Yesterday, the World Bank concluded that Russia will be one of the countries hardest-hit by the recession, including not returning to precrisis levels until 2012. But Russian communists believe that the cure lies in a blast from the past:

Russian communists have put up giant billboards of Soviet dictator Josef Stalin in a southern city, promoting his tough methods as the best remedy for the world economic crisis.

Stalin killed millions of people during his 30 year rule until his death in 1953, but many in recession-hit Russia have grown nostalgic for his strong leadership, and he was voted the third most popular historical figure in a nationwide poll.

"Everybody knows that under Stalin our country achieved the highest rate of economic growth and development in other spheres, and the great victory (over Nazi Germany)," Sergei Rudakov, a senior Communist party official in the town of Voronezh, told Reuters by telephone.

Because what the world economy needs right now is a good ol' fashioned purge. 

Freedom Toast/Flickr

From an L.A. Times article on the still atrocious human rights situation in Zimbabwe:

Amnesty International said Thursday that serious human rights abuses continue in Zimbabwe and criticized members of President Robert Mugabe's ruling party, saying they regard violence as a useful political tool.

After a six-day trip to Zimbabwe, the group's chief, Irene Khan, dismissed the government's explanation that it lacked the funds to make improvements on human rights.

"Ending attacks on human rights defenders, lifting restrictions on the media and allowing public protests do not require more money. They only require political will," she said in a statement.

This raises a question though, which is also very pertinent given the events in Iran this week: is it cheaper to have a dictatorship or a democracy? 

At first glance, Kahn's statement makes intuitive sense. Allowing demonstrators to protest, journalists to write what they want, and NGOs to function is cheaper than monitoring and suppressing them. Police states cost money. 

But as Paul Collier points out, if you're a dictator, the problem with making your country more democratic is that you might lose. And if you don't want to lose you have to keep your population happy, which generally costs money. Why spend your hard-earned tax revenue/natural resource wealth/foreign aid money on schools and hospitals when you can just buy new batons for your riot police and send the rest to your Swiss bank account?

For what it's worth, this NationMaster table doesn't show much of any correlation between regime type and government spending as percentage of GDP. There are some very expensive totalitarian regimes (Cuba: 57 percent of GDP) and some very cheap ones (Turkmenistan: 13 percent of GDP). Zimbabwe's percentage is quite high, but the fundamentals of the country's economy are so completely screwy that this probably doesn't mean much of anything. 

Still, though, I think Kahn's statement is wrong. The Zimbabwean state is currently set up with the primary goals of repressing its citizens and accumulating wealth for elites. Converting it into a democracy whoe goal is promoting the welfare of its citizens is not going to be cheap. 

This is not to defend Mugabe's regime or any other authoritarian state. But those of us rooting for democratic change, whether in Harare or Tehran, need to understand the costs, both economic and political.

New U.S. employment numbers out this morning indicate things are getting worse at a less-breakneck pace. A mere 345,000 Americans lost their jobs in the month of May.

The New York Times sunnily reports that the numbers are "a welcome sign that the decline in the job market would not continue forever."

People will say this means the recession is bottoming out. They will call it a green shoot. They will glass-half-full it. Pollyannaism is Pollyannaism. 

But the report is dismal: that graph on the front web page of the New York Times shows change, not the absolute unemployment. The employment-to-population ratio is under 60 percent, the underemployment number is 16.4 percent, and unemployment is worse than the provisional numbers used the stress tests. 

Plus, a Deutsche Bank report notes, "the length of the workweek declined by 0.1 hour to 33.1 hours, which is the aggregate hour equivalent of an additional loss of about 350k jobs" -- making May look much more like April.  

Still, there are signs that even if the employment numbers in the U.S. are really bad, things worse elsewhere. Here's a fascinating graph from Stratfor:

The chart is missing a few key countries, most notably China. (Stratfor says it did not include China because its economy is too different to compare. Fair point.) Stratfor argues the recession is hitting the U.S. much more softly because "the American system is far more stable, durable and flexible than most of the other global economies, in large part thanks to the country’s geography."

It makes some sense: each country's economy grows to take advantage of its geography. Russia, with its massive oil and gas reserves, benefited from the massive surge in commodity prices through 2008; it has been hit hard since because the economy is highly dependent on that one industry. The U.S. economy is much more resource- and industry-diverse.

