Global Economy

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Neshant
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Re: Global Economy

Postby Neshant » 12 Sep 2010 01:23

Sanjay M wrote:Japan Plans to Seek Discussions With China on Bond Purchases



You can already see the beginnings of what 21st century conflict will involve.

Economic warfare needs to be carefully understood as one slip could cost a country billions and cause it to surrender its soverignty.

Just a few months ago, Barclays and Society General was caught trying to sell credit default swaps and other junk in India without permission from the govt.

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Re: Global Economy

Postby shyam » 12 Sep 2010 01:54

Neshant wrote:Just a few months ago, Barclays and Society General was caught trying to sell credit default swaps and other junk in India without permission from the govt.

Why didn't GoI impose big fines on those banks for doing illegal trade?

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Re: Global Economy

Postby Suraj » 12 Sep 2010 02:10


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Re: Global Economy

Postby Sanjay M » 13 Sep 2010 08:22


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Re: Global Economy

Postby Prem » 13 Sep 2010 23:01

http://www.nytimes.com/2010/09/13/opini ... ugman.html
China, Japan, America
By PAUL KRUGMAN

Last week Japan’s minister of finance declared that he and his colleagues wanted a discussion with China about the latter’s purchases of Japanese bonds, to “examine its intention” — diplomat-speak for “Stop it right now.” The news made me want to bang my head against the wall in frustration.
You see, senior American policy figures have repeatedly balked at doing anything about Chinese currency manipulation, at least in part out of fear that the Chinese would stop buying our bonds. Yet in the current environment, Chinese purchases of our bonds don’t help us — they hurt us. The Japanese understand that. Why don’t we? Some background: If discussion of Chinese currency policy seems confusing, it’s only because many people don’t want to face up to the stark, simple reality — namely, that China is deliberately keeping its currency artificially weak. The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different. And in a depressed world economy, any country running an artificial trade surplus is depriving other nations of much-needed sales and jobs. Again, anyone who asserts otherwise is claiming that China is somehow exempt from the economic logic that has always applied to everyone else.
So what should we be doing? U.S. officials have tried to reason with their Chinese counterparts, arguing that a stronger currency would be in China’s own interest. They’re right about that: an undervalued currency promotes inflation, erodes the real wages of Chinese workers and squanders Chinese resources. But while currency manipulation is bad for China as a whole, it’s good for politically influential Chinese companies — many of them state-owned. And so the currency manipulation goes on.

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Re: Global Economy

Postby Sanjay M » 14 Sep 2010 08:39

Certainly the left-wing trade unions aren't accepting globalization or China's predatory trade policies.

The only ones who might are George Soros types who will invest in such things to make a buck even while denouncing them. Soros of course denounced Credit Default Swaps, even after himself being a participant in such schemes.

But we can say that the Left are the original globalists in the sense of embracing all sorts of foreign lobbies and international leftist fraternities. Yet now they hypocritically cry foul when they see the capitalists doing the same thing.

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Re: Global Economy

Postby Sanjay M » 14 Sep 2010 10:14

Japanese Buy Lula Bonds as Rates Jump Over 10%: Brazil Credit
September 13, 2010, 11:07 PM EDT

By Tal Barak Harif

Sept. 14 (Bloomberg) -- Japanese investors are pouring more money into Brazilian bonds than any region in the world after Latin America’s biggest economy raised interest rates the most of any nation this year.

...

“The Japanese are probably some of the most aggressive investors because they know that the carry trade is very valuable,” said Luis Fernando Lopes, who helps manage 1.1 billion reais ($643 million) at Patria Investimentos in Sao Paulo. “Rates aren’t going down in the foreseeable future and that’s an interesting play on fixed income.”

...
Japanese Immigrants

Cultural ties between Japan and Brazil are helping fuel demand for the debt, according to Patria’s Lopes. Brazil has about 1.6 million Japanese or people of the nation’s descent, the biggest community outside of Japan, according to the country’s embassy in Brasilia.

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Re: Global Economy

Postby abhishek_sharma » 16 Sep 2010 09:29

Movement on the IMF

http://bosco.foreignpolicy.com/posts/2010/09/15/movement_on_the_imf

The slow-moving standoff between the United States and Europe regarding the composition of the International Monetary Fund's board (see here) shows some signs of coming unstuck. Germany has signaled that the EU is moving toward acceptance of thinner representation on the IMF board:

"We agree in principle that there has to be some sort of reshuffle of the executive directors that allows for a better representation of the dynamic, developing nations but we see this in a slightly bigger framework."

That "slightly bigger framework" might include a firm agreement to keep the existing 24-member board and, perhaps, a U.S. willingness to forfeit the effective veto power it now has over major Fund decisions (these require 85 percent of votes, and the U.S. has about a 17 percent voting share). No word yet from Washington on whether that would ever be considered. For the major developing countries, the sight of Washington and Brussels bidding against each other to loosen the Western grip on the institution must be enjoyable.

