With the advent of the Internet, major movie and record studios have been demanding extensions to copyright laws in order to preserve outdated business models. But copyright law can do little to protect them and they need to move with the times and embrace the new technologies.  Read more

Greece’s exit from the eurozone appears to be inevitable. Still, like a doomed marriage, it is better to have rules for the impending divorce so as to make separation less costly to both sides.  Read more

With François Hollande’s defeat of Nicolas Sarkozy, Merkel has virtually no support left in the eurozone. As the world looks for signs that Europe’s new power duo can overcome political difference and work together to save the euro, almost all European governments are counting on Hollande to change the balance of power. Will he succeed?   Read more

The future of the global economy remains shrouded in mystery. Whether the crises in the United States and the eurozone will improve remains to be seen. While the latest economic data from China largely points to a soft landing, until the Chinese economy rebalances, it will not emerge from its own domestic crisis. In fact, China will be the last major economy to emerge from the global crisis.    Read more

Greece may not be the basket case that the rest of Europe seems to believe it is. Against the bleak picture commonly propagated by the media, the Greek state actually possesses numerous positive factors in its economy, including: a massive amount of real estate, and huge savings that can be generated simply by shrinking its public sector.  Read more

Europe’s single-minded focus on austerity is a result of a misdiagnosis of its problems; and the fact that so many economies are vulnerable to natural disasters only makes the man-made disaster of austerity all the more tragic. Accordingly, the pain that Europe, especially its poor and young, is suffering as a result of its leaders’ willful ignorance of the lessons of the past is entirely unnecessary.  Read more

The advent of digital and social media has presented new opportunities for corporations in Asia. But in a region that possesses a diverse range in cultures, identities and languages, many companies have been struggling with a holistic approach for their digital strategy, which has ultimately led to corporate disaster.  Read more

Spain’s banking system is in a fragile state. Already, bad property loans are threatening to bring the system down like a house of cards, while international pressure means that the government has little manoeuvrability to support the system if further disruptions occur. Needless to say, the Spanish government is desperate to have the banking sector solve its own problems without a bailout from either the state or the EU. But will this be possible?  Read more

The United States fixation with the Renminbi has distracted the government from far more important economic issues in its relationship with China. Rather than vilifying China as the principal economic threat to America, this relationship should be recast as an opportunity – especially when the opportunities of market access far outweigh the currency threat.  Read more

Argentina’s decision to nationalise YPF – a subsidiary of Spanish energy company Repsol – has been met by international disapproval; though the Argentine government insists that the move had been necessary in order to meet its energy needs. Yet this may not turn out to be the case, particularly with investment in exploration greatly reduced.  Read more

The world’s biggest oil and gas companies are competing for the enormous reserves of natural gas and oil in the Arctic, but the ecological and economic consequences of a major oil spill would be catastrophic.  Read more

Scientists have discovered a vast reservoir of groundwater located within Africa, which is said to contain a hundred times the amount of water found on the continent’s surface. But while the news has already sparked excitement across the once water-scarce continent, this joy will be short-lived unless global leaders exercise moral and social responsibility.

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High-frequency trading has been in existence since 1999; thought it only caught the public’s attention after the “Flash Crash” in 2010 – when high-frequency liquidity providers were found to have withdrawn from the market, resulting in increased volatility and inflated asset price bubbles. But does speed-trading, as it is sometimes called, deserve its bad reputation or does it really create a “mirage of liquidity”?

Libertarian paternalism, or “soft paternalism”, is a political philosophy which states that government can nudge citizens into making decisions that are good for themselves, while offering complete freedom to individuals to make up their own minds. The problem is that the semblance of choice is an illusion, because individuals do not consciously think through their decision.  Read more

For years, the Indus River has brought water (and life) to both India and Pakistan. But today, the river now stands at the centre of a water conflict between the two South Asian neighbours, which threatens to escalate into violence. Is a water war between India and Pakistan imminent, and what is China’s role in the whole thing?  Read more

Rumours suggest that the US is likely to insist on maintaining the perverse selection process in which it gets to pick the World Bank’s president. But while Jim Yong Kim may be a good candidate, no single country should effectively decide who gets the job. Should America continue to insist on controlling the selection process, it is the Bank itself that would suffer.   Read more

In order to be a bank that serves the world’s needs and addresses global challenges, the World Bank needs internal reforms congruous to a changing world order. To find relevance, the World Bank needs to be a truly global institution with a special responsibility vis-à-vis the world’s poorest countries and a commitment to helping middle-income countries face their own challenges.   Read more

The global community will face two important decisions in Washington, DC this month; they must decide on how to proceed with the European debt crisis as well as on whom to pick as the next World Bank president. Yet, complacency, coupled with rigid practices, could very well mean that the best decisions will not be made, and the world will instead be forced to settle for second best.  Read more

Egypt’s political transition has had deep economic consequences. Though the country is now free of a repressive and tyrannical regime, the economy has entered into a steep decline, which threatens the main goals of the revolution. What’s more, Egyptian politicians now favour populist rhetoric; and unless the upcoming presidential elections can lead to economic stabilization and revival, Egyptians’ hard-won political gains may well be lost.  Read more

Student debt is growing at an alarming rate. At the end of 2011, total student loan debt crossed the $1 trillion mark, a level that is higher than the sum of all credit card debt in the United States. Already, this category of debt has been likened to the subprime crisis, raising worries that a potential delinquency crisis could find its way into the wider economy.   Read more

Having reduced the risk of a relapse into recession, the US economy is now able to move on its own power, albeit gingerly. Consequently, the question on most people’s minds today is whether the US economy is ready not just to walk, but also to run and sprint. But the US faces a new problem: that the sense of relief now can – and probably will – be taken too far.  Read more

Neoclassical economics has led us into a cul-de-sac. Although alternatives do exist, neoclassical thought has been so deeply entrenched into our finance ministries, economics departments, banks and other financial institutions, until a widespread belief has now materialised: that fictions like “perfect markets” and “efficient market hypothesis” are real.

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The Vatican Bank has been plagued by corruption and criminality ever since it was established in 1942. Yet this is hardly a surprise, given that no bona fide legal system is currently in place to ensure check and balances for the bank of God.  Read more

In the next 20 years, China will face serious economic challenges: Rising inequality, environmental degradation, external imbalances, as well as an aging society, all present major risks to China’s future. With the nation heading for an inevitable slowdown, can its government provide long-term solutions to its short-term problems?  Read more

China’s woes do not stem directly from the fact that its local governments are struggling to repay its bank loans. After all, it has been correctly argued that the Chinese government can afford to, and will most likely allow the debt to ‘roll over’ to the country’s main balance sheet. But the key problem here is two-fold: China’s debt is rising and it will eventually blow up. Secondly, China needs to identify and ensure that its long-run engine of growth works, given the weak links that exist in China’s socio-economic model.   Read more

Political change in Myanmar has been numbingly slow for a half-century, but a new leadership is trying to embrace rapid transition from within. However, the country is now being held back by the international sanctions that were imposed before its leaders turned away from authoritarianism and isolation.  Read more

There have been wildly different opinions about China's economic prospects in recent years. While plenty of investors remain very bullish about China, others express doubt about China’s economic future – with some even betting on a major financial catastrophe to happen anytime soon. Why are there two distinct camps on China’s economy and are there statistics to support either side?  Read more

The eurozone crisis has exposed the deep disparities in competitiveness among European economies. Southern European countries, in particular, are lagging far behind other European nations such as Germany and France. But while Europe needs to address the two macroeconomic imbalances – external and fiscal –at the heart of that crisis, such a solution does not require a euro breakup or a major austerity-induced recession.  Read more

With Europe on the brink of recession and recovery in the US finally getting some traction, the case for fiscal consolidation appears increasingly weak. But the case becomes stronger when one considers Asian countries' path from crisis in the late 1990's to astounding growth and prosperity today.  Read more

After being in denial for years, India’s Department of Atomic Energy finally admitted last month that the deaths of some employees and their dependents at the Kalpakkam nuclear site were caused by multiple myeloma, a rare form of bone marrow cancer linked to nuclear radiation. Will this news put a damper on India’s plans to broaden their nuclear power capabilities?  Read more

While recent developments seem to suggest some positive news for the global economy, there are at least four downside risks that could materialize this year – undermining global growth and eventually negatively affecting investor confidence and market valuations of risky assets.  Read more

Corporations, today, are holding the largest amounts of cash, relative to assets and net worth, ever recorded. The velocity of money (the frequency at which money is spent, or GDP relative to base money) also continues to plunge to historic lows. But why are companies deciding to hoard cash, when more capital investment is needed to stir economic growth?  Read more

It is easy to blame politicians for our current economic woes, but do the public have to bear some of the blame as well? As Axel Weber would say, policymakers simply do not have the public mandate to get ahead of problems, especially novel ones that seem small initially, but, if unresolved, imply potentially large costs. What then should the public do to overcome this?  Read more

Greece may have reached a last-minute bailout deal with its debtors, but the country has been saddled with harsh austerity measures and debt conditions, which leaves serious doubt on their ability to recover and avoid default in the longer term. , In key respects, Greece is facing today what Argentina faced in August of 2001. Unless Europe reflects on Argentina's experience, the parallels with Greece may end up including financial meltdown, a deep output collapse, and social and political turmoil.  Read more

The world needs a new paradigm for sustainable development. With economies teetering, ecosystems under siege, and inequality soaring, the world needs to act now to ensure our sustainable development. But how do we begin to tackle the massive challenge of retooling our global economy, preserving the environment, and providing greater opportunity and equity, including gender equality, to all?  Read more

In the last few years, the debate on socioeconomic inequality has received greater media attention and academic interest, especially after last year’s Occupy Movement. However, governments across the world have been slow to enact real changes to address the rising epidemic. Income disparities have the potential to upset social equilibriums, and when that happens, the economic recovery might inadvertently be stalled.  Read more

In part two of our feature on the Iraqi economy, we look at how the downfall of Saddam Hussein’s regime, and the subsequent introduction of the US, managed to shape Iraq’s oil industry and political scenario. Finally, we ask what the Iraqi government needs to do to ensure the nation’s future, particularly with the fate of its citizens at hand.   Read more

The modern “capitalist system” cannot be considered as true capitalism. Rather, this corrupted version is more akin to corporatism, which chokes off the dynamism that makes for engaging work, faster economic growth, and greater opportunity and inclusiveness. The time though could be right for capitalism to once again carry its true meaning, rather than the one attributed to it by corporatists seeking to hide behind it and socialists wanting to vilify it.  Read more

There are several explanations for the ECB’s insistence on a "voluntary" restructuring of Greece's sovereign debt, none of which speaks well for the institution. Indeed, as we have seen elsewhere, institutions that are not democratically accountable tend to be captured by special interests.  Read more

There is a new bank on UK's High Street. While Virgin Money has been around since 1995,the company only came into serious prominence when it finalised the deal to acquire troubled bank Northern Rock on the 1st of January this year. But will the deal to take over Northern Rock be a good result for the public who bailed out the bank during the financial crisis? And what impact will Virgin Money have on the UK's banking sector?  Read more

The pace of China’s Internet revolution has been breathtaking. Since 2006, the number of Internet users in China has more than tripled to 485 million, while the cost of connectivity is also expected to fall sharply as China’s Internet penetration rate continues to grow. But while it is always easy to get carried away with the numbers, the real change in China concerns the implications of connectivity, and not just its scale.  Read more

In part two of our feature on Goldman Sachs, we look at Goldman’s networks of power in Europe and consider the ways in which Goldman is using the same dangerous financial products, which caused the 2007 crisis, to bet against Europe’s floundering economies whilst governing, or advising those countries. Finally, we ask what can be done to reduce Goldman’s power.  Read more

The world faces a nasty credit problem. Far too often, companies and households with access to credit tend not to need it; while those who do, are not able to receive it. If this situation is left unattended, it might lead to a gradual, and then accelerated, renewed deleveraging of the economic system. How then can we unclog the global economy’s choked credit pipes?  Read more

China’s success story is one that would certainly go down the chapters of economic history. While the West firefights its debt crisis, many fail to realize that China too has her own fair share of debt. The overinvestment theory has gained greater attention from academics and politicians alike, and China is now looking to boost internal consumption as its engine of growth. However, unless Beijing has new tricks to cover its losses, her bad debt will put downward pressure on consumption growth.   Read more

Exactly one year ago, as the World Economic Forum convened in Davos, Egyptians took to the streets in a relatively peaceful protest to overthrow a regime that had ruled over them with an iron fist for 30 years. Today, their revolution is, unfortunately, incomplete and imperfect, but make no mistake: Egyptians will finish what they started.  Read more

Natural disasters are inevitable, but at every level we have the power to ensure that they do not become unnatural tragedies. According to a recent report released by the World Bank and the United Nations, an ounce of prevention in planning for disasters is worth a pound of cure. So prevention pays, if done right. And that means getting incentives right.  Read more

Recent favourable macroeconomic data has suggested that the US economy could be back on track. But the recent uplift in the economy only hides more fundamental problems, and the US still remains in the early stages of a deleveraging cycle.  Read more

Pakistan faces a desperate need for more energy. As such, officials are now pinning their hopes on an underground coal gasification project that they hope will be able to power the country for the next 30 years. But will the country’s lack of knowledge and expertise, coupled with inept crony management, threaten to snuff out their latest efforts?  Read more

Many of us are familiar with the basic services that banks provide. In simple, straightforward cases, banks keep our money and pay an interest on it, while providing the convenience of cash withdrawals along their network of ATMs. But are consumers benefitting from their banks, or are they really ripped off by hidden bank charges?  Read more

As the 2008 financial crisis showed, a simple banking system based on collecting retail savings to fund the credit needs of borrowers has evolved into a highly complex – and global – supply chain. To restore trust and adapt to the growing needs of new markets, financial leaders must re-engineer it.  Read more

Google has it. Microsoft, too, has it. Virgin, eBay and many other successful companies, they all have it. Corporate values, that is. While the term ‘corporate values’ has lost its buzzword status in recent years, it remains a key foundation of great businesses. Cliché or not, corporate values help businesses stay true to themselves, and more than anything else, it’s the vision of a great company.   Read more

Both China and India depend heavily on the broader economic global climate. The fear is that if China and India fall, Asia would be at risk, and it would be hard to avoid a global recession. Yet fears of hard landings for both economies are overblown, especially regarding China.  Read more

In the wake of the Fukushima disaster, countries around the world have been re-evaluating their nuclear power facilities. Just like Fukushima, Taiwan’s nuclear power reactors are fairly old, with all six of its existing reactors built near fault lines. Will there be a turnaround in Taiwan’s commitment to nuclear energy?  Read more

An economy is simply an accumulation of transactions involving goods and services, mostly carried out by business enterprises. Their behaviour is what matters, and this can be adequately perceived only on the ground, where the behaviour occurs – where an economy is built, where it breaks, and where it must be fixed.  Read more

The world’s major 3,000 corporations are responsible for a third of global environmental damage, but economists are divided in their views of how to stop them polluting. Some say government regulation, allied to promoting the business case, is the answer. But other experts say we need a new type of capitalism, which allows our economies to stop growing, or even to shrink.  Read more

The decade for emerging markets has come. It is not an understatement that there has been a major shift in global powers following the financial storm that started almost 5 years ago. Despite the storm, emerging markets have already captured 40 percent of world GDP. Looking ahead, a lesser-known revolution – theorised: disruptive innovation – will see to the exponential growth of emerging markets in the next decade.   Read more

Is the United States leaving Iraq for good, or are they leaving them in the lurch? As Iraqis celebrate the departure of the last American convoy, Iraq’s security and economy remains extremely vulnerable. President Obama has said that Iraq will grow faster than India and China, but can, and will Iraq warm up to economic cooperation with the United States?   Read more