I wonder what Robert D. Kaplan would have to say about all of this...which countries' have advantageous geographies for downturns? Is this why Australia seems to be doing relatively well?

(h/t The Monkey Cage and Ezra Klein)

Despite a recession dramatically affecting some of the biggest and most robust economies in the world, Australia has managed to have an economic improvement. In the fourth quarter, not only did the GDP creep up 0.4 percent while others stalled or fell, but stocks rose and the value of the Australian dollar increased to 82.40 U.S. cents, the highest it's been in several months, thanks to generous government cash handouts intended to stimulate spending. 

Craig James, the chief equities economist at Commonwealth Bank of Australia explained:

"Rumors of the death of the Australian economy have been highly exaggerated... Much of the credit for Australia's resilience must be given to the swift actions of the Reserve Bank and government in stimulating our economy."

So even though China is on the verge of buying out a huge portion of the country's natural resources, and its soldiers are the world's pickiest eaters, Australia does seem to be doing something right.

This is one weird commercial:

Yes, that's noted humanitarian and alleged former rock star Bob Geldof (along with physicist Stephen Hawking, feminist scholar Germaine Greer, and businessman Alan Sugar) trying to sell Britons on National Savings & Investments.  NS&I is a state-owned savings bank serves as a lender to the British government. It describes itself as a way to "raise cost effective financing for the government and to reduce the cost of government borrowing to the tax payer."

So after more than two decades of raising money for famine relief and pushing for debt cancellation in Africa, Geldof is now raising money for the exchequer to cover its debts. Not sure if that says more about Geldof or about the current state of the British economy, but either way, like I said, weird commercial.

Today, U.S. Treasury Secretary Timothy Geithner and President Barack Obama laid out a plan to create and enforce stricter tax regulations for U.S. corporations. Obama's opening salvo from the presser:

Most Americans meet their responsibilities because they understand that it's an obligation of citizenship...and yet, even as most American citizens and businesses meet these responsibilities, there are others who are shirking theirs. 

He went on to describe the U.S. tax code as "full of corporate loopholes that [make] it perfectly legal for companies to avoid paying their fair share."

That's right. He was talking about "tax havens": not just countries in which major U.S. corporations hide from U.S. taxes, but a big fat open season sign for fire and brimstone metaphors and sword of Damocles swinging. Democratic speechwriters must adore tax havens. They're like the Newt Gingrich of tax policy: always there to beat up.

Rhetorical fury aside, tax havens really do allow U.S. companies to shore up a whole lot of money, money which Obama hopes to use to revamp the U.S.'s healthcare system, among other things. Interesting factoids from the Treasury release: 

• In 2004, the most recent year for which data is available, U.S. multinational corporations paid about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings -- an effective U.S. tax rate of about 2.3 percent
• A January 2009 GAO report found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens.
• In the Cayman Islands, one address alone houses 18,857 corporations, very few of which have a physical presence in the islands.
• Nearly one-third of all foreign profits reported by U.S. corporations in 2003 came from just three small, low-tax countries: Bermuda, the Netherlands, and Ireland.

The closing of three major tax haven loopholes should garner $190 billion in tax revenue for the government in the next ten years. 

Another big beneficiary of the changes? Lobbyists. Corporate America isn't going to like this -- and they're going to pay a lot of money to see the repeal of these changes.  

Brazil's Lula may blame "white people with blue eyes" for the global financial crisis, but in financially-crippled Iceland, many women in finance and government feel they have to clean up the mess left by the country's boys-club power elite. One former government official who, according to Der Spiegel, runs Iceland's only still-successful investment firm, put it this way:

"The crisis is man-made," claims banker Halla, 40, who like all Icelanders, is only addressed by her first name. "It's always the same guys," she says. "Ninety-nine percent went to the same school, they drive the same cars, they wear the same suits and they have the same attitudes. They got us into this situation -- and they had a lot of fun doing it," she says. Halla criticizes a system that focuses "aggressively and indiscriminately" on the short-term maximization of profits, without any regard for losses, that is oriented on short-lived market prices and lucrative bonus payments. "It's typical male behavior," says Halla, who compares it to a "penis competition" -- who has the biggest?

Now Iceland's women are rising to the top ranks -- in politics, too -- and they want to make everything better. Writer Hallgrimur Helgason says the new star is Johanna Sigurdardottir, 66, a Social Democrat, who had previously been known to most Icelanders as an honest and unimposing politician. "My time will come," she once railed at her opponents angrily almost 20 years ago.

