tag:blogger.com,1999:blog-75111631764103654842011-11-02T12:29:10.337ZGlobal Economics BlogTamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.comBlogger741100tag:blogger.com,1999:blog-7511163176410365484.post-74729356166390325852011-08-12T15:21:00.000+01:002011-08-12T15:21:44.764+01:00

If you're looking for an example for the kind of global economic uncertainty we live in, the Swiss central banks announcement about plans to pack the Swiss Franc to the Euro must be a perfect one. Coming from a decidedly non-random process (just imagine the meeting that finally decided on this), and totally unforeseen by most bar the insiders. Made my day.

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-68125591394828571792011-08-10T08:59:00.001+01:002011-08-10T09:17:35.495+01:00

This post argues (again) that there is no way ahead for the global economy without theoretical innovation. The trouble is that the wave of innovations that has been sparked by the 2008 meltdown, still assumes that the world economy is built from discernible building blocks: the national macro economies. There are brill new models that incorporate the national financial sectors into the monetary

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-35975667580071327262011-08-03T12:25:00.000+01:002011-08-03T12:25:55.277+01:00

Th global economy's outlook: as if the 24 months since the summer of 2009 have flown by in one minute. Not much changed. The future of the global economy is as uncertain as it was 2 years ago. (Would any self-respecting macro analyst dare to stand by a mid-term forecast of global GDP, oil prices, or even policy stance?) We still lack any coherent global institutional framework that could offer

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-82550698253704820352010-11-02T22:47:00.000Z2010-11-02T22:47:51.060Z

What passes these days as monetary policy in the US and in the Eurozone is going to be a complete disaster for developing countries. Just think for a second what the taboos are is that emerging markets politicians cannot touch when it comes to monetary policy. Surely, the independence of the central bank is going to be top of anyone's list. How do you build an efficient central bank in a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-54827048707113514872010-09-23T13:07:00.001+01:002010-09-23T14:34:17.523+01:00

(Book review of ‘The Future of Finance. The LSE Report’ -- you can download it here) Hmm. What a perfect moment! An near-perfect crisis over (well, just, and perhaps), and one very much triggered and spread by the financial sector, offering a lab-like insight into the mechanics of global banking. The complexity of the structure, the proportion of what is global to what’s local, and the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-90561711259898507032010-08-20T09:38:00.003+01:002010-08-21T08:41:57.857+01:00

Two global economics observations about the ineptitude of economic policy. First, we knew about the credit crunch for at least a 15-18 months before the September 2008 meltdown. Yet, the crisis was not only not averted, but perhaps not even slowed down. The months after the collapse of Lehman were spent in a frantic search for new policy solutions. Nothing seemed to have worked. The nature of

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-47962596909499837522010-05-13T10:06:00.004+01:002010-05-13T10:53:43.156+01:00

A central question of global economics concerns the architecture of policy institutions. If you regard the global socio-economic system as a single unit -- a not entirely unreasonable assumption, perhaps -- then it is strikingly obvious that the system's optimal management would call for much stronger global governance functions than existing today. Global economics calls for efficient global

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-90636249194269949652010-04-22T18:21:00.009+01:002010-05-12T16:21:39.320+01:00

(Report from my friend, Balazs Szendroi) "Knowledge Is Power"(Motto painted on the walls of thousands of schools around rural Kenya) "In case of accident, do not admit liability"(Advice printed on all Kenyan car insurance certificates) Kenya is a beautiful country. The breathtaking views along the descent into the Rift Valley, the sounds and colours of hundreds of thousands of flamingos on Lake

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-55386038862783942782010-03-25T12:24:00.010Z2010-03-25T19:44:09.615Z

And now onto financial regulation? Europe is poised to win from stalemate of the US Senate. The fallout from the success of the US health care reform bill might just determine the fate of the emerging global regulation. The Volcker-Obama-Dodd initiative will never see daylight as a law without all the teeth are pulled out: the Republican’s strategy of obstruction makes any meaningful financial

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-79954227919409723632010-03-22T11:34:00.008Z2010-03-24T11:40:42.903Z