Russia appears to be playing a dangerous game in its relationships with the US and Central Europe. Moscow’s strategy involves using crises with the United States to create uncertainty in Central Europe and to make the Europeans uncomfortable over perceptions that the United States has forced Russia to act the way it is acting. But, if Moscow takes its aggressive moves too far, it could spark a backlash from both sides.  Read more

The recently concluded European Union Summit only proved one thing: that Europe’s leaders were still in denial about the true causes of the eurozone’s problems, and thus were unable to resolve them. The proposed fiscal stability union may indeed prevent a collapse in the short run – though that is far from certain – but treaty negotiations outside the EU framework, and the ratification procedures that will follow, are a recipe for even more uncertainty when Europe needs it least.  Read more

The UK’s financial regulatory bodies have shown a surprising "hear no evil" attitude to criminality in its banking and financial sector. At times, the financial regulators almost seemed to want to pretend that criminality and fraud didn't, or couldn't exist in the domain they are supposed to police. Unless this issue is addressed, London risks losing its mantle as a world leading financial centre.  Read more

Powerful and unpredictable synthetic drugs that mimic the effects of marijuana, cocaine, and other illegal substances, are leaving a trail of paranoia, hallucinations and death across the US.  Read more

It is increasingly evident that Europe’s political leaders, for all their commitment to the euro’s survival, do not have a good grasp of what is required to make the single currency work. Public-sector cutbacks today do not solve the problem of yesterday’s profligacy; they simply push economies into deeper recessions.  Read more

Since China opened up its doors to the world a few decades ago, we’ve witnessed what has been a remarkable Chinese growth spurt. Today, China has the second largest economy in the world, the largest bank by market capitalization, and also the largest population of 1.34 billion in the world. As its economy continues to run full steam ahead, it is unsurprising that China is grappling to contain a massive influx of foreigners, both skilled and unskilled, who want a slice of its growing economic pie.   Read more

The US’s and Europe’s woes should be ringing alarm bells across Asia. Although many believe that the region can shrug off almost anything that the rest of the world dishes out, the crises in both regions have intensified Asia’s vulnerability to external shocks. This is Asia’s second wake-up call in three years, and this time the region needs to take the warning seriously.  Read more

The costs of services need no longer be linked to the cost of goods. A sharp decline in the costs of health care, education, and other services is now possible, thanks to the ongoing revolution in information and communications technology. Consequently, the world’s economies, both rich and poor alike, have much to gain from accelerated innovation in the information age.  Read more

The European Union project is facing its biggest test. Regardless of whether the next immediate European crisis is focused on Spain or Italy, it follows that by mid-decade, Europe’s political landscape will have shifted dramatically, with new parties, personalities and values emerging. As such, the real question, therefore, is not how the financial crisis works out. It is whether the European project will survive.  Read more

Over the last 25 years, the share of poor people in developing countries has been cut by half, while impressive development successes have been witnessed in countries once thought beyond help, thanks to effective developmental aid. But, while these results are promising, much remains to be done.  Read more

Poverty rates are on the rise in the Western world, as recession, rising fuel costs and austerity cuts to social welfare benefits, take their toll on the most vulnerable people. But rather than trying to alleviate the problem, most continue to perpetuate the cycle even further.  Read more

On November 10 2011, Cuba’s Communist Party implemented free market-like reforms to the nation’s property market, by finally allowing Cubans to buy and sell property on their own. These reforms have been met by both optimism and scepticism from within the Cuban and international community, as doubts remain over their long-term future. How will these reforms affect Cuba, and how should the rest of the world react?  Read more

The latest report from the IEA is not going to please environmentalists. Accordingly, the IEA admonishes governments for not fully embracing renewable energies – including nuclear energy. But to be fair, there is a desperate need to focus on nuclear power if we are to meet growing energy demand. The only question then that remains is whether governments have the cash and political will to consider embracing nuclear.   Read more

The Trans-Pacific Partnership (TPP) is a multilateral free trade agreement that aims to further liberalise the economies of the Asia-Pacific region. While the economics of the TPP is important, the strategic component is even more so. This is the second leg of America’s new “Pacific offensive,” aimed at offering nations in the region an alternative to excessive and rapidly growing dependence on a rising China.  Read more

Germany and the ECB have less power over the eurozone's peripheral countries than they seem to believe. If they continue to insist on concentrating all the pain of economic adjustment in the periphery, the monetary union’s slow-developing train wreck will accelerate as peripheral countries default and revert to national currencies.  Read more

Reading some economists, it might seem that the answer to all current problems is to tax the richest 1 percent and redistribute to everyone else. But if governments tax their rich more, they should do it with the aim of improving access and opportunity for all, rather than as a punitive measure to rectify some imagined wrong.  Read more

The fallout from the Fukushima nuclear disaster left the entire world running scared. Germany, for instance, announced that they would be shutting down all of its 18 nuclear power plants by 2022, choosing to rely on renewable energy sources and traditional coal-fired plants in the future instead. But the cost of utilising renewable energy sources will be great. Apart from having to actually invest into the technology, Germany could also face opportunity losses that would harm its long-term economic planning.  Read more

If the Keystone XL pipeline, which would run from Alberta, Canada to the Texas coast, goes forward, it would spell disaster for efforts to combat climate change. But defenders of the pipeline are using dirty tactics to promote dirty oil. If these tactics succeed, the very future of our planet could be at stake.   Read more

Across the world, protestors are agitating for change. On one level, the protesters are asking for little: a chance to use their skills, the right to decent work at decent pay, a fairer economy and society. Their hope is evolutionary, not revolutionary. But, on another level, they are asking for a great deal: a democracy where people, not dollars, matter, and a market economy that delivers on what it is supposed to do.  Read more

The US is a nation of vidiots – idiots raised through an unhealthy diet of television and mass propaganda. Ever since America’s love affair with the television set began in the early 1960s, there has been a slow but gradual atomisation of the American society, thanks to the propagation of corporate and political propaganda.  Read more

Eurozone’s outsized banks are highly leveraged and dependent on large quantities of wholesale debt. According to Barclays Capital, the 15 largest banks increased their returns on equity by 58 percent between 1998 and 2007, with 90 percent of the gain coming from higher leverage. However, returns have since collapsed. While this collapse will not result in a Lehman Brothers-scenario, the collapse does reflect an obsolescence in the banks’ business models, which could eventually result in further misfortune.  Read more

For a few years now, the banking industry has shouldered much of the blame for the massive financial crisis that is threatening the health of the global economy, while many others have been quick to point out the glaring lack of financial regulation. But, interestingly, there is now a growing awareness of what is known as the “shadow banking system” and findings have shown that they may have been the ones who caused the crisis after all.   Read more

Systems analysts have shown that a “super entity” of interconnected transnationals dominate the world economy. Their political power is such that even politicians fear the consequences of breaking their monopoly. But unless something can be done, the whole system is a ‘house of cards’ that could collapse at any moment.  Read more

China-bashing in the US has now reached unprecedented levels. While China does account for 42 percent of America’s trade deficit, few realise that the US actually also runs deficits with 87 other countries. At the same time, most of the US problems stem from within the country. Blaming China for all of the US problems will only serve to deflect attention away from those truly responsible for perpetuating the greatest saving shortfall in history.  Read more

The Financial Stability Board (FSB) was formed in the midst of the global financial crisis in order to coordinate urgent international regulatory-reform efforts and ensure greater financial stability and global consistency of rules. Yet today, the FSB continues to be criticised as simply a product of a political statement, lacking the legal standing to enforce or implement any of its mandates. What more can be done to strengthen the role of the FSB?  Read more

Modern capitalism, as we know it, is a sick and distorted perversion of its true origins. Since the 1980s, the form of capitalism that has dominated western economies has been one where large corporations and most financial institutions are able to privatize their gains whilst socializing their losses. The recent Occupy Wall Street movement, as such, isn’t so much as a retaliation against capitalism, but rather against its modern incarnation.  Read more

At last month's UN General Assembly, Bhutan's Prime Minister denounced what he called a “monster of a consumerist market economy” that “enslaves humanity and thrives on the insatiable nature of our greed,” urging instead for an alternative form of economic governance that shies away from the indulgent emphasis on GDP. EconomyWatch spoke to Bhutan’s Chief Planning Officer, Mr. Karma Galay, and found out exactly what the nation sees as a viable and sustainable form of alternative development.  Read more

Nearly all research into GM foods is funded by Monsanto, or other bio-tech companies, meaning truly independent data is rare. Some scientists claim only GM foods can feed the world’s booming population, but others say we are only using people as “human guinea pigs”.  Read more

Any economic model that doesn’t properly address inequality will eventually face a crisis of legitimacy, as today's global protests are now demonstrating. Unless the relative economic roles of the market and the state are rebalanced, the protests of 2011 will become more severe, eventually harming long-term economic growth and welfare.  Read more

The eurozone crisis is now a global crisis. If the crisis cannot be resolved quickly, the entire world will suffer. Despite the global implications, the eurozone continues to try and rely on itself to solve its woes. This is a recipe for trouble. The eurozone should suppress any wounded pride, acknowledge that it needs help, and provide quickly what it has already promised.   Read more

China is under pressure to bailout European countries facing debt crises. It is in the interest of China to save the eurozone, but China so far seems reluctant to extend a helping hand. As governor of the Chinese central bank, Zhou XiaoChuan told the IMF, it is still too early for China to intervene – which is probably code for “If you think we are buying euros or even euro bonds on any kind of scale while you are in this mess, think again.”

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To cure the economy, we need to understand exactly what ails it. An accurate diagnosis is just as important as a proper prescription. As Stiglitz argues, the economic problem we have is more severe than most people realize and the shocker is this: Austerity will not cure it.   Read more

The economic crisis in the eurozone is, without doubt, mammoth. On a more optimistic note, central bankers and governing authorities seem to have reached a consensus on how to tackle the economic problems: by giving banks and countries money, defaults can be avoided. But this does not address the fundamental dilemma of Europe, nor does it show a concerted understanding of Europe’s underlying political complexities.   Read more

 5 October 2011. Too much has been said about the state of the Chinese economy. While it has largely powered through the thick of the global financial crisis – China’s economic strength in fact buoyed much of the world’s economy during the meltdown – many doubts have also been raised about the outlook for the world’s second largest economy. 

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Economic globalization has, of course, produced some large benefits for the world, though it has also created major problems that need to be addressed. These problems demand a similar global response, which must first be built from individual governments. For years, the world’s government has got it wrong: in order for governments to operate effectively, the role of government needs to be modernized, in line with the specific challenges posed by an interconnected world economy.  Read more

29 September 2011. He who laughs last laughs best. For decades, European countries were the colonial masters of Africa, dividing the continent at their own whim and exploiting the abundant resources available for their own purposes. Yet today, there has been a paradigm shift where African nations are now leading the world in economic growth and can more hold their own against their ex-colonial masters.  Read more

27 September 2011. A crisis of confidence envelops the global economy today. Too much debt is denting confidence – in turn holding back spending, investment and job creation. In these circumstances, we need collective action for global recovery along four main policy lines: repair, reform, rebalancing, and rebuilding.  Read more

 23 September 2011. Sir John Vickers recently unveiled the Independent Banking Commission’s proposed reforms for the United Kingdom’s bloated and dysfunctional banking sector. In the 358-page article, neither the words “ethics” nor “ethical” are mentioned once. Is it any wonder that many have lambasted the report as a “total waste of time”?

21 September 2011. Human trafficking is a global industry worth $32 billion and places millions of vulnerable people from poor countries in servitude, but the number of successful prosecutions is still pitifully small.   Read more

19 September 2011. Unemployment in the US has remained above 9 percent for 22 of the last 24 months. While some are supporting additional stimulus, others are calling for UK-style austerity. With Nobel-prize winning economists on either side of the debate, the public is rightly confused. But would either of these approaches really reduce unemployment effectively?  Read more

15 September 2011. The banking sector faces a continuous trade-off between competition and stability. Too much competition increases instability and the risk of systemic failure, but too little competition will also have dire consequences for consumers and investors. What is the balancing point?  Read more

 13 September 2011. The Norwegian economy has thus far shown remarkable resilience to the global financial crisis. The Norwegian krone is seen as a reliable currency, while many investors consider Norway as a “safe haven” to park their cash. Yet, the surge in the value of krone may lead to economic problems in the future. Will Norway’s “safe haven” status negatively impact its economic health?  Read more

The events of September 11 2001 forever altered the course of human history. Till today, Americans continue to bear the bulk of the cost for the tragedy – both economically and socially. However in the aftermath of 9/11, it has been disheartening to note that a large portion of the cost could have been avoided.  Read more

7 September 2011. Belgium has not had a government in over 15 months. Yet their economy somehow managed to outperform those of the UK, Germany, France, Italy, Spain, The Netherlands, Finland, and Switzerland in the last quarter of this year. Are government worthless or is this just another abnormality?  Read more

The scale of the earthquake and tsunami that struck Japan in March was far greater than even the authorities’ worst nightmare scenarios foresaw. Now, nearly half a year after the crisis, Japan has a rare opportunity to undertake the comprehensive reforms that have been postponed for too long.   Read more

Companies like Google and Apple are holding on to nearly US$2 trillion on their balance sheets. Yet, financial institutions need to address the need to balance liquidity requirements and the pursuit of revenue growth. So why are companies holding on to such large amounts of cash?  Read more

30 August 2011. The US economy – and the global economy – cannot get back on its feet without the American consumer. But never before in the post-World War II era has the American consumer been so weak for so long. One number, in particular, highlights the problem.  Read more

26 August 2011. In the aftermath of the global financial crisis, many expected Western banks to abandon their foreign interests and refocus on their domestic markets. Yet today, the presence of foreign banks in local markets is much greater overall than it was a few years ago. According to a new report by Deutsche Bank Research, banks’ cross-border business – direct or via branches or subsidiaries – has now broadly stabilized. As such, the outlook for cross-border banking is positive.  Read more

24 August 2011. The Arab world is changing. The fall of the autocratic regimes – particularly in Tunisia, Egypt and Libya – has led many political analysts to label the Arab Spring as the start of a new fourth wave of democracy. However, political change need not necessarily mean democratic change. As such, talks of a fourth wave may be premature.  Read more

Some say that the best expression of excess capacity and overdevelopment in China is its real estate market. With nominal interest rates going at a pittance, stringent capital controls and volatility in China’s equity markets, there seems to be no real alternative outlets for the nation of savers (China saved 50% of its GDP in 2010) and it is therefore no huge wonder that investors have turned to real estate as investment options.   Read more

18 August 2011. Time is running out for the eurozone. Unless a euro-bond regime of one kind or another can be reached, the euro will break down. As the EU’s largest and best-rated economy, Germany has a critical role to play in Europe’s future. But the Germans are not willing to accept any level of responsibility. Till the day they do, Europe is headed towards a breakdown of the euro that will precipitate a banking crisis beyond the control of global financial authorities.  Read more

16 August 2011. There has been much concern about financial contagion between Europe and America. But the real problem stems from another form of contagion: bad ideas move easily across borders, and misguided economic notions on both sides of the Atlantic have been reinforcing each other.  Read more

12 August 2011. The electric car industry is experiencing a revival. Electric vehicles, such as the Chevy Volt, Nissan Leaf and Tesla Roadster, are returning to production after being scrapped just a few years ago. Today, the Nissan’s Leaf has sold out while General Motor’s Volt has been back-ordered for six months. What has sparked the renewed interest in the electric car, and what does the future hold for the industry?   Read more

10 August 2011. During the 1970s, Former Citibank Chief Executive Walter Wriston famously declared that countries would never go bust or bankrupt. Governments also started to borrow large sums of money in order to fuel their spending, while lenders continued to provide these governments with a seemingly endless source of funds. Eventually, government debts grew to such insurmountable proportions that countries today are now faced with the distinct possibility of a default or even bankruptcy. How can we address the structural issues that threaten to consume the global economy?  Read more

A recurrent characteristic of Europe’s debt-crisis debate is a Latin American precedent. But, while many highly indebted Latin American countries conducted debt buybacks in the late 1980’s the most relevant experience with debt buybacks is a more recent and far less studied case: Ecuador in 2008. What lessons Greece can learn from these debt buybacks and what can they expect if they go down the same route?  Read more

 4 August 2011. The Chinese admire America’s economic dynamism, but they have lost confidence in the US government and its dysfunctional economic stewardship. The debate over the debt ceiling and the budget deficit is the last straw, and China's own shift away from export-led growth implies an end to its limitless demand for US government securities.  Read more

With all the debate in the United States over raising its debt ceiling, politicians and lawmakers are once again fighting over national spending. Democrats are sore that the US$2.4 trillion in savings will not include any mandated tax increases, while the Republicans are worried about the US$350 billion cut in the defense budget. Why is the United States perpetually policing the world at the expense of the American people and global markets?  Read more

29 July 2011. Who really got us into this mess? In Wall Street, in the City, in the corridors of Whitehall and Washington DC, and in the Berlaymont Building, it's quite common for the general public to be blamed. The Nobel prize-winning economist Paul Krugman has written a New York Times column that does a great job of puncturing such nonsense. Read what he has to say about the real causes of the financial crisis.  Read more

27 July 2011. The fate of the eurozone is ominous. As the debt crisis in Greece continues to spread and infect other eurozone nations such as Italy and Portugal, the euro-zone appears to be teetering on the brink of collapse. This is its last stand, says Nouriel Roubini, chairman of Roubini Global Economics and professor of economics at New York University's Stern School of Business. According to Roubini, “the status quo is no longer sustainable. Only a comprehensive strategy can rescue the eurozone now.”

