Global Business & Economics Program

  • Russian Economic Model Dead? From BRIC to BIC?

    Anders Åslund asserts that "The Putin model of crony state capitalism is dead" and consequently "the juggernaut of emerging economies in Brazil, Russia, India and China is being reduced from BRIC to BIC."

    Writing in today's Washington Post, he explains:

    For years, the structure that Vladimir Putin crafted looked invincible, with its steady, high growth rates and effective, mild repression. But the system only distributed ample oil rents to the elites and the ordinary people, creating neither moral nor economic value.

    Today the bill is due. In 2009, Russia's gross domestic product plunged 7.9 percent, even though Moscow had the world's third-largest international


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  • Just What Is The Real Level Of Government Debt In Europe?

    “If you don’t fully understand an instrument, don’t buy it.”

    To the above advice from Emilio Botín, Executive Chairman of Spain’s Grupo Santander, I would simply add one small rider:  Don’t sell it either, especially if you are a national government trying to structure your country’s debt.

    In a fascinating article in today’s New York Times, journalists Louise Story, Landon Thomas and Nelson Schwartz begin to recount the mirky story of just how the major US investment banks have been able to earn considerable sums of money effectively helping European governments to disguise their growing mountain of public debt.

    Wall Street tactics akin to the ones that fostered subprime mortgages in America have worsened the financial crisis shaking Greece and undermining the euro


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  • Eurozone and the Five Little PIIGS

    Greece has been the story underneath much of the financial markets this week. The problem is that while everyone wants to solve the problem with Greece's sovereign debt crisis, nobody wants to put money behind it.

    Germany and France will on Thursday promise their support for debt-laden Greece in a vow of eurozone solidarity but they are unlikely to come up with a detailed rescue plan.

    President Nicolas Sarkozy and Chancellor Angela Merkel are expected to give a show of political support to Athens at a summit of EU leaders in Brussels, one of the most momentous in the bloc’s recent history, in the hope that it will calm debt market turmoil.

    But officials in Paris said there was “reticence” in Berlin about signing up to a bail-out package with further “assurances that the Greek government would undertake

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  • Euro in Deep Trouble?

    In its short existence, the Euro has achieved its goal of establishing itself as a rival to the dollar.  But many analysts see trouble ahead, with some wondering if it can survive much longer.

    Writing for the FT, Peter Garnham, Victor Mallet and David Oakley report that "Traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis." They explain that "It suggests investors are losing confidence in the single currency’s ability to withstand any contagion from Greece’s budget problems to other European countries" and add, "Amid growing nervousness in financial markets over whether countries


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  • Davos 2010: No Agreement on Bank Regulation

    French president Nicolas Sarkozy opened up the World Economic Forum with a call for tighter regulation of business, including executive pay limits and new accounting rules.  He warned of catastrophe if "we do not change the regulation of our banking system and the rules for accounting and prudential oversight."

    Beating a straw man, he continued, "From the moment we accepted the idea that the market was always right and that no other opposing factors need to be taken into account, globalization skidded out of control."

    Another headliner at Davos, investor George Soros, heartily ...
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  • Davos 2010: New Year, Same Mission (Saving the World)

    The 40th World Economic Forum kicked off in Davos today, with a modest agenda to "Improve the State of the World: Rethink, Redesign, Rebuild."

    As Spiegel's Anne Seith notes, Klaus Schwab, the forum's German founder, has always been decidedly ambitious and has by all accounts been successful as a gathering (although not so much at saving the world).

    The economist first invited top managers to the luxury ski resort for an exchange of views in 1971. That year, some 444 guests came. Davos has since grown into a mega-meeting of the world's political, business and science elites. Thousands of police and snipers have cordoned off the town and private jets crowd the little airfields dotted around the valley.

    BBC's ...
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  • Derivatives Market 20 Times Size of American Economy

    The nation's chief commodities regulator told the Atlantic Council that, "A healthy financial future requires that we bring comprehensive reform to the over-the-counter derivatives markets. It is critically important that we bring transparency to this market and address the significant information advantage enjoyed by Wall Street."

    Gary Gensler, chairman of the Commodity Futures Trading Commission, delivered that call to


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  • Eurozone's Periphery Fighting With One Hand Tied Behind Their Back

    The FT's chief economics commentator, Martin Wolf, argues that, without the ability to manipulate national currencies, the EU's poorer members are going to have a very difficult time recovering from the global recession.

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  • USA Gets in the New Trade Game

    It was all but unnoticed in the U.S. press, but a recent free trade agreement between the European Union and South Korea is a development worth pondering. In the current environment– with the US Congress reluctant to pursue new trade deals (or for that matter, even ratify the FTAs already concluded with Panama, Columbia and South Korea that have been on hold for more than a year) and with the Doha Round of global trade liberalization at best uncertain and at worst, moribund– the future of trade liberalization may well be in “second best” bilateral and regional agreements.

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  • Iran Could Learn from China's New Economic Model

    The recent demonstrations by pro-democracy activists should provide a clear warning to President Mahmud Ahmadinejad and the Iranian mullahs, who are responsible for maintaining his authority, that the regime must address the social and economic concerns of its well-educated populace if it wants to stay in power. 

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