Halla credits her success to bringing "female values into the financial world."

Sigurdardottir, currently prime minister in an appointed caretaker government, is widely expected to win big in an early election this weekend. She is not only her country's first female prime minister, but the world's first openly-lesbian head of state. 

Perhaps Iceland too -- as The Onion brilliantly summed up the last U.S. election -- is now "finally shitty enough to make social progress."

Felix Salmon writes up a World Bank report on the returns a vulture fund made off of Liberia:

Liberia, with the aid of the World Bank, has been negotiating with vulture funds holding $1.2 billion of its debt. You know what vulture funds are, right? They’re evil hedge-fund types who buy up debt at pennies on the dollar, and then sue for repayment in full, with interest and penalties and everything.

Just look at the deal they drove in this case! Liberia, one of the poorest countries in the world, is going to have to pay them, er, nothing at all. The World Bank is kicking in $19 million, a few rich countries are matching that sum, and the vultures are walking away with a not-very-princely-at-all $38 million, or just 3 cents on the dollar. Which probably barely covers their legal fees, let alone the amount they paid for the debt in the first place.

Let's read that again: the World Bank and Liberian government negotiated a deal so that vulture funds holding $1.2 billion in debt ended up with a check for $38 million -- three percent!

It's distressing that Liberia got in such a bad fix. It needed to raise funds and banked on future growth to make the payments -- but a bloody civil war meant it couldn't. The original lenders decided to sell the loans off to vulture and hedge funds who drove a hard bargain. Which meant that at one point, Liberia owed seven times its national income to creditors. 

So, the balance sheet -- in redux:

• The vulture funds (name makes it hard to feel bad for them, doesn't it?) lost $1.26 billion on paper. (I doubt they paid the full $1.3 billion for the loans, the World Bank doesn't say.) For better or worse, it means they likely aren't lending anymore. 
• Liberia, struggling with a crushing debt burden, found forgiveness. This is a good thing -- if Liberia's government has put in place measures to ensure security, stability, and economic growth. Johnson Sirleaf's at least making an effort. 
• Liberia's rich friends (the United States included) stepped in with a bit of cash to help a very ailing economy. A good thing.
• The World Bank negotiated what seems to be an amicable settlement. (Though the vulture funds might beg to differ.) A good thing for them.

Ultimately, though, Liberia isn't the story here. Emerging market and developing economies, like Liberia, will be among the hardest-hit in the Great Recession. Unlike OECD countries, they won't be able to issue debt or raise funds easily. They'll need the help of the international community -- and especially international organizations -- to ensure that their loans come with advisement and affordable repayment options. 

The hero here's the World Bank. Suddenly, it and the IMF -- especially the IMF, perhaps -- have become the world's most important international organizations. 

Dan Kitwood/Getty Images

Preeti Aroon

"Scholars on the Sidelines," by Joseph S. Nye Jr. in the Washington Post. Referencing FP's "Inside the Ivory Tower," Nye argues that American academics are "paying less attention to questions about how their work relates to the policy world" and that more scholarship should have "real-world relevance."

Elizabeth Dickinson

David Gardner asks a provocative question in this weekend's Financial Times: Is the West's fear of political Islam condemning the Middle East to a generation of poor leadership? Political Islam is the new communism, he argues; the United States fears it so much that it prefers despots to even the most moderate Islamists. The Middle East, by implication, might be going through the same bout of poor leadership that afflicted Latin America and Africa as the Cold War contest played out in their regions.

Rebecca Frankel

"War By Any Other Name." Joe Queenan takes a look at the ripples of the Obama administration's "semi-official" move to revamp the vocabulary for "the war on terror" and the attempt to distance itself from the Bush administration's "fierce" rhetoric. Money quote: "From now on, the bad guys will be referred to as 'the ostensibly malefic.' We'll get back to you when we have a new term for 'the good guys.'"

(Bonus pick: Presidential Pets. Couldn't resist...)

