MacroScope

Holdouts against a settlement of Argentina’s defaulted debt are opening a new front in their campaign for a juicy payout more than a decade after the biggest sovereign default on record.

Lobbyists for some of the investors who hold about $6 billion in Argentine debt are in London to persuade Britain to follow the lead of the United States, which last September decided to vote against new Inter American Development Bank and World Bank loans for Buenos Aires.

Washington believes Argentina, a member of the Group of 20, is not meeting its international obligations on a number of fronts. Apart from the dispute with private bond holders, Argentina has yet to agree with the Paris Club of official creditors on a rescheduling of about $9 billion of debt. It has refused to let the International Monetary Fund conduct a routine health check of the economy. And it has failed to comply with the judgments of a World Bank arbitration panel.

In short, Argentina is not playing by the rules of the international game, says Rob Shapiro, a former U.S. under secretary of commerce, who is now co-chair of the Argentina Task Force America.

According to its website,  the group’s aim is to “vigorously pursue” a “just and fair” reconciliation of the Argentine government’s default in December 2001 on some $95 billion of debt.

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:

"How Italy plays out will be important but people should not exaggerate its global importance.  In the next 12 months the four BRICs will create the equivalent of another Italy."

Emerging economies are cooling now after years of turbo-charged growth. But according to O'Neill, even then they are growing enough to allow the global economy to expand at 4-4.5 percent,  a faster clip than much of the past 30 years. Trade data for last year will soon show that Germany for the first time exported more goods to the four BRICs than to neighbouring France, he said.

Some fascinating data about the growing power of emerging markets, particularly the BRICs, was on display at the OECD's annual investment conference in Paris this week. Not the least of it came from MIGA, the World Bank's Multilateral Investment Guarantee Agency, which tries to help protect foreign direct investors from various forms of political risk.

MIGA has mainly focused on encouraging investment into developing countries, but a lot of its latest work is about investment from emerging economies.

This has been exploding over the past decade. Net outward investment from developing countries reached $198 billion in 2008 from around $20 billion in 2000. The 2008 figure was only 10.8 percent of global FDI, but it was just 1.4 percent in 2000.

The good news for Africa when the global financial meltdown began was that its financial markets were generally so far behind the rest of the world that groups such as the World Economic Forum reckoned that there was little or no danger. A new paper, posted on the economic research website VoxEU, suggests that that might be a bit too optimistic.

Tilburg University economist and former World Bank official Thorsten Beck – along with the World Bank’s Michael Fuchs and Marilou Uy —  write that despite shallow financial markets, sub-Saharan Africa is unlikely to escape the repercussions of the financial crisis.

Indeed, they argue that the crisis is threatening what little progress has been made to reverse what they call the alarming superficiality of African finance.

Hiroshi Watanabe, president of the Japan Bank for International Cooperation, saw his share of dollar buying intervention during decades at the nation's finance ministry.  But the market veteran says despite prevalent talk recently, a shift away from the greenback as the world's reserve currency may be great in theory, but like the language of Esperanto short on daily practitioners.

"Esperanto is a very good language, but no community uses it in its daily life, " Watanabe told the Reuters Japan Investment Summit.

"That's the same situation that applies to the currency... I don't see any other currency that can take the position to replace the key U.S. dollar."

Robert Zoellick, President of the World Bank, and a man who believes that 2009 will be a "dangerous year", will be speaking on March 31st and has agreed to take questions from Reuters readers.

Zoellick has been outspoken during the current economic crisis predicting the first shrinking of the economy since the '30s, warning that increased government spending will simply create a 'sugar high' until banks' toxic assets are dealt with properly, and urging a tougher stand against protectionism.

But the World Bank's primary focus is on helping developing nations and alleviating  poverty. Earlier this month it published research showing that the spreading crisis will push 46 million more people into poverty in 2009 on top of 130-155 million pushed into poverty in 2008.

Ladies and gentlemen, we have a name. We are living through “The Great Recession”. Dominique Strauss-Kahn, managing director of the International Monetary Fund, used the term to describe our current angst on a trip to Africa this week. He may not have been the first to use it — we have found other citations, including JPMorgan — but the guessing here is that it may  stick with him because of his role.

It’s a pretty neat moniker, actually. It resonates, of course, with “Great Depression” but without the soup lines and Hoovervilles. At the same time, it differentiates between the severe contraction now under way and run-of-the-mill economic misery. It also has the snappiness that media folks like — hence this post.

The Bretton Woods duo of IMF and World Bank have been underlining how bad things are. Strauss-Kahn, for example, tells Reuters that delays in bank restructuring could mean economic recovery is not on the cards even in 2010 (which sounds a long way off, but is only next year). Then comes Robert Zoellick, president of the World Bank, who opines to Britain’s Daily Mail that global growth will probably fall about 1 to 2 percent this year.

With the U.S. approving a $700 billion Wall Street bailout and the UK offering up £88 billion to bolster its banks, you can be forgiven for forgetting about that pesky food crisis in the developing world that dominated the news a few months back.

But the issue is still very much alive in the corridors of the World Bank, which released on Saturday a report entitled Rising Food and Fuel Prices: addressing the risks to future generations .

While the report is quick to point out that people around the world are starving, there is also a sentiment that as rich countries scramble to fund their own bailouts, there will be cutbacks in humanitarian aid funding.