The following video entitled “what is the meaning of IMF austerity measures” shows what happened in the third world countries such as Ethiopia, Argentina, and Peru when the IMF austerity programs were launched.
From the video:
Time and time and time again in country after country in every corner of the globe, IMF loans spell disaster for the people who are left holding the bag.
The crux of the entire issue is that none of this is unexpected. In fact, it is part of the design of the IMF austerity programs themselves.
As revealed by Joseph Stiglitz, the former chief economist of the World Bank, the IMF's modus operandi is to conduct economic raids of debtor nations, dismantling and selling off infrastructure for the benefit of foreign corporations, and making sure that all public money is used to pay off the bankers.
He even has a name for what happens after the "austerity" plan inevitably results in the dissolution of a society: the IMF riot.
http://tv.globalresearch.ca/content/meaning-austerity
Tuesday, June 29, 2010
Monday, June 28, 2010
The U.S. vs. China: the Saga Continues
We understand the problems and challenges facing the U.S. and China.
The U.S. holds a reserve currency status while China still has a peg to the USD.
Considering each country’s debt level, trading deficit, savings rate, growth rate, it seems that the U.S. is on a slide whereas China is on a ladder.
The saga reflects not only the realities of the changing economy but the status of civil liberties.
The saga continues.
The U.S. holds a reserve currency status while China still has a peg to the USD.
Considering each country’s debt level, trading deficit, savings rate, growth rate, it seems that the U.S. is on a slide whereas China is on a ladder.
The saga reflects not only the realities of the changing economy but the status of civil liberties.
The saga continues.
Sunday, June 27, 2010
Is Korea Entering the Korean Version of Japan’s Lost Decade?
We understand how Japan has got to where they are now in terms of economic difficulties.
Japan has had a real economy to a certain extent, but that was not enough while it has helped Japan keep a pulse since they could export products into a credit boom.
Has Korea entered the Korean version of Japan’s lost decade?
If it did, when was that?
Was it during the 1997 financial crisis?
The 1997 financial crisis was a watershed in modern Korean history.
Most of all, without fundamentally overhauling the broken system, Korea has been subjected to global forces.
Japan has had a real economy to a certain extent, but that was not enough while it has helped Japan keep a pulse since they could export products into a credit boom.
Has Korea entered the Korean version of Japan’s lost decade?
If it did, when was that?
Was it during the 1997 financial crisis?
The 1997 financial crisis was a watershed in modern Korean history.
Most of all, without fundamentally overhauling the broken system, Korea has been subjected to global forces.
Thursday, June 24, 2010
Japan May Be Seeing the End of QE
From Times Online:
The Japanese Government will rip up the promises it used to win last summer’s general election in an attempt to impose austerity and discipline on the most strained public finances in the developed world.
Pledges of generous child benefits, reduced motorway tolls and aid for farmers are likely to evaporate first, followed by the expected reversal of the promise not to raise consumption tax before 2013.
The dramatic policy U-turns were flagged yesterday by Yoshihiko Noda, the Finance Minister still less than a week into his new job and, like his predecessors, faced with defusing Japan’s explosive 200 per cent ratio of debt to gross domestic product. By the standards of Japanese finance ministers, he is already talking tough.
Describing Japan’s situation as “severe”, Mr Noda said that while he could not undo his party’s spending pledges in one go, he would start to do so “steadily”. Spending plans announced under the previous prime minister Yukio Hatoyama were savaged by economists as being impossible to achieve without eye-watering levels of new debt issuance.
Mr Noda’s comments came two days after Naoto Kan, Japan’s new Prime Minister, said that the country could face a Greek-style financial crisis if it did not act immediately to rein-in spending and start chipping away at the country’s spectacular mountain of public debt. Mr Kan, a known fiscal hawk, warned parliament that Japan’s long addiction to debt issuance had to end and told the country that he would try to deliver “minimum unhappiness” — a phrase seen as heralding an era of austerity and pain for many households.
http://business.timesonline.co.uk/tol/business/economics/article7149396.ece
The Japanese Government will rip up the promises it used to win last summer’s general election in an attempt to impose austerity and discipline on the most strained public finances in the developed world.
Pledges of generous child benefits, reduced motorway tolls and aid for farmers are likely to evaporate first, followed by the expected reversal of the promise not to raise consumption tax before 2013.
