Bloomberg - 11 Sep 2018
Contagion from Turkey and Argentina to other emerging markets is not a given, but it might happen. This article describes how trouble could spread. The major cause would be the “common lender channel phenomenon” - creditors curtailing lending to unaffected markets and as they seek to rebuild capital and realign risk. Volatility of and correlations among EM asset prices and currencies would also play as they increase in situations of stress (reads in 7-8 min).
Published in Weekly selection 14 September 2018
Project Syndicate - 24 Aug 2018
For more than a decade, financial markets supplied the Turkish economy with easy credit, making economic growth dependent on a steady flow of foreign capital that financed domestic consumption and flashy investments in housing, roads, bridges, and airports. This kind of economic expansion rarely ends well, and the only real question was: what would it take to push the country’s economy into a fully-fledged currency crisis? President Trump! (reads in 5-6 min).
Published in Weekly selection 25 August 2018
Foreign Policy - metered paywall - 16 Jul 2018
This article puts forward the argument of “premature deindustrialization” that every investor in emerging markets should carefully consider: for two centuries, countries have used low-wage labor to climb out of poverty, but what will happen when robots take those jobs? If automation prevents today’s poor nations from developing the kind of manufacturing that would allow them to increase urbanization, train low-skilled workers, and accumulate capital, the long-term economic impact could be disastrous (reads in 6-8 min).
Published in Weekly selection 20 July 2018