These Are The Riskiest Emerging Markets

Now that EMs are fully in the public eye, Bank of America has updated its “most important external vulnerability indicators” table for emerging markets. The full table is below – it shows seven indicators for 55 emerging and frontier markets: four of them focus on the stocks of external assets and liabilities (FX reserves; net external position of the banking sector; net international investment position of the economy; and external debt/exports ratio) and three highlight the external funding risk (FX reserves/short-term debt ratio; current account balance; and basic balance = current account balance + FDI).

However for those who don’t have the patience to pull all the numbers and compile a datatable, here is a chart which flags the highest external risk among the 10 most prominent EMs broken down by liquidity (reserves over near-term maturities) on the X-axis and capital flows (current account as % of GDP) on the Y-axis. It should come as no surprise, that Turkey is worst, followed by South Africa, India and Indonesia. China, Korea and Russia have current account surpluses and strong coverage of short-term debt by reserves. Brazil also has high reserve coverage of short-term debt. Mexico and Poland have small current account deficits and healthy reserve coverage, in addition to their IMF Flexible Credit Lines. As for Argentina, forgetabout it.

 

Full data:

Source: Bank of America


    



via Zero Hedge http://ift.tt/1mSBglL Tyler Durden

SOTU Preview: Obama Will Conflate Inequality with Mobility and Push Failed Fixes

I’ve got a new
column up at The Daily Beast, which previews tonight’s State of the
Union address and President Obama’s insistence on
conflating increasing income inequality with supposedly weak
economic mobility.


From the article
:

Tonight, don’t expect President Obama to cite any research
showing that mobility has remained constant. Instead, expect him to
echo his December speech, which was filled with lines about “a
dangerous and growing inequality and lack of upward mobility that
has jeopardized middle-class America’s basic bargain—that if you
work hard, you have a chance to get ahead.”

From a political perspective, the erroneous but strategic
conflation of inequality and mobility makes obvious sense. After
all, if mobility is as alive and well as it has been in the
post-war era, then the sense of urgency the president needs to sell
any legislation is largely undercut. As important, constant
mobility rates also make a mockery of the president’s
long-preferred strategy of redistributing income from the top of
the income ladder down to the lower rungs….

Instead, get ready for a long list of calls to maintain and
increase many programs that have been in place since before Obama
took office: extending unemploymentbenefits (without paying for
them by, say, cutting defense spending), making it easier for
people to buy or stay in homes whose prices are inflated by
government policies, and increasing access to higher education in
ways that continue to increase prices far higher than the rate of
inflation. Pump more money into a broken K-12 education system
whose per-pupils costs rise as results stay flat (certainly the
president won’t call for giving parents and children the right to
choose their own schools).

In short, expect Obama to invoke income inequality and supposed
declines in upward mobility as a way of maintaining a status quo
that has managed to increase inequality without affecting mobility
rates.


Read the article,
which documents research showing that
economic mobility in the United States has remained constant since
the 1950s.

from Hit & Run http://reason.com/blog/2014/01/28/sotu-preview-obama-will-conflate-inequal
via IFTTT

Peter Suderman on How Republicans Could Replace Obamacare

What
is the GOP’s health care plan? For years, this has been the
rejoinder from supporters of Obamacare whenever asked to confront
the flaws in their own legislation. It was an attack line, but also
a question worth asking: For the last five years, Republicans have
spent plenty of time bashing the president’s health law, but far
less time describing what they would do instead.

A new proposal from Republican Sens. Coburn, Burr, and Hatch
represents a tentative attempt to respond substantively to the
question. It’s called The Patient Choice, Affordability,
Responsibility, and Empowerment (CARE) Act, and it’s not intended
to be the answer, but one possibility—a first
step toward a Republican vision for reform. It’s less radical in
scope than Obamacare, writes Senior Editor Peter Suderman, and more
modest in its aims: The goal isn’t to rethink the health care
system. It’s to make it better, cheaper, and more accessible for
the majority of people.

View this article.

from Hit & Run http://ift.tt/1ftJvT6
via IFTTT

The Mexican Government Absorbs the Autodefensas—Or Is It Just Recognizing the Power They’ve Won?