Britt Peterson

Walter Benn Michaels's essay "Going Boom," in the February/March issue of Bookforum. According to Michaels, boom time for markets is bust time for literature, which turns back to unhappy but irrelevant periods of the past when there's not enough drama in the present day (the 1990s-2000s spike in popular fiction about the Holocaust), or focuses boringly inward (the memoir, anything Oprah's Book Club recommends). But, during an economic collapse, Western novelists will have enough material to deal relevantly with the present, and financial crisis fiction will blossom. (Hat tip: Paper Cuts)

Annie Lowrey

U.S. Office of Management and Budget Director Peter Orszag blogs that crime has fallen in New York City during the recession. Indeed, Orszag says economic bad-times tend to spur property crimes, but not violent crimes. "One reason may be that alcohol use tends to decline during recessions (another potentially surprising finding), and that the reduction in alcohol use reduces violent crime," he notes. (Hat tip: Tapped)

Andrew Polk

Nouriel Roubini puts a brake on all the sanguine predictions for China’s 2009 recovery prospects in a report titled "Outlook for China's Economy in 2009 and Beyond." In the analysis, Dr. Doom tells investors not to get ahead of themselves, as the Chinese economy has not seen a true rebalancing toward domestic consumption, but he also notes one major positive: The country's trade surplus might finally be shrinking.

Greg Shtraks

Today's big story on the high seas are the Somalian buccaneers, but the future of naval warfare may be developing in another part of the Indian Ocean. While India is taking measures to protect its vulnerable coast from terrorist attacks, China is preparing to make a major announcement at the 60th anniversary of the People's Liberation Army Navy (PLAN) on April 23rd. Writing in Time Magazine, Howard Chua-Eoan describes the brewing naval rivalry developing between Asia's two aspiring superpowers. 

Last month China recorded its largest-ever surge in bank loans, the government reported over the weekend. 

While the rest of the world begs for lines of credit and U.S. policymakers struggle to unclog the financial system, Beijing has announced that it will need to "strictly control lending," especially to certain areas of the economy such as "high-polluting, high-energy consuming industries and...those with overcapacity." 

Part of the Chinese government's concern is that money from their stimulus package, announced last November, is getting stuffed into various industries that may eventually produce a spate of overly risky loans. They also worry about the onset of inflation in 2010, if too much money gets dumped into the economy now. Remember the good old days (as far back as summer 2008) when Beijing's biggest economic worries were high inflation and over-heating? Well, even if we don't, the Chinese certainly do. And they plan to avoid revisiting them.

In a related announcement on Saturday, Chinese Prime Minister Wen Jiabao explained that the Chinese economy was performing better than expected, building on recent positive projections from a variety of analysts, including some at the World Bank. A day earlier, U.S. President Barack Obama gave a press conference at which he expressed "glimmers of hope" for the American economy, but comparatively, the evidence for his prognosis seemed much more meager.

And it's safe to say that the Chinese noticed that fact as well. In fact, while reading this China Daily (one of China's state-run newspapers) report, it's hard not to detect a sense of schadenfreude coming out of Beijing when it compares Chinese prospects:

'Despite the year-on-year slowdown, the Chinese economy has posted a strong recovery on a quarterly basis, making us more upbeat about the country's economic prospects,' said Frank Gong, senior economist, JP Morgan, who predicted China's quarter-on-quarter GDP growth has rebounded to about 5 percent in the first quarter from only 1.5 percent three months earlier."

to American prospects:

US President Barack Obama said last Friday that the US economy was beginning to show 'glimmers of hope,' as mortgage interest rates declined to historic lows, while refinancing has shown significant pick-up. But some analysts said the largest economy in the world and also China's major trade partner is far from bottoming out, given the severe stress of financial malaise and job losses."

One hopes that China will use this growth potential not just to expand its regional influence and national interests, but also to continue to take positive steps in global cooperation. After all, they certainly still have great interest in the health of the American economy.             

Photo: Frederic J. Brown/Getty Images

If you only think of genocide when you hear the name "Rwanda," it's time to think again.

Today, Rwanda is moving forward, fervently set on rebranding itself into one of Africa's most investment-friendly havens. And it appears to have some of America's most recognizable names in business in its corner. A just-published article in Fast Company counts the CEOs of Starbucks and Costco as two of the Rwanda's most influential supporters, along with the likes of Google CEO Eric Schmidt, former British PM Tony Blair, and Pastor Rick Warren of "Purpose-Driven" fame. All seem to praise the Rwandan government -- and especially President Paul Kagame -- for being serious about making the country's business climate as streamlined and free of bureaucratic hassles as possible, which is certainly an anomaly in much of the developing world. (Registering a business in Rwanda apparently takes less than 48 hours.)

