Insubordination by top military officers to civilian authority is unacceptable in America. As presidential biographer Robert Dallek argued in today’s NYTimes, McChrystal’s defiance of his civilian masters may warrant dismissal. However, there is another important issue here: how hubris on the campaign trail can lead to sub-par policy choices. President Obama’s decision early in his administration […]
An excellent New York Times article yesterday discussed how democratic politics and bureaucracy in India prevent the elimination of infrastructure bottlenecks, especially in transportation. The article focused on India’s railway system, where freight rates are expensive, travel times excessive, and traffic volumes inadequate to the task of fostering strong economic growth…of the pace we see in China. […]
I have long said in my China posts that China does not have a lot of options right now besides buying US treasuries. The AP article below describes how China has increased its purchases of US debt in recent months. If you are going to hold your currency undervalued in order to run massive current account […]
As noted in an earlier post, inflation is a sensitive issue in India. In addition to worrying about over-heating, today a preoccupation in many Emerging Market Economies (e.g. China and Brazil), Indian politicians are concerned that when food prices rise, millions may starve. JPMorgan below analyzes the latest inflation report, including double-digit price hikes in the food category. Moreover, with only modest capital expansion going on […]
In an earlier post, I discussed a theory I developed that democratic countries with divided, often coalition, governments generally produce weaker public finances than countries where two dominant parties alternate in power. India is the posterchild for the former, with government debt at about 80% of GDP, very high for an emerging market economy. In order to […]
Henrique Meirelles, Brazil’s central bank president, helped save President Lula’s hide back in 2003 when the bond markets priced Brazilian sovereign bonds at default levels. He was a key pillar of Lula’s credible economic team, which convinced markets that the firebrand leftist was not going to spoil Lula’s predecessor’s hard work crushing pernicious hyperinflation. Lula had the […]
Turkish President Gul pictured with the world’s most notorious extremist, who is quoted in the article below as saying that the Zionists are “holding up the flag of the devil itself…” and are “the backbone of the dictatorial world order,” taking a page again from Julius Streicher’s Der Stuermer. In its drive to be a regional power, […]
Interesting Economist article (below) discussing whether other Asian currencies — the Korean won, Thai Baht, Singapore dollar, Malaysian Ringgit, New Taiwan dollar, Vietnamese dong, Indian rupee, Indonesian rupiah — track the Chinese yuan in order to maintain competitiveness in US markets relative to China as well as access to the Chinese market. There have been […]
Benjamin Netanyahu subscribes to the George W. Bush school of anti-diplomacy. It’s nice to blow off steam, especially when you are in the right. But does brandishing your sword make an effective foreign policy? Ask Kaiser Wilhelm II, the arch-villain of World War I, whose bluster and belligerence led to the encirclement of Germany, his gravest fear. Ask most Americans after W left […]
This is a guest post by Patrick Frost, a Senior Blogger at FPA: In the past couple days, the world’s great powers have been busy courting and challenging the Middle East’s prospective regional power, Iran. To most people’s surprise, the leaders of Turkey and Brazil reached an agreement with Tehran to transport and hold about […]
How unwieldy Europe is to manage! How difficult it is for EU institutions to act… Bruce Kasman, Chief Economist of JPM, whom I remember from my years at the New York Federal Reserve in the early 90s where he was an international economist, said this morning in a conference call that the main risk to […]
Jobs expanded in April, with the American private sector back with a vengeance. But medium-term risks abound, especially regarding very weak public finances at the federal, state and local levels due to the massive economic rescue enacted last year. Governments at every level in this country must put forward credible deficit-reduction plans, albeit cautiously, or this […]
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