Brazil’s capital controls and the law of unintended consequences

June 5, 2013

Brazilian economic policy is fast becoming a shining example of the law of unintended consequences. As activity fades and inflation picks up, the government has tried several different measures to fix the economy – and almost every time, it ended up creating surprise side-effects that made matters worse. Controls on gasoline prices tamed inflation, but opened a hole in the trade balance. Efforts to reduce electricity fares ended up curbing, not boosting, investment plans.

Best days over for emerging market local currency bonds?

May 15, 2013

Local currency bonds in emerging markets, like most financial assets, have enjoyed a solid rally on the back of ample global central bank liquidity. But the good times may be coming to an end, according to a report from Capital Economics. That’s because there’s only so much boost the securities can get out of the monetary easing efforts of the Federal Reserve and other major central banks, the firm says.

from Global Investing:

Show us the (Japanese) money

April 30, 2013

Where is the Japanese money? Mostly it has been heading back to home shores as we wrote here yesterday.

Not again, please! Brazil and India more vulnerable now to another crisis

April 25, 2013

After bad economic news from Germany, China and the United States over the past few weeks, here are two more. Brazil and India, two of the world’s largest emerging economies, are increasingly vulnerable to another crisis or to the eventual end of the ultra-loose monetary policies in developed economies after five years of a severe global slowdown.

Investors call for interest rate hike in Brazil

March 21, 2013

Two analyses published this week highlight how alarmed investors are about inflation in Brazil.

Losing the gold medal in football – and economics

August 14, 2012

Noe Torres and Jean Luis Arce contributed to this post. Blog updated Sept 5 to add Q2 GDP data for Brazil and Mexico.

Nigeria’s mighty economy

April 26, 2012

In a world of slowing growth (China), minimal growth (United States) and outright recession (Britain),  it is startling to hear that Nigeria’s economy is likely to shoot up by 40 percent in the second quarter this year. Yep. Forty percent. Four – O.

from Global Investing:

EM growth is passport out of West’s mess but has a price, says “Mr BRIC”

January 23, 2012

Anyone worried about Greece and the potential impact of the euro debt crisis on the world economy should have a chat with Jim O'Neill. O'Neill, the head of Goldman Sachs Asset Management ten years ago coined the BRIC acronym to describe the four biggest emerging economies and perhaps understandably, he is not too perturbed by the outcome of the Greek crisis. Speaking at a recent conference, the man who is often called Mr BRIC, pointed out that China's economy is growing by $1 trillion a year  and that means it is adding the equivalent of a Greece every 4 months. And what if the market turns its guns on Italy, a far larger economy than Greece?  Italy's economy was surpassed in size last year by Brazil, another of the BRICs, O'Neill counters, adding:

from Global Investing:

Hungary’s Orban and his central banker

December 21, 2011

"Will no one rid me of this turbulent central banker?"  Hungarian Prime Minister Viktor Orban may not have voiced this sentiment but since he took power last year he is likely to have thought it more than once.  Increasingly, the spat between Orban's government and central bank governor Andras Simor brings to memory the quarrel England's Henry II had with his Archbishop of Canterbury, Thomas Becket, over the rights and privileges of the Church almost 900 years ago. Simor stands accused of undermining economic growth by holding interest rates too high and resisting government demands for monetary stimulus.  The government's efforts to sideline Simor are viewed as infringing on the central bank's independence.

from Global Investing:

A shoe, a song and the promise of the West

December 16, 2011

I found myself at Selfridges this week, specifically in what the London retailer says is the world's largest shoe department.