Daily Archives: August 3, 2012

Guns, Germs, Steel, Markets

Given what a complete exercise in brain cell annihilation U.S. politics becomes every four years, I’m trying my best to keep it out of this blog. But given my stated aim here of tracking which countries are advancing and which are falling back, the recent kerfuffle Mitt Romney raised in mischaracterizing Jared Diamond’s Guns, Germs and Steel while “campaigning” in Israel warrants at least a comment.

It’s been years since I read that book so I’ve just spent some time reviewing who said what, when, in what context. Obviously this is potentially a very big topic that there is no way I’m going to adequately cover inside of 1,000 words here and now. But that aside, I’m reviewing the Silk Invest Frontier Markets report from last month, and particularly the notion that population, GDP and FDI help to better understand a country’s “true macro-economic identity.” Continue reading

Cocaine Cowboys and the Modern Banking System

Jonathan Weil issues perhaps the strongest wake-up call so far in Bloomberg. Excerpting it really doesn’t do it justice, but here you go:

Let’s try out a novel idea: Banks that help drug cartels launder money and give cover to those tied to terrorism should be put out of business. Is that really so hard for everyone to agree on? Free markets have worked in the U.S. because we have the rule of law. It’s why so many investors from other countries want to do business here. When contracts are breached, courts can be accessed to enforce them. When individuals or companies commit crimes, they’re supposed to be prosecuted and punished. Continue reading

Emerging & Frontier Markets Headlines 2012.08.03

The biggest obstacle to private equity investing in Africa? The exit. — How We Made it in Africa

Mythbusting: Emerging Market High Yield Bond Risk — iShares Blog

“The question is how much more stimulus the government will have to introduce to keep growth above the 7.5% target for the year. Chinese firms are betting that the answer will be “a lot.” The People’s Bank of China has already surprised the market with two interest-rate cuts this year, taking the benchmark one-year interest rate from 3.5% to 3%. The interest-rate swap market is betting the rate will go to 2% in the next twelve months, implying a full percentage point cut from the current level. Yuan appreciation has also swung into reverse, with China’s currency down 1.1% against the dollar since the end of the first quarter. The markets are betting there is more to come. The one-year forward contract is pricing in yuan depreciation of 1.5% in the year ahead.” — WSJ
Continue reading