Who's Weathering the Great Decession?


Nouriel Roubini, the NYU economist whose mid-decade bearishness won him permanent status as one of the dozen or so Only People To See the Recession Coming, uses his "Doctor Doom" column in Forbes to single out countries that are doing relatively well in the Repression or Decession. The explanation for how these exotic lands avoided getting hurt doesn't offer much for deregulationists to like:

What do these countries have in common? One major theme is that they tended to have lower financial vulnerabilities due to more restrictive regulation and less developed financial markets, as well as larger and stronger domestic markets that sustained domestic demand. Moreover, they had the resources to engage in countercyclical fiscal and monetary policies, actions that were not possible in past crises. In contrast, countries that borrowed heavily to finance domestic consumption in the days of easy money are now facing sharp economic contractions. Despite the relative strength of these countries, however, their ability to return to sustained growth will depend on structural reforms that support consumption.

Hmm, sounds like the situation presents challenges as well as opportunities. Having less developed financial markets does reduce your financial vulnerabilities, just as being blind means you don't have to worry about nearsightedness. And sure enough, in the winners circle we find (along with some strong economies) quite a few countries where the permanent rate of unemployment is higher than the U.S. rate of unemployment right now.

Here's the pantheon: Brazil, Peru, Australia, China, India, The Philippines, Indonesia, Poland, Norway, France, Canada, Egypt, Qatar, and Lebanon.

All perfectly charming places, I'm sure. But the problem with these kind of high-orbital views of global affairs is that they're so general as to be pretty pointless. Does it really tell you anything that remittances from overseas Filipino laborers have been "surprisingly resilient despite the global economic slowdown?" Or rather, it tells you something you already knew about the Philippines (that it continues to be a poor country whose citizens continue to seek opportunities elsewhere), but it doesn't tell you what countries Filipinos are going to where they can still earn enough to send money home—which seems like the important point.

Still, this kind of skylarking is catnip for some folks. If it is for you, read the whole article and you can say you understand this crazy, hill of beans world.