"The lunatic is all idée fixe, and whatever he comes across confirms his lunacy. You can tell him by the liberties he takes with common sense, by his flashes of inspiration, and by the fact that sooner or later he brings up the Templars." —Umberto EcoIn parts of Mexico ravaged by
the drug war, ordinary citizens have
formed militias
, dubbed autodefensas, to protect
themselves against brutal cartels such as the Knights Templar. (No,
not
those
guys. These
guys.) The militias haven’t been shy about taking on the government
either: “In some instances,” a sympathetic
piece
in Dissent notes, “the groups disarmed and
arrested the local police before acting against the criminals.”
Sometimes damned as vigilantes and sometimes hailed as liberators,
the autodefensas have represented a grassroots third
force in the conflict.

This week the dynamics of that conflict changed. Borderland
Beat

reports
:

The Self-Defense Groups that emerged in Michoacán
signed an agreement today along with the federal and state
government that will transform them into elements of the Rural
Defense Corps, an existing organization under the control of the
military. Rurales, groups of armed volunteers who were
once used to keep peace in rural areas when security forces were
unavailable, once existed between 1861 and 1914, during Mexico’s
turbulent 19th century.

The signing achieved under the Agreement for the Federal Security
Assistance of Michoacán (Acuerdo para el Apoyo Federal a la
Seguridad de Michoacán), states that the government of the Republic
and the state of Michoacán came to a “conviction of rebuilding
peace and public order”. The Self-Defense Groups also agreed to
provide a list of all of its members.

So: Did the state just formally recognize the power the
volunteer forces seized for themselves? Or did it find a clever way
to take command—and take names?
Discuss in the comments
.

from Hit & Run http://ift.tt/MayJrE
via IFTTT

The Mexican Government Absorbs the Autodefensas—Or Is It Just Recognizing the Power They've Won?

"The lunatic is all idée fixe, and whatever he comes across confirms his lunacy. You can tell him by the liberties he takes with common sense, by his flashes of inspiration, and by the fact that sooner or later he brings up the Templars." —Umberto EcoIn parts of Mexico ravaged by
the drug war, ordinary citizens have
formed militias
, dubbed autodefensas, to protect
themselves against brutal cartels such as the Knights Templar. (No,
not
those
guys. These
guys.) The militias haven’t been shy about taking on the government
either: “In some instances,” a sympathetic
piece
in Dissent notes, “the groups disarmed and
arrested the local police before acting against the criminals.”
Sometimes damned as vigilantes and sometimes hailed as liberators,
the autodefensas have represented a grassroots third
force in the conflict.

This week the dynamics of that conflict changed. Borderland
Beat

reports
:

The Self-Defense Groups that emerged in Michoacán
signed an agreement today along with the federal and state
government that will transform them into elements of the Rural
Defense Corps, an existing organization under the control of the
military. Rurales, groups of armed volunteers who were
once used to keep peace in rural areas when security forces were
unavailable, once existed between 1861 and 1914, during Mexico’s
turbulent 19th century.

The signing achieved under the Agreement for the Federal Security
Assistance of Michoacán (Acuerdo para el Apoyo Federal a la
Seguridad de Michoacán), states that the government of the Republic
and the state of Michoacán came to a “conviction of rebuilding
peace and public order”. The Self-Defense Groups also agreed to
provide a list of all of its members.

So: Did the state just formally recognize the power the
volunteer forces seized for themselves? Or did it find a clever way
to take command—and take names?
Discuss in the comments
.

from Hit & Run http://ift.tt/MayJrE
via IFTTT

Gene Healy Says Most Americans Shrug at State of the Union Spectacle

My fellow Americans,
the State of the Union is … irrelevant. As the speech has
become less important, presidents’ rhetoric has grown more
frantically stentorian. Presidential scholar Elvin T. Lim notes
“increasing rhetorical assertiveness” and “an increasing lack of
humility” in the language of the SOTU over time. Modern presidents
speak more often of “reform,” while “references to (and hence
concern for) the Constitution and constitutional in the annual
messages have declined.” Gene Healy writes that, in its modern
form, the SOTU is a meaningless ritual that rarely even does the
president—let alone the public—any good.

