Anti-vaccine sentiment in Pakistan Intensifies

The Associated Press has issued the following report:

"QUETTA, Pakistan (AP) — A suicide attack on a polio vaccination center in southwestern Pakistan on Wednesday killed 15 people, mainly policemen gathered to escort health workers, officials said. It was the latest attack on the vaccination campaign and health workers have been repeatedly targeted in recent years by Islamic militants.

The bombing on the outskirts of the city Quetta killed 13 policemen, a soldier and a civilian, said Shahzada Farhat, a police spokesman. He said 23 people were wounded.

"The suicide bomber detonated his explosives among the police officers, said provincial home minister Sarfraz Bugti. "We're in a war zone," he added.

"The bombing happened outside the polio center shortly before vaccination teams were due to be dispatched to local neighborhoods as part of a three-day immunization campaign, said Syed Imtiaz Shah, the local police chief.

"Hours after the attack, Ahmad Marwat, who described himself as a spokesman for Jundullah, or Army of God, a little-known militant group, claimed responsibility for the assault, without explaining why the center was targeted. He warned of more attacks on polio teams in the future.

"Polio workers in Pakistan, and their police escorts, have been targeted in recent years by Islamic militants who accuse them of working as spies for the United States."

Concerns about vaccinations are even stronger in Pakistan than in California.

The strong dollar and job losses in US manufacturing

I just saw a chart on Bloomberg TV that I have more or less duplicated on FRED. It shows the very tight relationship between US manufacturing jobs and the level of the trade weighted dollar. Common sense tells us that the strong dollar should lead to fewer manufacturing jobs and a weak dollar to more. What surprised me is how short is the lead time from the point when the dollar strengthens and jobs are lost, or how quickly a weak dollar leads to more jobs.

I guess this means that we should expect a big drop in manufacturing jobs in the coming months. The break in the link with the renminbi will make this even worse.

Are the Boston suburbs on the front lines of the cyber war?

The Internet has been down at the middle school in the Boston suburbs where my wife teaches math; she has been unable to post any examination results. The reason: a Denial of Service attack emanating primarily from the Islamic Republic of Iran. (see memo below) Lest there be any doubt, the entire school district, including the PTA and the maintenance staff, are united in refusing in advance to accede to any Iranian demands, should they be presented.

Vox populi: "We neither know nor do we wish to know -- anything."

. . . and proud of it, probably.

From today's FT:

Is there a bubble in the value of the US dollar?

Only the Chinese currency is stronger versus the US$ than it was before the crisis, and it has started the journey south to join the yen, pound, and euro. It looks like the world wants to solve its problems on the back of the US economy. How long can this go on before US manufacturing, or what is left of it, shuts down completely?

Summers in today's FT expects direct effect of Chinese slowdown on US/Europe

And he doesn't think there is any effective monetary response.  So we shall just grin and bear it.

Emerging Market Debt: the 1980s Elephant in the Room

Between 2005 and mid-2015 emerging market corporate debt rose from $900 bn to $4.4 trillion. (Central bank easy money had to go somewhere.) Total debt of emerging market countries went from $5.4 trillion to $24.4 trillion during the same period. (This includes both local currency and foreign currency debt.) Total debt is now 90% of average GDP for these countries. (data from today's FT)

This debt is largely supported by the proceeds from the sale of commodities.

Latin America had a similar quadrupling of debt in the ten years before August 1982 when Mexico suspended all debt payments. The current situation is somewhat similar, except that the emerging countries have relatively more local currency debt today.

In the 1970s, the recycling of petrodollars fueled the debt boom. In recent times, it has been the search for yield and central bank liquidity.

In the case where there is not a dramatic increase in commodity prices from today's levels (e.g. a doubling) it is hard to see how a 1980-like third world debt crisis can be avoided in the near future. (The first world debt crisis looms, but is probably more distant.)

Unlike in 1982, the present crisis has been moving forward in slow motion for a number of years, so the adjustment in the 3rd world may be less brutal than in the 1980s. Local currency debt also provides a cushion of sorts.

Some sort of debt cancellation for both sovereign and corporate debt around the world in both developed and developing countries will likely solve the problem sooner or later, so there is some cause for optimism.