Developing Economies Face Reckoning

Today’s chart porn:

Developing_emerg_20080123

Source:
Developing Economies Face Reckoning as U.S. Stumbles
PATRICK BARTA and MARCUS WALKER
WSJ, January 24, 2008; Page A1
http://online.wsj.com/article/SB120113771673811967.html

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What's been said:

Discussions found on the web:
  1. Ross commented on Jan 25

    Interesting chart. The small population ( Brazil Russia S. Africa ) have all the ‘stuff’. Chindia has the population and infrastructure needs. What is missing is the enabler, the good old USA AKA Uncle Shylock.

    Having lived in Russia I can assure you that they do not trust the West. They may play the game because it is the only one in town but when their interests are threatened, look out.

    I lust for Norilsk Nickel!!!

    Hoard Palladium………Just talking my book here.

  2. Mike commented on Jan 25

    So wait a minute… the panic events of M through W are clear evidence of:

    1. a failed global decoupling theory
    2. nothing more than just unwinding of fraud that forced the Fed to foolishly react for no good reason.

    Make up your mind, which is it?

  3. mhm commented on Jan 25

    Mike, why one or the other and who chooses the options? Could be both, maybe neither?

    Economics is not black and white as you can read for yourself in this discussions sponsored by TBP.

  4. kk commented on Jan 25

    Overused phrases/words of the week:

    1. Decoupling
    2. Monolines
    3. Rouge Trader
    4. Baltic Dry Index…oops that was last week

  5. Jose Padilla commented on Jan 25

    Interesting, Brazil has a larger economy than Russia’s but is growing much more slowly. Why was the Soviet Union ever considered an economic threat?

  6. Jim D commented on Jan 25

    If you beleive the China inflation numbers, I’ve got a jumbo conforming MBS to sell you.

  7. Pat Gorup commented on Jan 25

    So much for the de-coupling theory. We knew that was a bunch of C**P when it was floated out there. Also, alot of what’s going on in China is in preparation for the Olympic games. Once that’s over, where is their demand going to come from?

  8. Dave commented on Jan 25

    1/I can hardly see the inflation numbers (because of the Russian spike)

    2/ When does the pop. of India surpass China?

    3/ When does the pop. of SA surpass that of Russia? (For that matter when does the pop. of bigpicture readers surpass that of Russia?

  9. IwantToKnow commented on Jan 25

    Whatever you may think the decoupling theory may not be as dead as you think. For now these countries are coupled by both what the US stock markets do and maybe the US economy. The latest emerging declines only prove that they are coupled to are stock markets for now.

    India is the most self contained economic country in the emerging and China’s economy is not as dependant on the US as you might think.

    All’s I am saying is don’t dismiss the decoupling theory just yet. They will decouple just not sure if it’s in 3 weeks or 3 years but it’s gonna happen.

  10. MAS (Seattle) commented on Jan 25

    Question for the Russia experts:

    How much of their recent economic growth is based off the high price of oil?

  11. fulanomengano commented on Jan 25

    Is Mexico smaller than South Africa or is it not considered an emerging-market economy?

  12. John F commented on Jan 25

    I just can’t get past the poorly presented data. Someone needs to read Tufte.

  13. Grodge commented on Jan 25

    I used to be a Rouge trader, but I was pegged by the international make-up regulators…

    so now I’m on the straight and narrow and stick to mostly eye-liner futures.

  14. weidong commented on Jan 25

    >If you beleive the China inflation numbers, I’ve got a jumbo conforming MBS to sell you.

    Well, I would rather believe them rather than US’s so called ‘core’ inflation number, which according to them is ‘contained’.

    At least, china central bank, as well as European central bank, realizes the inflation is high and raises the intrest to fight the inflation.

    What does US Fed. do?