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25 July 2011. The phone-hacking scandal which has engulfed Rupert Murdoch’s News International has changed the rules of the game for politicians, police and media, and may yet impact the Government’s relations with the UK’s powerful financial sector. Ongoing investigations by London’s Metropolitan Police have revealed at least 3,700 cases of phone hacking by journalists at the 168-year-old tabloid News of the World newspaper. But that’s only half the story.  Read more

21 July 2011. Now let's get this right: Singapore is a great place to do business. It's the gateway to Asian economies and where businesses big and small base themselves to trade with the rest of South East Asia - and the world. But as much as Singapore prides itself in being the best place for business in Asia, underneath the sparkling facade of its Central Business District and well-dressed, well-spoken and good-looking frontline representatives lies fundamental practices - that just aren't right. So what is wrong with Singaporean businesses?  Read more

19 July 2011. When Deutsche Boerse wanted to merge with the London Stock Exchange in 2004 there was an outcry. When the LSE wanted to merge with TMX the Canadians got into a knot. When NASDAQ and ICE (the Intercontinental Exchange) decided, in April this year, to launch a hostile counter bid for the New York Stock Exchange (NYSE) Euronext in the teeth of an agreed Deutsche Boerse  bid. At the time of writing, the London Stock Exchange’s bid for the Toronto Exchange TMX, which most people, including the LSE and TMX, thought was a done deal, had just collapsed. Why are exchanges all round the world looking to partner up, even if the partner is a continent away?  Read more

15 July 2011. Organizations today can both create and manage risk on a global scale. Their capacities to manage risk however, vary enormously. Risk regulation is often a crisis response and focus on macroeconomic stability, fair competition and consumer protection – but how much regulation is too much and when does it eliminate more important activities?  Read more

Politicians from advanced economies today face a conundrum on whether to restrict or welcome migrants and foreign workers. While an influx of foreign workers may provide economic benefits to a country, there have been societal concerns over the possibility of an increase in social problems, a lack of social integration, and also the threat that foreign workers bring to local employment. But according to Ian Goldin and Geoffrey Cameron, migration is in everyone’s interest. The long term benefits associated with global migration and human mobility are simply too large to ignore and should not be left in the hands of politicians.  Read more

11 July 2011. To most regular observers, the appointment of Christine Lagarde as IMF’s Managing Director came as no surprise. Lagarde had been seen as the overwhelming favourite to replace Dominique Strauss-Kahn and was duly elected despite calls for a candidate from an emerging economy. However, the challenges for Lagarde are great. While Lagarde may undoubtedly have the credentials to run one of the world’s most influential financial organisations, doubts will remain over her actual ability until she proves herself worthy of the role. Former IMF Chief Economist Raghuram Rajan believes that Lagarde arrives at a pivotal, but extremely challenging, period for the IMF wherein her success, or failure, may have a deep impact for the world economy.  Read more

7 July 2011. Over the past decades the UK has shadowed the US in seeing growing inequalities of income, declining social mobility and rises in mental illness. But the UK is still demonstrably better off on most measures of social cohesion and social capital.  Read more

Wall Street hit its biggest four-day rally last week amid optimism that Greece will avoid default. The Dow Jones Industrial average was up 153 points, S&P’s 500 Index went up 13 points – even our Consumer Confidence Index registered optimistic activity in the US after a long period of pessimism. But is the US celebrating too soon?

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1 July 2011. Recently, the International Energy Agency (IEA) announced its intentions to release nearly 2 million barrels of oil per day into the market over the next month so as to boost supply and drive down prices. Naturally, the Organisation of Petroleum Exporting Countries (OPEC) didn’t take too kindly with that decision. President Mohammad Aliabadi declared, “the market is under normal conditions. Supply and demand are desirable. There is no additional need for supply in the market." Although the IEA’s decision appears to be justified, particularly with the loss of Libyan and Yemeni oil, oil prices have been barely affected and still remain fairly high.  Read more

29 June 2011. Rising food prices affect everyone. Some demographic groups – namely the poor – are affected more than others. As food prices continue to be highly volatile, Jeffrey Frankel asks; can food prices can be stabilized? And asserts that speculators could potentially act as “detectors of change” or “stabilizing forces”.  Read more

27 June 2011. Chief Financial Officers across the US are responding to greener solutions to combat the problem of the rising cost of fuel, with over half increasing their telecommuting and teleconferencing, a recent survey has found. The findings reflect a clear need for CFOs to react and adapt to the changing environment.  Read more

23 June 2011. The IMF recently updated its economic forecasts for the global economy – predicting a two-speed recovery process whereby emerging economies would experience strong economic growth whereas most advanced economies face an uphill battle to stimulate growth and avoid stagnation. As the world proceeds on a path of recovery, Olivier Blanchard, José Viñals, and Carlo Cottarelli of the IMF explains why this path is fraught with difficulties and what needs to be done in order to ensure a smoother global recovery.  Read more

21 June 2011. EconomyWatch speaks to Reza Behnam, former Managing Director of Yahoo South East Asia and founder of ADZ - an online advertising marketplace - about his vision for ADZ as well as the technology scene in Asia. Besides getting backing from the Singapore government, Reza has also secured a star investor: Eduardo Saverin, the co-founder of Facebook. We discover Asia is on the precipice of a new digital age - with entrepreneurs such as Reza and investors such as Eduardo paving the way forward.  Read more

17 June 2011.Casinos are glamourized, popularized and highly addictive. In America alone, problem gambling affects more than 15 million people. And the economics of it all? Well according to PriceWaterHouse Coopers, the global casino industry is predicted to be worth $120 billion in 2011, up from $100 billion in 2007.And the Asia Pacific region is leading the growth, growing at a rate of 15 percent per year, compared to 2 percent growth in Europe and 7 percent in the US. Follow the money in this report on world casino revenues.
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15 June 2011. Shareholder profits have risen steeply in the US at the same time as wages have spiralled downwards. So many Americans are now out of work, or only able to find part-time work, that the business-owners are calling all the shots. Weak employment protection laws and low trade union membership complete a bleak picture for the American worker.  Read more

13 June 2011. Bitcoins have been described as “the digital currency of the future” – a new global phenomenon that threatens to challenge all preconceived notions of currency and currency exchange. Worldwide interest in Bitcoins has started to grow almost exponentially in the past few of months. But can a virtual currency work and more importantly, how?  Read more

9 June 2011. The first results are in, and they will not be great news for everyone. Simply put, it is not a good time to be an American. Last week we launched our crowdsourcing economic indicators experiment, the world's first real-time Consumer Confidence Index from your friendly local global economists at EconomyWatch.com. 48 Americans have given the US a rating of 562 (out of 1,000), broadly meaning that they expect the economy to stay the same. This is down from a confident 756 Mid May. In fact, responses in the last week have been on overage below 500, meaning that most people in the US now believe things will get worse.  Read more

7 June 2011. Debt is making us poor. As a Certified Public Accountant (CPA) and former Member of Congress, I say that every citizen has the right to know the real cost of government. I want to make the point, loud and clear, that we are living on borrowed money and on borrowed time. U.S. taxpayers collectively owed $4.5 trillion at the end of 1996 and that each taxpayer owed $45,433. Incredibly, the national debt, subject to the statutory debt ceiling, has since skyrocketed to $14.3 trillion, and so today each taxpayer owes $143,000. Hon. Joseph J. DioGuardi gives us the real picture of US national debt.  Read more

3 June 2011. House prices in the US are crashing again. With 18 million households across the country on the verge of defaulting on their mortgage, how will the fall in house prices affect your mortgage? Refinancing can be a great way to save money, if you do it right. But a bad refinance can put you in a situation where the only person benefiting is the loan officer.  Read more

1 June 2011. The Rothschilds are the most famous banking family in history. In the 19^th century they lent money to Kings and Governments and funded both sides in the Napoleonic wars. They once saved the Bank of England from collapse with their own money. But how did they come to be so fabulously wealthy? In this two-part feature we first look at their rise from the ghettoes of Frankfurt, and then in part two we ask why they have been accused of everything from deliberately starting wars, to assassinating presidents and controlling the entire global financial system.  Read more

30 May 2011. It was the 26th September, 2008. Hank Paulson, then US Treasury Secretary, had got down on one knee to Nancy Pelosi, then Speaker of the House, and begged her to support his Bailout of the Too-Big-To-Fail Banks. At that moment we knew that consumer and business confidence around the world would plummet.  We already knew that, almost as one, our clients' confidence would tumble. Projects would be put on hold, downsized or cancelled. It was a matter of business survival for us to understand just how bad it would be, but the data was painfully slow in coming. I kept asking myself, what is the point of having a forward indicator when it takes so long to get the data?

Now we are taking a small step to fix that problem, by introducing the Global, Real-Time Consumer Confidence Index.

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26 May 2011. There’s a Chinese proverb that goes “If the world was fair, all my fingers would be the same length”. Work that one out. Or try working out why there is so much economic inequality, and the disparities are growing. The funny thing is, if all the money in the world was distributed equally, everyone would have $10,000 a month to live on. In this era of fast growing economic advancement and increased global wealth, why is economic inequality on the rise?  Read more

24 May 2011. Despite winning 81 out of 87 seats in parliament, the PAP has recognised the need to reconnect with the local population. However, based on social media sentiments, this looks to be an increasingly hard task. Singapore is growing into a true democracy, and freedom of speech is finally here. So how will Singapore’s political system and economy change in the next five years?  Read more

21 May 2011. In the US, consumers and households are dangerously in debt. Even after the catastrophic financial crisis in 2008, it seems in 2010 lessons from past mistakes have not been learned and taken on board. The Federal Reserve is looking at $2.4 trillion in unsecured debt. And the numbers just keep rising. Check out these dozen alarming consumer debt statistics.

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19 May 2011. In 2008, when we were hours away from ATMs running out of money, small businesses being unable to pay their staffs, and schools and hospitals closing down through lack of cash flow, it felt as if the crisis of the century was upon us. But if the world continues on its current path, the historians of the future will say that the great financial collapse of three years ago was simply the trailer for a succession of avoidable crises that eroded popular consent for globalization itself. Read more from Gordon Brown.  Read more

The United States has unquestionably been the most formidable military power in recent years. Its spending is the principle determinant of world military spending – a figure that reached $1.6 trillion in 2010. Generally, US military spending has been on the rise. Recent increases are attributed to the so-called War on Terror and the Afghanistan and Iraq invasions. Today, the US accounts for just under half of world military spending. The baseline budget, however, shows a continued increase, albeit at a seemingly lower rate. But why are the numbers for US spending so much higher than what was announced as the budget for the Department of Defense?  Read more

You know, I’ve heard about personal loan offers and promotions but never looked into one. This week I wondered, what’s the difference between a personal loan, a cash loan and a plain ‘ole credit card (apart from the fact that you don’t want a cash advance at 18 percent compounding interest on your Visa thank-you-very-much). And, when should I use a personal loan over a cash loan or credit? Find out the raw deal when it comes to personal borrowing in this week's personal finance missive.  Read more

11 May 2011. No sooner had we breathlessly reported April’s record highs for gold and silver, at over $1500

and close to $50 per troy ounce respectively, than commodities stage a ‘flash crash’, startling

investors and traders alike. Last week silver slumped to below $35 and even gold lost 3.6%.

 Alice Briggs, EconomyWatch Investment & Markets writer sums up the latest in commodities and the ripple effects of Osama's death.

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9 May 2011. Iraq and Afghanistan sit near the top of a list of the world’s most corrupt nations despite years of occupation by Anglo-American forces and more than $1 trillion of US taxpayers’ money having been spent on the two nations since 2001. The 2010 Corruption Perceptions Index (CPI) from the Berlin-based watchdog rated Somalia, with a score of 1.1 out of 10, as the world’s most corrupt nation, closely followed by Afghanistan and Myanmar with scores of 1.4, and Iraq on 1.5. This special report on world corruption uncovers the stories behind the most corrupt capitals of the world.  Read more

In a shocking report by Frederick Kaufman that has been featured on  Foreign Policy, the role of Goldman Sachs and its Wall Street cohort in creating the food crisis has been revealed. Frederick uncovers the 1991 scheme where Goldman bankers lead by Gary Cohn created a derivative that tracked 24 raw minerals; including coffee, cocoa, cattle, corn, hogs, soy and wheat, and how that scheme was then manipulated to raise food commodity prices. Each element was given a calculated investment value and is now known as the Goldman Sachs Commodity Index (GSCI). Follow the money trail and find out why your groceries are getting more expensive.  Read more

3 May 2011. When Osama bin Laden and Al-Qaeda attacked the World Trade Center on 9/11 nearly ten years ago, they sought to achieve two separate effects. The first was obvious – causing the death of human lives. The second however was symbolic in nature. By attacking America’s symbol of economic might, Osama bin Laden was foreshadowing his true desires – to significantly hurt the US economy. Three years later, Osama released a videotape where he explicitly stated his intentions to bankrupt the US. “We are continuing this policy in bleeding America to the point of bankruptcy…and it all shows that the real loser is you. It is the American people and their economy.  Read more

29 April 2011. Always wanted to blog successfully but didn't know where to start or how to really pull it off? In this five-part How-To Blog Guide, Andrea Edwards, managing director of SAJE; a Singapore-based strategic communications consultancy focused on professional writing and content development (and more) gives you inside her blogosphere and imparts her valuable knowledge, experience and tips for blogging success.  Read more

27 April 2011. Standard and Poors' decision to cut its outlook for US debt to “negative” came as a surprise to many market watchers. The unprecedented move has reaffirmed the role rating agencies have in determining the prospects of national economies, much to the chagrin of many politicians. One main reason the S&P's pessimism rattled markets was its novelty.