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Re: Global Economy

Postby Neshant » 16 Sep 2010 09:38

^^^ Watch out. Here comes an international currency which will surely be a ripoff.

Step 1) Transfer US demonimated debt that China & Japan holds into this SDR facility. Overpriced US debt magically gets transferred into international liabilities.

Step 2) Once China & Japan is off the US back, devalue the dollar and in the process throw all savers of fiat dollars under the bus both in US and elsewhere.

Step 3) Shareholder banks of the federal reserve are made whole by the resulting inflation - at the expense of savers.

Bunch of crooks! This works well from the point of central banking crooks as voters do not have a say at the so called international level of financing & high rolling. The aim is to cut out the people who are being ripped off from having any ability to shut down this racket.
Last edited by Neshant on 16 Sep 2010 09:56, edited 2 times in total.

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Re: Global Economy

Postby abhishek_sharma » 16 Sep 2010 09:50

Why is the WTO protest-free?

http://drezner.foreignpolicy.com/posts/2010/09/15/why_is_the_wto_protest_free

I think that one of the main reasons why the WTO is no longer in the line of fire is that the change in the pattern of world trade over the last decade - combined with a slump in the West and a boom in China and India - makes the idea that global free trade is a tool of western domination look increasingly absurd. The world has got a lot more complicated than that; and even the anti-globalisation movement has had to acknowledge that complexity, if only tacitly. These days, it is the developing nations that are pressing for completion of the Doha Round and the rich countries that are dragging their feet.

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Re: Global Economy

Postby krisna » 16 Sep 2010 23:18

India infrastructure boom to boost world growth: Adviser
India can showcase its massive infrastructure spending and a wider current account deficit at the next G20 summit as its contribution to reviving global economic demand, a senior adviser to the government said on Thursday.

Asia's third-largest economy is looking overseas to import equipment to help build infrastructure projects worth a planned USD 1.5 trillion in the ten years to 2017.

India is planning to spend USD 1.5 trillion on infrastructure in the ten years to 2017 to overhaul its creaking road, railway and power sectors, long seen as a drag on growth in Asia's third-largest economy.
Investment in infrastructure is more import intensive. So it is our expectation that if we follow that approach, even though exports will be a little depressed compared to what they would have been in a booming situation, the current account deficit may widen," Ahluwalia said.
"We are willing to live with that. We think we'll be able to finance it, so it's not actually a big problem, but the key to financing it is that there should be stability and an element of certainty in the global financial system, especially as far as flows to emerging market countries are concerned."

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Re: Global Economy

Postby Chinmayanand » 20 Sep 2010 14:09


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Re: Global Economy

Postby ManjaM » 21 Sep 2010 01:02

http://www.zawya.com/story.cfm/sidZW20100919000068

DOHA (Zawya Dow Jones)--Office vacancies in Dubai's financial center could hit 40% over the next couple of years as oversupply chokes the emirate's already battered property market, a new report from global real-estate consultancy Jones Lang LaSalle, or JLL, said Sunday.

"The inevitable conclusion is that vacancies will continue to rise across the Dubai market in the short term, as the level of office stock increases ahead of demand," JLL said.

Vacancy levels in Dubai's financial center are predicted to peak between 30% to 40% in 2011 and 2012, but then are expected to decline to 10% to 15% by 2014.


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Re: Global Economy

Postby vish_mulay » 21 Sep 2010 07:07

I dont know where to post this PDF file about Global goveranance. Moderators please delete it or post it to appropiate thread.

http://www.acus.org/files/publication_p ... e_2025.pdf

Global Governance 2025:at a Critical Juncture

The United States’ National Intelligence Council (NIC) and the European Union’s Institute for
Security Studies (EUISS) have joined forces to produce this assessment of the long-term prospects
for global governance frameworks. This exercise builds on the experience of the two institutions in
identifying the key trends shaping the future international system. Since the mid 1990s, the NIC has
produced four editions of its landmark Global Trends report. The most recent one, Global Trends
2025: A Transformed World, published in late 2008, noted that momentous change was ahead, with
the gap between increasing disorder and weakening governance structures widening. The EUISS
produced the first EU-level report on the factors affecting the evolution of the international system
in 2006, The New Global Puzzle. What World for the EU in 2025? The report stressed that a
multipolar system is emerging and that matching the new distribution of power with new rules and
institutions will be critical to preserving international peace and stability.


