Chart of the Day: Operation BRIC Twist

Operation Twist didn’t work in Russia, India or Brazil and it’s not working in the

Some Thoughts On EM FX Intervention And Vulnerability

Markets have been punishing countries with the weakest fundamentals, focusing on either high inflation, large current account and budget deficits, external debt loads, or a combination of these. These other vulnerability measures in the table also support the widely held view that Asia has the strongest fundamentals, EMEA the weakest, and Latin America somewhere in between. But we do note that there are pockets of vulnerability in Asia (India, Sri Lanka, Vietnam) and Latin America (Argentina)

Russian Currency Outlook Negative Due To Falling Oil Prices

This fiscal uncertainty may be enough to prevent any ratings upgrades ahead, but we do not think the situation will worsen enough to lead to downgrades. Our sovereign rating model has Russia as a very solid BBB+/Baa1/BBB+ credit compared to actual ratings of BBB/Baa1/BBB. The political situation leaves a lot to be desired, with the return of Putin to the presidency next year unlikely to change the status quo. Yes, there is stability, but there is a sense that Russia is basically treading water and relying on high commodity prices rather than making much-needed structural reforms to the economy to boost competitiveness and entrepreneurship

Policy Conclusions for Russia (Part 2)

Can Russia get the best of both worlds by freeing its economy from technologically unnecessary charges and rentier tolls paid to special interests? Such expenditures prevent the economy from developing. That is the basic cause of poverty – and hence of national decline. Now that neoliberal financial lobbyists have turned Progressive Era economic reforms upside down, it is necessary to “reform the reformers” in order for Russia to rebuild its economy in the way that made the U.S. and Western Europe so successful during their economic takeoffs

Russia’s Economic Interests (Part 1)

The neoliberal idea is to dismantle the government’s ability to regulate markets to steer growth and economic advance in the national interest. They claim that this is an alternative to centralized planning. But the reality is that it simply centralizes planning in the hands of bankers – primarily those of Wall Street and the City of London, followed by financial interests in satellite economies and other subordinate partners in this policy

Privatizing Will Make Life Worse

This article was published in the NYT more than 20 years ago, forecasting precisely what has happened in Russia

Russian Demographics: Something Stirring in the East

By Claus Vistesen One of the reasons that I have always had a problem with Goldman Sachs’ infamous notion of the BRIC economies was not the fact that it excluded other important economies such as e.g Chile or Indonesia, but rather that Brazil, India, Russia and China never belonged in the same group. The reason

Debt Ceiling Showdown Coming

A sovereign nation that issues debt in its own fiat currency cannot default involuntarily. Again, this is the Ecuador risk factor, defaulting for purely political reasons, not because of the inability to pay. It is not clear whether there will be a risk premium associated with this risk, increasing the yield of Treasury bonds, as the showdown draws near. We saw this in Russia when the Rouble crisis hit in 1998.

Here are the issues

Oil: Where is the spare capacity?

This morning’s note from UBS’ Andy Lees addresses something about which I am sceptical regarding the escalating Libyan conflict: global spare oil capacity. I am in the same camp with Jeremy Grantham. Call it peak resources, peak oil, the end of cheap oil, whatever – the fact is there is a finite amount of natural

Russia Widens RUB Trading Band, Signaling Comfort With Further Strength

By Win Thin Russia central bank First Deputy Chairman Ulyukayev confirmed that it has widened the so-called “floating corridor” for the ruble basket to 32.45-37.45 vs. 32.95-36.95.  The band is now 5 rubles wide, and continues a slow and steady process of liberalizing the ruble exchange rate regime.  Back in October 2010, it eliminated the

Russia has shown no interest in rapprochement with Europe

Russia is keen on developing stronger ties with both China and the EU in order to secure its global economic position. The recent agreement with China to begin Ruble-Renminbi trading in Russia is part of this effort. Last week, Marc Chandler also wrote about the increasing likelihood of Russia’s admission into the WTO framework. But

Russia Moving Toward WTO Membership

by Marc Chandler Russia is the last of the major countries that has not joined the World Trade Organization. The importance of the WTO may not be so much in liberalizing trade as negotiations take years. The WTO predecessor was GATT, which some suggested stood for the general agreement to talk and talk. Rather the