Since it began issuing reports on the outlook for US bonds in 1989, the agency had not once suggested it could lower the “AAA” rating of the world's largest economy. Now S&P warns the chances the US will lose its bulletproof credit vest are one in three over the next two years.  Read more

25 April 2011. Iran is one of the largest economies in the world - if the G20 is made up of the top 20 world economies, then Iran should be part of the group. But even countries such as Spain and the Netherlands who are also among the top 20 economies are excluded from the group. However, unlike Iran they are nevertheless invited to G20 summits. So will Iran ever be invited to join the G20?

There is a common misconception that G-20 members should be the twenty largest economies in the world. However the composition of the group has not changed since its inception in 1999. This has attracted controversy and criticism from the international community.  Read more

Michael Chan, Chairman of Fast-Food Giant Cafe de Coral:
Will issue a profit warning if the hourly rate proposed by the unions became law.
Credit: For91days

21 April 2011. Hong Kong's unemployment rate has fallen to an all time pre-crisis low of 3.4 per cent, the Census and Statistics Department announced this week. Critics blame Hong Kong’s first minimum wage law for job losses. "In view of the still strong economic performance and positive hiring sentiment in the corporate sector, the unemployment rate is likely to remain at low levels in the near term," said Matthew Cheung, Hong Kong's labour secretary. But he warned the city would "remain vigilant in monitoring any economic and employment implications.

Hong Kong’s US$3.61 minimum wage bill was passed amid growing concerns over the income gap – and is now being blamed for job losses among thousands of low-paid workers. Hong Kong's half elected, half appointed legislature passed the minimum-wage bill in July 2010 that will take it effect on 1 May 2011.But is minimum wage good for any economy?  Read more

"It seems that the corrupt forces in the country have united to derail the process of drafting an effective anti-corruption law through the joint committee."
Credit: ramesh_lalwani

19 April 2011. Anna Hazare is one of India's well-acclaimed social activists. The 73-year old fasting Gandhian was a former soldier in the Indian army.  Anna is well known and respected for salvaging a hopeless village ridden by drought, alcoholism and poverty. He inspired the state government to implement the ‘Model Village’ scheme as part of its official strategy.

However while Anna Hazare’s supporters celebrate the victory of the people, we wonder; how did he prompt thousands of people to join his fight-through-fast and change the minds of local Indian government authorities against corruption?  Read more

Beat The Banks At Their Own Game
Credit: reallyboring

16 April 2011. Banks and credit card issuers have long been under the spotlight for mercilessly adding unfair fees and charges to your monthly credit card statements. The fees and charges seem small and don’t bother most people: $12 cash advance fees, $20 in merchant fees and $7.95 monthly subscription.

Buried in your already maxed-out total, last year’s holiday expenses and piling interest rate charges – all you’re really hoping to do is shave the debt down. The monthly credit card repayments only ever seem to take care of the interest charges and mounting fees.

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13 April 2011. Well-informed sources say Israel has world's third-biggest oil shale deposits after US & China: "We estimate the equivalent of 250 billion barrels of oil. To put that in context, Saudi Arabia has proven reserves of 260 billion barrels." But oil shale mining is condemned by environmentalists as a dirty, energy- & water-intensive process. An Israeli company, IEI, believes its technique will be cleaner by separating oil from shale rock some 300m below ground. Water will be a by-product of its process, not consumed in large volumes. IEI estimates marginal cost of production will be $US35 - 40 / barrel, cheaper than ~ $US60 / barrel to extract crude from places like the Arctic -- & compares with $US 30 - 40 / barrel in deepwater oilfields off Brazil. "The Israeli deposits have been known about, but never listed, because it was assumed there was no appropriate technology." Now, there may be.  Read more

11 April 2011. As Wall Street successfully mobilizes its lobbying muscle with Congress and the Obama regime to fight off further "regulation" - and any real implementation of what weak rules do exist - in the UK the battle is just starting over how best to manage financial institutions considered 'too big to fail'. Today, a volley will be fired at UK's politically and economically powerful financial sector by a government-backed commission, expected to propose UK's largest banks separate trading from deposit-taking functions. That goes further than so-called / self-styled / alleged US financial "reforms", which, typically and predictably, almost totally blur the line between speculative trading and traditional banking services. At least the UK will have the US model for what not to do.  Read more

7 April 2011. Stagflation -- paying more and getting less -- has hit the world food industry big-time. But you won't necessarily notice it. Because food companies are "hiding" it by downsizing their packages while maintaining -- or even raising -- their prices. Don't be fooled. Chips are disappearing from bags, candy from boxes and vegetables from cans. As an expected increase in the cost of raw materials looms for late summer, consumers are beginning to encounter shrinking food packages. With unemployment still high, companies in recent months have tried to camouflage price increases by selling their products in tiny and tinier packages. So far, the changes are most "visible" at the grocery store, where shoppers are paying the same amount, but getting less - but only if you look really hard to see them.

5 April 2011. As the world watches in horror at the unfolding Fukushima nuclear disaster, it forces a new look at an on-going technological revolution in the least environmentally destructive fossil fuel -- natural gas. The fruits of this natural gas revolution may not be long in coming on-line, especially given the seemingly unstoppable rise in the price of oil. In many parts of the world, geologists are now testing the ground for natural gas trapped in shale (shale gas), sandstone (tight gas) or coal seams, gas that has been largely unreachable in the past. Using a technology called hydraulic fracturing, or "fracking," a sort of controlled earthquake, companies are now bringing the gas to the surface all over the globe. But the process can be ecologically brutal.  Read more

1 April 2011. General Electric reported worldwide profits of $14.2 billion in 2010, with $5.1 billion of the total from US operations. Its American tax bill? ZERO. In fact, G.E. claimed a tax benefit of $3.2 billion. Low taxes are nothing new for G.E. It's been cutting the percentage of its US profits paid to the IRS for years, resulting in a far lower rate than even other multinational companies. Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks with innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department is often referred to as the world’s best tax law firm, including former officials from not just Treasury, but also the IRS and virtually all the tax-writing committees in Congress.  Read more

 
Otmar Issing, Former Chief Economist, European Central Bank
Credit: INSM

30 March 2011. Otmar Issing, 74, was chief economist of the European Central Bank from 1998 to 2006. Prior to his position at the ECB, Issing worked as a senior economics advisor to German Chancellor Helmut Kohl before taking a senior management position at Deutsche Bank, where he ultimately became chief economist. "As soon as public money is spent, private investors must also be involved and relinquish portions of their claims or agree to extending maturity dates. It is part of the market economy that those who buy securities and collect higher interest rates for doing so should carry part of the risk when something goes wrong. Taxpayers shouldn't always be footing the bill."

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Long Hot Sweaty Summer for Japanese Workers ???
Credit: lowerincase

24 March 2011. Current capacity of Tokyo Electric Power Company [TEPCO] is less than half theoretical capacity. Because of air conditioning, peak summer electricity demand is a third higher than off-peak spring and autumn. So turn off the air-conditioning, you say? Easier said than done. When outside temperature is 35°C and humid, life in a modern office building without air-conditioning is intolerable. Plus factories producing silicon wafers and luxury cars cannot cope with wild fluctuations in temperature.  Thus the Japanese consumer will be asked to sweat to keep offices purring and factories humming, since it is conceivable Japan will not have sufficient capacity to cope with peak demand for years to come.  Read more

Toyota's Gas-Electric Hybrid Prius v:
NOT Coming To A US Showroom Any Time Soon
Credit: Toyota UK

21 March 2011. Since catastrophe struck Japan, car makers that rely on its factories are concluding their operations will be affected more severely — and longer — than initially hoped. “This is a serious situation, with potential to affect many markets, including the Americas,” says Nissan's US head. Of particular concern to Toyota dealers is the gas-electric hybrid Prius, assembled only in Japan, that has experienced a surge in US demand. A vehicle pricing and sales web site says uncertainty about Prius availability has already caused the average price customers are paying to soar by about $1,800 since the earthquake: “There’s so much uncertainty. The supply-chain problem is much more dramatic than automakers are portraying. Even if they were able to come online in two weeks, which I think is wishful thinking, there’s a couple hundred thousand units to make up already, and nobody knows how long this is going to last.”  Read more

Saudi-Led Sunni Forces Enter Bahrain on Monday
Credit: bahrainmujaz

18 March 2011. Even before Saudi Arabia sent troops into Bahrain Monday to quell an uprising it fears might spill across its borders, US officials were increasingly concerned its stability could be threatened by regional unrest, succession politics and resistance to reform. So far, oil-rich Saudi Arabia has successfully stifled public protests with a combination of billions of dollars in new jobs programs and an overwhelming police presence, backed by warnings from the foreign minister to “cut any finger that crosses into the kingdom.” Monday’s action, in which more than 2,000 Saudi-led troops from gulf states crossed the narrow causeway into Bahrain, demonstrated the Saudis were willing to back their threats with firepower. The move created another quandary for the Obama administration, which obliquely criticized the Saudi action without explicitly condemning the kingdom, its most important Arab ally.

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Fukushima Disaster Melting Down Public Confidence Too
Credit: tula_7755

16 March 2011. After days of confusion over responsibility, constant downplaying and cover-up of danger from both Tokyo Electric Power Company and his own government, Premier Naoto Kan now wants to get things under control. But it may already be too late. Fear is mounting among Japanese, and their trust in Tokyo's announcements is dissipating quickly. The world is now seeing the Japanese habit of trying sweep accidents under the carpet -- out of shame and a sense of group loyalty or corporate spirit. "The nail that sticks out gets hammered down," is not just a Japanese proverb, but a rule the country's children learn very young. This time too, it seems, no one in power in Tokyo has had enough confidence to tell the entire truth.
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11 March 2011. As Michael Moore recently pointed out, America is not broke, it is just that the rich are getting richer. Everyone else faces stagnating or declining incomes – if they are lucky enough to have a job. Ten to twenty percent unemployment levels have come to feel normal in many advanced economies. So, if you are wondering where all your bailout and stimulus tax dollars have gone, it is a fair bet to think that a good chunk of it has gone to the growing list of billionaires. Forbes, compilers (and cheerleaders) of the annual rich list, has announced that the number of billionaires has increased by 214 to a record 1,210.  Read more

The Colonel: More Excuse than Cause. Credit: EnemyKe

8 March 2011. The world is entering an oil supply crunch because the demand for oil is increasing so rapidly, global oil production can't keep pace with the level of demand. As demand exceeds supply in the midst of political turmoil and crisis in oil producing countries, prices are escalating.  The price of oil has risen sharply in the last few months and today Brent crude sells for just under $116 a barrel following OPECs plans to boost oil output.

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1 March 2011. India’s 2011 Union Budget was announced yesterday by Finance Minister Pranab Muhkerjee. The good news: no big changes in headline rates of taxation. The bad news: no big changes on outstanding reforms. However, Mukherjee continues to show commitment to reforms. Indians counting on a budget rich in new opportunities were sorely disappointed, although those in corporate India may come off happy – things might not be any better, but they haven’t gotten any worse.  Read more

23 February 2011. Hot growth has boosted valuations and increased competition for acquisition of Chinese companies, often not so interested in being acquired, prompting some MNCs to see joint-ventures as good way to enter China economy. Many foreign executives prefer large, well-established Chinese partners. Yet that hasn’t necessarily benefited joint ventures, typically because "partners" didn’t share strategic or commercial interests. MNCs emphasize profitability, even when growth is slow, while Chinese stress growth, even without profitability. MNCs should pair with local companies that explicitly share their strategic goals. This doesn’t eliminate large, well-established Chinese companies. But it does open the door to faster-growing, privately owned and smaller firms that bring strong commercial mind-set & tangible business assets to joint venture.
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21 February 2011. Former piano bar singer gained global fame by giving families of trapped Chilean miners donations of $10,000 each — before rescuers saved them. He has become the nation's most prominent philanthropist, contributing millions to help needy Chileans, earthquake victims there and Haiti. While that has endeared him to the country’s poor, public nature of gift giving and outsize personality have made him enemies among the buttoned-down Chilean elite: “Business people here don’t like me too much. I don’t think I fit in.” It does not help he is openly critical of Chile’s upper class: “The rich people in Chile are very stingy, all over South America.” So when he flirted with running for president in 2008, his populist appeal made him one of the most feared rich men in Chile.  Read more

16 February 2011. In 1998 Chinese academia produced 830,000 graduates. Last May, it was more than six million and rising. Despite robust growth, the economy doesn't generate enough good professional jobs to absorb highly educated young adults. Many bear inflated expectations of parents, who emptied bank accounts to buy them education presumed to guarantee "the good life." Supply of graduates in accounting, finance, computer programming now seems limitless, so value has plunged. Between 2003 and 2009, average starting salary for migrant laborers grew 80 percent. During same time, starting pay for college graduates was flat, though if inflation taken into account, their wages actually fell. “College essentially provided them with nothing” For government fixated on stability, situation is major cause for concern.
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14 February 2011. Every spring, in Serengeti National Park, two million wildebeasts, zebras and gazelles march north in search of food: the Great Migration, is one of most spectacular assemblies of animal life on earth. But Tanzania president Jakaya Kikwete plans a national highway straight through the park, bisecting the migration route and possibly sending thick streams of overloaded trucks and speeding buses through the traveling herds. Scientists and conservation groups paint a grim picture of what could happen next. But rural people "not only want the highway, we've been praying for it for years", hoping it will bring: cheaper goods; faster access to hospitals; better connection to towns; and a higher chance of someday getting electricity and cellphones. It's hard to argue with either side.  Read more

9 February 2011. Ten years after dot-com bust taught Wall Street and Silicon Valley investors that what goes up doesn't go up forever, a growing number of entrepreneurs and a few venture capitalists are starting to wonder if hi-tech start-ups are headed toward another bust. Chief evidence is how VCs and established companies are clamoring to give money to new firms, including those with only shred of an idea. They are piling into me-too start-ups imitating popular Web sites that already received financing. Social shopping, mobile photo sharing and new social networking "ideas" are finding it easy to attract investors because no one wants to miss the next big thing.

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7 Feb 2011. As the issue of "dignity" becomes more pronounced in the struggle now under way in Egypt, consider Niodior: an African village that exists simultaneously in Senegal, where families endure heart-rending poverty, & in southern Spain, where the sons who have somehow managed to make the perilous journey there live together in a replicated version of their home. In general, they work illegally, but the money they send home is crucial for the survival of their families. The agricultural town in which they live, Roquetas de Mar, is a laboratory for the EU's foreign, economic and development policies at one and the same time.

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2 February 2011. In the EU and US, coal seems past its prime, but growth and shifts in coal exports to China are rising. Seaborne trade in thermal coal rose to 690 mn tons in 2010, up from 385 in 2001. Price rose from $40 to $60 a ton 5 years ago, to high of $200 in 2008, by end 2010 selling $120 per ton. Perennial coal ex-porter til 2009, 1st year of net imports, China's total imports for 2010 expected up to 150 mn tons. Tho plentiful domestic supplies, its coal is low grade with impurities. Coal from the US tends to be low in sulfur, allowing power plants to burn more without exceeding pollution limits. China’s coal also inland, while factories are coastal, thus cheaper to ship coal from US, Canada, Australia. But conflicts between trade imperatives & environmental concerns are growing fast & nasty in all those countries.  Read more

31 January 2011. Venezuela is an immigration puzzle. While large numbers of the middle class leave, 100s of 1000s of foreign merchants and laborers arrive. Opposing tides reflect country's increasing polarization. Government of Hugo Chávez has declared “economic war” on “bourgeoisie,” expropriating more than 200 private businesses in 2010 — including banks, cattle ranches and housing developments. At other end of economic spectrum, many new immigrants arrive on tourist visas and overstay their visits, drawn by incomes higher than some of Venezuela’s neighbors and broad array of social welfare programs for poor championed by Chávez government. “One can live w a little bit of dignity here, at least enough to send money home now and again”  Read more

26 January 2011. Telcom giant Huawei is China’s 1st truly home-grown multinational, world’s 2nd-largest telcom equipment supplier after Sweden's Ericsson. With government backing, has sewn up major deals in Asia, Africa, Latin America. In Europe, has outmaneuvered Ericsson to supply equipment to big carriers. It has struggled, tho, to break into US, largely due to security concerns. Even hint of Huawei presence has generated reaction in DC. Its success a result of heavy R&D spending, where Chinese corporations usually weak. But Huawei has 17 global research centers, including Dallas, Moscow, Bangalore and Silicon Valley. Of company’s 96,000 employees, nearly half in R&D.  Analysts say its spectacular rise is model for other Chinese companies seeking to compete globally.