View this article.

from Hit & Run http://ift.tt/1aFftOD
via IFTTT

Will Obama Say Anything Interesting About Foreign Policy Tonight?

Later today, President Obama
will give his latest State of Union address, which progressives

are hoping
will include plenty of liberal rhetoric and
promises.

Domestically, there are plenty of policy areas Obama will
undoubtedly mention. The Obamacare website rollout was a disaster,
although as
Politico
notes, “The speech is coming at the right time for the
White House. HealthCare.gov is largely fixed for consumers.”

In the 2013
State of the Union
 address Obama said that “right
now, leaders from the business, labor, law enforcement, faith
communities — they all agree that the time has come to pass
comprehensive immigration reform.” Given the current state of
immigration reform legislation, it shouldn’t be surprising if Obama
revisits the issue.

This morning, it was reported that Obama is expected to announce
a raise in the
minimum wage
for new federal contract workers.

While there are plenty of domestic issues for Obama to mention
this evening, foreign policy will also be addressed. Since the last
State of the Union address the NSA revelations have done damage to
America’s relationships abroad, Al Qaeda-linked groups have been
playing an increasingly significant role in Iraq as well as Syria,
a nuclear deal with Iran has been agreed to, there was a coup in
Egypt, the crisis in the Central African Republic worsened, and
protests erupted in Ukraine.

Some of these are new developments, but others, such as the
situations in Syria, Iran, and post-Mubarak Egypt have been
mentioned in previous State of the Union addresses.

Syria

In his
2012 State of the Union
, Obama mentioned Syria once:

As the tide of war recedes, a wave of change has washed across
the Middle East and North Africa, from Tunis to Cairo; from Sana’a
to Tripoli.  A year ago, Qaddafi was one of the world’s
longest-serving dictators -– a murderer with American blood on his
hands. Today, he is gone. And in Syria, I have no doubt that the
Assad regime will soon discover that the forces of change cannot be
reversed, and that human dignity cannot be denied.  

The Assad regime has not discovered that “the forces of change
cannot be reversed,” and
infighting
among opposition forces has only helped the
regime.

In the 2013 State of the Union, the situation in Syria got some
more attention than it did in the 2012 State of the Union:

We’ll keep the pressure on a Syrian regime that has murdered its
own people, and support opposition leaders that respect the rights
of every Syrian.  And we will stand steadfast with Israel in
pursuit of security and a lasting peace.  

Since making the above statement Obama’s “red
line”
was crossed, providing what some might have hoped would
present the president with an opportunity to “keep the pressure on
a Syrian regime that has murdered its own people.” However, rather
than the strikes on Syria some were hoping for, the U.S.
struck a deal with Russia
relating to the Assad regime’s
chemical weapons.

Unsurprisingly, the ongoing Syria peace talks
look unlikely
to produce any sort of peace deal that the Assad
regime, the represented opposition, and international
representatives will agree to, let alone be able to enforce. Given
the situation in Syria and the state of the peace talks, don’t
expect more than condemnation of the Assad regime from Obama
tonight.

Iran

In the 2012 State of the Union Obama said the following about
Iran:

And we will safeguard America’s own security against those who
threaten our citizens, our friends, and our interests.  Look
at Iran.  Through the power of our diplomacy, a world that was
once divided about how to deal with Iran’s nuclear program now
stands as one.  The regime is more isolated than ever before;
its leaders are faced with crippling sanctions, and as long as they
shirk their responsibilities, this pressure will not relent.

Let there be no doubt:  America is determined to prevent
Iran from getting a nuclear weapon, and I will take no options off
the table to achieve that goal.  (Applause.)

But a peaceful resolution of this issue is still possible, and
far better, and if Iran changes course and meets its obligations,
it can rejoin the community of nations.

In the 2013, the same year that the U.S. and other members of
the so-called P5+1 group agreed to a deal
relating to Iran’s nuclear program, Iran was only briefly mentioned
in the State of the Union:

Of course, our challenges don’t end with al Qaeda.  America
will continue to lead the effort to prevent the spread of the
world’s most dangerous weapons.  The regime in North Korea
must know they will only achieve security and prosperity by meeting
their international obligations.  Provocations of the sort we
saw last night will only further isolate them, as we stand by our
allies, strengthen our own missile defense and lead the world in
taking firm action in response to these threats.  

