ECON 401: INTERNATIONIAL ECON (Part 2 of 3) Commanding Heights: Agony of Reform. B.R.I.C. Story
Part 2. The B.R.I.C story has "legs" it is being repeated over and over again on CNBC. BRIC stocks have gone parabolic in dollar terms. The US has the worlds worst performing currency of 16 traded and has one the worlds worst performing stock markets. In real terms the US stock market is down almost 20% over a 10 year period. As Warren Buffet and other hedge fund managers travel the world looking for investments, it is important for LONG TERM investors to have an idea, what is outside of the US. Why are so many economies attracting capital as the US dollar continues to fall?
Today, we will cover the B.R.I.C. story. Bolivia, Russia, India, Chile, plus Poland and Britian
"WAIT! Abitarecatania! OMG! That is not the B.R.I.C. story I was told, I mean sold on CNBC!" you say.
Lets be honest most fools don't know the difference between India or China. Bolivia vs Brazil or Chile vs Mexico. Right? You were just following a herd? Hoping things would work out right? Right?
Lets get smart and get some background on the international market.
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A Capitalist Revolution for the majority of the World. Governments move away from state control to free markets.
Chapter 2 The Ghost of Norilsk [4:27]
Soviet planning Norilsk, a prison camp, slave labor is component of Soviets.
Checking out the wrong book at the library, 10 minute trial = prison camp.
Chapter 3 Behind the Iron Façade [8:18] 1980s Soviet Union
1. Britain’s Top Spy in Jeopardy – feeding dogs ________ to throw them off scent.
2. West neglected the important factor of __________ in their debrief of defector. Oil prices kept up the Soviet successes.
The people do not want to work, they have no incentives. You can put a gun to his head or provide incentives.
Chapter 4 India’s Permit Raj [3:04] India Permit Raj
Everything requires a permit. 50 Visits and 24 months to buy a $1500 computer
3. India's Hindustan vs Toyota starts same year __000 vs ___ million
Chapter 5 Latin American Dependecia [2:03] Chile 1971
Dependence theory of economic growth, reality is you falling back in long term.
Chapter 6 [3:30] Counterrevolution in Chile
1971 Chile more government, hyper -inflation, then military take over 20% per month inflation
4. "You got ____ hours to come up with a plan to fix economy."
Chapter 7 Chicago Boys and Pinochet [8:16]
Direct challenge to dependence theory, but the Generals prefer to control the economy.
5. The most famous free market economist in the world saves Chile ____________! Wins the Noble Peace prize and has major protestors for talking to Pinochet.
You can/cannot have a repressive government and a free market.
6. ___________ is the first case of a movement from communism to the free market.
Chapter 8 Heresy in the USSR. [8:08]
Questioning the system? Marxism vs Markets?
We can't solve the problem of womens pantie hose.
My job compared to your job is much easier, if you have a market economy.
7. ______________ to create an open market. It will take a generation to get going.
8. _________________ and _________________ went on the offensive of freedom and liberty.
Mr Gorbachev tear down this wall!
Chapter 9 Poland Solidarity [7:32]
Margaret Thatcher helps save Poland! Seriously!
Chapter 10 Bolivia on the Brink [7:07]
189 military take over!
Who is the president this week? What is the inflation this week? \
Inflation 1% every 10 minutes! OMG! Hyper inflation! The government spends 30X what it take in.
Chapter 11 Shock Therapy Applied - Bolivia
Bolivia - Gradual stuff does not work! Curing hyperinflation (pay attention US)
The government will spend only what it gets. No borrowing from central bank.
Chapter 12 The Miracle Year - Poland 1989 [6:57] My Favorite, I love Poland!!!!
The Poles feared they were descending into starvation. "no milk in the city"
The phone call that ended the cold war! OMG!!!!
Chapter 13 Poland In Transition [2:39]
Chapter 14 Gorbachev Tries China [7:17]
Write up a plan for radical economic change! Soviet economy to a market economy.
Chapter 15 Soviet Free Fall [4:52] 1991
Soviet Union will cease to exist in a couple of days.
Chapter 16 Reform Goes Awry [4:26]
Chapter 17 India Escapes Collapse [3:16]
Idea of central planning collapses in India. Planned by bureaucrats cut off from World Trade
Chapter 18 Russia Tries to Privatize [5:33]
Giving away industry.
Chapter 19 Loan for Shares [6:18]