An article in Fortune called "Why CEOs love Rwanda" offers this money quote from Chicago financier Dan Cooper (who is credited with introducing Kagame to Costco CEO Jim Sinegal):

We came away saying, this is the most undervalued ‘stock' on the continent and maybe in the world.  Here's an African nation that's reaching out, not to governments so much, but to corporate America.  They want to work.  They want U.S. business to bring innovation to their country."

But is this too good to be true? The country's new model of economic development is an interesting one; it's almost as if Kagame has torn a page out of Beijing's handbook. While Kagame can be credited with cracking down hard on government corruption and creating a competent administration in the country's capital of Kigali, there's always the problem of restricted political rights and civil liberties, which critics of the regime never fail to point out. The issue is certainly important, especially given Rwanda's long history of political violence.

But that said, the country's clearly moving forward. And apparently, the business world isn't the only one taking notice. Last year, the United States signed a bilateral investment treaty with Rwanda -- the first such treaty signed between the U.S. and any Sub-Saharan African country in almost a decade. 

Fifteen years after genocide, this is Rwanda rising.

Hat tip: Africamusings

GIANLUIGI GUERCIA/AFP/Getty Images

Reuters reports on the details of Japan's largest-ever economic stimulus plan, revealed by Prime Minister Taro Aso. He intends to make cultural products 18 percent of Japan's exports, up from around 2 percent now.

Aso waved glossy magazines from China and Taiwan featuring Japanese pop stars on their covers.

"Japanese content, such as anime and video games, and fashion draw attention from consumers around the world," he said.

"Unfortunately, this 'soft power' is not being linked to business overseas ... By linking the popularity of Japan's 'soft power' to business, I want to create a 20-30 trillion yen ($200-300 billion) market by 2020 and create 500,000 new jobs."

The proposal seems a bit pie-in-the-sky -- Japan's exports have more than halved this year. But the country's certainly on a mission to expand its cultural importance (including in all things cute). Nota bene, Gwen Stefani. 

Photo: Flickr user dogonthesidewalk

On his New York Times blog, Nobel-prize winning economist Paul Krugman has reponded to a VoxEU post showing that the current Great Recession might be accelerating deeper and faster than the Great Depression. Krugman writes: 

What hasn’t happened — at least not yet — is any counterpart to the catastrophes of 1931: the wave of bank runs in the US, the failure of Credit Anstalt in Austria, and the great perverse response of central banks that was triggered by the death spasms of the gold standard.

What Eichengreen-O’Rourke show, it seems to me, is that knowledge is the only thing standing between us and Great Depression 2.0. It’s only to the extent that we understand these things a bit better than our grandfathers — and that we act on that knowledge — that we have any real reason to think this time will be better.

Eichengreen and O'Rourke convincingly argue that two indicators, trade volume and stock values (they don't take on other indicators, like global GDP or unemployment), are plummeting. But they also show the alacrity and force of governmental responses -- the only option for staunching the bleeding and returning the world economy to health.

At VoxEU, economists Barry Eichengreen and Kevin O'Rourke compare the current global recession and the Great Depression -- or, more accurately, parse the comparisons. They note that many commentators, like Paul Krugman, include only U.S. stock and economic indicators, in which case, some evidence suggests this downturn may be shorter and milder.

But, they argue, the Great Depression was a global phenomenon; it originated with the U.S. stock crash and soon engulfed the world economy. The current recession, likewise, is one of a globalized world. The U.S. led the fall, but didn't fall alone.

So, they write: "the global picture provides a very different and, indeed, more disturbing perspective than the U.S. case...which as noted earlier shows a smaller decline in manufacturing production now than then." And they demonstrate the effect, with a series of compelling and frightening graphs. 

Here's the global stock market, the blue line representing its value during the Depression and red during the current recession: 

And here is global trade volume, another indicator. They write, "This is highly alarming given the prominence attached in the historical literature to trade destruction as a factor compounding the Great Depression."

The one bright spot, they note: the policy responses have been far, far better this time around. Central banks have slashed interest rates earlier and lower, and increased the money supply more and faster. And, globally, there is heightened government deficit spending, intended to arrest decline.

Still, Eichengreen and O'Rourke's analysis demonstrates that the global recession may be worse than people think, even if the U.S. manages a recovery.