Finally Obama might have some global consequences... The crisis offered hope about the global reform. Although we are still struggling with understanding how the global economy works, the eventual development of some kind of global economic policy umbrella has become increasingly inevitable. As this blog pointed out before, Barack Obama had a unique opportunity to design and push through such a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com6tag:blogger.com,1999:blog-7511163176410365484.post-76993231574735449522010-01-27T11:29:00.004Z2010-01-27T15:04:13.722Z

(The past two months I have been working on some exceptionally interesting problems, and hence the absence from the blog. Here is one to the 'dear readers' who bugged me to return.) Fascinating it is to see the way our thinking evolved about the 'optimal' policy behaviour in a crisis. You could argue that before the meltdown of September 2008 we all thought that the way to deal with recession

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-52199152137142916812009-11-20T10:10:00.002Z2009-11-25T00:28:58.956Z

(The Green-Shoot Worm And The Abracadabra Herd) It is almost as interesting to follow the way the commentators of the global economy keep moving in odd herds, as it is to watch this wannabe recovery itself. A few days before the meltdown most of the people -- now famously -- thought things would be just fine. Then suddenly the lightning struck and the entire herd changed direction. But it turned

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-76178209740576497042009-11-16T10:20:00.010Z2009-11-17T13:02:57.387Z

"Obama damps hopes for final treaty on climate change at Copenhagen" Grrrrrr. The week starts with yet more global procrastination. This blog has had a critical, but hopeful attitude towards Barack Obama's global policies. The global economics observation that the 2007-2009 crisis was an evidence of the failure of pre-existing institutions led to the expectation of a global economic policy

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-26091412622304289382009-11-06T13:35:00.010Z2009-11-06T14:01:15.300Z

(Notes from the Papuan Highlands, from about a year ago) Imagine that globalisation had turned out differently. It had been not European cultures that somehow got spread and dominated the world, in fact created the ‘world’, but it would have come from the other end of the massive Eurasian continent. Imagine that Augustus, Kepler, Darwin, John von Neumann were actually Papuan highlanders, from

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-81976929312310296662009-10-15T09:57:00.001+01:002009-10-15T10:38:28.916+01:00

A fantastic Nature page on Global Boundaries. The only missing item is the human society and global economics... This Nature publication is a great overview of the boundaries that humanity should not cross, if it wants to ensure its survival. However, you can really not do this well, unless you deal with the nature of human society itself. You cannot treat the global society as being separate

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-7354347322999332172009-10-09T14:35:00.008+01:002009-10-14T15:53:28.297+01:00

(Two notes on diversity.) Note one. The we are making a mistake by focusing on carbon. Carbon is easy. The claim that the carbon problem, or in general the problem of global warming, is easily solved might strike you as an odd statement if you are involved in the effort to curb the release of greenhouse gases into the atmosphere. Clearly, getting the global society to recognise the problem and

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-69845701459750055672009-10-01T11:59:00.002+01:002009-10-01T12:52:14.666+01:00

(Funny how an idea that looked so strange and impossible even a few years ago, is self evident now.) A very odd thing is going on in the world. The rise of the global market led to unprecedented global flows of products and services, technology and capital, people and resources. International economics is giving way to global economics. It has become clear that there can be no national

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-70522969344269902412009-09-15T11:10:00.014+01:002009-09-16T11:45:33.290+01:00

(Two boats, a lot of waves, and one Mount Fuji)There’s a new law of global economics: the deeper you are in a crisis, the emptier the policy tool box becomes. And the emptier the policy toolbox is, the more similar the measures become in practice. (Global economics starts its life in a very odd way…)Before the credit crunch, we all thought that monetary policy was rapidly converging towards

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com4tag:blogger.com,1999:blog-7511163176410365484.post-30822209734282976822009-09-10T14:25:00.007+01:002009-09-10T15:31:17.358+01:00

The silly talk is returning about emerging markets as the global economy is turning into a full-blown recovery mode. In particular, there is a renewed hype about the non-existent group formed by Brazil, Russia, India and China: the BRICs.The reality is that the term BRICs has never made sense in either the International macroeconomics, or the global economics framework. For much of the 1980’s