The shift to a multipolar world is complicating the prospects for effective global governance
over the next 10 years. The expanding economic clout of emerging powers increases their
political influence well beyond their borders. Power is not only shifting from established powers
to rising countries and, to some extent, the developing world, but also toward nonstate actors.
Diverse perspectives and suspicions about global governance, which is seen as a Western
concept, will add to the difficulties of effectively mastering the growing number of challenges.
• Brazilians feel there is a need for a redistribution of power from developed to developing
states. Some experts we consulted saw Brazil tending to like “old fashioned”
multilateralism, which is state-centered and does not make room for nonstate actors.
Many of our Chinese interlocutors see mounting global challenges and fundamental defects
in the international system but emphasize the need for China to deal with its internal
problems. The Chinese envisage a “bigger structure” pulling together the various institutions
and groups that have been established recently. They see the G-20 as being a step forward
but question whether North-South differences will impede cooperation on issues other than
economics.
• For participants from the Persian Gulf region, the question is what sort of global institutions
are most capable of inclusive power sharing. They bemoaned the lack of strong regional
organizations.
The Indians thought existing international organizations are “grossly inadequate” and
worried about an “absence of an internal equilibrium in Asia to ensure stability.” They felt
that India is not well positioned to help develop regional institutions for Asia given China’s
preponderant role in the region.
• Russian experts we consulted see the world in 2025 as still one of great powers but with
more opportunities for transnational cooperation. The Russians worried about the relative
lack of “transpacific security.” The United States, Europe, and Russia also have scope for
growing much closer, while China, “with the biggest economy,” will be the main factor in
changing the world.
• The South Africans assessed that globalization appears to be strengthening regionalization as
opposed to creating a single global polity. They worried that the losers from globalization
increasingly outnumber the winners.
In addition to the shift to a multipolar world, power is also shifting toward nonstate actors, be
they agents or spoilers of cooperation. On a positive note, transnational nongovernmental
organizations, civil-society groups, churches and faith-based organizations, multinational
corporations, other business bodies, and interest groups have been equally, if not more effective
than states at reframing issues and mobilizing publics—a trend we expect to continue. However,
hostile nonstate actors such as criminal organizations and terrorist networks, all empowered by
existing and new technologies, can pose serious security threats and compound systemic risks.
Many developing countries—which are likely to play an increasing role at the regional and
global level—also suffer from a relative paucity of nonstate actors, that could help newly
emerging states and their governments deal with the growing transnational challenges.

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Re: Global Economy

Postby Prem » 22 Sep 2010 05:00

http://www.bloomberg.com/news/2010-09-2 ... sting.html
U.S. Loses No. 1 to Brazil-China-India Market in Investor Poll
In the September poll of 1,408 investors, analysts and traders who are Bloomberg subscribers, respondents rate the U.S. fourth for potential returns over the next year, behind Brazil and China, tied for first, and India, in third place. The U.S. economic situation “is obviously unsustainable, and the concerted attempt to suspend disbelief is playing increasingly poorly abroad,” says poll respondent Eric Kraus, chief strategist for Otkritie Brokerage House in Moscow. “One can delay, but no one can forestall the unwind of a multidecade credit bubble.” Economic reports released since the June poll show U.S. GDP growth slowed to 1.6 percent in the second quarter from 3.7 percent in the first quarter. In the final quarter of last year, GDP grew at a 5.0 percent annual rate.
Expectations for U.S. GDP growth next year have dropped to a median forecast of 2.5 percent in September from 2.9 percent in June, according to Bloomberg’s monthly survey of economists. Since the June survey, U.S. stock markets have been on the rise. The Standard & Poor’s 500 Index has risen 3.62 percent since the last investor poll was completed June 3. That’s not as much as Brazil’s Bovespa Index, which is up 10.56 percent and India’s Bombay Stock Exchange Sensitive Index, which is up 10.44 percent. The U.S. stocks still did better than China’s Shanghai Stock Exchange Composite Index, which has risen 1.41 percent since June 3. “I think the U.S. will get back on track, but not in the next 6-12 months,” says poll respondent Thomas Knudsen, a senior trader with OW Supply & Trading in Copenhagen.

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Re: Global Economy

Postby Sanjay M » 27 Sep 2010 02:03

Bloomberg
Record Ruble Bond Sales Lure Deutsche Bank, HSBC: Russia Credit
September 26, 2010, 4:37 PM EDT

By Denis Maternovsky and Jason Corcoran

Sept. 27 (Bloomberg) -- The biggest increase in ruble bond sales is spurring underwriters from Deutsche Bank AG to HSBC Holdings Plc to recruit bankers to help manage issues for the first time in at least two years as Russia’s economy rebounds.

