Archive for October, 2009
Check out all the great contributions that were published during the past week on RGE’s Nouriel Roubini’s Global EconoMonitor, RGE Analyst’s EconoMonitor, Finance & Markets Monitor, Peterson Institute for International Economics Monitor, Global Macro EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor. On Nouriel Roubini’s Global EconoMonitor, Nouriel discusses […]
After a free-fall of output in the last quarter of 2008 and the first quarter of 2009, second derivatives of U.S. economic activity have turned positive between Q2 and Q3 of 2009. That was a clear indication of a significant slowdown in the pace of contraction and the first step toward positive growth (and therefore […]
From Bloomberg: Oct. 29 (Bloomberg) — The Oracle of Omaha retains his pre-eminence as a market visionary, outshining a new wave of financial strategists and the best-known central bankers. Billionaire investor Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., is regarded as the best assessor of financial markets by a plurality of […]
From the International Herald Tribune: Global imbalances — roughly defined, the different emphasis the world’s leading economies place on savings, spending and debt — is a phrase much used and little acted upon. Well before the current financial crisis began, world leaders pledged to address this disconnect. At an International Monetary Fund meeting in 2007, […]
Currency appreciation in emerging markets has been particularly strong this year both because of external conditions, including high liquidity, a weak US dollar and strong risk appetite, and domestic factors such as strong fundamentals, high potential growth and wider interest rates differentials. With portfolio investments to EM countries also rising, policymakers need to figure out […]
From Bloomberg: Oct. 27 (Bloomberg) — Investors worldwide are borrowing dollars to buy assets including equities and commodities, fueling “huge” bubbles that may spark another financial crisis, said New York University professor Nouriel Roubini. “We have the mother of all carry trades,” Roubini, who predicted the banking crisis that spurred more than $1.6 trillion of […]
CNBC — Roubini on the Economy (Click for Report and Video) [8:16] CNBC — Nouriel Roubini, chairman of RGEMonitor.com, shares his outlook on the economy. ________________________________________ CNBC — Roubini’s Parting Shots (Click for Video) [3:28] CNBC — Discussing the dollar’s weakness and gold’s luster, with Nouriel Roubini, chairman of RGEMonitor.com. _________________________________________ CNBC — The Fed’s […]
Check out all the great contributions that were published during the past week on RGE’s Nouriel Roubini’s Global EconoMonitor, RGE Analyst’s EconoMonitor, Finance & Markets Monitor, Peterson Institute for International Economics Monitor, Global Macro EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor.
On Nouriel Roubini’s Global EconoMonitor, Nouriel looks at the club of emerging market economies and considers whether Russia really deserves to be included among the BRIC countries. Purely from the standpoint of economic potential and fundamentals, countries like Indonesia, South Korea and Turkey make a more compelling case. Please read BRICkbats for the Russian Bear .
On the RGE Analyst’s EconoMonitor, Adam Wolfe and Rachel Ziemba examine whether China’s loose monetary policy is likely to fuel a property price bubble and what effect it will have on industrial overcapacity. See Chinese Monetary Policy: Little Effect on Overcapacities, and Risks of Blowing a Property Bubble.
In Eastern Europe: Out of the Danger Zone? Mary Stokes and Jelena Vukotic argue that despite some encouraging signs Eastern Europe is not out of the woods yet. They note that the specter of a Latvian devaluation still looms, banking stress continues, and rising political risk in several countries with IMF programs is a concern.
In Fine-Tuning Australian Monetary Policy, Mikka Pineda demystifies the Reserve Bank of Australia’s decision to begin raising its interest rate ahead of other major central banks. She then outlines the trajectory for Australian interest rates for the rest of 2009 and 2010 in line with an outlook for a gradual global economic recovery and tame inflation in Australia.
Fears of a full-fledged regional financial crisis across Eastern Europe have eased, calmed by a strong IMF presence, hefty external assistance to those in need, and a general improvement in global risk appetite. Nevertheless, the region is not out of the woods. The specter of a Latvian devaluation still looms, banking stress continues, and rising political risk in several countries with IMF programs is a concern.
The Good: Bright Spots Have Emerged
Risks may linger, but bright spots have emerged. The second quarter upturns (q/q) in France and Germany—key export markets and important sources of foreign capital for Central and Eastern Europe—are a positive sign, but the jury is still out on the strength of the recovery. Meanwhile, the improvement in global risk appetite cannot be underestimated. As the saying goes, “A rising tide lifts all boats.” For now, investor appetite for Eastern European sovereign debt has picked up compared to earlier this year, which has alleviated external financing risks.
The Improved: Contagion Effects from a Latvian Devaluation Likely To Be Limited
From The Globe and Mail:Anthony Jenkins/The Globe and Mail
One powerhouse in the BRIC group is just hanging in there. Hint: It isn’t Brazil, India or China
Conventional wisdom rarely survives a good stress test, and few tests have been as stressful as what the global economy has endured over the past 24 months. A healthy season of reappraisal has dawned, shining a new light on boom-time notions such as the value of opaque markets, the untouchable status of the American consumer and the wisdom of deregulation.
One piece of bubble wisdom that has escaped relatively unscathed, however, is the assumption that the BRIC countries – Brazil, Russia, India and China – will increasingly call the economic tune in years to come. The BRIC notion, coined in a 2003 Goldman Sachs report, is not all bad: At 75-per-cent correct, it scores a good deal better than most economic prognostications of the day.