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com7tag:blogger.com,1999:blog-7511163176410365484.post-34917621050400412592009-09-08T10:33:00.013+01:002009-09-09T00:16:49.158+01:00

Once upon a time there lived a very very large dragon. This beast was the scariest of all creatures ever lived. It was taller than a house, and its mouth was big enough to gobble down six little children at once. Its teeth? Oh those giant, yellow teeth were the largest, sharpest, spikiest in the whole wide world. There were all kinds of princes, kinglets, knights, and quite a few of the smallest

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-42543935915619333842009-09-07T09:42:00.004+01:002009-09-07T14:24:46.492+01:00

Is that very funny how the G20 is doing it again? As the crisis unfolded, some 'out of line' people suggested that banks should perhaps be treated as utilities. They were wiped off the table. Now, that it is becoming clear that the largest economies of the world will again fail to harmonise real policy action, they are pledging to clamp down on the banks together instead. The previously

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-55248403472416398882009-07-30T13:58:00.005+01:002009-07-30T14:20:38.777+01:00

(off global economics)At the apropos of an FT article about the small rise of the gender pay gap in Britain, I thought I would share an anecdote. After my years in Cambridge I took a gap year from academia, which turned out to be a gap decade. I was running a smallish research consultancy, seated in Hungary, but covering the macroeconomics and fixed income markets of many emerging markets. Our

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com4tag:blogger.com,1999:blog-7511163176410365484.post-10850086473091402192009-07-27T11:46:00.009+01:002009-09-08T00:39:27.243+01:00

In academia - unlike in my previous profession - one might occasionally be asked to check out his own previous forecasts. So here it is: a qualitative revisiting my global economics forecasts of the past two years.One. About the nature of the current crisis. The argument originally put forward was that the current crisis is that of models and not that of over-hype or under-regulation, as

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com4tag:blogger.com,1999:blog-7511163176410365484.post-32053647004484506642009-06-17T16:32:00.012+01:002009-06-19T02:54:55.442+01:00

The technology-update dynamics (see previous post) is central to the argument that the current crisis will finish with a jobless recovery, similar to the years after the 2001 dot.com bubble burst.The raw form of the hypothesis suggests that the firms that had shed labour during the recession subsequently invest into technology, new technology in particular, rather than expand their labour force,

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com5tag:blogger.com,1999:blog-7511163176410365484.post-20487708588674468062009-06-15T22:36:00.019+01:002009-06-16T16:03:22.136+01:00

The jobless recovery scenario goes like this. (1) During a recovery (as at all other times) the basic labour market identity holds: the number of people employed depends on overall demand and productivity. (2) Productivity growth depends on innovation. (3) While the relationship between employment and demand is short term, the relationship between productivity and innovation is long term.

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com8tag:blogger.com,1999:blog-7511163176410365484.post-33622288154766198302009-06-11T15:24:00.006+01:002009-09-08T00:41:40.797+01:00

Is this really the end of the recession?Perhaps, there is reason to be sceptical about last month’s fashion of optimism.The new, global economics framework for modelling the world economy in a post transition-phase state is still missing. The models we use still have major systemic errors in them, we obviously still have the same valuation problems and mis-specification of the policy mix. Despite

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com11tag:blogger.com,1999:blog-7511163176410365484.post-64422232846459762022009-06-07T07:40:00.006+01:002009-06-17T09:59:04.288+01:00

(Some good news about China's strategic choices in the global arena)China's role on the global scene has gone through a spectacular metamorphosis in the past ten years. In the early 1990's China was still very much in the developing economy category. Although it was very large, its international behaviour resembled that of poor countries. Then, around a decade ago, its global action-set started

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com4tag:blogger.com,1999:blog-7511163176410365484.post-44153192931838078482009-05-14T10:23:00.003+01:002009-05-14T17:19:43.956+01:00

Many economist spent the years before the current crisis in utter frustration. They saw their bit of the world being upside down, valuations being all over the place, and their arguments being not heard by the markets. "Hey! You gloomy guy! Shut up! If you were right, the markets would have reacted! Have you heard of efficient markets?" And thus the markets pointed at themselves as the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-7421075925664927952009-05-11T10:28:00.005+01:002009-05-11T13:49:51.231+01:00

