Has Conflict of Interest Created a Check-Mate in the Reporting of Economic Data?

In February 2012 The Economist took an astonishing step, removing Argentina from their much respected financial indicators page.   Their rationale being that, “…since 2007 Argentina’s government has published inflation figures that almost nobody believes. These show prices as having risen by between 5% and 11% a year. Independent economists, provincial statistical offices and surveys of inflation expectations have all put the rate at more than double the official number.”  They continue to note that, “…in an extraordinary abuse of power by a democratic government, independent economists have been forced to stop publishing their own estimates of inflation by fines and threats of prosecution. Misreported prices have cheated holders of inflation-linked bonds out of billions of dollars.”

The Inter Press News Service (IPS) also note how trials against Argentina’s 1976-1983 dictatorship have revealed economic crimes.  One prominent Argentine businessman they interviewed told IPS, “We weren’t involved in politics and had nothing to do with the government. But they took everything we had, our seven companies and the company plane. And it’s a miracle they didn’t kill us…” He later explained to journalists that government front-men, against these assets, took millions of dollars in loans from banks with ties to the dictatorship.  They defaulted on these loans taking down the companies against which they were secured and even the banks.  The Argentine Central Bank then auctioned off these [toxic] assets which were bought in good faith by others. Continue reading →

Guest article written for AllAboutAlpha.com – the official publication of the  Chartered Alternative Investment Analyst (CAIA) Association

Originally posted at: http://allaboutalpha.com/blog/2012/03/01/alpha-hunter-louis-vincent-gave-on-opportunities-in-china/

In a 2010 working paper titled “The Chinese Economy: Myths and Realities” Lawrence Lau of the Institute of Global Economics and Finance at The Chinese University of Hong Kong notes that, “China has made tremendous progress in its economic development since it began its economic reform and opened to the World in 1978. China is currently the fastest growing economy in the World—averaging approximately 10 percent per anuum over the past 30 years. Between 1978 and 2009, Chinese real GDP grew 18 times, from US$277 billion to US$4.99 trillion (2009 prices) to become the third largest economy in the World, after the U.S. and Japan….”   More recently, The Economist in January 2011 stated that, “…Absent a total disaster in China, the transition [to China being the world's biggest economy] will take place” well within this decade.

To learn more about the opportunities and risks in the Chinese economy, we spoke to Louis-Vincent Gave, CEO of GaveKal who are one of the world’s leading independent providers of global investment research.   The firm advises several funds with combined assets of over US$1.2 billion and has offices in the US, Europe and China.    Louis-Vincent contributes frequently to the firm’s research and was the main author of the books Our Brave New World and The End is Not Nigh. Continue reading →