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Re: Global Economy

Postby Prem » 29 Sep 2010 00:55

Trade War Tuesday: China, Japan and U.S. at Odds
http://seekingalpha.com/article/227422- ... -s-at-odds

War does not determine who is right, only who is left. - Bertrand Russell


China is fighting a trade war on two fronts as they are threatening to retaliate against US businesses operating in China if Congress passes legislation intended to force a revaluation of the Yuan. The House of Representatives is set to consider legislation this week that would let companies petition for higher duties on imports from China to compensate for the effects of a weak yuan. Forcing China to raise the value of its currency may create 500,000 jobs in the U.S., most in manufacturing at above-average wages, according to C. Fred Bergsten, director of the Peterson Institute for International Economics in Washington. China’s currency, which is undervalued by as much as 25 percent, is the most important trade issue facing the U.S., he said in testimony last week
Banks borrow money at 0.25% FROM THE GOVERNMENT and they lend it back TO THE GOVERNMENT for 1-2.5% and THAT is how the US can give the banks over $4Tn of bailouts and stimulus WITHOUT CREATING A SINGLE JOB

Image

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Re: Global Economy

Postby Neshant » 29 Sep 2010 11:37

I got an easier explaination :

Thin air --> $

Quantitative easing : Its just printing money out of thin air

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Re: Global Economy

Postby Manu » 30 Sep 2010 12:09

France proposes slashed spending in new budget
By GREG KELLER

PARIS

The French government unveiled Wednesday a 2011 budget that aims to tighten the deficit sharply in the face of pressure from both its European partners and international investors.

The 2011 budget presented in parliament includes euro40 billion ($54 billion) in spending cuts and extra revenue that Budget Minister Francois Baroin says will rein in the country's deficit to 6 percent of gross domestic product next year from 7.7 percent in 2010.

"This is a historic budget," Baroin said. "A drop in the deficit by 1.7 percentage points in one year has not been seen in fifty years," he said.

To meet its goal, the government is also counting on economic growth picking up to 2 percent next year from 1.5 percent in 2010.

Finance Minister Christine Lagarde said she had "no hesitation" in sticking with that forecast, which is above that of many private sector economists as well as the European Commission.

France has pledged to its European partners to bring down its deficit to 3 percent of GDP by 2013. While Germany has set 2016 as a date to balance its budget, Baroin would only say that France will "probably take a little longer" to do the same. France's debt meanwhile is forecast to continue rising to almost 88 percent of GDP in 2012 from 83 percent this year, and to begin falling beginning in 2013.

Much of the spending cuts in next year's budget come from a rollback in stimulus measures France introduced during the financial crisis. Another euro10 billion will be saved by eliminating tax breaks, including those for so-called "triple-play" internet, television and telephone contracts and a break for newly wedded couples.

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Re: Global Economy

Postby abhischekcc » 01 Oct 2010 12:55

Quantitative easing is what we do at 7 am in the morning :mrgreen:

When we release a quantity, it eases us.

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Re: Global Economy

Postby joshvajohn » 02 Oct 2010 11:47

http://www.dinamani.com/edition/story.a ... EO=&Title=

This is an interesting article in Tamil on Globalization which exposes the present conditions of Global Economy. Let me translate some part of the article.

First While Western countries continue to develop restrictions for the entry of Indian Engineers and technical goods and other things into their country by developing new new quality control. So the protectionism is more used by the Western countries using one or other reasons.

At the same time there is attempt to bring in every good even toxic in India. Without any restrictions there are a lot of importing into India is going on.


Even allowing new medicines on Indian Children is a dangerous thing.

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Re: Global Economy

Postby akashganga » 02 Oct 2010 21:45

http://financialsense.com/contributors/ ... rket-rally

Interesting article. I believe the US stocks are experiencing bear market rally. When the US bears take down US stocks below the March 09 lows our own Bombay sensex may crash 50% or more. My two paise.

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Re: Global Economy

Postby abhishek_sharma » 12 Oct 2010 01:47

An old article by Paul Krugman published in Foreign Affairs

Competitiveness: A Dangerous Obsession

http://www.ucema.edu.ar/~agaletto/krugman_competitiveness.pdf

The view that nations compete against each other like big corporations has become pervasive among Western elites, many of whom are in the Clinton administration. As a practical matter, however, the doctrine of "competitiveness" is flatly wrong. The world's leading nations are not, to any important degree, in economic competition with each other. Nor can their major economic woes be attributed to "losing" on world markets. This is particularly true in the case of the United States. Yet Clinton's theorists of competitiveness, from Laura D. Andrea Tyson to Robert Reich to Ira Magaziner, make seemingly sophisticated arguments, most of which are supported by careless arithmetic and sloppy research. Competitiveness is a seductive idea, promising easy answers to complex problems. But the result of this obsession is misallocated resources, trade frictions and bad domestic economic policies.