(Fooling around with the credibility of global forecasts. Or the lack of it therein.)The collapse of ability to forecast during this current global economic crisis, resulted in the abandonment of the previously employed semi-sophisticated merge of national level macro models, and the return of the U’s and the V’s. The debate is reduced to discussions whether the recession will take a u-shape or a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-5250545133280247442009-04-29T17:34:00.033+01:002009-04-30T01:59:40.860+01:00

Last week, the IMF published its updated global forecasts, as part of the IMF World Economic Outlook, titled ‘Crisis and Recovery’. All the media, all around the world, was completely full of it (FT, NYT, Bloomberg, China Daily, Gulf News, Jakarta Post, The Times of SA, etc., etc.).Given the hype, it is striking how different this 2009 growth forecasts is from those published half a year and a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com5tag:blogger.com,1999:blog-7511163176410365484.post-21637954528923175402009-04-25T10:06:00.002+01:002009-04-25T10:12:16.956+01:00

Some years ago I got involved in the very practical exercise of designing a real tax system. It was in a transition country, in Europe, and it was messy.I learned a number of lessons, some of which might be distantly relevant for the current fashion of re-designing tax systems. So, here they are.Lesson number one. There is no possibility of an ‘engineering’ debate when it comes to taxes. Anyone

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-78723532350806794262009-04-22T17:03:00.006+01:002009-04-23T02:54:02.632+01:00

(About the emotional decision making of the Global Economy)One of the earliest posts of this blog was about policy rules and policy discretion. The original economics model is generally used to provide evidence for how short term optimisation of policy can screw up your long term rules, and thus lead to a sub-optimal outcome. It is an economy level procrastination problem, which - on the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com12tag:blogger.com,1999:blog-7511163176410365484.post-41411766441647858592009-04-14T11:28:00.009+01:002009-04-30T02:10:37.121+01:00

Now that the economic forecasting profession has sunk to the standards of the tea leaf reading lot, it might be worth highlighting the occasional shine through of light. Consider the FT's interview with Cao Jianhai (spread into two articles, on property prices and on macro data). His cautious assessment of the outlook for the Chinese economy should warn all those who read too much into the recent

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-24139261379335470422009-04-09T10:23:00.007+01:002009-04-09T11:04:57.113+01:00

Emerging markets have always been an enigma for economists. They are poor, but unlike the ‘poor’ countries, they have a lot of economic dynamism. They have functioning governments, and they have economic institutions such as a central bank, or a stock exchange, like the developed world, but these are often erratic in their effectiveness. But most of all, these countries, should they be in East

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com8tag:blogger.com,1999:blog-7511163176410365484.post-42926448393029968682009-04-07T03:17:00.004+01:002009-04-07T09:51:17.761+01:00

(A guestpost from my travelling friend and corespondent, Balázs Szendrői.)In this day of global multiculti, we constantly walk past, and sometimes interact with, people whose cultural background is very different from ours. But this was not always so. Here in Australia, I am reminded of one affair in particular, in recent (painful) memory, relatively well-documented, which took one party

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-61992227621980462662009-03-26T09:28:00.005Z2009-03-26T09:35:16.797Z

Fascinating how politicians, commentators, and the markets alike are in constant search for the turnaround. It seems that even after almost two years of slide, it is still difficult to take in the magnitude, depth, and length of the crisis.Amidst all the talk of optimism and rebounding markets, consider this picture of the Japanese export dynamics from today's FT. Remember those times a year -

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com15tag:blogger.com,1999:blog-7511163176410365484.post-73670887644795620582009-03-24T10:10:00.005Z2009-04-12T23:36:42.099+01:00

Now there it is. We have kept trading down the policy tools. By now, only the stone axe is left. Just as the super-sophisticated inflation targeting (or almost that, in the case of the Fed) has by now been replaced by the 1 trillion intervention (a.k.a. The Round Large Red Panic Button), the fiscal intervention has reached a new peak (or low - depending on your point of view) with the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com8tag:blogger.com,1999:blog-7511163176410365484.post-90289517515605608402009-03-18T12:35:00.003Z2009-04-12T23:34:17.200+01:00