The dramatic policy U-turns were flagged yesterday by Yoshihiko Noda, the Finance Minister still less than a week into his new job and, like his predecessors, faced with defusing Japan’s explosive 200 per cent ratio of debt to gross domestic product. By the standards of Japanese finance ministers, he is already talking tough.
Describing Japan’s situation as “severe”, Mr Noda said that while he could not undo his party’s spending pledges in one go, he would start to do so “steadily”. Spending plans announced under the previous prime minister Yukio Hatoyama were savaged by economists as being impossible to achieve without eye-watering levels of new debt issuance.
Mr Noda’s comments came two days after Naoto Kan, Japan’s new Prime Minister, said that the country could face a Greek-style financial crisis if it did not act immediately to rein-in spending and start chipping away at the country’s spectacular mountain of public debt. Mr Kan, a known fiscal hawk, warned parliament that Japan’s long addiction to debt issuance had to end and told the country that he would try to deliver “minimum unhappiness” — a phrase seen as heralding an era of austerity and pain for many households.
http://business.timesonline.co.uk/tol/business/economics/article7149396.ece
Wednesday, June 23, 2010
The Rising Wages in China and Its Ramifications
Foxconn has announced that it would offer its workforce a 30% pay raise. Foxconn is a Taiwanese contract manufacturer with a factory complex in China, exploiting its cheap labor and serving international companies including Intel, Nokia, Apple, Sony, Microsoft and Nintendo. How would this cost inflation affect people around the globe?
Of course these inflationary pressures would have different ramifications for the Western advanced economies, newly industrialized economies, and emerging ones.
Cycles seem to turn relentlessly.
Of course these inflationary pressures would have different ramifications for the Western advanced economies, newly industrialized economies, and emerging ones.
Cycles seem to turn relentlessly.
Tuesday, June 22, 2010
Illusion of Decoupling and Consequences of Current Policy Decisions
We understand what’s been going on around the globe: the U.S., China, the Eurozone, Japan, and so on.
Can any country with export-driven economy decouple from this historic credit bubble bust?
What have politically motivated policy decisions such as bailouts, low interest rates, and QE done to the U.S. economy and any other country’s?
The math is real, yet how will the effects unwind on every level?
The broken system needs to be significantly reformed and restructured.
Moral elite leadership leading to constructive policy actions, fiscal sustainability, and social culture will make a country less susceptible to global forces and sovereign debt woes worldwide.
Any government should establish its policies in the best interest of its own people and failure to do so may result not only in lower standard of living but in a solvency crisis.
Solvency is a choice.
Can any country with export-driven economy decouple from this historic credit bubble bust?
What have politically motivated policy decisions such as bailouts, low interest rates, and QE done to the U.S. economy and any other country’s?
The math is real, yet how will the effects unwind on every level?
The broken system needs to be significantly reformed and restructured.
Moral elite leadership leading to constructive policy actions, fiscal sustainability, and social culture will make a country less susceptible to global forces and sovereign debt woes worldwide.
Any government should establish its policies in the best interest of its own people and failure to do so may result not only in lower standard of living but in a solvency crisis.
Solvency is a choice.
Monday, June 21, 2010
China's Yuan Announcement
China announced on Saturday that they plan to increase the yuan’s flexibility. Yet, some remain skeptical over a large appreciation of the yuan.
It seems clearer that while MNCs have profited from China, Beijing has behaved in their best interests, regardless of Western global forces’ intentions.
By contrast, how Japan and Korea have dealt with those forces?
It seems clearer that while MNCs have profited from China, Beijing has behaved in their best interests, regardless of Western global forces’ intentions.
By contrast, how Japan and Korea have dealt with those forces?
Sunday, June 20, 2010
Thursday, June 10, 2010
Will Exports Drive Economic Sustainability?
Manufacturing has been the backbone of Korea’s economic growth. The rise in Korean manufacturing has been fuelled largely by exports.
We understand why the East Asian countries like Korea have pursued export-driven economic model.
We also understand the perils of export-driven economy.
Production and innovation are vital to economic sustainability when they are aligned with other crucial factors such as fiscal discipline. The 1997 financial crisis and Japan’s decade-long deflation have taught us that.
Furthermore, globalization needs to be factored in.
We understand why the East Asian countries like Korea have pursued export-driven economic model.
We also understand the perils of export-driven economy.
Production and innovation are vital to economic sustainability when they are aligned with other crucial factors such as fiscal discipline. The 1997 financial crisis and Japan’s decade-long deflation have taught us that.
