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Niall Ferguson: Paris, Big Emerging Market Cities 'Could Burn This Summer'

By    |   Thursday, 20 June 2013 08:25 AM

Paris, as well as big emerging market cities, may burn this summer, predicts Harvard economist Niall Ferguson.

"There are two kinds of city that we could see burn this summer. The big European cities with Paris at the top of the list look extremely vulnerable," Ferguson told CNBC. "Paris has a greater tradition of urban rioting than almost any city in the world."

High youth unemployment and slowing economic growth is ready to set off mass protests and rioting throughout Europe and many emerging markets countries, Fergusons said, calling the youth unemployment in Latin Europe "an explosion waiting to go off."

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There could also be trouble in big emerging market cities, "where the rising expectations are about to be disappointed," he explained.

In fact, over 100,000 people in at least eight major cities in Brazil protested a 10 cent increase in public transportation fees, CNBC reported. People are angry at the poor condition of public transportation and feeling ignored because the government is pouring money into sports stadiums.

Wealthy Brazilians fly over the transportation quagmire in helicopters. Sao Paulo has more helicopters and landing pads per capita than any other city.

"The infrastructure sucks," Ferguson said, summarizing the situation.

"The economy has been doing less well lately," he told CNBC. "Young people have got used to rising living standards. Inequality has been coming down somewhat from its extraordinary terrible heights. And now as the economy slows down the frustration boils over because people's expectations were rising and now they're disappointed."

There is also a copycat effect, he noted, saying people seeing riots on YouTube in one city may copy the actions of others in other cities.

Social unrest in China is also a threat, and economic growth there is slowing.

Chinese authorities are "seriously worried" about a revolution, said Ferguson, who visited China in April. Chinese officials are reading de Tocqueville's "Old Regime and the Revolution."

"They think they're 18th century France," Ferguson quipped.

"But my guess is they have better handle on this than their counterparts in Brazil. If there's one thing the Chinese communists do pretty well, it's public order. They run a pretty efficient police state."

The youth unemployment rate is over 40 percent in Italy, over 56 percent in Spain and over 62 percent in Greece, noted The Atlantic. Youth unemployment in Greece has increased about a 1 percentage point a month since April 2012, a rate that will send it over 70 percent in early 2014.

Never before have so many young people been unemployed. About 40 percent of people in their 20s and early 30s in Spain are college educated. In Greece, about 30 percent are.

"Europe's crisis — clearly worsened by its austerity obsession — is an absurd waste of the most educated generation in the continent's history," The Atlantic stated.

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Paris, as well as big emerging market cities, may burn this summer, predicts Harvard economist Niall Ferguson.
Thursday, 20 June 2013 08:25 AM
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