Economics is a prostitute, really. After having managed to turn itself into the most science-like of all those groups thinking about the ways and whys of societal behaviour, a feat done mostly via the application of mathematics as language, it has sold itself, body and soul to, well, whoever pays.The people who try to figure out how economies behave tend to be preoccupied with the question of how

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com13tag:blogger.com,1999:blog-7511163176410365484.post-36645356128660182532009-03-06T13:30:00.002Z2009-03-06T13:40:03.290Z

(A review of the book ‘Economics 2.0’ by Norbert Häring and Olaf Storbeck)I set out reading this book (I was asked to do so by the publisher) with great expectations. The blurb and the reviews that the publisher provided suggested that although this will probably be no economics revelation, a lot of fun was guaranteed. Well, the first part was definitely true. But fun?This book is economics 2.0

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-3636019354948294242009-02-27T14:06:00.003Z2009-02-27T14:43:24.815Z

It is almost an axiom that data revisions almost never matter, at least not in the short run. Maybe this one will be an exception... If you wanted to have a symbol for how bad things are turning, and how unexpected that is, consider this revision of the US GDP data for the Q4 2008, down from -3.8 to -6.2. And the forecast that we will mention this news a few times, is fairly straightforward.

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-20824890214511995122009-02-25T12:39:00.007Z2009-02-25T15:01:02.354Z

Mature economies increasingly behave as if they were emerging ones. If you look closely, they are.When dealing with emerging markets, you always have a problem: figuring out which country is really your subject matter. When does an economy leave utter hopeless poverty and get on the - always bumpy - road towards affluence? When, during its rather rocky past decades, did Cambodia enter the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com18tag:blogger.com,1999:blog-7511163176410365484.post-81740227649219641822009-02-23T13:18:00.001Z2009-02-23T13:21:45.057Z

Amazed at the extreme reaction to ideas related to global government institutions.  People treat those who even enter the discussion as if they were obviously nuts. There is hardly any debate involving arguments about potential merits. The recognition, by both sides, that the establishment of effective global government agencies would be politically very difficult, finishes the discussion at the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-17186297054018291552009-02-17T16:49:00.005Z2010-03-24T12:28:15.205Z

Do you want to know the real mechanics behind the rise of the global technological society? Well, if Bob Allen is correct about the origins of the industrial revolution, it is not geography, nor human capital, nor institutions, nor culture. His fascinating reading of the origins behind the industrial revolution goes like this. First, discoveries of the 15th century led to increased trade, and

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com7tag:blogger.com,1999:blog-7511163176410365484.post-41335667547737684712009-02-06T20:58:00.002Z2009-02-06T21:12:53.133Z

(A guestpost written by Balázs Szendrői.)Walking across the University of Berkeley campus one sunny afternoon, I could not help but notice two young, scantily dressed people on the grass in front of the Campanile, Berkeley's iconic bell tower. They were engaged in an activity which, in most countries I know, would have counted as sex and therefore strictly forbidden in public places. Not in

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com6tag:blogger.com,1999:blog-7511163176410365484.post-59010824409779497272009-02-02T07:03:00.002Z2009-02-02T10:13:20.393Z

Last Thursday I went to a fascinating talk by Graeme Barker on the shift from hunter gatherer to farming societies on Borneo. I went along to understand more about the technology dynamics of the Papuan Highlands, but I picked up something very unexpected. Graeme Barker discussed the orthodox models of the spread of agriculture around the world, and compared it to the new understanding that has

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com18tag:blogger.com,1999:blog-7511163176410365484.post-5667158903908261562009-01-29T09:47:00.007Z2009-02-04T14:36:33.413Z

It is now demonstrated beautifully that giganormous system level risks originate from the financial sector, which then banks accumulate in a very non-transparent way. As a consequence, an unexpected - and sizable - shock hit the global economy. The panic button was promptly jumped on, and governments around the world started to shoot emergency cash injections towards any bank standing up. (Ok,

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-1684716134389279572009-01-27T10:42:00.005Z2009-01-27T23:19:14.542Z