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Re: Global Economy

Postby Prem » 21 Oct 2010 04:54

http://www.bloomberg.com/news/2010-10-1 ... rkets.html
Credit-default swaps on bonds sold by Brazil, Russia, India and China are closing in on those tied to the world’s largest economies, which are piling on debt in an attempt to stoke growth.
The average cost of contracts protecting debt of the so- called BRICs dropped to 41.4 basis points more than the price of swaps on the Group of Seven countries and last week reached the lowest on record. The extra cost to insure the emerging-market nations’ bonds shrunk from 362 basis points, or 3.62 percentage points, in March 2009. Record demand for emerging-market bonds is driving down the relative yields that investors seek to own the debt. Fixed- income investors are wagering nations including Brazil and China will continue to fuel the global recovery while the U.S., Japan and some of Europe’s biggest countries wrestle with budget deficits and sluggish growth. Developing nations will grow 6.4 percent next year, while developed economies will expand 2.2 percent, the International Monetary Fund said last week.
“Emerging markets don’t have the problems that developed markets are having right now,” said Mikhail Foux, a credit strategist at Citigroup Inc. in New York. “They don’t have the heavy debt load. They’re growing. A lot of them export commodities, and the price of commodities is increasing. Their populations are young and growing. So people feel really good about emerging markets in general.”
The average cost of swaps on BRIC nations has fallen 9 basis points since the start of the year to 116 basis points, while the G-7 average jumped 15 to 74, according to data provider CMA. The G-7 average includes swaps on the U.S., U.K., France, Germany, Italy and Japan. Swaps on Canada are not actively traded.

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Re: Global Economy

Postby Prem » 25 Oct 2010 03:57

http://yglesias.thinkprogress.org/2010/ ... dependent/
The USA Is Not Very Import-Dependent

So, you give me an envelop full of cash, I go and buy a pair of shoes made in China, and a TV set made in Korea. That will certainly stimulate China and Korea; though it’s not quite clear to me what they are going to with that cash.I think this reflects a widespread misunderstanding about the impact of trade on the United States economy. Not misunderstanding about the merits of trade even, just misunderstanding about the extent of trade. The United States is a very big country and consequently we’re actually a country that doesn’t trade all that much compared to most developed nations. You can see this if you look at imports as a share of GDP in the top ten economies (GDP calculated at market exchange rate levels here because we’re talking trade):

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Re: Global Economy

Postby wig » 30 Oct 2010 16:56

http://curiouscapitalist.blogs.time.com ... ing-world/

India vs China: Which is the best role model for the developing world
More balanced growth. Whenever economists talk about China, they focus on the need to “rebalance.” That means China is too dependent on exports and investment for its growth, and needs to increase the role of private consumption to make its growth more balanced. India is already where China wants to be. Consumer spending plays a much bigger role in India's economy than in China's. Thus India doesn't have to implement policies that distort the global economy (like China does with its currency regime). India, in fact, buys more from the rest of the world than it sells. India's growth is thus less susceptible to shocks from the international economy.

More rational companies and banks. Under China's “state capitalism,” the state-owned banking system and big companies can easily fall victim to government mandates and policy priorities, leading to problems like asset bubbles, excess capacity and a weakened financial system. India's companies are more focused on profitability than China's (as you can see from this chart). Historically India's banks tend to have lower levels of bad loans, and though China's nonperforming loan ratio has improved dramatically in recent years, serious concerns remain that the big government-sponsored credit boom of 2009, aimed at boosting growth during the Great Recession, could eat into Chinese banks' balance sheets in coming years. The private sector in India also has a lower level of debt. According to data kindly provided to me by Fitch, bank credit to the private sector in China reached 148% of GDP in 2009 compared to only 54% in India. I admit I'm making a sweeping generalization here -- China does have its share of smart companies, from industrial giants like Geely to start-ups like Tencent. But I think it's fair to argue that India's corporate and banking sectors are more professional and healthier than China's.

Democracy. Few things annoy me more than having to sit through mindless praise of China's authoritarian political system, especially from Westerners who don't live under one. Many businessmen believe that authoritarianism in China has been a necessary factor behind the economy's rapid growth. But India proves that countries don't need dictators to create rapid development and gains in human welfare. India's raucous democracy has been able to produce one of the world's best records of economic growth over the past two decades – and preserve people's civil liberties in the process. I'm certain to get comments on this post complaining that India doesn't have a true democracy, that it's all corrupt and unjust. But people do vote and governments do change in India, and that means the vote of the average person does count. Perhaps the convoluted nature of India's democratic policymaking is one reason why the economy doesn't grow as quickly as China's. But would you sacrifice human rights

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Re: Global Economy

Postby svinayak » 30 Oct 2010 23:11

The author in this article and some economists seem in complete ignorance of the fact that China has the largest automobile market, the largest cell phone market, the largest TV market, the largest computer market, the largest agriculture product market... In fact it is hard to find that China is not number 1 or number 2 market of any significant products. If this is not consumption, what else should be? In contrast, the automobile market in India is a pigmy (15% of chinese market) in comparison with China's. India market sizes are lagging behind China's in almost every single category, and is praised as consumption driven. The reason for that is lack of production competiveness in India, and there is not much to export. I think that Schuman and Summer feel too much heat from China, and cling to a lesser opponent for the relief. A country with economic growth of 8% but still has a children malnutrition rate of 43% is model of epic disaster, not envy.