Furthermore, globalization needs to be factored in.
Wednesday, June 9, 2010
Korea Is among Top 10 Sovereign Deriskers
From Zero Hedge:
The week's biggest (sovereign) CDS movers have been released, and we have some new entrants in the most endangered species list. While by now nobody will be surprised that the UK is a consistent top 2 player (coming in this week with $319 million in net notional derisking, this making it the 8th week or so the country has made the top 3), only behind Italy and its $452 million in net notional, and just in front of last week's #1 Brazil, the presence of the United States at #4 should be a little unsettling. It has been months since the US appeared in the top 5. And just like in the long gold case, the same types of existential questions once again arise when the interest in US CDS picks up: who gets to pay off your contracts in the case of an event of default? Elsewhere, the presence of Korea and Turkey (or Australia) in the top 10 should not come as too surprising.
http://www.zerohedge.com/article/uk-and-us-among-top-5-weekly-sovereign-deriskers
The week's biggest (sovereign) CDS movers have been released, and we have some new entrants in the most endangered species list. While by now nobody will be surprised that the UK is a consistent top 2 player (coming in this week with $319 million in net notional derisking, this making it the 8th week or so the country has made the top 3), only behind Italy and its $452 million in net notional, and just in front of last week's #1 Brazil, the presence of the United States at #4 should be a little unsettling. It has been months since the US appeared in the top 5. And just like in the long gold case, the same types of existential questions once again arise when the interest in US CDS picks up: who gets to pay off your contracts in the case of an event of default? Elsewhere, the presence of Korea and Turkey (or Australia) in the top 10 should not come as too surprising.
http://www.zerohedge.com/article/uk-and-us-among-top-5-weekly-sovereign-deriskers
Tuesday, June 8, 2010
China Bashing on Goldman
From The Financial Times:
Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.
The article was widely distributed through commercial news portals and the website of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.
Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.
The reports were highly critical of Goldman for designing and selling oil hedging contracts to state-owned Chinese companies that then lost billions of dollars when oil prices plunged, contrary to Goldman analysts’ predictions, in 2008 and 2009.“
Goldman has just been so successful in China, but this is one of the perils of success here,” said a senior banker at one rival in China.
Many people believe Goldman Sachs, which goes around the Chinese market slurping gold and sucking silver, may have, using all kinds of deals, created even bigger losses for Chinese companies and investors than it did with its fraudulent actions in the US,” read the opening lines of an article in the China Youth Daily, a state-owned daily newspaper, last week.
The article was widely distributed through commercial news portals and the website of government mouthpiece Xinhua News and the People’s Daily, the Communist Party publication.
Referring to Goldman as a “black hand” that “played little tricks carefully designed to gamble with Chinese enterprises”, the article made few specific accusations of wrongdoing by the bank.
The reports were highly critical of Goldman for designing and selling oil hedging contracts to state-owned Chinese companies that then lost billions of dollars when oil prices plunged, contrary to Goldman analysts’ predictions, in 2008 and 2009.“
Goldman has just been so successful in China, but this is one of the perils of success here,” said a senior banker at one rival in China.
Monday, June 7, 2010
The U.S. hits 130% debt to GDP Ratio
The U.S. debt chart
President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”
The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.
Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”
Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”
http://preview.bloomberg.com/news/2010-06-04/u-s-s-13-trillion-debt-poised-to-overtake-weigh-down-gdp-chart-of-day.html
Chart compliments of the Contrary Investor.
According to Zero Hedge, total U.S. debt has increased from $10.95 trillion on Marcy 6, 2009 to $13.06 trillion today. It is still growing.
President Barack Obama is poised to increase the U.S. debt to a level that exceeds the value of the nation’s annual economic output, a step toward what Bill Gross called a “debt super cycle.”
The CHART OF THE DAY tracks U.S. gross domestic product and the government’s total debt, which rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.
Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”
Dan Fuss, who manages the Loomis Sayles Bond Fund, which beat 94 percent of competitors the past year, said last week that he sold all of his Treasury bonds because of prospects interest rates will rise as the U.S. borrows unprecedented amounts. Obama is borrowing record amounts to fund spending programs to help the economy recover from its longest recession since the 1930s.
