which has been used for the past 60 years as a unit of account by international financial institutions like the IMF and some of the multilateral development banks. Based on a weighted basket of currencies – the dollar, the pound, the euro and the yen – use of the SDR might mitigate the volatility in exchange and interest rates and would partially de-link reserves from dependence on the policy decisions of any single country (i.e., the U.S.), or so the Chinese argue.
With over half of its $2 trillion in foreign exchange reserves invested in U.S. Treasury bonds and other dollar-denominated bonds, the Chinese have reason to worry. A major decline in the value of the dollar relative to other currencies could have disastrous effects, and inflationary pressures from the stimulus package, the Federal Reserve’s “quantitative easing,” and other spending-driven increases in the money supply make this at least conceivable.
How likely is this to happen, and would it be a good thing if it did – and if so, for whom? [click to continue…]
Tagged as:
China,
dollar,
euro,
SDR
I have just returned from a week-long ski vacation in Montana. We stayed in a condo with limited Internet access, thus the lack of posts this past week.
Despite no broadband access, there was cable TV with dozens of channels, and I got a heavy dose of TV news, which I rarely watch at home. By far the biggest story of the week has been the AIG scandal. If you have been on Jupiter the past week or two, AIG is the huge insurance company that has received over $150 billion from the U.S. Government since last September, when it became apparent that the company lacked the funds to make good on the hundreds of billions of dollars in credit defaults swaps – essentially insurance against default on the mortgages underlying mortgage-backed securities – it had written. It transpires that since AIG went on government life-support it has paid out some $160 million in bonuses to staff, a figure recently revised upward to more than $200 million. [click to continue…]
Tagged as:
African Union,
AIG,
Kosovo,
NEPAD,
Zimbabwe
Most of the people we call capitalists have little use for capitalism, if by capitalism we mean competition and free markets. Adam Smith put it best when he wrote “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” [click to continue…]
Tagged as:
capitalism,
nationalization,
regulation,
socialism
