February, 2010


19
Feb 10

Emerging Markets: The BRIC Myth

The Templars at War

Religion, politics and sex are not fit subjects of conversation for a dinner party, an old saying has it. To add sparkle to my blog – which today deals with PIGS, BRICS and taxes – I have ensured they are all alluded to in this post.


The imagination of financial market participants is often captured by absurdly named arbitrary groupings. PIGS is one of them. Portugal, Italy, Greece and Spain are all very different countries, even in their debt levels, deficits and economic capacity.

BRICs is another misnomer. Coined in 2001 by Goldman Sachs to stand for the high-growth emerging economies of Brazil, Russia, India and China, the thesis is that by 2050 their combined economies could be larger than those of the current richest countries of the world.


12
Feb 10

Stiglitz on the Ultimate Emerging Market

The Terminator departs

The US is the ultimate emerging market.

I remember first hearing this from Alfonso Prat-Gay, former central bank governor of Argentina – a man who had quite a bit of experience of irresponsibly high spending governments.

If the old-style IMF were in charge, it would have ordered the Obama government to cut spending radically, jack up interest rates and suffer through the ensuing recession to come out healthily on the other side.

But the new warm and fuzzy Bretton Woods institutions (IMF/WB) won’t do that.