“The incremental borrower of funds in the U.S. capital markets is rapidly becoming the U.S. Treasury,” Boston-based Fuss said. “Do you really want to buy the debt of the biggest issuer?”
http://preview.bloomberg.com/news/2010-06-04/u-s-s-13-trillion-debt-poised-to-overtake-weigh-down-gdp-chart-of-day.html
Sunday, June 6, 2010
Japan May Trigger Next Sovereign Debt Crisis
We know the difference between the U.S. and Japan’s sovereign debt situation. One thing they have in common is that both don’t appear to have the political will to resolve this issue in a constructive way any time soon. More monetization will have to stop at some point.
From Bloomberg:
Japan may spark the next global debt crisis unless the nation’s new leader addresses its widening fiscal deficit, Kusano Global Frontier Co. said.
Japan’s 10-year yields have stayed mostly below 2 percent in the past decade partly because domestic investors hold over 90 percent of government debt, according to Kusano. Overseas investors will start avoiding Japanese bonds as the supply of the securities exceeds local demand, Kusano said.
“If bond yields spike, Japanese financial institutions will take a heavy blow, shaking the nation’s financial system,” Kusano said.
“The clock is ticking,” Kusano said. The new government “has to address debt problems urgently.”
The Organization for Economic Cooperation and Development said that Japan’s debt is approaching 200 percent of GDP, the highest among its 31 members.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azo8REkdtnv0&pos=7
From Bloomberg:
Japan may spark the next global debt crisis unless the nation’s new leader addresses its widening fiscal deficit, Kusano Global Frontier Co. said.
Japan’s 10-year yields have stayed mostly below 2 percent in the past decade partly because domestic investors hold over 90 percent of government debt, according to Kusano. Overseas investors will start avoiding Japanese bonds as the supply of the securities exceeds local demand, Kusano said.
“If bond yields spike, Japanese financial institutions will take a heavy blow, shaking the nation’s financial system,” Kusano said.
“The clock is ticking,” Kusano said. The new government “has to address debt problems urgently.”
The Organization for Economic Cooperation and Development said that Japan’s debt is approaching 200 percent of GDP, the highest among its 31 members.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azo8REkdtnv0&pos=7
Friday, June 4, 2010
North Korea Threatens Immediate Retaliation
Amid South Korea’s plan to submit the Cheonan issue to the UN Security Council, North Korea threatened immediate retaliation if South Korea introduces the results from the one-sided investigation to the Security Council.
From AFP:
A North Korean diplomat said Thursday that tensions on the Korean peninsula were running so high over the sinking of a South Korean warship that "war may break out at any moment."
In a speech to the international Conference on Disarmament, Ri Jang-Gon, deputy permanent representative for North Korea at the United Nations in Geneva, blamed the "grave situation" on South Korea and the United States.
"The present situation of the Korean peninsula is so grave that a war may break out at any moment," he said.
http://news.yahoo.com/s/afp/20100603/wl_asia_afp/skoreankoreamilitaryundisarm
From AFP:
A North Korean diplomat said Thursday that tensions on the Korean peninsula were running so high over the sinking of a South Korean warship that "war may break out at any moment."
In a speech to the international Conference on Disarmament, Ri Jang-Gon, deputy permanent representative for North Korea at the United Nations in Geneva, blamed the "grave situation" on South Korea and the United States.
"The present situation of the Korean peninsula is so grave that a war may break out at any moment," he said.
http://news.yahoo.com/s/afp/20100603/wl_asia_afp/skoreankoreamilitaryundisarm
Variation of Capitalism in the West and the East
The U.K and the U.S. have practiced the “Anglo-Saxon” variation of capitalism.
Japan and Korea have practiced the “Asian” variation of capitalism.
We know the difference and the common factors between these different versions of capitalism.
What has driven the demise of the Western industrialized economies?
How has Japan built its economy and fell into its declining path?
Where does China stand on this?
How have global forces played out?
Japan and Korea have practiced the “Asian” variation of capitalism.
We know the difference and the common factors between these different versions of capitalism.
What has driven the demise of the Western industrialized economies?
How has Japan built its economy and fell into its declining path?
Where does China stand on this?
How have global forces played out?
Thursday, June 3, 2010
The Korean Government to Cut Jobs in Public Institutions
The administration announced plans to cut 14,000 jobs in public institutions by 2012.
Wednesday, June 2, 2010
China's Property Bubble and More Stimulus Due
The Financial Times runs a candid interview with Li Daokui, who serves on the Chinese central bank’s monetary policy committee, re the state of China’s housing market.