-----------
It is totally valid to question the long-term sustainability of China's rise, as the extreme centralization of power can accelerate decline as well as growth. It is total lunacy, however, to claim that India will serve as the model of economic development for the world.

Throughout the human history, the most advanced civilization has been either the west or China, never anywhere else. The main reason is that only these two regions developed a tradition of strong central authority that actually cares about governing instead of conquering. India has no such tradition, and the many ills (corruption, iliteracy, social caste division, poverty, short-term focus, etc.) are simply consequences of not developing a proper advanced culture in its history. To compare India with the true leaders of mankind just because it finally reaches 8% of economic growth shows, once again, how shallow and inept American economists are.
For an in-depth comparison among cultural developments of major civilization, read "Why the West rules -- for now".



Read more: http://curiouscapitalist.blogs.time.com ... z13rmL5DYV

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Re: Global Economy

Postby Suraj » 30 Oct 2010 23:33

It's just as well that people are critiquing the whole "consumption driven growth in India" story. That suggestion has become almost a mantra, without anyone seriously trying to analyze the claim in more detail. Consumption driven growth where production levels are still struggling to meet demand, fixed asset investment is a long way from satisfying what's needed, and volume of imports exceeding exports, is not a particularly great situation. Our BoP remains positive primarily because of capital inflows.

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Re: Global Economy

Postby Vipul » 31 Oct 2010 02:51

Suraj, any idea what is the gap in BOP if we add India's Services Exports and Remittances(Indian's sending back Foreign exchange,not FDI/FII).

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Re: Global Economy

Postby wig » 31 Oct 2010 17:22

this article in the german newspaper spiegel is concerning the Chinese Government policy of restricting exports of rare earths. Global economic powerhouses in japan, germany, europe at large are facing a shortage of rare earths. The chinese appear to desire that high tech manufacturing should be based on chinese soil. but for the high tech manufacturers this raises copyright isses. this is likely to raise new avenues for recycling units.
Worries over a bottleneck in rare-earth metals from China, which are needed in the production of high-tech equipment, have dominated a conference on raw materials in Berlin this week. Beijing says export quotas are almost filled for the year. German Economics Minister Rainer Brüderle has called for more recycling and greater cooperation between the EU and the US to fill the gap
Other German industrial heads claimed China was using its raw materials advantage to position itself politically. "Rare-earth exports from China could fall even further, even by 30 percent next year
The supply shortages have spurred new mining projects in Australia, California, Vietnam and eastern Europe, according to The Economist. Gary Litman, vice president for Europe and Eurasia at the US Chamber of Commerce, argued at the Berlin conference on Tuesday that America and the EU should join forces to solve the problem. "The US has the resources and together with our EU partners, we can produce anything we want," he said.


Brüderle seemed to agree, saying "we have more clout when we work together on the international stage," according to the Berlin daily Der Tagesspiegel. He said Western governments should "agree on rules at the WTO that will ensure a minimum of competition on world raw-materials markets."

But Brüderle, a member of the business-friendly Free Democrats (FDP), also stressed that the problem should be solved by markets, rather than through politics. "Business needs to rely on itself to ensure a supply of raw materials, now and in the future," he said.

Recycling could be the most important domestic source of these metals, he added. "We need to utilize the valuable potential of our own residual waste," he said. "We need more intelligence on (recycling)."

http://www.spiegel.de/international/bus ... 06,00.html

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Re: Global Economy

Postby sourab_c » 01 Nov 2010 06:12

Restricting rare metal exports to Japan will prove to be a foreign policy blunder for China. I fail to comprehend what they were trying to do by blocking its exports for a couple of weeks? Did the ban on exports result in any sort of diplomatic, strategic, economic or political advantage?

The only thing that has happened is that the world now knows what the future holds as far as dependency on China is concerned. They are now looking for alternative means for rare metals and rest assured, a stable international supply will be established very soon.

Industries will now think twice before buying rare metals from Chinese companies.

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Re: Global Economy

Postby wrdos » 01 Nov 2010 07:28

- it is rare earth, not rare metal
- A large sector of Japanese industry depends on rare earth as an essential input
- Rare earth export consists only a tiny fraction of Chinese economy, in fact negligible and the Chinese government has planned to stop its export.
- China and Japan were shouting at each other at that time, rare earth was used as a signal to Japan by then
- Even Sino-Japanese relationship had no trouble at that time, the Chinese government will stop rare earth sooner or later; it was a decided policy.

sourab_c wrote:Restricting rare metal exports to Japan will prove to be a foreign policy blunder for China. I fail to comprehend what they were trying to do by blocking its exports for a couple of weeks? Did the ban on exports result in any sort of diplomatic, strategic, economic or political advantage?

The only thing that has happened is that the world now knows what the future holds as far as dependency on China is concerned. They are now looking for alternative means for rare metals and rest assured, a stable international supply will be established very soon.

Industries will now think twice before buying rare metals from Chinese companies.