When I moved to the UK a few years ago, I did not expect that I would ever take a break from my new discipline, global economics, and return to the old one, emerging markets macro. And especially not with my new home country being the subject matter. And yet, the day has come. The fiscal response to the credit crunch combined with the implied and not-so-implied spending promises by the government

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-44949336752995292342009-01-26T11:04:00.003Z2009-10-03T07:47:51.490+01:00

(This is an unpublished note that I wrote March 2008. Strictly for the buffs.) What to expect when the recovery comes Maybe it is time to talk about the coming upswing, whenever that is going to be. Since the previous downturn, emerging economies have come to play a far greater role in the global economy. This will change the way that the global financial system adjusts to the current crisis,

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-85483275842007963472009-01-22T12:50:00.001Z2009-01-22T12:53:45.585Z

Our crisis is a crisis of knowledge. We witness a remarkable market failure in creating high quality financial research for the global economy. There is plenty of evidence. The lack of adequate modelling framework for the global economy results in the absence of effective asset valuation; the lack of price anchors lead to major bubbles in boost times, and a downward asset-price-spiral in bad

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com6tag:blogger.com,1999:blog-7511163176410365484.post-86933172717588790042009-01-21T11:55:00.002Z2009-01-21T12:12:34.563Z

Most commentators are underwhelmed by Obama’s inaugural speech. However, an analysis of the text reveals the reason for the disappointment. Going against the expectations, this was a mostly policy speech, although you have to work a bit to uncover the content.In my count (and categorisation) 43% of the speech was directly policy related. Of that, around half (21% of the entire text) was dealing

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com17tag:blogger.com,1999:blog-7511163176410365484.post-50446002915416061752009-01-20T07:43:00.002Z2009-01-30T00:41:39.525Z

I never thought this would ever happen to me. I have an Obama Writer'sBlock. (Check the time stamp of the previous post.) I have beenwaiting to chew on something, and there is nothing given. His 825bnpackage, I could tear apart (at least part of it) with harsh words on'more of the same', with 'hey, don't you get it, you cannot achievemuch without global action' etc. But, my mature and and well

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-55091308196033196712008-12-16T09:57:00.001Z2008-12-16T09:59:21.942Z

Even if nation states were on their way out, some governments seem to want to linger around. They are thrusting themselves onto the global arena with a whole new set of aspirations, quite detached from their original functions. And by doing so, they meet entirely new forms of appreciation by the World.Some will be happy, it seems, to subject themselves to ridicule: the Polish government banning

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-64929118665283090502008-12-09T11:01:00.001Z2008-12-09T11:03:16.109Z

(more from those equatorial forests of Cornwall)We also collected some real gems:One. In the village shop where we stayed, people were very friendly to me. Liz suggested that here it might be better to be a foreigner than a non-Cornish Brit… So there was this guy, the local baker, who wanted to show off his freshly baked bread to me, accompanied by the words: “I bet that they did not tell you at

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-88944208481617863682008-12-09T10:43:00.000Z2008-12-09T10:44:16.354Z

(notes from one other remote, exotic place, with strange people and customs: Cornwall) In a Papuan rainforest location I recently witnessed a PR person bragging about how her company had really not done that much damage to the environment at all. In a field which had previously been a complex forest ecosystem on the equatorial, there now lies a grass meadow with grazing cows, right out of a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-22453831633350545542008-12-09T10:23:00.000Z2008-12-09T10:24:25.885Z

The emerging economic policy of the Obama administration can - at best - be described as  enlightened left wing policies, the kind that has been practised by the better of the European social democrats. The usefulness of these might be a revelation for the government-fearing US conservative elite, but economic policy innovation it is not.There goes our hope for global leadership.A vision about

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-37504183510553803122008-11-26T02:13:00.002Z2009-03-27T12:21:40.370Z

When the economic storm had hit us, 10 weeks ago, we were all looking for parallels from the past. Are there similarities with the burst of the dot.com bubble, in 2001. This is really different here, we said. But there are general lessons, no? And we listed those. Then things turned worse, the storm became a crisis. We started to revisit, first the 1997-98 Asian / Russian / Brazilian crisis. "How

