Lead geese positive feedback loop

ARTICLE: Islamic Bonds to Get Boost From Singapore, India, Moody's Says, By Shanthy Nambiar, Bloomberg, Aug. 30, 2007

Further evidence of the positive feedback loop created by south and east Asian Muslim "lead geese" on Islamic finance. Long run, this is a great trend.

(Thanks: greg)

Comments

[M. Garcia]

So China (and maybe a few other SEA countries) is a "Tiger", India is an "Elephant", Russia might still be a "Bear", Japan could still be a "Dragon", and Asian Muslim countries are ... "Geese"? Really don't mean to make fun here, just seems an odd choice. Will the EU be "Ducks" (as in "get your ducks in a row") and the MENA (or just Sunni) Arab countries be "Sheep" (following their imam shepherds)? What is America, then? And please don't say "Donkey" or any variant on that one...

[Nathan Machula]

I think he just means "lead geese" as in the ones in front of the "V" formations when flying. The lead goose has to be stronger, as it doesn't have another goose to draft behind. As far as the Asian "tigers" go, they're traditionally Hong Kong, Singapore, South Korea, and Taiwan.

[M. Garcia]

OK, thanks for the clarification Nathan.

So in S and E Asia, who are the strong geese? Who was leading before India and Singapore joined the Islamic bond market? (Malaysia?) And who is leading now that those two have joined? (India?) If Malaysia led before, was it because of a large unsustainable extractive resources sector inflating their GDP? If India leads now, is it because they have very little of that left to hold them back? Singapore had/has essentially no extractive resource sector, as for most of the Tigers other than China. Is the bond market suddenly a leap more stable because of their sustainable industrial and tech sectors?

The lead goose trades off with another every once in a while in the "V" formation. The other geese must get stronger, or laggards will slow the flock (Tom's "caboose braking" concept). Who is/are the weakest link(s) in the S and E Asia Islamic bond market? (Pakistan? Indonesia?) What is it about their industrial and resource sectors that keep them there, and what can be done to bring them up to the strength and speed of the others?

[Stefan S.]

If Malaysia led before, was it because of a large unsustainable extractive resources sector inflating their GDP?

[M. Garcia]

What I was getting at was that the bond market is (or, ought to be) for national development in those Islamic countries, not for driving an economy into the ground over the long term and then defaulting on the bond repayments.

An extractive resources sector of a national economy is self-limiting, and both Indonesia and Malaysia seem strong in forestry (all those old-growth tropical hardwoods) and metals mining. Neither one will be able to sustain those sectors forever. Malaysia has already moved into some tech industry, while I haven't seem the same news of Indonesia (please point me to it, if you have seen such news).

When it's only the sustainable industry and tech/service sectors counted in the GDP, I get a better idea of long-term GDP growth, because the unsustainable elements that contribute to the current GDP (and thus "inflate" it, in my terminology) will eventually disappear, leaving the appearance of economic retreat or stagnation if the other sectors are not growing quickly at the same time. Any identified economists out there are welcome to correct me, however.