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Re: Global Economy

Postby abhischekcc » 01 Nov 2010 09:41

wrdos wrote:- it is rare earth, not rare metal
- A large sector of Japanese industry depends on rare earth as an essential input

It is this kind of obfuscation that prevents you from seeing this episode between China and Japan as nothing short of an unmitigated disaster. China has lost a lot of goodwill and trust in the world.

- Rare earth export consists only a tiny fraction of Chinese economy, in fact negligible and the Chinese government has planned to stop its export.
- China and Japan were shouting at each other at that time, rare earth was used as a signal to Japan by then
- Even Sino-Japanese relationship had no trouble at that time, the Chinese government will stop rare earth sooner or later; it was a decided policy.

Keep pumping the lie that this was just policy as usual and that the conflict with Japan had nothing to do with the decision to restrict the supply. The world sees it otherwise and will react accordingly, as Japan is doing. They have already signed an agreement with Vietnam for rare earth minerals.

This episode will make it easier for countries like US, EU, etc (free marketers) to consider and slap trade restrictions on China. It makes US decision not to sell Unocal to China as prescient, whereas it was held up as an example of American hypocrisy.

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Re: Global Economy

Postby Suraj » 01 Nov 2010 09:55

Vipul wrote:Suraj, any idea what is the gap in BOP if we add India's Services Exports and Remittances(Indian's sending back Foreign exchange,not FDI/FII).

There doesn't seem to be any listing of services export data anywhere, except partial data from the RBI's mid-year and end year macroeconomic data on their website. Unlike merchandise, there's no customs data for services exports. There's some more on BoP from the economic survey at this link (pdf).

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Re: Global Economy

Postby abhischekcc » 01 Nov 2010 12:13

Acharya wrote:
The author in this article and some economists seem in complete ignorance of the fact that China has the largest automobile market, the largest cell phone market, the largest TV market, the largest computer market, the largest agriculture product market... In fact it is hard to find that China is not number 1 or number 2 market of any significant products. If this is not consumption, what else should be? In contrast, the automobile market in India is a pigmy (15% of chinese market) in comparison with China's. India market sizes are lagging behind China's in almost every single category, and is praised as consumption driven. The reason for that is lack of production competiveness in India, and there is not much to export. I think that Schuman and Summer feel too much heat from China, and cling to a lesser opponent for the relief. A country with economic growth of 8% but still has a children malnutrition rate of 43% is model of epic disaster, not envy.


-----------
It is totally valid to question the long-term sustainability of China's rise, as the extreme centralization of power can accelerate decline as well as growth. It is total lunacy, however, to claim that India will serve as the model of economic development for the world.

Throughout the human history, the most advanced civilization has been either the west or China, never anywhere else. The main reason is that only these two regions developed a tradition of strong central authority that actually cares about governing instead of conquering. India has no such tradition, and the many ills (corruption, iliteracy, social caste division, poverty, short-term focus, etc.) are simply consequences of not developing a proper advanced culture in its history. To compare India with the true leaders of mankind just because it finally reaches 8% of economic growth shows, once again, how shallow and inept American economists are.
For an in-depth comparison among cultural developments of major civilization, read "Why the West rules -- for now".



Read more: http://curiouscapitalist.blogs.time.com ... z13rmL5DYV


The bolded part is a completely false statement. India has been the largest economy in the world for 4000 years till 1000AD. After that for 700 years, India and China has exchanged positions 1 and 2. Only in the past 300 years have western countries held any position 1 or 2.

So for 90% of known history, India has been number 1, China and some western country has held that position for only about 5% each. The period of decline of India coincides with the Islamic period. The period of India's extreme poverty coincides with the Xtian/western period.

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Re: Global Economy

Postby Rahul M » 01 Nov 2010 21:47

I've split the last few posts about wrdos' understanding that there was no India ( :lol: ) before the brits to create this thread. viewtopic.php?f=24&t=5713

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Re: Global Economy

Postby Prem » 01 Nov 2010 22:38

http://economictimes.indiatimes.com/opi ... 849890.cms
World needs the skills of Indian bankers: PwC’s Nigel Vooght
( Good old fashioned Baniya in Demand Internationally BINDI)