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com5tag:blogger.com,1999:blog-7511163176410365484.post-10886309047433669872008-11-16T08:50:00.002Z2008-12-16T17:51:30.463Z

(A report from Wamena, the capital of the West Papuan highlands.)I have a new friend. He is Papuan, from the Nduga tribe. He is 22. And he wants to be a pilot.His name is Samuel.We met at the Jayapura airport. I had to stand around for hours, and in my boredom, started to circle around the departure lobby. There was a young, very university student looking Papuan guy with a girl, also very

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-66333927816902121422008-11-03T17:35:00.001Z2008-11-03T17:41:15.418Z

(A pre-note on Obama’s victory speech, scribbled down in Kuala Lumpur) A few years ago, well, exactly four, Liz and I were invited to a posh dinner on what happened to be the night after the US elections. The organiser was a good friend, who rushed up to me as we were looking for our seats, looking rather anxious. Tamás - she said - I beg you, please, please, no scandal tonight… As it turned out,

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-35793549249241782232008-11-02T10:16:00.000Z2008-11-02T10:17:59.568Z

I am going to be on an lengthy trip for a month now. Blog posts will be patchy.

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-87421492253891502302008-10-27T05:32:00.003Z2008-10-27T09:22:19.404Z

Comedy in Three ActsDramatis PersonaeProblem, son of Old Habits, in love with Global SystemSolution, king of Cheap Talk, a.k.a Good EnoughTrouble, cute little Goodfellow, messing with the WorldGovernors, presidents, ministers, all kinds of further support. Running around the stage at high velocity, in random directions. Some without head attached.Act I. RegulationScene 1. Financial sector rules(

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com2tag:blogger.com,1999:blog-7511163176410365484.post-18280585732876093772008-10-21T16:07:00.007+01:002008-10-21T21:47:56.410+01:00

(Notes from Abu Dhabi and Dubai) I didn’t plan for this. There I was, arguing for an overarching crisis. That a tsunami was coming. That the outer islands had already been hit, and that we could see that enormous wave coming towards the beach. No one was to be spared. Can’t you see, people, it will hit us all? There will be no dry land left. Run for your lives!The past five weeks looked good for

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-65892127239336738622008-10-08T15:46:00.002+01:002008-10-21T22:32:15.053+01:00

“With knots, the best is to use a hatchet,” - he used to say. “Just as it is coming towards you, large and complicated. Dark, and sometimes frightening.” Yes, it happened even to him. Only occasionally, though. “Just cut it right through. That’s all you can do. But, that will take any of them down.”He was good at knots.What the world’s governments are doing is using Lilliputian scissors on the

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-51791468431330289252008-10-07T16:17:00.002+01:002008-10-07T16:54:25.269+01:00

Mahler 1908. The triumph of the individual becoming one with the Earth. Death is merely part of the cycle of Life. One’s Life. Any particular one’s life, and the lives of all of us, individual ones. The highest point reached by human civilisation. The world was becoming interconnected and global, savouring the fruits of rapid economic growth after decades of innovation. New technologies created

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-20933749266629286722008-10-03T16:14:00.001+01:002008-10-03T16:17:46.911+01:00

My Dear Friends, People of Denial. You amaze me.Don’t you ever wonder why your Explanations and Explications, your Wisdom of Experience, your Expert Authority are so cheap, useless, and empty? These days.Do you ever suspect that the world financial meltdown might reflect something more than ‘greedy CEO’ contracts encouraging “risk-taking culture”? (Wasn’t ‘greed’ meant to go with being a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com0tag:blogger.com,1999:blog-7511163176410365484.post-67081510034505637962008-09-30T18:19:00.003+01:002008-10-02T15:02:58.748+01:00

What is a bail-out?It’s just a promise.A government bail-out of a private company is a promise to provide assistance such that some socially important function of the company can survive without discontinuity. The most often used form is short-term liquidity provision during bankruptcy. However, the ‘assistance’ could be provided in many other forms than mere cash (e.g., procurement orders). You