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24 January 2011. At 20 percent, Spain has highest unemployment rate in euro zone, with real estate prices dropping. Approximately 1.4 million Spaniards face potential foreclosure. For most of them, the fine print in deals they agreed to years ago is catching up with them. Not only are Spanish mortgage holders personally liable for full amount of loan, but throw in penalty interest charges plus tens of 1000s in court fees, and people can end up facing a mountain of debt. Bankruptcy is not an answer, as mortgage debt is specifically excluded. “Effectively, you can never get rid of this debt”  Read more

19 January 2011. While companies may dream of sales to 1.3 bn Chinese, getting start-up money into China is hard. Foreign corps can't convert a single dollar into renminbi [RMB] without prior approval from local branch of Commerce Ministry. If investment is in industry prohibited for foreign investment like agriculture or publishing, no go. But if proposed investment is not restricted & < $300 million, can be approved by cities or provinces. Anything larger must go to Ministry in Beijing. Once investment approved & business license issued, company needs approval from State Administration of Foreign Exchange to convert investment into RMB. Only then can it open local bank account & start spending, which presents a Catch-22: companies need to invest RMB to get approvals, but cannot spend RMBs until they have approval to invest. There are 3 ways they might do that ...  Read more

17 January 2011. Since 1968 when Dr. Shokri Ghanem took a post at Libya’s Ministry of Petroleum, he has maintained a high profile in Middle East energy scene. An economist, professor, and a veteran of both the oil industry & public sector, he currently chairs Libya’s National Oil Corporation (NOC). Director of OPEC’s research division from 1993 to 2001, Ghanem also led its secretariat for 3 years. He then returned to Libya, where he was prime minister before returning to the energy sector. In this interview, he discusses the future of energy pricing, the relation between oil and natural gas, the operation of national oil companies, and their changing relationship with the international oil majors.

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11 January 2011. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Monday, we called for Pres Obama to use horrible Arizona murders to claim legacy of Martin Luther King & take three steps. Most readers liked idea, but doubted anything like that would happen. Then, Tuesday, NY Times - quietly - reported he wd, in fact, do first thing we proposed: go to Tucson to meet w victims & their families at a memorial service. Will he now take next two steps: give the speech of his life, combining hope of "I Have A Dream" w incisive courage of "A Time To Break Silence" - & then use that speech as guide for sustained campaign vs hate-filled right-wing rhetoric that legitimates violence? We can only wait, watch & hope he does resurrect the best American political traditions of Lincoln, FDR & King  Read more

10 January 2011. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Shocking events in Arizona give Obama chance to follow path of Martin Luther King: First, being physically present at murder site, showing whole world - esp spiritual children of Reagan - he rejects openly & forthrightly violent & hate-filled rhetoric that inspired evidently disturbed young gunman. Then, he needs to give speech of his life, combining hope of "I Have A Dream" w incisive courage of April 67 "Beyond Vietnam - A Time To Break Silence" Finally, needs to make speech center of on-going campaign vs forces that have promoted this kind of hateful action. If so, has chance to break from corporate mediocrity so far & join FDR, Lincoln & King in embodying best, not worst, of American values.

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21 December 2010. For last several months, China has been said to have more than 200m empty apartments. China has more living space per capita than Europe or Japan so this is not a housing shortage. Given the unprecedented amount of living space, it is hard to see how higher rents have been sticking. The huge stock of empty flats equals not just price, but quantity, bubble, which are less common & shorter than price bubbles. Unusually, China seems to be experiencing simultaneous price AND quantity bubbles. If either pops, results could be disastrous, but that outcome can be avoided.  Read more

16 December 2010. Vinod Khosla, billionaire VC & Sun Microsystems co-founder, was already among world’s richest when he invested in SKS Microfinance, a lender to poor women in India. Roaring success of SKS’s IPO has enriched him by ~ $117 mn, which he says he plans to put into other ventures that fight poverty while turning a profit. Also says he wants to challenge other rich Indians to do more to help country’s poor. Plans to start venture capital fund to invest in companies focusing on poor in India, Africa etc by providing health, energy, education. By backing businesses that make education loans or distribute solar panels in villages, wants to show commercial entities can better help people in poverty than most nonprofit charitable organizations: “There needs to be more experiments in building sustainable businesses going after the market for the poor”  Read more

6 December 2010. Ali Allawi as the first civilian minister of defence in post-Saddam Iraq. In this fascinating interview, he says Iraq got the worst of all worlds: the destruction of whatever dysfunctional state had existed, without anything coherent replacing it. It is not that the Americans didn't spend money - on a per capita basis it has cost more than the Marshall Plan. It was just so misguided and ill-directed by people who were indifferent to the long-term evolution of the country's institutions. Allawi suggests that this 'Second Iraq State' is now having its final fling and has to prove itself to its people, or it might face disintegration.  Read more

1 December 2010. Until now Euro Zone has had single option vs surging budget deficits: an EU bail-out. Now it wants to create 2nd: rescheduling sovereign debt of an ailing member state, in Wall Street parlance, "taking a haircut". Countries w high debts will have significant part waived, w ALL creditors sharing burden in EQUAL measure - private investors, banks, investment funds. But orderly "haircuts" via new mechanism only possible from 2020 onwards. So risk of dis-orderly rescheduling remains, esp as Euro banks say low equity / capital ratios make them unable to handle a haircut - what banks in Japan have said since 1989 & in US since Black September 2008. Any real action thus requires re-assertion of political control over - ending govt indulgence of - TBTF finance sector. Don't expect solution to Euro area crisis anytime soon.  Read more

29 November 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Key under-appreciated factor in NE Asian drama is fear in China & S Korea that, if pushed too far, N Korea will collapse as independent state, unleashing refugee flood they, not Japan or US, wd have to deal w as immediate, multi-dimensional problem: above all economic, plus social / political / strategic. For Japan, most important is nuclear threat posed to population & industrial centers, leading to generally hard line vs North's efforts in that area, in which it is usually joined, for ideological reasons, by US. N Koreans well aware of these differences, so strategy built around exploiting them. Unless other 4 can find way to make sure they all get what they want, North Korea likely to continue setting agenda in region.  Read more

24 November 2010. When Indians travel to Europe, they usually go to Paris, London & Switzerland, places familiar to them via Bollywood films. Thus decision by Bollywood superstar Shah Rukh Khan to use Berlin as setting for a film could give tourism an enormous boost - or so hope city officials, who made it their mission to woo him. Film's €12 million ($16.2 million) budget includes €2 million in German funds, most from Berlin-Brandenburg Media Board & German Film Promotion Fund, which focuses significantly on promoting sites as tourist destinations, using investment as leverage. Indian travellers currently account for ~ 22,000 overnight stays in Berlin hotels. City's tourism director hopes numbers will grow 10-fold in 2 - 3 years - as soon as Indians have seen "Don 2". Khan heartily agrees.  Read more

22 November 2010. Wireless technologies, esp cell phones, have created advanced communications infrastructure where none existed in emerging & frontier markets, powering huge econ & social advances. But US medical researchers find signs cell phone radiation MAY link to certain cancers. No one need stop using them, but people world over shd pay more attention to "small print" warnings re radiation found in instruction manuals. Potential econ stakes for industry are huge: Americans alone talk for 2.26 trillion minutes annually, generating $109 bn. Wireless is leading element of telecom revolution in China, India etc, where today’s typical user indistinguishable from heavy user 10 years ago. Researchers say use wired headsets or speakerphone, children shd text rather than call, pregnant women shd keep phones away from abdomen, & all shd hold cell away from head or body. But one says “I do think we're looking at an epidemic in slow motion”  Read more

16 November 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. As we noted yesterday, President Obama spent his 10-day Asia trip saying an export surge would reduce America’s worsening unemployment crisis. But there is little evidence - aside from misplaced faith in the dogmas of neo-classical economics - a visibly weakening dollar has or will create any US jobs. Indeed, the $ fell 31% vs basket of major currencies since 2001 & American exports increased 45%. But manufacturing employment dropped by nearly a third in that time, from 16.4 to 11.7 mn workers, demonstrating once again the "fallibility" of neo-classical analysis. Still, don't expect Americans to forsake their neo-classical "religion."  Read more

11 November 2010. Chinese manufacturers have helped send price of conventional solar panels plunging & grabbed market share far more quickly than anticipated. California companies, once so confident they could outmaneuver the competition, are thus scrambling to retool their strategies & find niches in which they can thrive. Situation has made investors — who once saw region’s future as Solar Valley — skittish re backing capital-intensive start-ups. In Q3 2010, venture capital investment in solar companies plummeted to $144, from $451, mn in Q3 2009. Chinese solar panel makers now supply ~ 40% of California market, largest in US, & bulk of EuroZone “We grow every year w double revenue & almost double capacity. By year end, we'll have 1.8 gigawatts of capacity & 11,000 employees, from 4,000 at start of year”  Read more

9 November 2010. An Irish bond market already in free fall plunged further after it announced on Thursday plans to nearly double its package of spending cuts & tax increases to try to rein in huge deficit. "Investors" took it not as a sign of resolve, but Ireland’s desperation & uncertainty about true extent of problems. Borrowing costs in Spain, Portugal & Greece also spiked up, amid concern they would be hard-pressed to bring deficits under control & avoid bond default. “The scale of the deficits are just so big. The issues are political as much as they are economic."  Read more

29 October, 2010. From the Baltic states to the Balkans, Chinese companies, flush w money, are setting up bi-lingual schools, buying real estate, competing for public infrastructure contracts. They are also investing in manufacturing of products like electronics and chemicals. Why? To gain a foothold inside the EU, Europe’s expansive single market, via former Soviet bloc. Some countries, like Hungary, are extremely enthusiastic, extensively promoting Chinese presence. Others are less thrilled. But the China Wave has unmistakably arrived in Eastern, hence all of, Europe.

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25 October 2010. Italy’s northernmost province is wealthy South Tyrol / Trentino. There is almost no unemployment in area near capital Bolzano, Bozen in the German spoken by many of its residents. It is debt-free, while Italy as a whole has highest govt debt, as %age of GDP, in entire Euro zone. Investors exploit bilingualism of many South Tyrolese to capture southern markets.  Vacationers flock there. And it’s politically very stable. In last 50 years, Rome has seen 19 prime ministers. But in South Tyrol, there has been only one change at the top during same period: from "über-father" Silvius Magnago to current head Luis Durnwalder. And that’s part of the problem as it confronts the future.  Read more

19 October 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Despite India’s extended economic boom, the benefits have not been equally shared. Southern India has rocketed ahead of much of the rest of the country on virtually every score — people earn more money, are better educated, live longer lives, have fewer children. A crucial factor is collapse of the caste system over last half century, which undergirds many of the other reasons the south has prospered — more stable governments, better infrastructure & geographic position that gives it closer connections to the global economy “The breakdown of caste hierarchy has broken the traditional links between caste and profession, releasing enormous entrepreneurial energies in the south, which goes a long way to explaining why it has taken such a lead over the north in the last three decades.”  Read more

14 October 2010. Investments in green energy make sense not just environmentally but economically, and whichever country sets up the corresponding infrastructure will be at the forefront of growth, jobs, and profits in the coming decade. While the US continues to capitulate to powerful interests and invest in trying to clean up the dirty energies of yesterday, China is taking advantage of a once in a century opportunity and is emerging as the leader in the green technologies of tomorrow. Christine Shearer analyzes the situation.
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6 October 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. For long time, we have argued US enmeshed since 2000 in simultaneous crises in 6 major areas of public life: financial / economic / ideological / political / academic-intellectual / media. Thoroughgoing deterioration made clear by ugly fight between two TBTF groups: banks & insurance companies, arguing other shd pay for bad housing loans on which BOTH freely admit they consciously failed to do ANY due diligence. Even worse, each has found judges willing to buy their stories - even WITH admission of no due diligence. Story is pathetic, enraging, disgusting - & totally true. Sad indication of how once-great country has become an un-funny parody of its worst elements.  Read more

4 October 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Rare earth metals are key to products like high-definition televisions, cell phones, computers, guided missiles, hybrid cars, satellites, wind turbines, batteries & magnets, as well as vital component in emerging green high-tech areas & clean energy applications, like generators for large wind turbines & lightweight electric car motors. China is constantly quoted as source of 93% of global supply of these metals. Its main market for them, ironically enough, is Japan, w whom it has been engaging in a strange confrontation for several weeks, which thankfully seems to be simmering down. One aspect of this bizarre & inexplicable encounter has been an unannounced ban on rare-earth exports to Japan. It is thus ironic, to say the least, that Japan has just announced its own source of rare earths via "urban mining" - recycling of discarded electronics.  Read more

29 September 2010. Malvinder Singh, 37, first made a fortune in 2008 selling generic-drug giant his family built, Ranbaxy Laboratories. Now he’s trying to expand Fortis Healthcare, another family company, from string of hospitals around India into a pan-Asian health care network. Fortis has grown from single hospital in northwest India into network of 48 hospitals & clinics. Last year, Indian health care market estimated at $38 bn, & given country’s fast-growing, increasingly affluent population, more Indians suffering from lifestyle diseases common to developed countries. India already has largest number of diabetics in the world after China. “The health care market in India is very fragmented. The corporatization of health care is still emerging.” While 70% of country’s hospitals government-run, private hospitals treat 70% of all patients. But Mr. Singh is after much more: not only a slice of China’s 1.3 bn & Indonesia’s 227 million, but emerging class of affluent Asian medical tourists. “There is a huge opportunity for growth in Asia for health care,” says Mr. Singh. “There are multiple markets which need investment that we would want to be a part of.” But it’s not happening yet.  Read more

27 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Brazil established as global force, one of largest economies in the world. W huge new oil discoveries & important new role providing food & raw materials to China, it is poised to surge even more. But educational shortcomings are leaving many Brazilians on the sidelines. Finding workers w adequate basic skills for even manual labor jobs is a challenge. More than 22% of ~25 million workers available to join Brazil’s work force this year were not qualified to meet demands of the labor market. “In certain cities & states we have a problem hiring workers, even though we do have employment.” Tens of 1000s of jobs went unclaimed because there weren’t enough qualified professionals to fill them. Unless that gap is filled soon, Brazil may miss its “demographic window” over next two decades in which “economically active population is at its peak,” says World Bank.  Read more

22 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Current tensions between China & Japan arise from minor incident whose importance lies in where it happened: islands in East China Sea, Senkaku-Japan / Diaoyutai-China, ~ 300 km from vital natural gas fields lying directly between two countries. A thorny issue for some time, 2 sides agreed in 2008 to jointly develop deposits. Japan invests & shares in profits of existing Chinese operations in Chunxiao, Japan/Shirakaba, closer to China, while two jointly develop other fields farther out. Deal was breakthrough in Japan-China relations, as could have easily bogged down in territorial disputes. Decision to shelve conflicting claims in favor of co-operation is almost unprecedented. That progress now threatened by, literally, almost nothing, that took place in the middle of nowhere. We hope both sides calm down quickly, before totally unnecessary explosion erupts.  Read more