Likewise, the leaders of Iran must recognize that now is the
time for a diplomatic solution, because a coalition stands united
in demanding that they meet their obligations, and we will do what
is necessary to prevent them from getting a nuclear weapon.
(Applause.)

Although the deal with Iran is a far from perfect step in the
right direction, Obama may urge legislators not to impose any
further sanctions, which could jeopardize the deal agreed to last
November. Sens. Carl Levin (D-Mich.) and Angus King Jr. (I- Maine)
wrote in
The New York Times
yesterday that,

For us to impose additional sanctions under these circumstances
(or threaten to impose additional sanctions) could be an “I told
you so” moment for these hard-liners, providing the very excuse
they’re looking for to kill the negotiations and, with them, what
is probably the best chance we have of resolving this incredibly
dangerous situation without resorting to military action.

Egypt

Since Obama’s 2013 State of the Union there has been a coup in
Egypt, which was followed by a
brutal crackdown
on supporters of ousted President Morsi.
Recently, Egyptians
overwhelmingly approved
a constitution in a referendum that the
Muslim Brotherhood urged its members to boycott.

In the 2012 State of the Union Egypt was not mentioned, and in
the 2013 State of the Union the country was mentioned once:

In defense of freedom, we’ll remain the anchor of strong
alliances from the Americas to Africa; from Europe to Asia.
 In the Middle East, we will stand with citizens as they
demand their universal rights, and support stable transitions to
democracy.  (Applause.)  

We know the process will be messy, and we cannot presume to
dictate the course of change in countries like Egypt, but we can —
and will — insist on respect for the fundamental rights of all
people.

It shouldn’t be surprising if Obama speaks out again for a
transition to democracy in Egypt, but don’t expect any changes to
foreign aid or diplomatic status to be announced.

Al Qaeda

In last year’s State of the Union address Obama mentioned
Al Qaeda, and described the organization that carried out the 9/11
attacks as “a shadow of its former self.” However, since that
speech the Al Qaeda-linked group the Islamic State in the Iraq and
the Levant seized the Iraqi cities of
Fallujah and Ramadi
and have been fighting opposition groups in
Syria. Obama may want to elaborate on the threat of Islamic
terrorism given the situation in Syria and Iraq, his comments last
year about Al Qaeda didn’t specifically mention Iraq or Syria:

It’s true, different al Qaeda affiliates and extremist groups
have emerged — from the Arabian Peninsula to Africa.  The
threat these groups pose is evolving.  But to meet this
threat, we don’t need to send tens of thousands of our sons and
daughters abroad or occupy other nations.  Instead, we’ll need
to help countries like Yemen, and Libya, and Somalia provide for
their own security, and help allies who take the fight to
terrorists, as we have in Mali.  And where necessary, through
a range of capabilities, we will continue to take direct action
against those terrorists who pose the gravest threat to Americans
(Applause.)  

Europe

It will be surprising if Snowden’s NSA revelations do not get
mentioned this evening, especially considering what Obama said in
the 2013 State of the Union.

Last year, Obama announced that talks between the U.S. and the
European Union would begin on “a comprehensive Transatlantic Trade
and Investment Partnership.”

However, reporting on the NSA’s snooping on European citizens
and officials understandably put a dent in
U.S.-European

relations
and
trade negotiations
. Obama has sought
to reassure allied leaders
that he will not spy on them, and
may use tonight’s State of the Union as an opportunity to
demonstrate his commitment to getting the terms of a trade deal
with the E.U. finalized.

I and others from Reason will be livetweeting the State
of the Union tonight, click
here
to follow along.

from Hit & Run http://ift.tt/1aFfrpZ
via IFTTT

Why Rick Snyder’s Plan to Conscript Immigrants to Fix Detroit Won’t Work

Michigan Governor Rick Snyder seems to have hit a motherlode of
bad ideas to save Detroit last week. First, he announced a
bailout plan
that’ll only feed more profligacy by the city’s
political classes.