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1tag:blogger.com,1999:blog-7511163176410365484.post-59334786989947305292008-09-29T13:02:00.005+01:002008-09-30T14:01:57.298+01:00

Europe could become the centre of the world, simply by not screwing up. Europe is big and loves government. But it will miss its chance for want of revolution. When in globalisation, huge and mature is the best. The size of the European economy relative to that of the world makes it the largest economy on Earth that is both mature and integrated. The consequence: Europe possesses internal demand

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com8tag:blogger.com,1999:blog-7511163176410365484.post-41184585197393259562008-09-25T00:07:00.003+01:002008-09-29T09:26:55.269+01:00

The World’s complacency is deafening.The ‘explanations’ coming in from around the Globe take a surprising range of forms. All kinds of factors, all kinds of reasons, why that one country, that one region, or even that one city will be spared by this crisis. The denial is the only common element. For instance...No, China is fiiiinnnne. More of a problem is the domestic slow-down, if anything,

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-31903685219462303322008-09-23T15:42:00.002+01:002008-09-23T15:45:25.821+01:00

What do you think? It was the second day of the crisis when I started this blog. A week ago. It now has six postings, somewhat varying in style and depth. It would be rather useful for me if you gave me feed-back. Its direction, the topics, everything. Please.

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com5tag:blogger.com,1999:blog-7511163176410365484.post-52733855995976110122008-09-22T10:52:00.005+01:002008-09-23T10:12:42.360+01:00

It is 1947. The Cold War is starting. A group of defence strategists get together to figure out how to best tackle it. They start with the analysis of the world war finished only two years earlier. They focus on details, where, of course, the devil lives. Weapons, or in general ‘military technology’ is all based on Newtonian mechanics. That is, the weapons that count. Or rather, the weapons that

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com9tag:blogger.com,1999:blog-7511163176410365484.post-8446107970993858142008-09-20T18:08:00.002+01:002008-09-20T18:10:39.946+01:00

Here is a question to you. If you were a geopolitical strategist working for the Chinese government, what would you be thinking about the global banking crisis?First, your country’s exposure in US capital markets has just been dealt a substantial blow. Clearly, pulling out now is not an option, the drag on the market would be insufferable. (However, the US government bailout implies a free ride

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com7tag:blogger.com,1999:blog-7511163176410365484.post-59316247386187510562008-09-18T12:00:00.002+01:002008-09-18T13:45:39.662+01:00

The closer you are the more worried you are. The analysing is almost as frantic as the markets, but there is clearly no agreement even about the basics. Neither on causes, nor on consequences. The regulation-optimists. A.k.a. the ‘ultimate-denial-people’. The more political function you have, the more likely you are to be here. The regulation-optimists see the current crisis as primarily caused

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-35252000936820273592008-09-17T13:45:00.002+01:002008-09-17T15:18:24.337+01:00

This is the end of market capitalism as we know it.  Imagine this, someone asks you a week ago, to assign a probability to the Fed taking 80% share of AIG and thus the most important central bank of the world effectively nationalising the largest insurance company. Would you have just laughed? Or would you have bothered to actually say less than 1%? Or would you have got bogged down in giving a

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com6tag:blogger.com,1999:blog-7511163176410365484.post-41071434070054670072008-09-16T11:41:00.005+01:002008-09-17T13:47:00.364+01:00

It is very interesting to see how the narrative about the current crisis, which in my view is clearly a global one, stays on the national level. This is true for the policy makers, the media, as well as the investment banking chatter. Part of the reason is that the institutions that could do something about it are on the national level, such as central banks, treasuries, as well as regulatory

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com3tag:blogger.com,1999:blog-7511163176410365484.post-59636219247104509662008-09-16T11:21:00.001+01:002008-09-16T11:22:38.182+01:00

Today is the perfect day to start a global economy blog. This could be the very first truly global crisis. So far all previous economic and financial crises were limited geographically or in sectoral width. Most emerging markets had been closed, and the relationship network among mature economies was too loose for a crisis to really impact all. Even the 1929-1933 meltdown or the two oil shocks of

Tamashttp://www.blogger.com/profile/11641190007103495073noreply@blogger.com1