16 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Plunging home sales, a bleak job market & confirmation Q3 growth slowed to 1.6% has left American hopes pinned to an uncertain remedy: hoping things somehow get better.  It increasingly seems policy makers attending like MDs to US econ peer into their medical kits & come up empty, their arsenal of pharmaceuticals largely exhausted, & few that remain deemed too experimental, or laden w risky side effects. The patient — who started in critical care — may have shown slight signs of improvement earlier this year, but has since deteriorated.  The doctors cannot agree on a diagnosis, let alone administer an antidote w confidence. Great Recession has taken the world’s largest economy to a Great Ambiguity over what lies ahead & what can be done. Economists debate the benefits of previous policy prescriptions, but their sterile exchanges have an air of irrelevance & unreality. There is a deep intellectual void at the center of US economic policymaking.  Read more

13 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Tiny West African nation of Benin has been rare success story in continent not full of them. It has long taken pride in a stable political life, w no military in the streets, a Parliament not in the pocket of the president, & a relatively free press. It has not looked back since a popular uprising effectively overthrew a corrupt military dictatorship 20 years ago, the first such democratic rebellion in post-colonial Africa. Newspaper kiosks explode w disputatious publications, as yellow-vested drivers of motorcycle-taxis crowd them to read & argue politics. Govt, if not always clean, has at least been more or less freely elected.  Though still stuck in the throes of poverty, it has kept an unusual commitment to political freedom & openness. But now its stability has been shaken, by a massive Ponzi scheme, that seems to have infiltrated almost all aspects of the society.  Read more

8 September 2010. David Caploe PhD, Chief Political Economist, EconomyWatch.com. In stock trading, so-called “quantitatives”, or quants, were revered as the brightest minds in finance, able to outwit Wall St w their Ph.D.’s & superfast computers. But after blundering through the financial panic, losing big in 2008 & lagging badly in 2009, quantitative investment managers no longer look so genius-like. Combined assets of quant funds specializing in US stocks have plunged from $1.2 trillion in 2007 to $467 billion, a 61% decline, reflecting both bad investments & client withdrawals. One in four quant hedge funds has closed since 2007. And even though the crisis of conventional academic economics has yet to fully begin, the reasons for the fall of the “quants” on Wall Street are almost exactly the same as ITS failure to ALSO predict the disaster of Black September – & the long-range consequences may be just as bad.  Read more

6 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. For decades, moneyed interests have bankrolled India’s political parties, but nouveaux mining magnates have conflated money & politics in far more naked fashion, as thirst for iron ore in India, & more so in China, has created huge fortunes. Mining scandals have emerged in at least 5 Indian states, w > 20,000 complaints of illegal mining filed nationally in past 3 months. Politicians in several states are accused of enriching themselves or their friends, incl a former chief minister of state of Jharkhand, who is charged w extorting huge bribes in exchange for granting mining leases. In August, Indian media reported central govt would form inquiry to investigate illegal mining across the country, a move regarded as 1st step in reversing past failings in regulation.  Read more

1 September 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. While not dominant in Latin America’s relations w China, a wariness is crystallizing in some countries, focusing on cheap Chinese imports & assertive efforts for exclusive access to energy reserves. But worst tensions stem from mine a Chinese company itself owns in a desolate town in Peru’s southern desert. Workers here said problems began in 90s, when the company, Shougang, slashed work force to 1,700 from 3,000 & brought in Chinese workers. Strikes soon convinced managers to return the workers to China. Resentment continued when Shougang did not invest promised $150 million in the mine & town’s infrastructure, opting to pay $14 million fine instead, & left empty blocks once occupied by workers, in town w acute housing shortage. Workers also spoke of low wages, company resistance to government-mandated raises & chemical waste dumping in ocean. The result: a revolt lasting to this day, marked by repeated strikes, clashes w police paid by Shougang, & even arson attacks vs nominally Communist bosses. “We quickly realized we were being exploited to help build the new China, but without seeing any rewards for doing so,” said one union official at mine, where workers have held three strikes this year alone, including 11-day stoppage last month. “When the Chinese arrived, they talked about things like solidarity and equality of man. If this is the brotherhood they praise, then one day sooner or later, the Chinese must be made to leave.”  Read more

30 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. China Banking Regulatory Commission last month issued sharp warning 2 banks & private trusts, apparently worried they've been forming secret partnerships & creating products to finance loans without calling them loans. Govt evidently suspected banks were using maneuvers to evade rules put in place to rein in rampant lending & excess credit, conditions driving rising property prices & overall inflation. Suspecting banks & trusts secretly repackaging old loans, & moving them off bank balance sheets, regulators worried China financial institutions may have engaged in same sort of shenanigans that got Western banks in trouble, which was, of course, EXACTLY what we said when we first found out about these practices. More recently, govt overseers acted again, ordering banks to move off-balance-sheet loans back onto their books & make provisions vs. rise in bad loans. Let’s just hope, for sake of not just China but whole world economy, these regulatory moves aren’t coming too late.  Read more

25 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. South Korea & China likely to open free-trade talks next year, says South Korea’s ambassador. Negotiations could be 1st step toward 3-nation trade zone w Japan, which, if concluded, would rival EU & NAFTA in size. He said it would face deep skepticism from farming, fishing & forestry industries, but would be in S Korea’s long-term interests. Trade pacts centerpiece of China commerce strategy: agreements since 2007 w New Zealand, Taiwan, Singapore, Peru & ASEAN. And if S Korea & Japan ever reach accord, alliance would remove tariff barriers among 3 of 4 largest Asian economies. But there are political blockages, from both current interests & historical memories.  Read more

23 August 2010. After years of being known for inefficiency, corruption and instability, Indonesia is emerging as Asia’s new economic golden child. Largest economy in Southeast Asia grew at annual rate of 6.2 % in Q2. Stock market has hit record highs this year, among best-performing in Asia, up > 20 % since Jan 1. Its currency, the rupiah, has appreciated nearly 5 % this year vs USD, among strongest showings in Asia besides Japanese yen. Indo on track to draw more foreign investment this year than 2008, when it lured in $14.87 billion. Significant obstacles to sustained growth surely remain. But some here cautiously say the Muslim-majority democracy & one of world’s most populous countries could soon merit attention investors now lavish on China and India. “In Asia there is a feeling that after you invest in China and India, where do you go? It’ll have to be Indonesia – it’s a natural destination” says senior analyst for a Western bank in Jakarta.  Read more

18 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. At this particular time, a great opportunity for Westerners living in Asia, or, indeed, anywhere outside the “developed” world, is the chance to see concretely the rise of what is often called “the new global middle class.” The rapidly growing ranks of middle-class consumers in more than a dozen “emerging” and “frontier” nations include almost two billion people, spending $6.9 trillion annually, a figure that should rise to $20 trillion during next decade, twice current US consumption. Given the fact that in 17 US product categories the market leader in 1925 remained the number-one or number-two player for the rest of the century, “early capture” is crucial for both local and global companies. Here’s how they might approach that vital goal.  Read more

16 August 2010. Business pragmatism seems to trump political tensions between the two countries. Short term, flotilla raid has produced inevitable fallout, but so far it seems no Israeli companies are leaving Turkey. Said one, “It is business as usual & if anything, investment is growing” Israeli companies selling everything from computer software to water irrigation systems in Turkey insist they haven’t been affected by recent events. That is because they operate mostly in joint ventures w Turkish companies, making their Israeli identities invisible. Bilateral trade officially amounted to ~ $3 billion last year. But Israeli & Turkish business leaders say economic ties are actually much larger. The extensive business connections are largely camouflaged because many Israeli businesses use Turkish partner companies to sell to Arab world, while Turkish companies use Israeli partners as a gateway to US markets. One Turkish exporter said no contracts had been canceled, nor has his company shelved its plans to establish a factory in Israel. He cited many advantages to doing business w Israel, including geographic proximity & shared mentality. “All the problems are between the politicians. Israelis, hot-tempered and stubborn, are just like us Turks.”  Read more

12 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Good relations between India & China are one of the most important conditions for a positive future in Asia & the world in general. Now come some disturbing reports things are heating up where the two confront each other directly: the Himalayas. In past decade, China has furiously built up military & civilian infrastructure on its side of the border. Now India is racing to match its rival for regional & global power, building / bolstering airstrips & army outposts, shoring up neglected roads & building a tunnel to bypass the deadly Rohtang Pass. While we understand India's strategic thinking for this move, we think it best accompanied by a sustained policy campaign of co-operation w China in as many areas, especially economic, as possible - since no one needs a confrontation between these two giants.  Read more

09 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. In the wake of the just concluded joint conference call with the media by Ivan Seidenberg of Verizon and Eric Schmidt of Google re their proposal for a "tiered" Internet - which, significantly, would EXCLUDE any wireless communication from the "non-discrimination" part of their "plan" - it becomes even more important President Obama recently announced he would seek to nearly double the amount of wireless broadband spectrum available for commercial use over the next ten years. If both his - & the Verizon / Google - "plans" succeed, any notion of "net neutrality" in the US would be down the drain, disastrous not just from an equality and principled point of view, but also putting the US technologically & economically further behind other countries where "net neutrality" isn't an issue. It could also have crucial implications for the disastrous cycle of media advertising / political fund-raising / corporate domination of the US political process now holding America in a death grip - just by the way.  Read more

5 August 2010. By David Caploe PhD. Chief Political Economist, EconomyWatch.com. We’ve often talked about our hopes for both China and India as leaders of the emerging world economy. China has followed the general post-WW II East Asian strategy of export-led growth - an approach it is now trying to circumvent by jumping to the top of the value-added spectrum in areas like high-speed rail and clean / green tech. India, conversely, has imported jobs from the West, depending on its excellent higher education system and general English language culture. So despite the problems of each, we think both countries can become central to the global economy of the future. In that context, here is a story about technological entrepreneurship at the street level in Mumbai - not Bangalore or Hyderabad, the usual centers of Indian high-technology. It's not just funny in itself, but illustrates why, despite the almost uniformly grim scene in US / EU / Japan, there are positive possibilities for the world in the years to come.  Read more

03 August 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Some 150 lobbyists registered since last year used to work in the executive branch at financial agencies, from SEC lawyers to Federal Reserve bankers. Dozens of former lawyers for the government, not registered as lobbyists, now scour new financial regulations for corporate clients. Why? On a scale never before seen, government regulators will enact rules on everything from the definition of a “systemically important” mega-bank to limits on debit card fees.  Federal agencies will decide the details of at least 243 financial rules & conduct 67 studies. S.E.C. alone is responsible for developing 95 rules on topics like derivatives, standards for credit rating agencies & disclosure of executive bonuses. The Commodity Futures Trading Commission must develop 61 rules, the Federal Reserve has 54, and two new agencies — Consumer Financial Protection Bureau & Financial Stability Oversight Council — have 80 rules between them. Former agency officials have a much easier time getting phone calls or e-mails returned from old colleagues, & that access extends to greater credibility in arguing their clients’ positions. That’s why.  Read more

30 July 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. We have consistently argued the political leadership of the US & EU - in "response" to Black September 2008 & Euro-zone crisis - have been following Japan down the path of deflation and Lost Decade/S: letting Too Big To Fail Banks keep off their books their losses from derivatives, thus creating the same kind of zombie banks - effectively bankrupt, but still operating - that have bedeviled Japan since ITS political leadership allowed their banks to do the same when the Tokyo real estate market collapsed in 1989. Now James Bullard, president of the Federal Reserve Bank of St. Louis, and voting member of Fed committee that determines interest rates, has warned the Fed’s current policies were putting the US economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”  Read more

28 July 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. The scale of the new markets in China and India unleashed by the pace and scale of their urbanization is staggering. But businesses still need to be able to serve these markets in practical terms. The way cities are run—and the productivity that results—is a major factor for companies. Here, China is in much better shape than India. While India has barely paid attention to its urban transformation, China has developed a set of internally consistent practices across every element of the urbanization operating model: funding, governance, planning, sectoral policies, and the shape, or pattern, of urbanization, both across the nation as a whole and within cities themselves. India has underinvested in its cities; China has invested ahead of demand. But all that can change, as legendary developmental economist Arthur Lewis made clear.  Read more

26 July 2010. Countries, even whole regions, a few years ago dismissed as perilous – to both body and bourse – have now come into stock market vogue. Big investment companies have rolled out mutual funds and exchange-traded funds that put all or at least a big chunk of their money in frontier regions. The frontier pitch resonates at a time when US & EU economies are struggling and interest rates are sagging. Plus returns in several of the leading emerging stock markets, Brazil, China and Russia, have faltered this year, after surging in 2009. “We view frontier markets as attractively valued compared with emerging markets,” according to one heavily-invested executive. But frontier investing is a new-enough phenomenon that professionals don’t even agree on which countries make up the sector. Still, “they’re relatively diverse, populous and growing fast,” said another. “They’re not fully established, but people were saying the same kinds of things about emerging markets 15 years ago.” Others, however, are skeptical: “A lot of these trends are true, but you can go through periods of sharp volatility.”  Read more

21 July 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Much of the lending through off-balance-sheet channels is fueled by trust companies, mostly privately owned, that partner w banks, & engage in complex deals that repackage loans into investment products — an informal type of securitization: the deals are essentially disguised loans, as GS did w Greece. The China Banking Regulatory Commission supposedly ordered banks to stop working with trust companies to securitize or repackage loans. But the regulator made no official announcement - eerily reminiscent of the AIG "bailout." One analyst estimated trust companies raised hundreds of billions of dollars in 2009 and first five months of 2010, partly since depositors disdained low interest rates at banks, & trust companies were willing to offer double that amount - with principal guaranteed. “There’s limited transparency, so obviously that’s a red flag.”  Read more

19 July 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. The Goldman settlement — both its size and its legal implications — brought a palpable sense of relief on Wall Street. After two months of strident claims and equally strident denials, the matter was finally settled, and for a price Goldman could easily afford. The penalty amounted to about 15 days of profits – if that. And that nearly useless result seems all too typical of the way the Obama administration handles just about everything.  Read more

14 July 2010 – Happy Bastille Day !!! Latin America, beset in the past by debt defaults, currency devaluations and the need for bailouts from rich countries, as well as consistent domination by US corporations and officials, is experiencing robust economic growth that is the envy of its northern counterparts. Strong demand in Asia for commodities like iron ore, tin and gold, combined with policies in several countries that help control deficits and keep inflation low, are encouraging investment and fueling much of the growth. The World Bank forecasts the region’s economy will grow 4.5 percent this year. And while Brazil is the current powerhouse, nations like Peru may not be far behind.  Read more

12 July 2010. Turkey is a fast-rising economic power, with a core of internationally competitive companies turning the youthful nation into an entrepreneurial hub, tapping cash-rich export markets in Russia and the Middle East, while attracting billions of investment dollars in return. For many in aging and debt-weary Europe, which will be lucky to eke out a little more than 1 percent growth this year, Turkey’s economic renaissance — last week it reported a stunning 11.4 percent expansion for the first quarter, second only to China — poses a completely new question: who needs the other one more — Europe or Turkey?  Read more

07 July 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Manufacturing in China is about to get far more expensive. Soaring labor costs caused by worker shortages and unrest, a strengthening Chinese currency that makes exports more expensive, plus inflation and rising housing costs are all threatening to sharply increase the cost of making devices like notebook computers, digital cameras and smartphones. Desperate factory owners are already shifting production away from this country’s dominant electronics manufacturing center in Shenzhen, and toward lower-cost regions far west of here, even deep in China’s mountainous interior.  Read more

5 July 2010. An information revolution is sweeping India – but has nothing to do with cell phones. It’s the far-reaching, powerful and wildly popular Right to Information law, granting 1.2 billion Indians the right to demand almost any information from the government. Passed in 2005 after more than a decade of agitation by good-government activists, the law has become embedded in Indian folklore. In its first three years, two million applications were filed, becoming part of the fabric of rural India, and clearly starting to tilt the balance of power, long favoring bureaucrats and politicians, to ordinary people, though it has by no means eliminated systematic corruption.  Read more