The dynamics of the global financial market is changing rapidly post the credit crisis. There are different voices on which direction the sector should move to avoid a repeat of 2008. Some believe that the planned regulations from the US to Europe won’t be able to avert another crisis since it doesn’t address the key “too big to fail” issue. Others say that hasty rules could cripple the recovery which is faltering. ET met Nigel Vooght, PricewaterhouseCoopers’ new global financial services leader on his first visit to India. Vooght believes that Basel 3 may be barking at the wrong tree. It addresses capital issues, but fails to address liquidity issues that were the cause of crisis. Also, he believes that Indian banks should stick to their shores and anything overseas may be adventurous. Excerpts from the interview:
The new Basel 3 capital requirement norms have attracted an absorbing debate. While the likes of Citigroup CEO Vikram Pandit objecting to the Basel’s use of credit scores to measure risk for borrowers, European Central Bank governing council member Mario Draghi backed the proposal to increase capital requirement for banks. What is your take on the new rules?
I think most banks at the moment would say they could agree to those new norms. The real issue about Basel 3 is how it reflects the economic times you are in.
The Bank of England governor said recently that actually it is not going to work because when you are in good times, you have to have more capital and, therefore, you don’t have the money to lend to your customers when they actually wanted to grow the economy. How are you going to use the capital in bad times? Does it work as a concept?
I don’t think we understand fully enough as most banks would exceed the capital ratios. It is difficult to say how you would put the changes in practice when the economy is moving. You create a buffer in good times but the question is how do you use the buffer to stimulate the economy in bad days? I think it is a good challenge but we don’t have the answer yet. It is an interesting conundrum.
Do you think the new capital norms would be effective to avert financial crisis? Capital was not the problem in the current crisis. Liquidity was the issue. Banks had grown more than the economy they operated in. They became bigger than their GDP. That was not sustainable and then money began to dry up. Lehman was actually technically solvent on the balance sheet basis on the day it went burst. It was a liquidity mismatch. Like Basel 2, Basel 3 also did not try to address the liquidity issue

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Re: Global Economy

Postby Prem » 01 Nov 2010 22:43

http://www.cnbc.com/id/39952335
Global manufacturing shows signs of strength ( Asia onlee)

China's official purchasing managers' index (PMI) rose to a six-month high in October of 54.7 from 53.8 in September, easily beating market forecasts of 52.9.
The strength of China's official PMI was especially striking because the index normally heads down in October, said Yu Song and Helen Qiao, economists at Goldman Sachs."The fact that the PMI went up despite this seasonal bias suggests real activity growth was likely to have been exceedingly strong in October," they said in a note.The survey showed manufacturers continued to run down stocks last month to meet rising domestic orders."These readings bode well for a recovery of output in coming months," Ting Lu at Bank of America Merrill Lynch told clients.
A companion PMI produced by Markit for HSBC painted a similar picture, rising to 54.8 from 52.9 -- one of the largest month-on-month rises in the history of the survey.Manufacturing in India -- Asia's other emerging powerhouse -- put in a performance every bit as strong as China's.India's manufacturing was supported by strong domestic consumption. The HSBC Markit PMI for India, Asia's third-largest economy, rose to 57.2 in October from 55.1 in September.Mirroring a report from Japan last Friday, South Korean manufacturing shrank for the second month in a row as the HSBC/Markit PMI fell to 46.75 in October -- the lowest since February 2009 -- from 48.8 in September.

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Re: Global Economy

Postby paramu » 01 Nov 2010 22:54

Prem wrote:Also, he believes that Indian banks should stick to their shores and anything overseas may be adventurous.

What is his takleef here? If Indian banks fold up because of overseas issues, it is their problem. Or, is he concerned that due to the stability of Indian banks, because they operate under strict guidelines from RBI, they may attract more depositors overseas worsening liquidity crisis for TFTA banks?

I know few Indians in Bay Area who already transferred some of their deposits to SBI, San Jose branch, after recent bank crisis. It can only increase if another bank crisis erupts.

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Re: Global Economy

Postby Prem » 02 Nov 2010 07:54

China Boss in Peru on $50 Billion Peak Bought for $810 Million
http://www.businessweek.com/globalbiz/c ... 682546.htm
Great powers have always reached beyond their borders for wealth and resources, including the U.S. as it built the world's largest economy. Today, China's purchases of copper, iron, oil and other materials pour cash into resource-producing countries like Peru, while its exports hold down prices for consumers around the world. "A lot of countries are benefiting" from China's demand, says Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington and an author of the 2008 book, "China's Rise: Challenges and Opportunities." "You don't hear so many complaints from the countries that are the recipients of the Chinese investment." 50,000 Skyscrapers
More than half of China's 1.3 billion people live in rural areas. Over the next 15 years, the country will need 50,000 skyscrapers, 170 mass transit systems and urban housing for 350 million people as it develops the interior, according to a 2009 study by the McKinsey Global Institute, a research arm of New York-based McKinsey & Co. That represents a potential doubling of the domestic market for autos, appliances, televisions and other consumer goods. Copper—first smelted over wood fires 10,000 years ago—is at the center of it all, conveying the country's electrical pulse and providing the nervous system for the computers, dishwashers and microwaves China makes for the world. Beijing-based Aluminum Corp. of China, known as Chinalco, bought the mineral rights in 2007 to the mountain in central Peru called Toromocho—Spanish for bull without horns—one of the world's richest copper claims. Chinalco plans to begin mining in 2013, subject to federal environmental approval.


(China's strategy for accumlating, controlling commodity)


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