  15. carioca girl commented on Jan 25

    Here in Brazil we have a high intrest than Russia that is why our GDP grow is slower. Our CB is a inflation hawk. For a country that have such long history with inflation this is good. Unlike Russia, i.e. we dont need to control food prices…

  16. Don commented on Jan 25

    Question for all the smart folks out there:

    How can Russia, with a declining population, have a booming economy, when Japan, with its rapidly aging and declining population seem to be irretrievably stuck in stagnation?

    I see the oil boom, and the new fascist gov of Russia as good for the economy (fascists don’t make good for political dissenters, but who needs them for economic growth?). But I don’t see Japan. They practically beg people to buy Yen, borrow Yen, do anything please w/ Yen and while we run huge budget deficits, yet they still languish, going on almost 20 years. What gives?

    It is killing me. My Keynesian/Friedman, is-it-the-money-or-the-fisc-that-matters brain, can’t get around it. Any suggestions?

  17. rickrude commented on Jan 25

    If you are american, you believe the US
    economy is the mightiest, therefore,
    no decoupling theory.

    We are still the greatest exporter of US debt

  18. Howard Veit commented on Jan 25

    Why would anyone in their right mind “invest” in any Russian stock? A kleptocracy, a thugocratic system, all free speech gone. Who knows who is counting the money anywhere?

  19. DavidB commented on Jan 25

    @ Don | Jan 25, 2008 7:39:54 PM

    Don,

    I think most of it has to do with the incentive people are given to work along with some cultural differences as well. Many Russians are free to build businesses for the first time and they are taking advantage of that. In Japan they are a more conservative society and thus are more concerned with capital preservation.

    Their government also does not know how to give the proper incentive for people to go out and be aggressive with their dollars. They also, with the extremely low interest rate, force many savers into the carry trade and thus force many potential investment dollars out of the country in search of higher risk reward.

    If the Japanese government would learn how to manage its books they could afford to give businesses more incentive to invest in their own nation. Unfortunately Japan is a nation that has swallowed the ‘export your way into prosperity’ hallucinogen with gusto and thus they are more interested in protecting their businesses via exports than giving them the incentive to grow.

    Don’t get me wrong, I’m not saying exporting is not a good thing but taken to it’s extremes it can’t be the front line solution for stagnating business problems. That is because it is impossible for every nation to become a net exporter for obvious reasons.

    That is why governments need to be more focused on growing their consumer class via proper incentives for businesses and consumers to both save and invest in their own economies. The ones that do that should have better and stronger economies *over the long run* than the export focused nations. Russia, for all its regulatory and legal faults is currently doing that better than Japan for now in my opinion

    If I were the Japanese government the first thing I would do is to make a balanced budget and then focus on paying off their accumulating debt. Over the longer term that will allow them to cut taxes through savings on interest expense instead of having to raise taxes to pay for the interest they are accumulating via their yearly deficits.

    That is the kind of difference you are seeing between the Canadian and US economies and if the two economies continue down the same path they each are on the differences should begin to widen. It really is the only formula that will work over the long term. When a government is underspending they can afford to make a lot more mistakes than one that is overspending. It works the same way for government as it does for corporations as it does for persons. The only difference is the scale

  20. brazilian outsider commented on Jan 26

    Maybe USSR was a economic threat, not Russia, which is alot smaller now.

    Decoupling is kinda real, it might become more real if stocks slump in the US and foreigners take most of their money out of the emerging countries. This way they would have less means to speculate and stocks would respond more to local data.

    Today in Brazil you can find reasons for rallies and routs in local news, but it’s obvious that stocks are responding to US data not local news.

    Examples:

    thursday rally: low unemployment rate in Brazil, government decline on Vale’s bid for Xstrata and PetrobrĂ¡s discovery of a new natural gas field.

    but it was all a response to the insurers bailout and the US futures going up that day, I guess.

  21. Vasily commented on Jan 28

    MAS (Seattle): last I’ve heard it were approx 10% of the growth linked back to the oil prices. The rest was I and C.

    Jose Padilla: because without a threat it whould be difficult to spend so much money on the army, i guess.

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