30 June 2010. China’s move last week to make its currency, the renminbi, more flexible - and the authorities’ apparent tolerance of recent factory strikes that have led to significant wage increases - both signal that Chinese leaders are serious about re-engineering the nation’s entire economic model. The appreciation of the renminbi will make Chinese exports somewhat less competitive in the global marketplace - but strengthen the purchasing power of Chinese consumers. And government policies to encourage wage increases for an estimated 150 million poor migrant workers in cities could also spur consumption - if the pay increases outpace inflation.  Read more

28 June 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Think of this as the financial “reform” equivalent of the health “reform” bill: nobody really knows what’s in it, it requires a LOT of interpretation by regulators – hence opening the door for an equally huge amount of LOBBYING by the industries supposedly being regulated – and it AVOIDS, rather than solves, the two MAIN issues: breaking up the now even MORE powerful Too-Big-To-Fail [ TBTF ] banks and other financial institutions; and, of course, clamping down HARD on the real cause of Black September meltdown, DERIVATIVES.  Read more

23 June 2010. Sponsorship of major athletic events is big business, both for the brands splashing out and sporting governing bodies cashing in – meaning that so-called "ambush marketing" has itself become a huge growth industry. "Events like the Olympics and the World Cup are hugely expensive to put on, so they need big-money sponsors, and this in turn means that the organisers must protect aggressively against ambush marketing. But this means there is potentially huge exposure for anyone who manages to outwit them."  Read more

21 June 2010. Wielding cellphones and keyboards, members of China’s emerging labor movement so far seem to be outwitting official censors in an effort to build broad support for what they say is a war against greedy corporations and their local government allies. And it might not be possible if the Chinese government had not made a concerted effort in the last decade to shrink the country’s digital divide by lowering the cost of mobile phone and Internet service in this country — a modernization campaign that has given China the world’s biggest Internet population of 400 million, and allowed even the poorest of the poor to log onto the Internet and air their labor grievances.  Read more

15 June 2010. By David Caploe PhD, Chief Political Economist, Economy Watch.com.  Credit ratings agencies have become increasingly visible during the Euro-zone sovereign debt crisis. Despite this, they remain a relatively unknown and, as we discovered, almost impenetrable world unto themselves that, nevertheless, can have a huge impact on the financial fortunes of both countries and companies. To help make this mysterious universe a bit more accessible to our readers, we tried to do some research about them, and, despite what are clearly their best efforts to keep themselves and what they do hidden, we were able to come up with some points of interest that we'll now share with you. Hope it helps.  Read more

11 June 2010. BIROBIDZHAN, Russia. As with many places in Siberia, it is nearly impossible to drive here. Yet just under the surface, Russian geologists say, lies enough iron ore to build hundreds of millions of cars. “I’m standing on a billion tons of iron ore,” one said he told influential Chinese visitors. They were impressed, he recalled. “They said, ‘Hurry up; we’re ready.’ ” For resource-starved China, overland transborder supply helped it surpass Germany to become Russia’s largest trading partner early last year. But price disputes are growing and have delayed a natural gas pipeline deal between China and the Russian company Gazprom. Which points to a potentially even bigger deal: a trans-Siberian oil pipeline that is scheduled to bring a million barrels a day to China by 2012 - IF they can work out the pricing.  Read more

07 June 2010. By now, pretty much anyone reading this is aware of the destructive role played by derivatives - largely, although not exclusively purveyed by Goldman Sachs  - in creating the mess in Greece now rolling through Europe under the rubric of the "Euro debt crisis". What may be a bit more shocking is that these same sort of dubious government financial practices turn out to be just as "popular" WITHIN the US as well. Municipalities such as metro Atlanta, Marietta, Birmingham Alabama, and even Emory and Georgia State Universities have all been scorched by the same sort of derivative deals that have been so prominent in Europe. At least a dozen local governments and other institutions that used derivative deals to try to lower the cost of bond issues have ended up owing as much as $394 million in fees to the Wall Street investment banks that set up the deals. That total includes at least $100 million in fees paid to firms such as Goldman Sachs, J.P. Morgan and UBS AG just to cancel the deals when they went sour. As in southern Europe, these hefty refinancings and fee payments occurred even as the city of Atlanta and other institutions were cutting budgets, laying off employees, reducing services and being downgraded by bond rating agencies because of budget shortfalls. In each case, the higher costs will likely be passed on to taxpayers or the users of the various institutions, which include the city’s water system and airport, some area hospitals and other facilities - sound familiar ???  Read more

EconomyWatch.com economic news archives from 2008, including a Renewable Energy special  Read more

02 June 2010. India's economy grew at its fastest pace in six months in the quarter through March 2010, fuelled mainly by government and consumer spending. The 8.6 percent expansion in the fourth quarter of the fiscal year 2009/10 was broadly in line with a median forecast of 8.7 percent in a Reuters poll, and lifted the annual average growth rate for the full fiscal year to a slightly better-than-expected 7.4 percent. India's economy had grown 6.7 percent in 2008/09, and the Jan-March 2009/10 growth rate matches the revised data for the second quarter of 2009/10. Revival of growth in farm output after a contraction in the quarter ago underscored the broad-based recovery in Asia's third-largest economy. The arrival of fresh crops helped agriculture grow by 0.2 percent, having dropped significantly in the previous quarter of 2009-10 due to a poor monsoon. The farm sector, which forms nearly 17 percent of the economy but is dependent on monsoon rains, is expected to do well in 2011. The rapid acceleration in the world's second-fastest growing major economy after China is boosting consumer demand far ahead of what can be met by existing supply capacity, which means that inflation, as well as high-levels of domestically held debt, are serious concerns for the Indian political leadership.  Read more

27 May 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  Quite aside from the human and social justice aspects, income equality is a crucial factor in creating and continuing sustained economic growth. The fact that – as income inequality BETWEEN nations decreases, something we think is a good thing, income inequality WITHIN nations, in general, is growing. This is happening both in the major old markets of US, UK, Germany and Japan, and in the new, above all, China and India, but also other emerging markets like Brazil, Russia and Mexico. While income in-equality is problematic anywhere, it is ESPECIALLY so in the US, because, as we have said so many times, since 1947, we have had an American-centered world political economy, meaning, very simply, that countries either SELL to the US – or they SELL to countries that SELL to the US. Which means the more income in-equality WITHIN the US, the harder it's going to be for the world to pull out of the Great Recession in which so much of it finds itself mired today.  Read more

19 May 2010. From Der Spiegel interview with former head of the German Central Bank, SPD economic guru, Karl Otto Pöhl: The European Union should have declared half a year ago -- or even earlier -- that Greek debt needed restructuring. * But according to Chancellor Angela Merkel, that would have led to a domino effect, with repercussions for other European states facing debt crises of their own. Pöhl: I do not believe that. I think it was about something altogether different. * Such as? Pöhl: It was about protecting German banks, but especially the French banks, from debt write offs. On the day that the rescue package was agreed on, shares of French banks rose by up to 24 percent. Looking at that, you can see what this was really about -- namely, rescuing the banks and the rich Greeks ... * If you were president of the Bundesbank today, would you be ordering the printing of German marks just in case they became necessary? Pöhl: No, no, we have not gone that far quite yet. In my opinion, the euro is in no danger.  Read more

12 May 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. The problems for banks holding government debt that can't be paid is EXACTLY the same as banks holding mortgage debt - and, even worse, derivatives supposedly BACKED by that mortgage debt - that can't be paid. In ALL of these cases, the banks that hold that debt are forcing governments NOT to force them to "mark to market" assets that were perhaps ONCE worth something, but are now relatively worthless. This is enabling those Too-Big-To-Fail banks to pretend they are still in good shape. In fact, they are in very BAD shape, but don't have to admit it, so their stock prices remain inflated - and the weakest of them avoid bankruptcy. The US  chose to deal with its crisis by mimicking the Japanese response. NOW, it seems, Europe is doing the EXACT SAME THING: bailing out the banks, the TRUE beneficiaries of the so-called "Greek bailout", since THEY hold most of the Greek debt. The governments are becoming more weak and direction-less just at the moment decisive action is needed. Japan has had more than two "Lost Decades", the US is following right along in its footsteps, and if Europe is now heeding America's advice, it seems more than likely Europe will be Lost for Decades to come.  Read more

5 May 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Ever since he became President, Barack Obama has displayed a disturbingly consistent pattern of behavior: ignoring the desires of the base that elected him in favor of consistently failed attempts at bi-partisan “co-operation” with Republicans and other actors definitely not part of that base, above all big corporations and industries who have made no secret of their opposition to even his weakest efforts at “change.” This was demonstrated once again on the last day of March, when Obama announced new plans for extensive offshore oil drilling, an initiative that not only came out of the blue, but put in play whole new areas previously ruled off-limits. In that context, the BP oil spill - which threatens to become the greatest ecological disaster in US history - presents him with a serious problem that underscores what we have always considered his most egregious problem: depending on middlemen, with a vested interest in the outcome, to formulate and carry out policies that are, in fact, the responsibility of the Federal government.  Read more

29 April 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com. Later this week, the independent Lisbon weekly EXPRESSO will be examining in its Economia section the current crisis in the Euro-zone, which has already embroiled Greece -- and with the downgrading of the sovereign debt of Portugal earlier in the week by Standard and Poors, has now reached that country of superb food and beautiful Atlantic beaches -- and has asked our Chief Political Economist, Dr David Caploe, to examine both the Portuguese and larger Euro-zone crisis from his unique perspective. With the agreement of our friend and colleague, Jorge Nascimento Rodrigues, long-time contributor to the Economia section, we now present an unedited and complete transcript of that interview.  Read more

India could achieve 7 Per Cent GDP growth in 2009, and then return its previous 9 per cent plus showing from 2010, but only if significant financial reforms are enacted. That was the verdict of the annual India Economic Survey of 2008 - 2009.">

Wealth is going east, and the wealthiest nations for those looking to make money are in Russia, the Middle East and Asia">

The rankings of the worlds top banks has changed significantly through the Financial Crisis, with big names falling by the wayside but others rising to take their place.">

With interest rates at record lows, does it make sense for homeowners to look at  home loan or mortgage refinancing? This is an updated guide to help you understand what refinance is, whether mortgage refi is for you, and how to go about finding the best refinancing package. ">

In a bold display of power, technology, and defiance, North Korea launched a rocket over the weekend. The rocket crossed over Japan, threatening stability in the region. In response, Japan has introduced new sanctions to the impoverished, isolated nation.">

China has long sought ways to bypass the US dollar and allow other countries to by their imports directly in Yuan. This new $10 billion currency swap with Argentina means that Argentina will have much-needed cash.">

When the Volkswagen was first launched in 1938, it was supposed to be the “people’s car”, affordable and practical for all Germans. Now India has its own version – with the exact same tag line: “The People’s Car”.">

Today US President Barack Obama announced his plan for economic recovery. Included in this strategy includes means to create new jobs, reviving the housing market, and reestablishing liquidity in banks and getting them to resume lending.">

22 April 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  It's far too early to say anything definitive, of course, but we couldn't help but be struck by how quickly major structural components of our analysis of the strange aspects of the Goldman / SEC fraud case have already been confirmed by unfolding events in Washington. This unexpectedly swift validation comes in a New York Times story about a crucial vote Wednesday on DERIVATIVES in the Senate Agricultural Committee. Three key elements of our scenario - an up-for-re-election-in-November Republican joining Democrats / the Pandora's Box of a POTENTIAL real change in the key arena of derivatives / and the simultaneous reluctance of Team Obama to endorse that "change" - were ALL vividly and dramatically demonstrated on Capitol Hill yesterday. While the SEC v. Goldman era has just begun, we are certainly pleased to see our take on it so quickly and strikingly illustrated in almost exactly the way we outlined.  Read more

A sustained recession, frozen banks, and rising unemployment are likely to keep the US and many other countries in recession. Dr. Roubini, also known as Dr. Doom, is the NYU professor who predicted the current crisis and he says this is probably going to last into 2010.">

20 April 2010 By David Caploe PhD, Chief Political Economist, EconomyWatch.com.There remain at this point many more UN-answered questions than certainties about WHAT the SEC's – and Obama's – "Goldman gambit" means. It could be the beginning of a far-reaching change in the whole way Obama and the rest of official Washington deal with the key issue of Wall Street and TBTF organizations in general. But we remain dubious as long as the President retains Larry Summers and Tim Geithner as his key economic policymakers. If, on the other hand, we see them replaced by the likes of Brooksley Born or Joe Stiglitz or Paul Krugman, and there is a substantive revision in the nature of the "financial reform" being proposed, then we may start to believe there really IS going to be a change. But until then, we are not yet convinced that even the seemingly dramatic events with Goldman and the SEC are anything more than, to paraphrase Shakespeare, 'a tale full of sound and fury, signifying not too much.'  Read more

It’s not uncommon for economists and analysts to accuse China of inflating economic figures or embellishing economic conditions. Some say the slumping Chinese economy is partly due to government exaggerations.">

Top Indian economic adviser Suresh Tendulkar recently reported that the nation’s economy could be on the path to recovery. This came with the Reserve Bank of India (RBI) cutting the reverse repurchase rate to 3.5% and the repurchase rate to 5%.">

The Bank of England slashed interest rates to an unprecedented low of 0.5% on 5 March, 2009. It also announced plans to increase the domestic money supply through quantitative easing – which is almost like printing money.">

Author, journalist, and three-time Pulitzer Prize winner Thomas Friedman spoke with the BBC on 18 February about what he calls, “the price of oil and the pace of freedom”. This states that as oil prices increase the need for governments to act democratically decreases. He says that this is “The First Law of Petropolitics”.">

The inflation rate dropped to 4.39% the last week of January, the lowest it has been in over a year, while industrial growth has shown a rare decline, of 2%.">

What was once one of the world’s most prosperous nations, Iceland is now struggling from the shocks of the financial collapse, and many are wondering how in the world this could have happened.">

Royal Bank of Scotland announced it would report losses before write-downs of £7 to £8 billion for 2008. This has caused its shares to sink 67%.">

The worldwide carbon market developed as a response to the threat of climate change caused by the excessive emission of greenhouse gases, and in particular carbon. Today 182 countries are working to limit carbon emissions, although the biggest polluter, the USA, has yet to ratify the accord. ">

In the last decade, the world has seen tremendous growth, and in the past five years, the world GDP has outpaced inflation. Much of this can be attributed to the new global economy that allows for freer trade than ever, a vast pool of able-but-cheap labor in developing countries, unprecedented amounts of capital, and of course more advanced technology.">

Seemingly never-ending woes about oil, war, and inflation have had the world bracing for recessions and hard economic times in general. But the US has experienced an unexpectedly high annualized growth rate of 3.3% in Q2.">

Foreign reserves in various Asian countries are enormous, and they are getting bigger. What does this mean to the rest of the world and the global economic landscape as a whole?">

Now we may be seeing reverse globalization in certain sectors, while others will only continue to use outsourcing as the cheaper alternative.">

The financial meltdown has hit an all-time low with Fannie May and Freddie Mac being bailed out by the government and Lehman Brothers collapsing. Who is to blame?">

Olympic excitement has worn off, and now the country is back to reality. Despite having organized the biggest, costliest, and most-publicized Olympic Games ever, with nary a hiccup, economic worries are setting in.

