Category Archives: emerging markets

Sovereign Default: A Conversation

I’m trying out an experiment, here: Paul Kedrosky and I will be chatting live on the subject of sovereign defaults. Feel free to join in!

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Crazy Ecuador

A couple of major developments on the Ecuador front: yesterday, finance minister Elsa Viteri came out with the rather stunning decision that the country would make the coupon payments on its 2015 global bonds — despite deciding to default on … Continue reading

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Ecuador Craziness Datapoint of the Day

Today is clearly "crazy things people try to do while in default on their debt" day. First Friendfinder Networks tries to IPO, and now Ecuador is trying to borrow more money: Ecuador is seeking $2.6 billion in credits from regional … Continue reading

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Ecuador’s Ingenious Descending Auction

There’s something quite elegant about Ecuador’s proposed bond auction. It’s not doing a typical old-bonds-for-new-bonds exchange, which no one would tender into. And it’s not trying to buy up its debt in the secondary market, where it could be picked … Continue reading

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Did Derivatives Help China’s Poor?

I’ve seen some pretty strong claims on behalf of derivatives in my time, but this one, from the Economist, is definitely among the strongest: The market for derivatives also facilitated investment in developing countries. That investment brought millions of people … Continue reading

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Ecuador Own-Goal Datapoint of the Day

Just how much damage can one president do by defaulting on a single $30 million coupon payment? Well, he can cut off his country’s access to US markets, via the Andean Trade Promotion and Drug Eradication Act, and he can … Continue reading

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Ecuador’s Small Investors

Since I wrote about Ecuador on Friday, there’s been a trickle of emails coming in from individual investors who hold the country’s bonds. These two came in quick succession: I’m not into locking up on default for months/years while the … Continue reading

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Ecuador’s Idiotic Default

In the annals of idiotic political decisions, today’s default by Ecuador has to rank pretty high. The country failed to pay a $30.6 million interest payment on its 2012 global bonds, despite the fact that it has $5.65 billion in … Continue reading

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Zimbabwe: When Even the Central Bank Can’t Keep Up

The Reserve Bank of Zimbabwe reports: Between the 10th and the 20th of November, 2008, total fraudulent cheques we intercepted in the clearing system had risen to $60 hexillion ($60,000,000,000,000,000,000,000). Someone really ought to tell Zimbabwe’s central bankers that there’s … Continue reading

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Zimbabwe Datapoint of the Day

Steve Hanke is mainly known in the world of international economics for his conviction that dollarization is the cure for all ills. (How’s that working out, Steve?) But he’s come up with something really rather fabulous for the Cato Institute: … Continue reading

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Investing in Africa and Ecuador

Paul Collier has started giving investment advice. His big idea, as glossed this speech, is that poor resource-rich countries, such as a lot of African states, are largely immune from the global financial crisis since they were never really part … Continue reading

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Ecuador Approches Default

Here we go again. A brief history: as soon as he was elected, back in 2006, Ecuadorean president Rafael Correa started making entirely-predictable noises about defaulting on his country’s bonds. (He’d said he’d do just that throughout his presidential campaign.) … Continue reading

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Country Risk Datapoints of the Day

Here’s the kind of table most of us never thought we’d see, taken from Merrill Lynch’s latest economics note: The rankings are constructed by considering the biggest risk factors affecting countries today: current account financing gap, FX reserves/short-term external debt … Continue reading

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Chart of the Day: The Russia-Brazil Spread

After writing about my BRIC decoupling thesis, I asked the friendly chaps at Markit if they could share with me the 5-year CDS spreads for the four countries in question. It turns out that India isn’t really much of a … Continue reading

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Argentina: Sinking

Bloomberg has changed its headline from the alarmist "Argentina Default Looms" to the slightly more sober "Argentine Bonds Sink as Pension Takeover Fuels Default Concerns". But it was right, the first time round, as is evidenced by the prices on … Continue reading

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Investor Notes: BRICs and Credit Default Swaps

A couple of notes from the lunch I went to this afternoon put on by Natixis Asset Management: •Ron Holt of Hansberger Global Investors passed along a provocative datapoint: that the total market capitalization of all Russia’s oil companies is … Continue reading

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The End of the BRIC Trade

In a crisis, as we all know by now, all correlations go to 1. But it’s still interesting to see how similarly the BRICs have behaved. Floyd Norris has their respective declines: Brazil, down 55% Russia, down 65% China, down … Continue reading

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How Investment Bankers are Helping Argentina

Amazingly, amidst all the financial-market chaos, there is still old-fashioned shoe-leather investment banking going on, and some of it is very ambitious: Citigroup Inc., Barclays Plc and Deutsche Bank AG proposed a debt-restructuring plan to Argentina that may help the … Continue reading

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Zimbabwe Photo of the Day

This quadrillion-dollar check was written back in July. Just as well the amount was rounded off to the nearest million dollars, or the written-out part might not have fit in the space available. (Via Prieur du Plessis, via Humble Money)

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The Risky World of Argentine Debt

For all that commodity prices might be falling right now, they’re still very high — which is good news for Argentina and its current account. Since its disastrous default and devaluation in 2001, the Land of Silver has managed to … Continue reading

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How Risky is Venezuela’s Bank Nationalization?

Hugo Chávez has done a lot of things to endanger the Venezuelan economy. But to read John Lyons in the WSJ today, one of the worst and riskiest is his decision to nationalize Banco de Venezuela, which the then-government sold … Continue reading

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Free Zimbabwe’s Banks!

As Zimbabwe knocks another ten (yes, ten) zeroes off its currency, the central bank governor, Gideon Gono, is optimistic that somehow this will do some good: so optimistic, in fact, that he’s reintroducing coins. It won’t work, of course. Something … Continue reading

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The Competitive Advantage of Stock Exchanges Without Parking Lots

The headline of the day, without a doubt, is at Bloomberg News: Pakistani Investors Stone Karachi Exchange as Stocks Plunge Yes, they really started throwing stones at the physical stock exchange. In Karachi investors today broke windows, threw plant holders … Continue reading

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Don’t Go To Brazil, Young Man

Paul Kedrosky asks: Say you were 22-years-old, unattached, and recently graduated and looking for your first job. You want to be part of something big and dynamic, a truly dynamic economy where you’re going to be able to rise up … Continue reading

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The Beijing Consensus

Alex Tabarrok reports on Sino-Syrian relations: "What can we do," the Syrian finance minister asked, "to increase Chinese investment?" "Well," the Chinese minister replied, "before we invest in Syria you most open your markets, cut your subsidies, and reduce regulation…"

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