International Economics

A picture is worth a 1000 words and it certainly resonates with the economic global meltdown this past year.   A red flag indicator on the economy is the TED spread .  This metric is an indicator of perrceived credit risk in the economy.  The TED spread tracks the difference between interest rates of interbank loans and short term T-Bills (government debt).  The difference is measured in basis points (bps). Unlike the economic recessions of the past, this spread skyrocketed universally across the globe rather than in specific countries.  Historical averages are usually below 50 bps so when the TED spread went over 450 ... Read Full Story

Al tiempo que Estados Unidos sigue tratando de estimular el gasto de los consumidores con sus programas de activación económica, hay países, como India o China, que parecen estar logrando mejores progresos. En un reciente viaje a India y China vía Singapur realizado en septiembre pasado, pude comprobar con toda claridad que la zona de Asia Pacífico no se ha quedado parada sino que impulsa a los trabajadores de las fábricas que quedan inactivas hacia nuevos proyectos de infraestructura. La charla con clientes y socios en China e India sirve justamente para confirmar lo que podría describirse como una mejor práctica aplicable a toda nación ... Read Full Story

There are many different determinants of productivity that when not kept constant may tend to prohibit or limit a poor country’s ability to catch up with rich ones. In most poor country’s people tend to save very little to invest later in capital due to the low wages of most workers that tend to be so low as to be barely enough to meet the necessities of life as opposed to rich countries who tend to have incentives by the government to save. Since saving and investment plays such an important role in economic growth, this in fact slows down economic growth. The next ... Read Full Story

The Telegraph today bewails the fact that customers of Indian curry houses in the UK - which imports more rice than any other EU country - can now look forward to smaller portions, higher prices, less meat and more vegetable dishes. "We've heard that people are taking away the little embellishments - fish and chips might now be missing the coleslaw...Where before you might be offered a 4oz and 8oz steak, now you can only have the 4oz." Fortunately most of us in Europe and the US will take the fallout out from a growing global food crisis in our stride. Motorists are also ... Read Full Story

One would have to be pretty insulated to be oblivious to all the economic troubles throughout the world.   In the last 2 months I have visited Brazil, China and India and the economic impact in each country is amazing.  A year ago in India I was amazed at the Bombay stock index surge and the feverish pace in Beijing preparing for the Olympics.  Who would have thought back then that in one year things would be completely the opposite.  The credit crunch has hit consumer confidence throughout the world.  Banks are not lending.  Even private equity is hard to come by and the terms ... Read Full Story