Firms from developing nations are rising to the top of global business, even acquiring the biggest and best from the west.">

Recent flooding in India has been disastrous for millions. And while this may not significantly affect the Indian economy, it is affecting the economies of hundreds of villages.  Read more

Popular polls say Obama won the recent presidential debate, and much of his success could be attributed to the current economy.">

The Dow, S&P, Nasdaq and even the Nikkei were all up more than 11% after losing almost as much in the past week. Investors have wagered that the markets were at their worst, right after a series of European announcements to resuscitate credit, amounting to over US $1.4 trillion.

Most countries can only dream of 9% growth rates, but for China that’s bad news. Growth is slowing in the world’s fourth biggest economy.">

It is often said that when the US sneezes the rest of the world catches a cold. This three-part series looks at how India, China, and Russia have been affected by the US financial crisis.">

There may be global uncertainty overall but Indian outsourcing is not in any immediate danger.">

In the aftermath of the Dow collapse and failure for the $700 billion bill to pass through Congress, the world is reacting differently. In this installment, we examine Russia’s condition.  Read more

In this multi-part series, we uncover the events that led to the subprime credit crunch, and analyze future financial prospects.">

While many of us are worried over impending recessions and uncertainty in the financial markets worldwide, we do have one thing to be happy about: Lower petrol prices.">

It’s one thing for a country’s GDP to drop – which is common enough these days – but to have the finance minister drunk at the same time, when the country needs him most, is another story. This is when the economy shrinks at 3.3%, the worst it has been in years, amid job cuts by Toyota, Toshiba, Sony, NEC and more.  Read more

The outlook for Europe’s largest economy is nothing less than catastrophic. For an economy that has been historically strong, never contracting more than 1% a year since World War II, the Commerzbank forecast that it would shrink 7-9% in 2009 is not encouraging.  Read more

In an effort to address credit, food, and oil woes, Thailand and Iran are planning to barter rice and oil.">

08 April 2010, By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  A source from within GE - one of the most allegedly respected companies in the world - supports the view put across in Roger Lowenstein's "The End of Wall Street" that, despite its reputation, GE's earnings were deliberately manipulated by guru Jack Welch, and his successor Jeffrey Immelt, in a fashion disturbingly reminiscent of the infamous Lehman Bros "Repo 105". And he claims this is / was true not simply on the corporate / GE Capital side, but on the equipment side as well, where "the company pushes product forward or holds it back, depending on which quarter they want to take the profit."  Read more

The Singapore government has been put in a tough spot in on whether or not it should intervene in saving citizens’ losses.">

In this multi-part series, we uncover the events that led to the subprime credit crunch, and analyze future financial prospects.

It’s funny that in the midst of a financial crisis while politicians try to calm the masses and restore confidence they also make apocalyptic statements about the economy.

The global financial crisis has hit Indonesia hard, with a projected GDP growth to less than 4%, down from 2008’s 6.1%. Much of this is due to a slump in exports.  Read more

The Chinese economy grew a whopping 9.9% in the first three quarters of 2008, and 11.9% in 2007. Forecasts for 2009 are nowhere near as rosy.

Indian Economy: Update – History Will See This as a Crucial Milestone for India

19 October 2009.Although Sovereign Wealth Funds, or SWFs,  still represent a small percentage of total world finance, with the Top 12 alone holding close to $3.2 trillion in assets they are big, and you can rest assured they plan on getting bigger. We analyze the top SWFs and what impact they are having on world finance.

A number of indicators are pointing to the fact that the global recession is ending now. If true, this marks a turning point for the world, which has suffered its worst recession since the Great Depression and World War II.

17 September, 2009 By David Caploe PhD, Chief Political Economist, EconomyWatch.com The reason a problem in the money world was magnified into a Global Great Recession in the real economy was derivatives deregulation - championed under Clinton by Robert Rubin and his acolytes, now National Economic Council head Larry Summers and, as Treasury Secretary, former New York Fed head Tim Geithner. Real change would have come from putting someone like Nobel Prize Joseph Stiglitz in charge.  Read more

By ˜free economy" we are not talking about an economic system or even Friedman's admiration for economic freedom. We are talking about gratis, on the house, free of charge.

The UK Budget 2009 has been derided as a piece of dishonest politics, but it also holds troubling warning signs for taxpayers worldwide

The MPs expenses scandal has gripped British politics, led to many heads rolling, and could change the political system for good

The Nabucco pipeline is supposed to free much of Europe and Central Asia from their dependency on Russia for energy, but it is also fast becoming a pivot point for negotiations in Ankara's aspirations.

Tourism makes up 6.7% of Thailand’s economy and 7% of its work force. The recent political violence and unrest is scaring off tourists, putting two million jobs at risk, and exacerbating an already-dark economic future.

The latest UK economic data from the Office for National Statistics (ONS) continues to be gloomy, and points the way to a recession could kick in this year. If the economy does contract this quarter as most analysts expect, it would be the first time it has done so since 1992.

23 September 2009. By David Caploe PhD, Chief Political Economist. The Chinese are using a mixture of aid and trade to expand their influence internationally, sometimes in dubious ways. But before westerners get too high-and-mighty about these sort of practices, they would do well to remember that the US/ Europe/ Japan travelled this path for decades.

It's sex that creates economic peaks and troughs. The number of babies born in a certain time can largely predict economic trends with surprising accuracy. In fact, in 1999, Harry S. Dent predicted that the economy would crash in about 2009.

Internet advertising in the US adds about $300 billion to the economy, amounting to 2.1 percent of the GDP. This is good news during the worst economic recession since the 30s.

Mumbai, 19 May 2009.Yesterday we said 'expect to see a Sensex rally’, but even we were surprised by just how right we were. A one minute frenzy at the opening bell led the Sensex to roar, surging 17.34 per cent for its best daily showing ever.

05 April 2010  By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  Ever since the run-up to / outbreak / and aftermath of Black September 2008, we have argued the crisis in the US has SIX aspects: financial / economic / ideological / political / media / intellectual-academic. While we generally have focused on the first five aspects of this on-going mess, a substantively fabulous Op-Ed piece in the New York Times underscores at least ONE side of the intellectual / academic aspect of this crisis. The article is by professors from four different law schools around the US, and shows in chilling and convincing detail how the entire regulatory apparatus allegedly keeping an eye on banks / hedge funds / large corporations et al were actively complicit in allowing them to get away with, literally, murder, at least in the financial economic realm. Unfortunately, it's often almost impossible to tell what they're saying.  Read more

Africa is quickly rising as an economic power of incredible potential. Private investment is skyrocketing. Interest rates and inflation are down. Trade is booming. The continent may see as impoverished and war-torn has benefited from its incredible commodity reserves and stable banking. But some say it’s all exploitation.  Read more

After the 'summer of discontent' when it seemed like President Obama's signature reform of the US Healthcare industry was on the ropes, his primetime address to both Houses today has been heralded as a pivotal victory. Obama said 'I am not the first President to take up the cause of healthcare reform, but I intend to be the last.' Early polling after the speech was delivered suggests he has the backing of the majority of Americans, and the Democrats have working majorities in both houses. Despite the legislative hurdles, we believe that  Obamacare is coming - but why is it so important?

The Salaryman: This stereotypical, male-dominated breed of corporate samurai seems to be dying, along with Japan's economy. Enter the grass-eater: A 20-30 year-old Japanese male who lives with his mother, is uninterested in women, is de-motivated at work, and is an herbivore. Yes, that's right, he eats grass, but not bush.

<i>Vladivostock, Russia, 8 June 2009</i>. Russia, basically, is broke. Unlike the United States, which is also broke, Russia doesn't hold a reserve currency and can't keep itself going with other people's money very long.  Premium league football, tennis stars and the mafia will only take you so far as well. Either the price of oil goes up soon, or simmering social issues could explode into civil unrest.

After the break up come the recriminations. The World Trade Organization (WTO) Doha Round trade talks in Geneva had been billed as a last ditch effort to save the talks. When they failed, fingers were pointed.

Indian Economy: Why Risk Losing Office over a Nuclear Deal? 

It's no secret that for some time now, China has toyed with the idea of moving away from the US dollar as its reserve currency. And that desire has probably never been stronger as China shudders at the thought of US dollar inflation which would slash the value of its 1.3 trillion in US reserves.

India's 2009-10 budget was announced yesterday which gives increases in personal tax exemption limits. It also enacts a wide rage of stimulus measures spanning a variety of industries. This is despite a growing fiscal deficit.

Traditional print media is struggling to survive with the ubiquity of the web, citizen reporters, and media habits we don't even understand yet. 

The global economy has been built around the US consumer since 1947. US consumers, however, won't resume buying until they have jobs and can keep them. Since US Unemployment won't drop any time soon, the world economy is still mired in difficulty.

The IEA has warned that oil prices above $70 could stop the global economic recovery. Will prices stay above that level?

OECD Leading Indicators Show World Economy at Inflection Point

30 March 2010. By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  Given the crisis in the Eurozone and, doctored BLS statistics aside, the on-going problems of the US, China's short-term economic profile remains key to the immediate future of the world political economy. And if the Rio Tinto case is any indication -- which it may or may not be -- then one would have to figure the Chinese leadership, at least, is confident about the country's ability to continue its remarkable growth, even within a global context of weakness at best and steep recession at worst. They could, of course, be arrogantly wrong in this assessment. But the fact they would even take such a stance -- given all the complications it will clearly bring with one of their most important private-sector partners -- is definitely a fact worth pondering.
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Both Clinton and Obama were elected with key policy plans for healthcare. Clinton's didn't work out so well. While Obama is still popular, his ratings are starting to suffer during uncertain economic times and unproven healthcare policy. Will his healthcare plans fail too? 

If you are an emerging markets investor, you may be forgiven for asking 'Financial Crisis? What Financial Crisis?' - because emerging market stocks are now back at pre-crisis, pre-Lehman collapse levels. Whether this level is sustainable is an altogether different question.

Manmohan Singh was once derided as a lame duck prime minster, but his bold new economic plans for India prove quite the opposite.

Loan sharks thrive in times of economic trouble, but their costs can be much more than the exorbitant interest charged.

Latin Amercian Growth Slowing – But Still a Safe Haven for Investors.Rio de Janeiro, 24 July 2008. Latin American growth is slowing thanks to rising inflation, with the causes of its economic growth over the last few years threatening to derail its efforts. It remains attractive as a region to investors, however, thanks to its positive carry trade.

There is a lot of talk of the balance of power shifting from the West to Asia, but is it really happening? According to the list of the largest companies in the world in by market capitalization in 2009 - yes it is.

This stereotypical, male-dominated breed of corporate samurai seems to be dying, along with Japan's economy. Enter the grass-eater: A 20-30 year-old Japanese male who lives with his mother, is uninterested in women, is de-motivated at work, and is an herbivore. Yes, that's right, he eats grass, but not bush.

New York, US, 24 June 2009. The Market Rally that started in March may finally be over, having got ahead of itself - and the economic realities that we still face. As markets have tumbled this week, the technicals have started to come in-line with the fundamentals.

27 March 2010  By David Caploe PhD, Chief Political Economist, EconomyWatch.com.  The real challenge China poses to the US lies not in the "lower-value-added" area where currency valuations may or may not be of importance, but in the “higher-value-added” regions of so-called “green” or “clean” technologies. The active intervention of the state in the Chinese economy has shot China to the front rank of countries where clean / green  technological innovation is being militantly pursued on a variety of fronts. The most significant indication is the arrival in China of not just Applied Materials, one of Silicon Valley’s most successful and historically important companies, but also Mark Pinto, its Chief Technology Officer. In this sense, we may now be witnessing in very concrete terms the beginnings of a “reverse brain drain” from the US to China.
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Traditional media's business model is dying, and their reponse to the ban on foreign journalists covering the Iranian crisis is only accelerating that process.

The Delhi metro was supposed to be the best run project in India, an example of the new modern infrastructure that would transform the country. In reality, it is an example of the corruption, greed and incompetence - the same old India but with more money.

Indian Inflation Through the Roof

Lima, Peru. 25 May 2009. Which market has grown 72 per cent this year? Most people know a lot more than they probably would like to about the massive destruction of wealth that occurred on a global scale in 2008. Understanding how much wealth is currently being created - or recovered - is an altogether more enjoyable learning experience.

Vietnam Economy: Vietnam Grapples with 27% Inflation and Collapsing Markets. 

India Special Report: The Wealth Tax  

15 October 2009. After big outflows at the end of last year and the start of this, both FDI and FII investment in India is on a tear. While at first sight this looks like a great thing, is it really? We take you through the reasons for optimism - and the dangers lurking.

World Economy: IMF Revises World Economic Growth Foercast  

Men caused the global recession, and now they are the ones hurting. At least that’s what those who dub it a he-cession (or hecession) claim.

10 October 2010. Gold is the New Black for traders, but not all of the reasons are sound, and a massive new bubble could be getting build. Here are five reasons why.

At any Olympic games, the big powerful countries always seem to win. China, the US, the UK, Russia, Japan, and Germany are usually at the top of the list. Every now and then some obscure nation may win a medal or two. How were the Beijing games any different? Were GDP and winnings comparable?

Fannie & Freddie - Differing Views from Krugman and Rogers

A groundbreaking project to build massive solar farms in North African and the Middle East to supply Europe with clean power has begun.

As Wall Street shows signs of recovery, many investors are watching emerging markets. They could very well prove to be the markets to invest in as we pull out of the economic crisis.

EconomyWatch Special Report – Surge of Interest in Methods of Reducing Petrol and Gasoline Costs. Sky high oil prices are leading to a lot of innovation in the world of energy efficiency, with new methods to extract hydrogen from water and mix it with petrol & gasoline attracting a lot of attention.

25 Sep 2009. The necessary global economic leadership needed to get us out of the mess we are in seems absent, with the possible exception of China.

Predicting markets is something that investors have been trying to do for centuries, with limited success. What if you had the key to real estate forecasting? There are a few models which may hold the secret.

China is growing at an amazing rate, and when the global economic crisis comes to a close this incredible power will inevitably emerge with more momentum than ever. But this has to taper off eventually, and when it does, it will be more than just a decline. We will see that great bubble burst.

Chinese Economy: Chinese Economic Growth Slows - But Still Over 10% 

China’s economic stimulus package worth $585 billion is starting to show positive results, giving hope to the massive export-based economy. These results are indications that recovery is not far ahead.

Western Economists have long attacked China's trade surplus as being a great source of economic imbalance in the world - but it is investment that is the real imbalance.

David Caploe PhD, Chief Political Economist. Although China and the US are now so intertwined economically they are called Chimerica, and although there are clearly problems with how bank loans in China are being given out and spent, China is clearly in ruder economic health than the US.

As Americans, we often jokingly poke fun at our northern neighbor by referring to Canada as the 51st state. We say they talk funny; their baseball is no good, and their beer is overpriced. And don't forget the ice hockey jokes. But really, I think we're just jealous.

Aah. Brasil. Endless sandy beaches. Beautiful boys juggle footballs, the girls sun their perfect bodies, ready for carnival. A place of pleasure, certainly, but not a place where money is invested wisely, surely?

I think we'll lose 1,000 banks out of the system...over the next two years. We've already lost 81 this year. The numbers are climbing everyday. Now many of these institutions nobody has heard of," said John Kanas, whose firm bought over Florida's BankUnited in May.

23 March 2010  By David Caploe PhD, Chief Political Economist, EconomyWatch.com  Last year, we identified the fundamental difficulty with Obama’s approach to just about EVERY important problem as playing ball with the middlemen, in this case, the health insurance companies, as if they were the only game in town. Once that decision was taken – and it obviously happened early on, when Obama made clear that not only was single-payer off the table, but he also wasn’t going to push very hard for the “public option” that, its exponents claimed, would impose some “market discipline” on the insurance companies – the outcome was basically foreordained: either the whole thing would go down in flames, or the insurance companies would definitely be taken care of in whatever emerged. And that’s exactly what happened.
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