Now, he has
decided
that he wants to repopulate the city with high-tech
immigrants. To that end, he’s planning on Asian Immigrantsasking President Barack Obama to give him a
special dispensation of 50,000 EB-2 visas. Although details are
skimpy, these immigrants will be required to live and work in
Detroit for some time in the hopes that their superior knowledge
and entrepreneurial skills will reverse half-a-century of
population decline, create jobs and perk up Motown’s sad
economy.

“Isn’t that how we made our country great, through immigrants?”
said Mr. Snyder.

Err, yes and no.

Reason and I are all for more
immigration now, tomorrow and forever.

I am also for
federalzing
America’s immigration system so that local
municipalities have more flexibility in recruiting immigrants that
best serve their labor needs, just like Canada does.

But the notion that cities like Detroit can conscript immigrants
and watch a comeback happen is fanciful at best, as I wrote in

this Bloomberg column
last year. Immigrants are ordinary
mortals, not miracle workers.

There is no doubt that newcomers are very good at finding and
seizing openings in an economy that the native-born residents don’t
see or don’t want. But these opportunities have to exist.

Folks like Snyder often point to examples of Korean
storeowners reviving blighted New York neighborhoods
in the 1970s. But as I noted:

New York in the 1970s wasn’t quite as desolate a place as
Detroit is today. Its population losses were not as severe. The
financial industry had not retrenched as badly as Detroit’s auto
industry has. And its government wasn’t as badly broken. New York
got a federal loan to avoid bankruptcy, to be sure — but not until
President Gerald
Ford
was convinced it was serious about dealing with its
structural fiscal imbalances, not to mention crime and crumbling
schools. That is when the city became a magnet for immigrants who
speeded up its turnaround.

Crucial to whether immigrants can boost a city’s prospects or
not is why the city went downhill in the first place. Immigrants
easily reversed New York’s population decline because New Yorkers
weren’t leaving the city because opportunities had dried up. They
were leaving for greener pastures elsewhere. That is not the case
in Detroit and other Rust Belt cities, for that matter. As I
noted:

[I]mmigrants aren’t pioneers whose survival depends on
conquering an inhospitable frontier. Yes, they can put up with far
greater hardship than the native-born, but they aren’t clueless
ingenues who are easily seduced. They have word- of-mouth networks
that alert them to places that offer them the best economic and
social fit, making it difficult to plunk them anywhere and expect
results.

So what should Detroit, Baltimore, and other struggling cities
do to become more attractive to immigrants? Offer them a decent
quality of life at an affordable price. This means improving
schools, tackling crime, creating an entrepreneur-friendly climate
and keeping taxes reasonable.

You can’t pour high-octane fuel into a broken engine and expect
it to run, folks. Gotta fix the engine first.

from Hit & Run http://ift.tt/1aFfnGI
via IFTTT

Why Rick Snyder's Plan to Conscript Immigrants to Fix Detroit Won't Work

Michigan Governor Rick Snyder seems to have hit a motherlode of
bad ideas to save Detroit last week. First, he announced a
bailout plan
that’ll only feed more profligacy by the city’s
political classes.

Now, he has
decided
that he wants to repopulate the city with high-tech
immigrants. To that end, he’s planning on Asian Immigrantsasking President Barack Obama to give him a
special dispensation of 50,000 EB-2 visas. Although details are
skimpy, these immigrants will be required to live and work in
Detroit for some time in the hopes that their superior knowledge
and entrepreneurial skills will reverse half-a-century of
population decline, create jobs and perk up Motown’s sad
economy.

“Isn’t that how we made our country great, through immigrants?”
said Mr. Snyder.

Err, yes and no.

Reason and I are all for more
immigration now, tomorrow and forever.

I am also for
federalzing
America’s immigration system so that local
municipalities have more flexibility in recruiting immigrants that
best serve their labor needs, just like Canada does.

But the notion that cities like Detroit can conscript immigrants
and watch a comeback happen is fanciful at best, as I wrote in

this Bloomberg column
last year. Immigrants are ordinary
mortals, not miracle workers.

There is no doubt that newcomers are very good at finding and
seizing openings in an economy that the native-born residents don’t
see or don’t want. But these opportunities have to exist.

