A Private Debt Story: Republic of Turkey Hires McKinsey & Company T Sabri Öncü

About four years ago, I penned an article in this column titled, “A Sovereign Debt Story: Republic of Argentina vs NML Capital” (EPW, 17 May 2014). Many things have happened since then and it is time to write a private debt story now, Turkey’s story. Turkey and Argentina are twins in the sense that these countries suffered from almost simultaneous financial crises both in 2001 and 2018. Both are currently suffering from currency crises with potential spillover to the rest of the emerging markets, and there are those who argue that these twins may have triggered a crisis in the emerging markets…

External Commercial Borrowings: Difficult times ahead Parthapratim Pal and Ahana Bose

The Federal Reserve of United States has raised short term benchmark interest rates for the third time this year. With this increase, the benchmark rates have crossed the 2 percent mark for the first time since 2008. The FED has also given enough indications to suggest that there might be one more rate hike in December followed by a few more next year. As job growth figures in USA are pointing towards historically low unemployment levels, and the GDP growth rate is expected to be more than 3 percent this year, the FED is gradually moving away from the accommodative…

Hype and Facts on Free Trade C. P. Chandrasekhar

Voices questioning the claim that nations and the majority of their people stand to gain from global trade are growing louder. The one difference now is that the leading protagonist of protectionism is not a developing country, but global hegemon United States under Donald Trump. Free trade benefits big corporations with production facilities abroad, Trump argues, while harming those looking for a decent livelihood working in America. With time Trump has made clear that his words are not mere rhetoric, matching them with tariffs that have frightened European and North American allies and US corporations, besides troubling the likes of…

Trade Wars of United States Biswajit Dhar

In the past few months, President Donald Trump has authorised a series of protectionist measures, the likes of which have not been seen in the postwar decades. The first salvo was fired in early March 2018, with the imposition of tariffs on imports of steel and aluminium from all countries except its immediate neighbors, Canada and Mexico. The President of the United States (US) then turned his attention to China, announcing that relatively high tariffs would be imposed to counter, what he perceived was “unfair” trade practiced by the second largest economy. Both acts of protectionism were promptly responded to…

Global Instability and the Development Project: Is the Twenty-First Century different? Jayati Ghosh

GLOBAL CAPITALISM TODAY: UNSTABLE, MORIBUND, OR JUST RESTING? Ever since the global financial crisis of 2008–2009, the trajectory of the world economy has been hesitant, unstable and prone to many risks. Output recovery has been limited and fragile; and, more significantly, even in the more dynamic economies, it has not increased good-quality employment or reduced inequality and material insecurity. Global capitalism as an economic regime is increasingly unable to deliver on its own promise of continuous expansion within a largely stable society. Even so, discussions of the ‘end’ of capitalism still typically seem overstated and futile, not least because those…

Another Global Financial Crisis for Developing Countries? Anis Chowdhury and Jomo Kwame Sundaram

George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs' in the global financial system waiting to explode, mainly due to the policies of major developed countries. Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazil's real fell sharply in June, and Argentina…

The State of the Indian Economy Jayati Ghosh

Only the blind or the foolhardy would claim that the Indian economy is in good shape. Despite the government’s obsession with high GDP growth – according to which the Indian economy is doing not just reasonably well but is among the best performers in the world – the fault lines are now only too evident: the external fragilities, the internal imbalances, the crisis in agriculture, the lack of employment opportunities, the rising inequality and the growing insecurity of material life for the majority of the population. Indeed, these problems are now so intense that they are clearly evident in plain…

The Real Problem with Free Trade Jayati Ghosh

Even if free trade is ultimately broadly beneficial, the fact remains that as trade has become freer, inequality has worsened. One major reason for this is that current global trade rules have enabled a few large firms to capture an ever-larger share of value-added, at a massive cost to economies, workers, and the environment. For full article click here (This article was originally published in the Project Syndicate on September 10, 2018)

Pakistan: Who needs a crisis? C.P. Chandrasekhar

With Imran Khan’s Pakistan Tehreek-e-Insaaf (PTI) or “Movement for Justice” winning 116 of the 272 seats filled through election in Pakistan’s National Assembly, the former cricketer is set to be installed as his country’s next Prime Minister. So attention has now shifted to how he would address the  ‘crisis’ the country faces. That crisis is not a crisis of growth. Pakistan has registered year-on-year growth rates exceeding 5.4 per cent in the three consecutive years ending financial year 2017-18, a record matched this century only in the globally-synchronised, high growth years 2003-2007. Nor could it be identified as a crisis…

Argentina: The risk of transforming a currency crisis into a financial crisis Alejandro Vanoli

Despite past experiences, the recent agreement between Argentina and the IMF includes unrealistic projections. On Friday, July 13th, the IMF staff report on its Argentina agreement was released. There, the staff has sought to protect itself, warning of the risks inherent in the dynamics of the Argentine situation. But the tango between the IMF and Argentina is inconsistent and unsustainable  because of the unrealistic projections incorporated in the agreement, the rigidity generated by the limitations in the use of monetary and exchange rate instruments to face the crisis, and the validation of policies that will aggravate the crisis. The agreement…