From the Financial Times:
“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” he said in an interview. “It is more than [just] a bubble problem.”…
Mr Li said the high cost of housing could hamper future growth by slowing urbanisation. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of the property market.
“When prices go up, many people, especially young people, become very anxious,” he said. “It is a social problem.”
On the other hand, Wen Jinbao said more stimulus was due.
From Reuters:
Striking a more optimistic note, China’s Wen said the world’s third-largest economy and its prime growth engine remained on course to meet its growth targets this year, though he added it would require Beijing to “maintain a certain level of intensity in its economic stimulus.”
http://www.reuters.com/article/idUSSGE64U0B320100531
It is widely known that there has been 25% credit growth over the last 2-3 years in China, resulting in intended/unintended consequences.
People differ in their view on China: the next economic superpower or the next big bubble. In any case, we would hope that the bottom line is how policy actions would be aimed at serving the interests of the general public in China in either long or short term.
From the Financial Times:
“The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,” he said in an interview. “It is more than [just] a bubble problem.”…
Mr Li said the high cost of housing could hamper future growth by slowing urbanisation. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of the property market.
“When prices go up, many people, especially young people, become very anxious,” he said. “It is a social problem.”
On the other hand, Wen Jinbao said more stimulus was due.
From Reuters:
Striking a more optimistic note, China’s Wen said the world’s third-largest economy and its prime growth engine remained on course to meet its growth targets this year, though he added it would require Beijing to “maintain a certain level of intensity in its economic stimulus.”
http://www.reuters.com/article/idUSSGE64U0B320100531
It is widely known that there has been 25% credit growth over the last 2-3 years in China, resulting in intended/unintended consequences.
People differ in their view on China: the next economic superpower or the next big bubble. In any case, we would hope that the bottom line is how policy actions would be aimed at serving the interests of the general public in China in either long or short term.
Japanese Prime Minister Hatoyama to Step Down
From Bloomberg:
Ichiro Ozawa, secretary-general of Japanese Prime Minister Yukio Hatoyama’s party, asked Hatoyama to step down from his post, Yukio Ubukata, vice secretary- general of the party said in a TV Asahi program today. Ubukata said he expects both to resign before an upper house election next month. Hatoyama refused to resign during a meeting of senior party officials yesterday, Kyodo News reported.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aBZLu7NuuTz8
Ichiro Ozawa, secretary-general of Japanese Prime Minister Yukio Hatoyama’s party, asked Hatoyama to step down from his post, Yukio Ubukata, vice secretary- general of the party said in a TV Asahi program today. Ubukata said he expects both to resign before an upper house election next month. Hatoyama refused to resign during a meeting of senior party officials yesterday, Kyodo News reported.
http://www.bloomberg.com/apps/news?pid=20601101&sid=aBZLu7NuuTz8
Tuesday, June 1, 2010
Chinese Workers Demanding Higher Wages
Korean news outlets report that Chinese workers at a parts plant have demanded wage increase.
See it in the context of China becoming its own consumer market.
The Western media run the similar stories.
From the New York Times:
More than 1,000 workers at a parts factory near Beijing that supplies South Korea’s Hyundai Motor suspended work for most of Saturday to demand higher wages. They returned to work after management promised a raise, the local media reported.
“There was a little production disruption on both May 28 and 29, but it has been back to normal operations since May 30,” a Hyundai representative said in an e-mail message from Seoul.
http://www.nytimes.com/2010/06/01/business/global/01honda.html
From Bloomberg:
Honda Motor Co.’s car production in China will remain halted at least until tomorrow as some striking workers at a parts plant in the country rejected a proposed pay increase.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3B3VvAkniBQ
See it in the context of China becoming its own consumer market.
The Western media run the similar stories.
From the New York Times:
More than 1,000 workers at a parts factory near Beijing that supplies South Korea’s Hyundai Motor suspended work for most of Saturday to demand higher wages. They returned to work after management promised a raise, the local media reported.
“There was a little production disruption on both May 28 and 29, but it has been back to normal operations since May 30,” a Hyundai representative said in an e-mail message from Seoul.
http://www.nytimes.com/2010/06/01/business/global/01honda.html
From Bloomberg:
Honda Motor Co.’s car production in China will remain halted at least until tomorrow as some striking workers at a parts plant in the country rejected a proposed pay increase.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3B3VvAkniBQ
Subscribe to:
Posts (Atom)