Britain’s Wake Up Call for the EU

I am pleased that my country has chosen to say halt to undemocratic and dysfunctional governance, even as I am aware that there are major challenges for Britain ahead.  I do believe Westminster can do better than Brussels for the simple reason that our government and MPs are more likely to be kept in check by the electorate.  Democracy is often frustrating for policy-making.  It is messy and very hard work.  It is very easy to slip into a preference for technocratic solutions.  But democracy prevents extremes, be it famines as the Nobel economist Amartya Sen discovered (famines are best understood as resulting from highly concentrated entitlements, quickly brought to the attention of democratic representatives if there be any) or inability to engineer major policy U-turns when needed – in a democracy failed policies go out with failed politicians where autocrats stubbornly persist.

The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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Incentives Have Shaped Finance Theory

How much of finance theory has evolved in order to cater to principal agent realities?

Fat in one’s diet is now back in vogue, with simple carbohydrates like sugars replacing it at the top of the list of what to eat less of. Diet is clearly subject to fads but the science telling us of the relative virtues of fat versus carbs is not new. What happened?  Why was the public not told earlier?

The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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No Lessons to Draw from Argentina’s Exceptional Debt Settlement

Elliott Management reportedly (Financial Times, 8th May 2016) received a payment from Argentina of about $2.4b billion a few weeks ago after the new government of President Macri agreed a settlement deal with Elliott and other ‘hold-out’ investors.  This is the legacy of Argentina’s sovereign default back in December 2001, and the fact that not all bond-holders agreed the subsequent exchange offerings.  Indeed, the offerings were widely considered inadequate at the time and although local institutional investors had little choice but to accept the new terms, a substantial number of foreign investors did not agree to them, including a lot of very angry European retail investors.

The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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Something May Happen

Are we going to go round again with US interest rate expectations, the dollar and ever more investment concentration in the developed world, and especially into low yielding bonds and cash?  And will this again be at the expense of emerging markets and more rational and risk-balanced allocations?  Or might the herd find itself trapped and finally veer off in a new direction, or even panic?  Perhaps something entirely unexpected may happen?

The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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Different Rules

One of the important props supporting Core/Periphery Disease is that one uses different rules for assessing developed and developing country risks.  This is reflected in my preferred definition of emerging markets, as follows.  All countries are risky; the emerging markets are those where this risk is perceived and priced in.  Developed markets are those where sovereign default, corruption and political risks in particular are not priced in, even when they are clearly visible.


The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.


Constitutional Advice for President Obama

President Obama has weighed into the Brexit debate. Whatever the President’s personal views, I suspect that the main focus for Washington’s interest, still heavily influenced by the zero sum strategic thinking of the likes of Henry Kissinger and Samuel Huntington, is the desire to have a strong Europe to be a counterweight to Russia and take on more of the costs of global governance in Eastern Europe, the Middle East and North Africa.


The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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An Inconvenient Fact – EM is Rallying

“Everyone is entitled to his own opinions, but not his own facts.”

Daniel Patrick Moynihan (attributed)

Emerging markets are rallying. That is a fact. Emerging market bonds have just experienced their largest rally in seven years. The bond market (JPMorgan EMBI GD index) is up over 13% in dollars. The equity market (MSCI EM index) is also up around 7%, easily beating developed market equivalents. Investor inflows into EM bond and equity ETFs stand at $4.5 billion from the start of the year to mid-April. Short interest is also significantly down.


The rest of this blog can now be found via this link on the New Sparta Asset Management website. The site also includes content and articles from other prominent Emerging Market economists, along with research and recent developments from the company’s current sectoral  interests.

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