Analysts Analyzed a socio-economic approach to fin

:ASocio-EconomicApproachtoFinancialandEmerging:Publishedby:(IPSA)canbefoundat:InternationalPoliticalScienceReviewAdditionalservicesandinformationfor::::):(thisarticlecites20articleshostedontheCitations©1999InternationalPoliticalScienceAssociation.Allrightsreserved.Notforcommercialuseorunauthorizeddistribution.atPENNSYLVANIASTATEUNIVonFebruary5,2008“makeorbreak”pricesonemergingmarkets.Behindthepowerofthemarkethidesamultitudeofactors,analysts,strategists,economists,andportfoliomanagerswhoconstituteaveritableepistemiccommunitywithitsowndynamicofopportunityandconstraint.Theaiminthisarticleistounravelthevariousstrandsinthetapestrythatweavestheinteractionsofthosewho“makethemarket.”ItisnotembroideredbytheinvisiblehandofGod,orthedevil,but,moresimply,bytheunceasinganticipationsandinteractionsofamyriadofanalystsandinvestorswhodrawtheirbreathfromWallStreet.But,becausecrisescanbeself-fulfilling,soundeconomicpolicyisnotsufficienttogainmarketconfidence;onemustcatertotheperceptions,theprejudices,andthewhimsofthemarket.Or,rather,onemustcatertowhatonehopeswillbetheperceptionofthemarket.Inshort,internationaleconomicpolicyendsuphavinglittletodowitheconomics.—P.KRUGMAN(1998)Withinonlyafewyears,emergingmarketshavebecomethenewElDoradoofinter-nationalfinance.Theiremergenceiscertainlynotnew;infact,mostLatinAmeri-canstockexchangesdatefromtheendofthelastcentury.1However,WallStreet’srediscoveryofthegoldminesthataretheseemergingmarketshasbeenattheoriginofoneofthemostincrediblegoldrushesattheendofthiscentury.2InternationalPoliticalScienceReview(1999),Vol.20,No.3,307–3300192-5121(1999/07)20:3,307–330;006154©1999InternationalPoliticalScienceAssociationSAGEPublications(London,ThousandOaks,CAandNewDelhi)©1999InternationalPoliticalScienceAssociation.Allrightsreserved.Notforcommercialuseorunauthorizeddistribution.atPENNSYLVANIASTATEUNIVonFebruary5,2008:theconstanttugofwarbetweenstatesandfinan-cialmarkets(Kindleberger,1996).Ontheonehand,statesarefacedwiththeever-increasinginflowsandoutflowsofcapitalthatsetthepaceforeconomicgrowth.Financialmarkets,ontheotherhand,unceasinglyundertakemultiplechoices,twenty-fourhoursaday,movingfromonecountrytoanotherinthesearchformarginsandprofits.AttheheightoftheAsiancrisis,the1997diatribesthatopposedMalaysianleaderMahathirMohamedandfinancialwizardGeorgesSorossymbolizethisconflict.3Soroshasbecomeasymbolof“markettyranny”inthelastfewyears,havinglaunchedseveralviolentattacksonnationaleconomieswhichthenfelllikedominos.4Thisapparentoppositionbetweenstatesandfinancialmarketscanbequalifiedonmanylevels.Itisimportanttorememberthatgovernmentshavehistoricallybeenbehindthecreationoffinancialmarkets.ThefirstwascreatedbytheBritishCrowninanefforttoraisefundstofinancethemilitaryexploitsoftheking(Carruthers,1997).5Inaddition,financialcrisesarenotsolelytheconsequenceofshort-termistfinancialmarkets.DevaluationoftheMexicanpesoinDecember1994,forexample,wasmainlytheresultofacomplexgameofinteractionsbetweenfinancialmarketsandgovernment(EdwardsandNaim,1998;CameronandAggar-wal,1996;Roett,1996).Thisparticularexampledemonstrates,initssequenceandtiming,theextenttowhicheconomicandpoliticaltemporalitiesinteract:howmuchstatesareobligedtoreactquicklytofinancialmarketsandhowmuchtheyseektogaintimeandtobuildlong-termcredibility(Santiso,1997,1999).Thefinancialcrisesofthelastfewyearshavehighlightedthevitalimportanceofthetemporaladjustmentsthatfacestates.Thesecriseshaveledtoaquestion-ingofthetemporalityoffinancialmarketsand,inparticular,ofthecognitivemapsoffinancialoperators,majoractorsintheoriginoftemporaladjustmentsimpo