Folks like Snyder often point to examples of Korean
storeowners reviving blighted New York neighborhoods
in the 1970s. But as I noted:

New York in the 1970s wasn’t quite as desolate a place as
Detroit is today. Its population losses were not as severe. The
financial industry had not retrenched as badly as Detroit’s auto
industry has. And its government wasn’t as badly broken. New York
got a federal loan to avoid bankruptcy, to be sure — but not until
President Gerald
Ford
was convinced it was serious about dealing with its
structural fiscal imbalances, not to mention crime and crumbling
schools. That is when the city became a magnet for immigrants who
speeded up its turnaround.

Crucial to whether immigrants can boost a city’s prospects or
not is why the city went downhill in the first place. Immigrants
easily reversed New York’s population decline because New Yorkers
weren’t leaving the city because opportunities had dried up. They
were leaving for greener pastures elsewhere. That is not the case
in Detroit and other Rust Belt cities, for that matter. As I
noted:

[I]mmigrants aren’t pioneers whose survival depends on
conquering an inhospitable frontier. Yes, they can put up with far
greater hardship than the native-born, but they aren’t clueless
ingenues who are easily seduced. They have word- of-mouth networks
that alert them to places that offer them the best economic and
social fit, making it difficult to plunk them anywhere and expect
results.

So what should Detroit, Baltimore, and other struggling cities
do to become more attractive to immigrants? Offer them a decent
quality of life at an affordable price. This means improving
schools, tackling crime, creating an entrepreneur-friendly climate
and keeping taxes reasonable.

You can’t pour high-octane fuel into a broken engine and expect
it to run, folks. Gotta fix the engine first.

from Hit & Run http://ift.tt/1aFfnGI
via IFTTT

California Public School Students Suing Against Teacher Tenure

get on the busAn interesting lawsuit went to non-jury trial in
a Los Angeles court room yesterday; nine public school students,
with the support of an educational non-profit called “Students Matter,” are suing the
state of California over teacher tenure laws and other protections,
which they argue prevent school administrators from removing
dysfunctional teachers from the system. To skeptics of the
eternally optimistic apologists of the government school system,
the argument seems pretty open and shut. Tenure and the other
public employee protections (which public unions call “due process”
as if their jobs were rights and not privileges) make it difficult
to remove teachers even in some of the most egregious cases. In
2012, LA Weekly
reported
the city’s school district had 300 teachers in the
“rubber rooms,” where teachers go after they’ve been removed from
the classroom but before they’ve had their “due process.” According
to LA Weekly, the average teacher spends 127 days hanging out in
the rubber room, collecting full salary and benefits while
“allegations” against them are investigated. It’s a system that’s
pretty recognizably rigged in favor of the teacher and not the
student, whose education can be severely handicapped by just one
lousy teacher in one school year.

Nevertheless, the teachers union in California argues that
teacher protections benefit students.
Via Fox News Latino
:

The California Teachers Association and the California
Federation of Teachers intervened and asked the court to throw out
the lawsuit filed against the state, including the Department of
Education, Gov. Jerry Brown and Superintendent of Public Education
Tom Torlakson.

“It is deceptive and dishonest to pretend that teacher due process
rights are unfair to students,” said California Federation of
Teachers President Josh Pechthalt, the parent of a ninth-grade
student in the Los Angeles Unified School District. “Students need
a stable, experienced teaching workforce. They won’t have one if
this lawsuit succeeds in gutting basic teacher
rights.”

So, teachers have more job security even though when they fail
to do their jobs they risk the life-long income earning potentials
of their students because that job security creates a stable
workforce for them. It’s a bizarre assertion that a labor
organization meant to protect the financial interests of teachers
as employees could somehow also protect the educational interests
of students. Talk about decepitve. The judge rejected the union’s
motion to dismiss the case.

Over the weekend, the California Department of Education
released a statement insisting there was “nothing in the law” that
prevents districts “from removing teachers from the classroom when
necessary.” The students who have brought the matter to court, and
their parents, disagree. That those who profit off the educational
bureaucracy don’t is no surprise.

from Hit & Run http://ift.tt/Maywow
via IFTTT